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2018 (8) TMI 35 - SC - Indian LawsDishonor of Cheques due to insufficiency of funds - failure to rebut the presumption that the cheque is issued in discharge of a legally enforceable debt or liability - Section 139 of the N.I. Act - Held that - Under Section 139 of the N.I. Act once a cheque has been signed and issued in favour of the holder there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability - This presumption is a rebuttable one if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan. In the present case the respondent has failed to produce any credible evidence to rebut the statutory presumption - The appellants have proved their case by overwhelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt. The respondent having admitted that the cheques and Pronote were signed by him the presumption u/s 139 would operate. The respondent failed to rebut the presumption by adducing any cogent or credible evidence. Appeal allowed - decided in favor of appellant.
Issues:
1. Interpretation of Section 138 of the Negotiable Instruments Act regarding dishonored cheques. 2. Burden of proof on the accused to rebut the statutory presumption under Section 139 of the N.I. Act. 3. Evaluation of evidence in a case involving dishonored cheques and promissory notes. 4. Reversal of conviction and sentence by the High Court in a criminal revision case. Issue 1: Interpretation of Section 138 of the Negotiable Instruments Act regarding dishonored cheques The case involved two complaints under Section 138 of the Negotiable Instruments Act filed by the appellants against the respondent for dishonor of two cheques. The Trial Court found the respondent guilty under Section 138 and sentenced him to undergo imprisonment and pay a fine. The respondent contended that the cheques were issued as security and not towards any debt. However, the Trial Court held that the cheques and promissory note were issued for repayment of a lawful debt, leading to the conviction. Issue 2: Burden of proof on the accused to rebut the statutory presumption under Section 139 of the N.I. Act The District and Sessions Judge upheld the conviction, stating that the presumption under Sections 118 and 139 of the N.I. Act was not rebutted by the respondent. Insufficient funds in the respondent's account at the time of cheque issuance and the lack of explanation on the possession of the promissory note favored the complainants' case. The accused's defense was discredited, and the conviction was affirmed. Issue 3: Evaluation of evidence in a case involving dishonored cheques and promissory notes The High Court, in a criminal revision case, reversed the conviction and sentence, holding that the respondent had raised doubts about the nature of the transaction, thereby discharging the presumption under Section 139. However, the Supreme Court analyzed the evidence, including the promissory note, blank cheques, and witness testimonies, concluding that the respondent failed to produce credible evidence to rebut the presumption. The defense's contentions were found lacking credibility, leading to the restoration of the Trial Court's conviction and fine. Issue 4: Reversal of conviction and sentence by the High Court in a criminal revision case The Supreme Court set aside the High Court's judgment and restored the order of conviction and fine passed by the Trial Court. The Court emphasized the statutory presumption under Section 139 and the respondent's failure to provide substantial evidence to counter it. The respondent's defenses were deemed unconvincing, and the appellants' overwhelming evidence established the issuance of cheques towards a legally enforceable debt, resulting in the restoration of the initial conviction. This detailed analysis of the judgment highlights the legal intricacies surrounding dishonored cheques, burden of proof, evaluation of evidence, and the appellate process leading to the final decision by the Supreme Court.
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