2025 (1) TMI 468 - HC - Indian Laws

Dishonour of cheque - conviction of the accused under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumptions under Sections 118 and 139 of the NI Act - HELD THAT - It is trite law that this Court is required to exercise restraint and should not interfere with the findings in the impugned orders or reappreciate evidence merely because another view is possible unless the impugned orders are wholly unreasonable or untenable in law. It is also well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque/ respondent received the cheque in discharge of a legally enforceable debt or liability are raised against the accused. From a perusal of the statement of the petitioner under Section 313 of the CrPC, it is apparent that the petitioner does not dispute that the respondent had advanced a sum of Rs. 20,00,000/- to the petitioner. The petitioner in fact admitted that he had already returned a sum of Rs. 12,00,000/- by way of various cash installments. He stated that the said amount was arranged by him by withdrawing the same from his bank account, and that he also had receipts in that regard - From a perusal of the impugned judgment, it is apparent that the learned ASJ took into account all the contentions of the petitioner. It was noted that since the petitioner had admitted his signatures on the cheque, the presumptions under Section 139 and 118 were raised against the petitioner. In the present case, the petitioner sought to raise a probable defence by stating that the cheques in question were misplaced from his office for which he had lodged a police complaint and had given intimation to the bank. Though pleaded that the cheques were stolen, and that he had filed a police complaint, the petitioner failed to lead any evidence to corroborate the same. The petitioner failed to produce or append a copy of such police complaint. In the absence of any evidence to substantiate his claim, a bare averment that a police complaint had also been filed does not suffice to refute the presumption raised against the petitioner under Sections 139 and 118 of the NI Act - Since the signatures on the cheque were not disputed, the presumptions were raised against the petitioner under Section 139 and 118 of the NI Act. It was thus up to the petitioner to raise a probable defence on a preponderance of probabilities to contend that there existed no debt/liability in the manner as pleaded by the respondent. Even otherwise, the learned ASJ did not rely upon the testimony of the Court witnesses while upholding the conviction of the petitioner under Section 138 of the NI Act. Since the signatures were not disputed, the onus was on the petitioner to have raised a probable defence on a preponderance of probabilities that there existed no debt/liability in the manner as pleaded by the respondent. Conclusion - The petitioner had not led any evidence to controvert the presumptions against him under Section 118 and Section 139 of the NI Act. Once the signature on the cheque was admitted, it was for the petitioner to rebut, and establish a probable defence to show that on a preponderance of probabilities, there existed no debt/liability in the manner pleaded in the complaint/demand notice/affidavit evidence. In the opinion of this Court, the said burden had not been discharged. The learned ASJ rightly upheld the conviction of the petitioner under Section 138 of the NI Act, and the same cannot be faulted with. Petition dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

• Whether the conviction of the accused under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) was justified based on the evidence presented.
• Whether the presumptions under Sections 118 and 139 of the NI Act were appropriately applied and rebutted by the accused.
• Whether procedural errors, specifically regarding the summoning of court witnesses and the application of Section 313 of the CrPC, affected the fairness of the trial.
• Whether the absence of a cheque return memo invalidated the claim of cheque dishonour.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Conviction under Section 138 of the NI Act

• Relevant Legal Framework and Precedents: Section 138 of the NI Act deals with the dishonour of cheques due to insufficient funds or if the cheque amount exceeds the arrangement with the bank.
• Court's Interpretation and Reasoning: The court upheld the conviction based on the admission of the accused's signature on the cheque, which raised presumptions under Sections 118 and 139 of the NI Act.
• Key Evidence and Findings: The cheque was admitted to be signed by the accused, and the legal demand notice was acknowledged.
• Application of Law to Facts: The court found that the accused failed to provide evidence to rebut the presumptions of debt and liability.
• Treatment of Competing Arguments: The accused's arguments regarding the cheque being misplaced and the absence of a return memo were considered insufficient to rebut the presumptions.
• Conclusions: The conviction was justified as the accused did not successfully rebut the presumptions against him.

Issue 2: Presumptions under Sections 118 and 139 of the NI Act

• Relevant Legal Framework and Precedents: These sections establish presumptions in favor of the holder of the cheque, presuming consideration and discharge of debt or liability unless rebutted.
• Court's Interpretation and Reasoning: The court emphasized that the burden of proof shifted to the accused once the signature was admitted.
• Key Evidence and Findings: The accused admitted to the signature but failed to provide evidence of the cheque being issued without consideration.
• Application of Law to Facts: The accused's failure to produce evidence or receipts to substantiate his claims led to the upholding of the presumptions.
• Treatment of Competing Arguments: Arguments regarding the cheque being misplaced and procedural issues were not sufficient to rebut the presumptions.
• Conclusions: The presumptions were not rebutted, supporting the conviction under Section 138.

Issue 3: Procedural Errors and Fairness of Trial

• Relevant Legal Framework and Precedents: Section 311 of the CrPC allows the court to summon witnesses, while Section 313 requires the accused to be informed of incriminating evidence.
• Court's Interpretation and Reasoning: The court noted procedural errors but found no prejudice against the accused.
• Key Evidence and Findings: The testimony of court witnesses was not relied upon in the final judgment.
• Application of Law to Facts: The procedural errors did not affect the outcome as the accused failed to demonstrate prejudice.
• Treatment of Competing Arguments: The accused's claims of procedural unfairness were dismissed due to lack of demonstrated prejudice.
• Conclusions: Procedural errors did not vitiate the trial or affect the conviction.

Issue 4: Absence of Cheque Return Memo

• Relevant Legal Framework and Precedents: Section 146 of the NI Act does not mandate a specific mode of intimation for cheque dishonour.
• Court's Interpretation and Reasoning: The court held that the absence of a return memo did not invalidate the claim as the cheque was presented and returned unpaid.
• Key Evidence and Findings: The cheque was produced in court, indicating it was returned unpaid.
• Application of Law to Facts: The court found that the lack of a return memo did not affect the presumption of dishonour.
• Treatment of Competing Arguments: The accused's argument regarding the necessity of a return memo was dismissed.
• Conclusions: The absence of a return memo did not impact the validity of the conviction.

3. SIGNIFICANT HOLDINGS

• Presumptions under Sections 118 and 139: "Once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque/ respondent received the cheque in discharge of a legally enforceable debt or liability are raised against the accused."
• Burden of Proof: "The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability and, if he adduces acceptable evidence, the burden again shifts to the complainant."
• Procedural Fairness: "While it is true that the learned MM should have afforded opportunity to the accused to refute the incriminating circumstances, and the procedure under Section 313 of the CrPC ought to have been followed, the same alone would not vitiate the trial unless prejudice is shown."
• Final Determination: The court upheld the conviction under Section 138 of the NI Act, finding no merit in the petitioner's arguments.