2021 (4) TMI 36 - HC - Indian Laws

Dishonor of Cheque - legally enforceable liability - rebuttal of presumptions under Sections 118(a) and 139 of Negotiable Instruments Act - HELD THAT - The execution of the cheque was admitted; similarly, he had failed to prove the plea of discharge and since it was contended that the cheque was issued as security; both the arguments were not acceptable to the court and the learned Magistrate proceeded to convict the 2 nd respondent as stated supra. Against that conviction, when appeal was preferred, the learned Sessions Judge reversed the finding on various reasons. According to him, it was a house deposit scheme, which had completed in the year 2005, and therefore, there is no possibility of issuing a cheque as claimed by the appellant on 22.01.2008 - The Sessions Judge also noticed inconsistency with regard to the date of issuance of the cheque between the testimony of PWs 1 and 2 and that on consideration of these aspects, the version of the 2 nd respondent was accepted and thus the finding of conviction was reversed. The appellant is a co-operative society, which is guided by the provisions of the Co-operative Societies Act. In no stretch of imagination it could be thought, nor it was suggested that a document was fabricated by the officials of the society for the purpose of deceiving one of its own members for getting enrichment of the society. In fact, that itself is the strength of the prosecution case - there is no serious dispute with regard to the execution of the Ext.P3 cheque. Both PWs 1 and 2 have stated that the instrument was issued after the 2 nd respondent had defaulted monthly repayments and amounts had fallen in lump towards repayment of monthly instalments due to the society. Then the 2nd respondent reached the society and handed over the Ext.P3 cheque, which version cannot be ignored. The Ext.P2 document reveals that he had received an amount of ₹ 18,500/- in the scheme on 05.03.2005. The consideration shown in Ext.P3 is the amount outstanding, together with interest accrued. This fact cannot be eschewed for the mere reason that the statement of accounts was not produced by the appellant. The appellant has proved the case beyond doubt, which entitles him to draw the presumptions under Sections 118 and 139 of the Act. The 2nd respondent did not even respond to the lawyer notice. It is true that no adverse inference can be drawn against the 2nd respondent for not sending the reply or not having mounted the box. The presumptions can be rebutted by him through other means also. But here, he has not rebutted the presumptions, nor taken any legally tenable contention to displace the presumptions available in favour of the appellant and that enables the appellant to get an order in his favour - Appeal allowed.

Summary

Issues:
Appeal against judgment of Sessions Judge acquitting the accused in a case under Section 138 of the Negotiable Instruments Act.

Analysis:
1. Background and Allegations: The case involves a complaint by a Housing Co-operative Society against the accused for issuing a bounced cheque. The accused failed to repay the amount, leading to the complaint under Section 138 of the Negotiable Instruments Act.

2. Trial Court Proceedings: The trial court found the accused guilty based on evidence presented by the appellant, leading to a conviction and sentence. The accused challenged this in the Sessions Court, which acquitted him, prompting the appellant to appeal to the High Court.

3. Appellant's Arguments: The appellant argued that the accused failed to rebut the presumptions under Sections 118(a) and 139 of the Act. The appellant presented evidence supporting the issuance of the cheque and the failure of the accused to repay the amount, as per the scheme agreement.

4. Respondent's Arguments: The respondent contended that inconsistencies in witness testimonies and the lack of proof of entitlement to draw presumptions under the Act should lead to dismissal of the appeal. The respondent emphasized the standard of proof required in such cases.

5. High Court Judgment: The High Court reviewed the trial court and Sessions Court judgments. The High Court found that the appellant had sufficiently proven the case, including the issuance of the cheque and the failure of the accused to repay the amount. The High Court disagreed with the Sessions Judge's reasoning and restored the conviction, sentencing the accused to pay a fine or face imprisonment.

6. Legal Principles: The High Court relied on legal precedents, including the importance of proving transactions in cheque bounce cases and the presumptions available under the Act. The High Court emphasized the burden on the accused to rebut these presumptions effectively.

7. Conclusion: The High Court allowed the appeal, overturning the Sessions Judge's acquittal and restoring the trial court's conviction. The accused was sentenced to pay a fine or face imprisonment, based on the evidence and legal principles presented in the case.

This detailed analysis highlights the legal arguments, evidentiary considerations, and the High Court's decision in the appeal against the acquittal in a case under Section 138 of the Negotiable Instruments Act.