2021 (9) TMI 146 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - acquittal of the accused - issuance of cheque for discharging his legally liable debt, is proved or not - HELD THAT - Of course, the documents are required to be proved by the complainant if it is disputed. But Exs. P. 8 and 11 are the public documents issued by the Public Authority, the post master who is the Central Government employee. He has no personal intention. He need not be examined in all the cases to prove the delivery of the registered post. Therefore the contention taken by the accused and also the findings of the trial Court reveals that the legal notice not served and non-examination of post master is fatal and requires to be set aside - the complainant has successfully proved that the notice has been duly served on the accused. Even as per Section 27 of the General Clauses Act, 1897 when the Article sent to the complainant to the correct address, it is deemed to be served. Therefore, the findings of the trial Court is not sustainable holding that the notice was not served to the accused. The cheque as well as the signature of the accused is not in dispute. The accused also questioned the capacity of the complainant but the complainant has stated that he is running the business relating to power loom and there is a business contract between them. He used to sell raw silk material to the accused and in this business connection, he has paid money to the accused and in discharging of the loan, the accused has issued a cheque and the same was dishonored. There is nothing to disbelieve the evidence of the complainant and the presumption under Section 139 of Negotiable Instruments Act is available in favour of the complainant and the same was not rebutted by the accused except taking contention that the notice has not been served. The accused account is at Vijaya Bank and the accused Bank has given endorsement of memo directly to the Manager of the complainant's Bank i.e., Karur Vysya Bank for dishonor of cheque due to insufficient funds. Therefore, the Karur Vysya Bank has given the said endorsement to the complainant for having dishonored the cheque. Therefore, there is no need for the complainant Bank to issue one more memo for dishonor of the cheque presented by the complainant. The Bank memo or letter issued by the Vijaya Bank of the accused is sufficient to show that the cheque has been dishonored for the reason 'insufficient funds'. Therefore, the trial Court has committed error in disbelieving the case of the complainant and acquitting the accused is erroneous. The judgment of the trial Court for having acquitting the accused for the offence punishable under Section 138 of N.I. Act is hereby set aside. The accused is found guilty and convicted - Appeal allowed.

Summary

Issues Involved:
1. Whether the complainant has proved the case against the accused that he has issued a cheque for discharging his legally liable debt and the cheque was dishonored?
2. Whether the judgment of the trial court calls for interference?

Issue-wise Detailed Analysis:

1. Whether the complainant has proved the case against the accused that he has issued a cheque for discharging his legally liable debt and the cheque was dishonored?

The complainant alleged that the accused, a close friend, approached him for a loan of ?1,50,000/- in November 2010, which he provided. When the complainant demanded repayment, the accused issued a cheque dated 03.01.2011, which was dishonored due to "insufficient funds." The complainant issued a legal notice on 11.01.2011, which was allegedly served on the accused's wife, but the accused failed to repay the amount, leading to the filing of a complaint under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act).

The trial court acquitted the accused, primarily on the grounds that the legal notice was not served and doubted the complainant's financial capacity. However, the High Court found that the cheque belonged to the accused, and his signature was not disputed. The legal notice was sent to the accused's address and was not returned unserved, indicating it was delivered. The post office acknowledged that the notice was received by the accused's wife, which the accused did not refute by examining his wife. The High Court held that the complainant successfully proved that the notice was duly served and the cheque was issued for discharging a legally enforceable debt. The presumption under Section 139 of the N.I. Act was in favor of the complainant, and the accused failed to rebut it effectively.

2. Whether the judgment of the trial court calls for interference?

The High Court found that the trial court erred in its judgment by holding that the notice was not served and questioning the complainant's financial capacity. The complainant provided sufficient evidence, including the cheque, bank endorsement, legal notice, postal receipts, and acknowledgment of delivery by the post office. The accused's contention regarding the incorrect address was disproved by the gas agency receipts and certificates showing the accused's local address. The High Court also dismissed the argument that the complainant's bank did not issue an endorsement, as the dishonor memo from the accused's bank was sufficient.

The High Court concluded that the trial court's judgment was unsustainable and set it aside. The accused was found guilty and convicted under Section 138 of the N.I. Act. The accused was sentenced to pay a fine of ?2,00,000/-, with ?1,80,000/- payable to the complainant as compensation and ?20,000/- to the State Exchequer. In default of payment, the accused would undergo simple imprisonment for six months.

Conclusion:

The appeal filed by the complainant was allowed, and the trial court's judgment acquitting the accused was set aside. The accused was convicted and sentenced to pay a fine, with a portion payable as compensation to the complainant. The High Court emphasized the importance of the presumption under Section 139 of the N.I. Act and the necessity for the accused to effectively rebut this presumption.