2022 (6) TMI 296 - HC - Indian Laws

Dishonor of Cheque - power to trial court to impose fine / penalty upto double of the amount of cheque - appellate court reduced the penalty equal to cheque amount - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT - The trial court after finding the accused guilty for the offence under Section 138 NI Act had imposed a substantive sentence of imprisonment till rising of the court and fine of Rs. 7,02,500/- and to undergo simple imprisonment for four months as default sentence. In a prosecution under Section 138 NI Act the trial court is empowered to sentence the accused to imprisonment upto two years or with fine upto twice the amount of the cheque or with both. The amount covered by Ext. P1 cheque being Rs. 5,00,000/-, the trial court is empowered to direct payment of compensation, double that amount. Rs. 7,02,500/- is the fine imposed in the case on hand and the trial court is justified in doing so. The appellate court has modified the sum to Rs. 5,00,000/-, but, without stating any reasons for doing so. The modification made by the appellate court in the fine amount is set aside. The sentence imposed by the trial court with the modified term of default sentence for two months is restored. Therefore, the accused has to serve imprisonment till rising of the court and pay fine of Rs. 7,02,500/- as substantive sentence and to serve simple imprisonment for two months as sentence in case of default in payment of fine.

Summary

Issues:
1. Prosecution under Section 138 of the Negotiable Instruments Act, 1881.
2. Dispute over a cheque issued for Rs. 5,00,000/-.
3. Examination of evidence and witnesses.
4. Denial of writings in the cheque.
5. Presumption under Section 139 of the Negotiable Instruments Act.
6. Sentencing in a case under Section 138 of the NI Act.

Analysis:

1. The case involved a prosecution under Section 138 of the Negotiable Instruments Act, 1881, where the complainant accused the defendant of issuing a cheque for Rs. 5,00,000/- that was dishonored due to insufficient funds. The defendant denied authorship of the cheque's writings, leading to a legal dispute.

2. The complainant alleged that the defendant borrowed Rs. 5,00,000/- and issued a cheque as security, which was later dishonored. The defendant claimed that the cheque was misused and denied the writings on the cheque. Evidence was presented, including witness testimonies and forensic analysis of signatures.

3. Witnesses, including the complainant and the defendant's wife, provided conflicting testimonies regarding the issuance and authorship of the cheque. The defendant's confusion about the transaction dates raised doubts about his version, affecting the credibility of his defense.

4. The defendant's defense rested on disowning the writings in the cheque, arguing that the complainant failed to prove the debt discharge. However, the court emphasized that the defendant voluntarily issued the cheque, making him liable unless he could rebut the presumption under Section 139 of the NI Act.

5. The court referred to the Supreme Court's ruling in Bir Singh Vs. Mukesh Kumar, highlighting that even a signed blank cheque handed over voluntarily attracts the presumption of debt discharge unless proven otherwise. The defendant's failure to provide convincing evidence to rebut the presumption led to the dismissal of his revision petition.

6. Regarding sentencing, the trial court imposed a fine of Rs. 7,02,500/- and a prison term, which the appellate court modified without proper justification. The complainant's petition sought to restore the original sentence, leading to the restoration of the trial court's sentencing terms in favor of the complainant.

In conclusion, the court dismissed the defendant's revision petition and allowed the complainant's petition, restoring the original sentencing terms imposed by the trial court in a case involving the dishonor of a cheque under Section 138 of the NI Act.