2021 (1) TMI 22 - HC - Indian Laws

Dishonor of Cheque - Unsigned Cheque - insufficiency of funds - rebuttal of presumption - burden of proving that a cheque had not been issued for a debt or liability - main grounds urged in the appeal is that the Trial Judge has committed an error in acquitting the accused and failed to take note of the mischievous act of the accused in issuing an unsigned cheque - HELD THAT - These are the aspects which have not been considered by the Trial Court while considering the material available on record both oral and documentary evidence and in the cross-examination of PW.1 also nothing is elicited to prove preponderance of probabilities of the case of the accused. PW.1 only gives the admission with regard to the transaction is concerned and having acquaintance with the accused and also admits that the payment was made in respect of consultation charges of the accused and it is clear that the services of the accused was availed for conversion of the land. No doubt, in the cross-examination of PW.1, it is elicited that no documentary proof with regard to entrusting the work to the accused for conversion of the land and then, the accused has to explain why he has received the amount more than ₹ 7,50,000/- other than the exhibits he relied upon. There is no explanation on the part of the accused for having received more than ₹ 7,50,000/-, when this Court comes to a conclusion that the document - Ex.P4 is issued by the accused only since he has not sent the document to the handwriting expert and the very theory of he has given the blank cheque as security cannot be accepted that too unsigned cheques. The trial Judge has committed an error in coming to the conclusion that the accused has made out the case by rebutting the evidence of the complainant and preponderance of probabilities are made out. The trial Judge did not consider the material available on record in a proper perspective. The Trial Court ought to have drawn the presumption against the accused under Section 139 of the NI Act. When the accused though denied the signature when he has not sent the same to the handwriting expert and also not given any reply to the notice and instead of drawing the presumption in favour of the complainant, the trial judge believed the evidence of the accused and committed an error which amounts to perversity and also not considering the material available on record. The impugned judgment of acquittal is hereby set aside - Appeal allowed.

Summary

Issues Involved:
1. Error in acquitting the accused.
2. Issuance and dishonor of the cheque.
3. Service of legal notice.
4. Defense of the accused regarding the cheque being a security.
5. Rebuttal of presumption under Section 139 of the NI Act.

Detailed Analysis:

1. Error in Acquitting the Accused:
The main contention in the appeal was that the Trial Judge committed an error in acquitting the accused. The complainant argued that the Trial Judge failed to consider the evidence properly, particularly the presumption under Section 139 of the Negotiable Instruments Act, 1881, which mandates a presumption that the cheque issued is towards discharge of a debt or liability.

2. Issuance and Dishonor of the Cheque:
The factual matrix involved the accused issuing a cheque for ?7,32,000/- to the complainant, which was dishonored due to "Funds insufficient." The complainant had paid the accused ?7,69,200/- for land conversion services, which the accused failed to deliver. Despite receiving the payments, the accused did not make efforts to get the land converted and continued to receive payments from the complainant.

3. Service of Legal Notice:
The complainant issued a legal notice to the accused, which was returned with the endorsement "Addressee Left." The court held that the notice was deemed served under Section 27 of the General Clauses Act and Section 114 of the Evidence Act, as the address used was the same as that used in previous communications between the parties.

4. Defense of the Accused Regarding the Cheque Being a Security:
The accused claimed that the cheque was issued as a security deposit and not for the discharge of any debt. However, the court found this defense untenable as no prudent person would accept an unsigned cheque as security. The accused also failed to provide any explanation for not taking legal action against the complainant for allegedly forging his signature.

5. Rebuttal of Presumption Under Section 139 of the NI Act:
The court emphasized that under Section 139 of the NI Act, there is a statutory presumption that the cheque was issued for the discharge of a legally enforceable debt or liability. The accused did not take any steps to rebut this presumption, such as sending the cheque for handwriting analysis or providing a stop payment notice to the bank. The court found that the accused failed to rebut the presumption and did not provide sufficient evidence to support his defense.

Conclusion:
The court concluded that the Trial Judge erred in acquitting the accused by not considering the statutory presumption under Section 139 of the NI Act and the evidence presented. The judgment of acquittal was set aside, and the accused was convicted under Section 138 of the NI Act. The accused was directed to pay a fine of ?8,00,000/- to the complainant within eight weeks, failing which he would undergo simple imprisonment for one year. The trial court was directed to secure the accused if he failed to pay the amount and subject him to serve the sentence.