2018 (8) TMI 707 - HC - Indian Laws

Dishonor of Cheque - presumption to debts / liability - original accused has been acquitted by the trial Court for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - trial court found that although the respondent had not adduced any direct evidence, the material that came on record in cross-examination of the appellant was sufficient to support the defence of the respondent. Held that - the appellant was clearly able to establish existence of transactions between it and the respondent and further that the cheque in question was indeed issued in respect of purchase of items reflected in the bills. There was no dispute about the fact that the signature on the cheque was that of the respondent. Therefore, the presumption under Sections 118 and 139 of the aforesaid Act operated in full force against the respondent. It has also come on record that the respondent neither sent any reply to the notice issued by the appellant on dischonour of the cheque, nor did he file any submissions or reply to the complaint filed by the appellant. The respondent also did not enter into the witness box to adduce any direct evidence to dispute the case sought to be made out by the appellant before the trial Court. It is clear that the appellant was able to prove its case beyond reasonable doubt against the respondent and that the trial Court committed an error in acquitting the respondent. - the respondent is convicted for offfence punishable under Section 138 of the aforesaid Act.

Issues Involved:
1. Whether the respondent was guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
2. Whether the trial court erred in acquitting the respondent based on the evidence presented.
3. The applicability and rebuttal of presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881.

Issue-wise Detailed Analysis:

1. Whether the respondent was guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881:

The appellant, a super stockist of pharmaceutical and cosmetic items, claimed that the respondent issued a cheque of ?49,444/- dated 16.01.2013 for the purchase of items. The cheque was dishonoured upon deposit, leading the appellant to issue a notice to the respondent, which went unanswered. Consequently, a complaint was filed under Section 138 of the Negotiable Instruments Act, 1881.

2. Whether the trial court erred in acquitting the respondent based on the evidence presented:

The trial court found that the appellant's bills (Exhibits 19, 20, and 21) showed the sale of electrical items, not cosmetic items as claimed. The court also noted the absence of documents proving octroi payment, which supported the respondent's defense. Thus, the trial court concluded that the respondent had rebutted the presumption of liability on the preponderance of probabilities and acquitted him.

3. The applicability and rebuttal of presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881:

The appellant argued that the respondent failed to produce direct evidence supporting his defense and that the presumption under Sections 118 and 139 should not have been rebutted. The respondent contended that he only needed to demonstrate the probability of his defense based on the material on record, without necessarily providing direct evidence.

The court referred to the Supreme Court's observations in Rangappa vs. Sri Mohan and Kumar Exports vs. Sharma Carpets, which clarified that the presumption under Section 139 is rebuttable on the preponderance of probabilities and that the accused can rely on the complainant's material to rebut the presumption.

Judgment Analysis:

The appellate court examined the trial court's judgment in light of the Supreme Court's rulings. It found that the trial court's focus on the nature of items sold (cosmetic vs. electrical) and the lack of octroi payment proof was misplaced. The appellate court noted that the appellant had established regular transactions and the issuance of the cheque for the exact amount mentioned in the bills. The respondent neither replied to the notice nor provided any direct evidence to support his defense.

The appellate court concluded that the trial court erred in acquitting the respondent, as the appellant had proven its case beyond reasonable doubt. The appellate court set aside the trial court's judgment, convicted the respondent under Section 138, and ordered him to pay double the cheque amount as compensation, failing which he would undergo simple imprisonment for six months.

Conclusion:

The appellate court allowed the appeal, set aside the trial court's judgment, and convicted the respondent for the offence under Section 138 of the Negotiable Instruments Act, 1881. The respondent was ordered to pay compensation of ?98,888/- within three months or face six months of simple imprisonment.

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