2016 (9) TMI 766 - HC - Indian Laws

Dishonoring of cheque - Committing an offence under Section 138 of the Negotiable Instruments Act, 1881 - Held that -When the cheque was bounced, on account of closure of account by the petitioner, the respondent had served a legal notice upon him before filing the present complaint, but the petitioner did not reply to the said notice. In order to invoke Section 138 of the act, the three ingredients which need to be fulfilled are (i) that there is a legal enforceable debt; (ii) that the cheque was drawn from the account of the bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt and (iii) that the cheque so issued had been returned due to insufficiency of funds. The proviso appended to the said Section provides for compliance of legal requirements before a complaint can be acted upon by the Court of law. Section 138 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. Rather, it merely raises a presumption in favour of the holder of the cheque that the same has been issued for discharge of any debt or liability. Thus, ingredients of Section 138 of the Act have duly been met, as the accused was unable to rebut the statutory presumption under Section 139 of the Act. Even otherwise, the petitioner has himself suffered a statement before the lower Appellate Court that a compromise has been effected between the petitioner, according to which, the petitioner agreed to make payment of ₹ 1,30,000/- on that date itself i.e. 16.5.2015 and to make the remaining payment within on month thereafter. But the petitioner did not honour the said statement. The plea of the petitioner that he is a patient of multiple substance abuse disorder with psychotic disorder with recent memory and judgment, is of no help to him, when the same was never agitated before the Courts below. This plea is altogether a new plea and the same is not admissible at this stage. Once the petitioner has made a statement that he will make the payment within a specified period and has failed to honour the same, he is estopped from raising altogether a new plea at this stage.

Summary

Issues:
1. Challenge to judgment of conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881.
2. Legal implications of dishonored cheque and failure to make payment within statutory period.
3. Interpretation of Section 139 of the Act regarding presumption of debt discharge.
4. Defense based on the petitioner's medical condition and compromise agreement.

Analysis:
1. The petitioner challenged the judgment of conviction under Section 138 of the Negotiable Instruments Act, 1881, where he was found guilty of issuing a cheque that was dishonored due to "Account Closed." The petitioner claimed false implication and innocence during trial but failed to rebut the statutory presumption under Section 139 of the Act, which presumes the issuance of a cheque for discharge of debt or liability. The Court noted that the existence of a legally recoverable debt is not presumed under Section 139, but it raises a presumption in favor of the holder of the cheque. The petitioner's failure to respond to the legal notice and his admission of a compromise agreement for partial payment further supported the conviction.

2. The dishonored cheque and the subsequent failure to make payment within the statutory period were crucial factors in upholding the conviction. The petitioner's argument that the complainant lacked a money lending license and therefore could not legally recover the loan amount was dismissed. The Court emphasized the legal requirements under Section 138 and the need for a legally enforceable debt, which was established in this case. The dishonor of the cheque due to insufficient funds fulfilled the necessary elements for invoking Section 138 of the Act.

3. The interpretation of Section 139 of the Act regarding the presumption of debt discharge played a significant role in the judgment. The Court clarified that the presumption under this section does not relate to the existence of a legally enforceable debt but rather presumes that the cheque was issued for the discharge of a debt or liability. The petitioner's failure to rebut this presumption and his subsequent admission of the compromise agreement undermined his defense.

4. The defense based on the petitioner's medical condition, specifically citing substance abuse disorder and psychotic disorder, along with recent memory and judgment issues, was not considered by the Court. The petitioner's plea regarding his medical condition and its impact on the compromise agreement was deemed inadmissible since it was not raised in the lower courts. The Court held that once the petitioner made a statement regarding payment and failed to honor it, he could not introduce a new defense at a later stage. Therefore, the defense based on the petitioner's medical condition did not affect the judgment.

In conclusion, the Court dismissed the revision petition, upholding the judgments of the lower courts based on the dishonored cheque, failure to make payment, statutory requirements under Section 138 of the Act, and the petitioner's admission of the compromise agreement. The defense related to the petitioner's medical condition was not considered due to its belated introduction.