2020 (11) TMI 431 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - section 139 of NI Act - HELD THAT - There is no dispute that the petitioner was running Electro-plating business under the name and style, Lakshmi Venkatesh Electro-platers. The respondent claimed that he was visiting to the petitioner's factory that is how he was acquainted with the petitioner. According to the notice Ex.P7 and the complaint, the petitioner borrowed loan of ₹ 2,00,000/- in December, 2002 to improve his business and another sum of ₹ 75,000/- in March, 2003 from the respondent and towards discharge of that liability he issued Cheque Ex.P2 for ₹ 2,75,000/- on 12.06.2003 - The respondent presented the Cheque for the first time on 13.06.2003 which was returned on 14.06.2003 with the endorsement Insufficient Funds . The respondent claimed that when he approached the petitioner informing him about the dishonour of the Cheque, petitioner requested him to wait till 02.07.2003 promising to arrange the funds. Therefore, he presented the Cheque second time on 02.07.2003 which was returned with the endorsement account closed . The respondent in his notice Ex.P7 had given all the particulars of the Cheque number, if the Cheque was issued to Chennappa, the petitioner could have taken such defence at the earliest point of time in his reply notice. Further though the accused in the evidence claimed that he has taken action against Chennappa by filing complaint before Nelamangala Police, no evidence was adduced to substantiate the same. Therefore the trial Court and the first appellate Court rightly rejected the theory of Cheque being issued to Chennappa. Rebuttal of Presumption - HELD THAT - In the cross-examination of PW1, petitioner only asked whether PW1 could produce his SB account passbook or the account extract. There was no specific denial of respondent's autorickshow business. In the later part of the cross-examination, it was only suggested that the respondent was not possessing the funds of ₹ 2,75,000/- which he denied. When possession of 5 - 6 autorickshaws and running of the business etc was not disputed, the mere suggestion that he was not possessing funds does not rebut the presumption under Section 139 of the NI Act. This Court does not find any illegality, impropriety or incorrectness in the impugned orders of the Courts below - Petition dismissed.

Summary

Issues:
1. Conviction and sentence under Section 138 of Negotiable Instruments Act, 1881.
2. Rebuttal of presumption under Sections 118 and 139 of the NI Act.
3. Defense of borrowing loan and issuance of cheques.
4. Allegations of fraudulent acts and collusion.
5. Dispute regarding account closure and issuance of cheques.
6. Examination of evidence and witness testimonies.
7. Application of legal precedents and judgments.
8. Appeal against conviction and sentence.

Analysis:
1. The petitioner challenged the order of conviction and sentence under Section 138 of the NI Act, which was confirmed by the first appellate Court. The trial Court convicted the petitioner for dishonoring a cheque issued for ?2,75,000, sentencing him to pay a fine of ?2,90,000, with compensation to the complainant and prosecution costs.

2. The trial Court relied on the presumption under Sections 118 and 139 of the NI Act, as the petitioner admitted the cheque belonged to his account and bore his signature. The defense of borrowing loans and collusion to misuse cheques was rejected for lack of evidence and inconsistency in statements.

3. The petitioner's defense of the account closure in 2001 was not substantiated, as no evidence was presented beyond self-serving testimony and an alleged passbook. The absence of this defense in the reply notice further weakened the petitioner's case.

4. The respondent's lending capacity was not disputed effectively by the petitioner, as he failed to provide evidence or consistent statements. The court noted discrepancies in the petitioner's claims, leading to the rejection of the defense based on lack of lending capacity.

5. Legal precedents, including the judgment in Rangappa vs. Mohan and APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers, were cited to support the application of the presumption under Section 139 of the NI Act. The courts found no grounds for interference in the lower courts' orders, dismissing the petitioner's appeal against conviction and sentence.

6. The court emphasized the limited scope for interference in revision petitions under Section 397 of the Cr.P.C., highlighting the need for evidence to rebut legal presumptions and inconsistencies in the petitioner's defense. The judgment was based on a detailed analysis of witness testimonies, documentary evidence, and legal principles.

7. The judgment addressed various aspects of the case, including the issuance of cheques, notice of dishonor, allegations of fraud, and the burden of proof on the accused. The application of legal principles and precedents played a crucial role in determining the petitioner's liability under Section 138 of the NI Act.

8. The appeal against the conviction and sentence was dismissed, upholding the trial Court's decision based on the evidence presented, legal precedents cited, and the application of relevant provisions of the NI Act. The comprehensive analysis of the issues involved in the case led to the rejection of the petitioner's revision petition.