2022 (4) TMI 1244 - HC - Indian Laws

Dishonor of Cheque - Payment was stopped by the drawer - discharge of legally recoverable debt or not - rebuttal of presumption - financial capacity to lend - sources of income - Legality of money lending business without any license - validity of signature on the cheque - burden of prove - section 138 of NI Act - HELD THAT - On perusing the averments made in the complaint coupled with the documentary evidence produced before the Court, it is evident that petitioner has discharged burden of proving his case. The accused has admitted that cheque belong to his account and also admitted his signature on it. In view of the evidence led before the Court, the presumption under Section 139 of Act and Section 118 of NI act arise in favour of complainant. In this case, the accused has lead evidence as DW1. In his examination in chief, it is stated that a false case has been filed against him. The contentions of the petitioner in this regard are all false as some of his cheques were missing and he has intimated the Bank to stop the payment and the signature on the demand note is not of his signature. This is in examination in chief. He never stated that, he does not know this complainant or his brother. He does not say that complainant has no financial capacity, he does not say that how the cheque was mis-used. Validity of signatures on the cheque - HELD THAT - The accused has not produced any documents before the Court to show that he has informed the Bank that he lost the cheques or cheque book, he has not examined the Manager also but simply state that he has informed the bank to stop the payment will not help the accused-petitioner. Even he has not stated that on which date he has given intimation to bank. According to him, neither he mentioned the date nor that he has given any intimation to bank to stop payment he has not lodged any complaint to the court or to the Police in this regard, even he has not mentioned which number cheques are lost. So this defence appears to be only for defence sake and there is no merit in it. On the other hand, it is evident that both petitioner and respondent were business persons - There is nothing in defence evidence to show that the complainant case is not true. The defence evidence will not help the accused in any way. The complainant has discharged the burden on him the presumption arising under said Negotiable Instrument Act is in his favour. If the entire materials are considered the judgment passed by the trial Court which was confirmed by appellate Court cannot be said as either illegal or erroneous. Both the courts have considered the provisions of laws and also the presumption under Section 139 of the NI Act properly. The accused has failed to rebut such presumption. Petition dismissed.

Issues Involved:
1. Legally recoverable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Financial capacity of the complainant to lend the amount.
3. Presumption under Sections 118 and 139 of the NI Act and its rebuttal.
4. Legality of the transaction in the context of money lending without a license.
5. Evaluation of evidence and cross-examination.
6. Consistency of the accused's defense.

Detailed Analysis:

1. Legally Recoverable Debt under Section 138 of the Negotiable Instruments Act, 1881:
The complainant alleged that the accused requested a hand loan of ?2,00,000/- and issued a cheque for ?1,85,000/- as part payment, which was dishonored with the endorsement "Payment was stopped by the drawer." The complainant issued a statutory legal notice, which the accused responded to falsely and did not pay the amount. The trial court convicted the accused under Section 138 of the NI Act, and this conviction was upheld by the appellate court.

2. Financial Capacity of the Complainant to Lend the Amount:
The petitioner argued that the complainant lacked the financial capacity to lend ?2,00,000/- as he had no sources of income. The complainant, however, testified that he was an electrical contractor with an annual income of ?2 to 2.5 lakhs and had borrowed money from his sister and her husband to lend to the accused. The trial court found this explanation credible, noting that the accused did not effectively challenge the complainant's financial capacity during cross-examination.

3. Presumption under Sections 118 and 139 of the NI Act and Its Rebuttal:
The court noted that under Sections 118 and 139 of the NI Act, there is a presumption in favor of the holder of the cheque. The accused admitted that the cheque belonged to his account and bore his signature. The court held that the accused failed to rebut this presumption effectively. The accused's defense that he lost his cheques and that the cheque in question was misused was not supported by any documentary evidence or credible testimony.

4. Legality of the Transaction in the Context of Money Lending without a License:
The petitioner contended that the transaction was illegal as it involved money lending without a license, which is not permissible by law. However, the court found that this argument did not hold merit in the context of the NI Act, which primarily focuses on the dishonor of cheques and the presumption of debt or liability.

5. Evaluation of Evidence and Cross-Examination:
The trial court evaluated the evidence, including the complainant's testimony and the documents marked as exhibits. The complainant's evidence was found to be consistent and credible. The accused's cross-examination did not effectively challenge the complainant's case. The court noted that the accused's defense was inconsistent and lacked supporting evidence, such as a formal complaint to the bank about the lost cheques.

6. Consistency of the Accused's Defense:
The accused's defense was found to be inconsistent. He initially claimed that he lost his cheque book, but later suggested that three specific cheques were lost and misused. The court found that the accused did not provide sufficient evidence to support his defense, such as notifying the bank about the lost cheques or providing details of the lost cheques.

Conclusion:
The court concluded that the complainant had successfully discharged the burden of proving his case, and the presumption under Sections 118 and 139 of the NI Act was in his favor. The accused failed to rebut this presumption effectively. The judgments of the trial court and the appellate court were found to be legally correct and were upheld. The revision petition was dismissed, and the conviction and sentence were confirmed.

Order:
The petition is dismissed. The judgment dated 23.03.2021 by the I Additional District and Sessions Judge, Uttara Kannada, Karwar, confirming the conviction and sentence dated 28.06.2019 by the I Addl. JMFC, Sirsi, in CC No.789/2012 for the offence under Section 138 of the NI Act, is confirmed. The trial court records are to be sent back, and the deposited amount is to be transmitted for withdrawal by the complainant after proper identification and verification.

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