2022 (4) TMI 1145 - HC - Indian Laws

Dishonor of cheque - Funds Insufficient - rebuttal of presumption - preponderance of probabilities - HELD THAT - Both the Courts after hearing the evidence have rightly come to the conclusion that ingredients of section 138 of the Negotiable Instruments Act, 1881 is proved by the complainant. There is also oral and documentary evidence produced by the petitioner at Ex.P.1 to P.11. There is a presumption in favour of petitioner under section 139 of the Negotiable Instruments Act, 1881 and that presumption can be rebutted by the accused either by cross-examining the complainant and witnesses of the complainant, if any, and show before the Court by preponderance of probabilities by leading defence evidence and show before the Court that case of complainant is not probable. But herein in this case the petitioner by both oral and documentary evidence coupled with the presumption, has discharged the burden and shifted the onus upon the accused but the accused failed to rebut the presumption by leading legally admissible evidence. The Hon'ble Supreme Court in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. 2010 (5) TMI 380 - SUPREME COURT elaborated the object of bringing Section 138 of N.I. Act into statute and insertion of Section 138 to 142 of the N.I. Act by Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988). The Hon'ble Supreme Court held that in respect of offence of dishonor of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. If the punishment awarded in this case is tested with touch stone of the principles stated by the Hon'ble Supreme Court in the above referred decisions, it is evident that the sentence of imprisonment awarded by the trial court and confirmed by the first appellate court is not justified - In the case on hand, it is a monetary loss to the complainant/respondent. Therefore imposing the sentence of imprisonment will not serve any purpose. Keeping in mind the object and purpose for which the N.I. Act was amended, period of pendency of case, nature of transaction, the relationship of complainant and accused and in view of the discussions made above, in my considered view, the sentence of fine of ₹ 3,00,000/- appears to be exorbitant and excessive - keeping in mind the object and purpose for which the Negotiable Instruments Act is amended, the period of pendency of the case, nature of allegation and the relationship of the parties and also in view of the discussion made, the sentence of fine of ₹ 3,00,000/- needs to be modified to the extent imposing sentence of fine only to the tune of ₹ 2,05,000/-. The ends of justice would be met by modifying order of sentence passed by the trial Court as well as setting aside imposing cost by the First Appellate Court - revision petition allowed in part.

Summary

Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act.
2. Examination of evidence and rebuttal of presumption under Section 139 of the Negotiable Instruments Act.
3. Appropriateness of the sentence and fine imposed.
4. Legal principles guiding the imposition of sentence and compensation.

Detailed Analysis:

1. Conviction under Section 138 of the Negotiable Instruments Act:
The petitioner was convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, by the Senior Civil Judge and JMFC, Harapanahalli, which was confirmed by the III Addl. District and Sessions Judge, Ballari. The complainant alleged that the accused issued a cheque for ?1,50,000/- which was dishonored due to insufficient funds. Despite repeated requests and legal notice, the accused failed to pay the amount, leading to the complaint.

2. Examination of Evidence and Rebuttal of Presumption under Section 139 of the Negotiable Instruments Act:
The complainant provided oral and documentary evidence, including the cheque, legal notice, and bank endorsements. The accused claimed that the cheque was issued to the complainant's brother for ?30,000/- and was not returned. However, the courts found that the complainant successfully proved the case under Section 138, supported by the presumption under Section 139 that the cheque was issued for discharge of debt. The accused failed to rebut this presumption with legally admissible evidence.

3. Appropriateness of the Sentence and Fine Imposed:
The trial court sentenced the accused to pay a fine of ?3,00,000/-, with ?2,00,000/- as compensation to the complainant and ?1,00,000/- to the State. The appellate court confirmed this judgment but imposed an additional cost of ?10,000/-. The High Court, however, found the fine excessive and modified it to ?2,05,000/-, with ?2,00,000/- as compensation and ?5,000/- to the State. The court emphasized the compensatory aspect over the punitive aspect, aligning with the principles laid out by the Supreme Court in various judgments.

4. Legal Principles Guiding the Imposition of Sentence and Compensation:
The judgment discussed several Supreme Court decisions, emphasizing that the primary objective of Section 138 is to ensure payment of money rather than to punish. The court referred to the principles in cases like Damodar S. Prabhu vs. Sayed Babalal H., Somnath Sarkar v. Utpal Basu Mallick, and Bir Singh v. Mukesh Kumar, which highlight the importance of compensating the complainant and the discretion courts have in imposing fines without imprisonment in appropriate cases.

Conclusion:
The High Court upheld the conviction under Section 138 of the Negotiable Instruments Act but modified the sentence to a fine of ?2,05,000/-, ensuring ?2,00,000/- as compensation to the complainant and ?5,000/- to the State. The court emphasized the compensatory nature of the remedy and set aside the additional cost imposed by the appellate court, ensuring justice in line with the statutory objectives and judicial precedents.