2021 (2) TMI 151 - HC - Indian Laws

Dishonor of Cheque - Insufficiency of funds - payment was not received and a complaint was filed under Section 138 of the N.I. Act before the court of the Metropolitan Magistrate - offences punishable under section 138 of Negotiable Act, 1881 - Section 143(1) (Provisio) of N.I. Act read with Section 357(1)(3) of Cr.P.C. - HELD THAT - Section 118 of the N.I. Act raises a presumption that a cheque is issued for consideration until the contrary is proved. It is well settled position that the initial burden in this regard lies on the accused to prove the non-existence of debt by bringing on record such facts and circumstances which would lead the court to believe the non-existence of debt either by direct evidence or by preponderance of probabilities - In the present case other than mere ipse dixit of the petitioner that there was no debt due and payable nothing is on record to show that the cheques were not issued for discharge of liability for the bus. The second bus bearing registration No. DL 1 PA 5798 stood in the name of the accused. There is nothing to show that the liability for the first bus bearing registration No. DL1 P 7279 has been discharged. The purpose of introducing Section 138 of the N.I. Act was to bring sanctity in commercial transactions. Two courts below have looked into the entire records of the case and have come to the conclusion that the cheques have been given in discharge of debt. The petitioner only seeks to take advantage of the fact that the respondent did not produce the books of accounts to rebut the initial presumption which was for the petitioner to show that the amount of loan taken by him and the amount that should be repaid in order to discharge the initial burden and the petitioner has failed to discharge the initial onus of proof. The learned counsel for the petitioner has not been able to demonstrate that the findings of the courts below are perverse. The fact that the respondent did not file the books of accounts is not fatal to the case of the respondent. It was open to the petitioner to produce his books of accounts to rebut the presumption and bring out a prima facie case that there was no debt due and payable on the date the cheques were dishonoured. The petitioner has not been able to discharge the initial burden on him to rebut the presumption under Section 118 of the N.I. Act. The fact that the petitioner took financial assistance from the respondent is admitted. The petitioner has not been able to show as to how there was no subsisting debt on the date when the cheques were dishonoured due to insufficiency of funds - No case has been made out which would warrant interference under Section 397/401 Cr.P.C. The revision petition is dismissed.

Summary

Issues Involved:
1. Legality of the conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Adequacy of evidence presented, specifically the non-production of books of accounts by the respondent.
3. Validity of the trial and appellate courts' findings and judgments.

Issue-wise Detailed Analysis:

1. Legality of the Conviction under Section 138 of the Negotiable Instruments Act, 1881:
The petitioner was convicted for offences punishable under Section 138 of the Negotiable Instruments Act, 1881, which pertains to the dishonor of cheques due to insufficient funds. The petitioner issued three cheques to the respondent, a leasing and financing company, which were dishonored. The petitioner contended that the cheques were given as security and misused by the respondent. However, the Metropolitan Magistrate found the petitioner's deposition inconsistent with the evidence, noting that the cheques were issued for a legally enforceable debt. The Additional Session Judge upheld this conviction, affirming that the cheques were issued towards a legally enforceable debt.

2. Adequacy of Evidence Presented, Specifically the Non-production of Books of Accounts by the Respondent:
The petitioner argued that the respondent's failure to produce books of accounts was fatal to their case. The petitioner relied on the Supreme Court judgment in M.S. Narayana Menon v. State of Kerala, which emphasizes the necessity of proving the existence of debt. Despite this, the court noted that Section 118 of the N.I. Act raises a presumption that a cheque is issued for consideration until proven otherwise. The petitioner failed to provide evidence to rebut this presumption. The court found that the non-production of books of accounts by the respondent did not significantly impact the case, as the petitioner did not produce his own books to counter the presumption of debt.

3. Validity of the Trial and Appellate Courts' Findings and Judgments:
The trial court and the appellate court both examined the records and concluded that the cheques were issued in discharge of a debt. The revision petition argued that the courts erred in their judgment, but the High Court emphasized the narrow scope of revision under Sections 397/401 Cr.P.C. and the supervisory nature of this jurisdiction. Citing precedents, the court noted that re-appreciation of evidence is not appropriate unless there is a glaring defect or manifest error. The High Court found no such defects in the judgments of the lower courts and confirmed the findings that the petitioner had not discharged the initial burden to rebut the presumption of debt.

Conclusion:
The High Court dismissed the revision petition, affirming the concurrent findings of the lower courts that the cheques were issued towards a legally enforceable debt and that the petitioner failed to rebut the presumption under Section 118 of the N.I. Act. The petitioner's arguments regarding the non-production of books of accounts and other contentions were found insufficient to overturn the conviction and sentence.