2021 (4) TMI 146 - HC - Indian Laws

Dishonor of Cheque - burden to prove - onus to rebut the statutory presumptions under Sections 138 and 139 of the N.I Act - service of notice - Existing debt or not - HELD THAT - It is a settled proposition of law that mere issuance of a cheque and its dishonour would not constitute an offence by itself under Section 138 N.I Act, 1881 unless the basic elements of Section 138 and the eventualities mentioned in Clauses (a), (b) and (c) in the proviso to Section 138 of the N.I. Act, 1881 are satisfied. With regard to the service of statutory notice, accused pleaded that she did not receive any such notice after the cheque issued by her was allegedly dishonoured. The complainant seems to have proved by adducing documentary evidence that he issued such notice (Exbt.4) within 15 days from the date of his receiving the information from the bank that the cheque was dishonoured for insufficiency of fund in the account of the accused. Existing debt or not - HELD THAT - Despite payment of loan the complainant did not give back her cheque which was later misutilized by the complainant and the present case was filed against her. In her cross examination also she said that she issued two cheques in favour of the complainant. In this regard, she could not produce any evidence at all. She could not recall the dates on which those cheques were issued. She also stated in her evidence that the blank cheques and the stamp paper given by her to the complainant were destroyed by the complainant in her presence. Therefore, question of using blank cheque against her is redundant. Moreover, though she denied to have issued the said cheque of the sum of ₹ 1,30,000/- to the complainant, she has categorically admitted in her cross examination that the signature appearing on cheque No. 028821 (Exbt.1) was her own signature. The fact that after the cheque was dishonoured, complainant issued demand notice within the statutory period demanding the accused to pay the cheque amount is also proved. Having received no response from her, the accused filed the case under Section 138 N.I Act, 1881 in which accused was convicted and sentenced by the trial Court which was reversed in appeal by the Additional Sessions Judge. The accused respondent is held guilty of offence punishable under Section 138, N.I. Act. She will pay ₹ 1,30,000/- as fine within a period of three months from today which will be paid to the complainant petitioner - criminal revision petition is allowed.

Summary

Issues Involved:
1. Legally enforceable debt.
2. Issuance and dishonor of cheque.
3. Service of statutory notice.
4. Burden of proof and rebuttal of presumptions under Sections 138 and 139 of the N.I. Act.
5. Appellate Court’s reversal of the trial court’s judgment.

Detailed Analysis:

1. Legally Enforceable Debt:
The complainant alleged that the respondent borrowed ?1,30,000 for purchasing a Maruti car and issued a cheque for repayment, which was dishonored. The trial court found the accused guilty under Section 138 of the N.I. Act, but the appellate court held there was no legally enforceable debt. The accused claimed she had repaid a ?50,000 loan with ?80,000 in installments and that the complainant misused a blank cheque. The High Court found the accused's defense unsubstantiated and upheld the existence of a legally enforceable debt based on the evidence and the accused's admission of her signature on the cheque.

2. Issuance and Dishonor of Cheque:
The complainant presented the cheque, which was dishonored for insufficient funds. Evidence included the cheque returning memo and statements from bank managers confirming the presentment and dishonor of the cheque. The High Court noted that the accused admitted her signature on the cheque, reinforcing the complainant's claim.

3. Service of Statutory Notice:
The complainant issued a statutory demand notice, which the accused claimed she did not receive. The High Court referenced the Supreme Court's ruling in K. Bhaskaran v. Sankaran Vaidhyan Balan, which presumes service of notice if sent to the correct address. The High Court found no evidence that the address was incorrect and presumed service of the notice.

4. Burden of Proof and Rebuttal of Presumptions:
The High Court emphasized that under Sections 138 and 139 of the N.I. Act, the burden shifts to the accused to rebut the presumption of debt or liability. The accused's mere denial was insufficient. The High Court cited the Apex Court's rulings in Uttam Ram v. Definder Singh Hudan and Kumar Exports, stating that the accused must provide compelling evidence to rebut the presumption. The accused failed to do so, and her defense was deemed improbable.

5. Appellate Court’s Reversal of Trial Court’s Judgment:
The appellate court acquitted the accused, citing lack of proof of a legally enforceable debt and other procedural deficiencies. The High Court found this conclusion unsustainable, noting that the trial court's findings were based on substantial evidence. The High Court held that the appellate court erred in its judgment, leading to a miscarriage of justice.

Conclusion:
The High Court allowed the revision petition, reinstating the trial court’s conviction of the accused under Section 138 of the N.I. Act. The accused was ordered to pay ?1,30,000 as fine within three months or face four months of simple imprisonment. The judgment emphasized the importance of statutory presumptions and the burden on the accused to provide a plausible defense against claims under the N.I. Act.