2021 (11) TMI 939 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption - Existence of legally recoverable debt or not - cheque issued as a security cheque or not - Sections 118 and 139 of NI Act, 1881 - HELD THAT - A joint reading of Sections 118 and 139 of the Act of 1881 would raise a legal presumption in favour of holder of the cheque that the same was received from the drawer in discharge of whole or in part of any legal debt or liability. Although, the said presumption is rebuttable but in the present case, no such fact is even prima facie proved on record to rebut the said presumption. Neither any document with respect to any loan having been taken from the said Babla has been produced nor there is any proof much less in writing, to even remotely show that any such loan was repaid. Both the Courts below have observed that the defence raised by the petitioner seems to be an afterthought inasmuch as once the alleged loan which was taken from Babla was returned, even then nothing in writing had been taken from the said Babla, clarifying that the cheque which was allegedly issued as a security cheque was not traceable and the amount was being returned - the defence sought to be put forth did not inspire confidence of both the Courts below. In the present case, it is not even remotely shown that the cheque in question which has been admittedly signed by the petitioner was issued as a security cheque. There is nothing on record to disbelieve the version of the complainant to the effect that the same was issued in order to discharge the legal enforceable debt of ₹ 1,00,000/- which had been taken by the petitioner from respondent No. 2/complainant. Moreover, even assuming for the sake of argument in case the same was a security cheque, then also, since the amount was due and payment/return of the said amount has not been proved by the petitioner, then the petitioner cannot escape liability on the ground that the cheque in question was a security cheque. The present Criminal Revision is dismissed.

Summary

Issues:
Challenge to conviction under Section 138 of the Negotiable Instruments Act, 1881 and quantum of sentence. Appeal dismissal by Additional Sessions Judge, Patiala.

Analysis:
The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881 for dishonoring a cheque. The complaint alleged that the petitioner borrowed a sum and issued a cheque which was dishonored due to insufficient funds. The trial court convicted the petitioner based on evidence and documents. The appeal filed by the petitioner was dismissed by the Additional Sessions Judge after re-evaluating the material on record.

The defense argued that the cheque was misused by the complainant's relative, who was a money lender. The petitioner's son had repaid the loan taken from the money lender, but the cheque was not returned, leading to its misuse. However, the courts found this defense to be an afterthought as no proof of loan repayment or documentation was presented. The defense raised did not convince the courts.

The legal presumption under Sections 118 and 139 of the Act favored the holder of the cheque, and the petitioner did not provide evidence to rebut this presumption. The courts found no basis to disbelieve the complainant's version that the cheque was issued to discharge a debt. Even if the cheque was a security cheque, the petitioner's failure to prove payment or return of the amount held him liable, as per a relevant judgment cited.

The judgment highlighted that a security cheque is part of the commercial process and serves as a deterrent against dishonoring financial commitments. The purpose of a security cheque is to acknowledge liability and can be used to discharge the drawer's obligation. The defense's argument that dishonoring a security cheque does not lead to liability under Section 138 of the Act was not accepted.

The court dismissed the Criminal Revision petition, upholding the conviction under Section 138. The defense's arguments were found insufficient to rebut the legal presumption in favor of the complainant. No other points were raised, leading to the dismissal of the petition and disposal of pending applications.