2022 (6) TMI 367 - HC - Indian Laws

Dishonor of Cheque - appellant was convicted by the lower court - insufficiency of funds - illegalities in exercise of jurisdiction - statutory presumption - rebuttal of presumption or not - whether the impugned judgment is both against law and facts of the case? - HELD THAT - A combined reading of the provisions of Section 139 and 142 of NI Act shows that a presumption is attached in regard to each and every negotiable instrument that the same was drawn for consideration and was issued for due discharge of liability. But this presumption is rebuttable and the burden lies heavily upon the accused petitioner to rebut this presumption. It also appears that the accused has not been able to substantiate his claim that he had issued 35 nos. of post-dated cheques to the Shriram Transport Finance Company Limited as security for the repayment of the loan taken by him and one of those cheques was misappropriated by the complainant to lodge the complaint against the accused petitioner. He has not adduced and concrete evidence to substantiate this claim of having issued 35 post-dated cheques. The penultimate that remains to be decided is whether the accused petitioner committed an offence under Section 138 of the NI Act? - HELD THAT - Section 138 of the NI Act is an exclusive provision dealing with dishonor of cheques and it comprehensively provides all the essential ingredients which requires to be satisfied before a complaint under this Section can be lodged. Exihibit-1, which is the loan cum hypothecation agreement entered between Shriram Transport Finance Company Limited and the accused petitioner Sri Manik Lal Das reveals that on 21.11.2012, the accused petitioner Sri Manik Lal Das entered into a loan cum hypothecation agreement bearing No- AGRTL0211200012, with the Shriram Transport Finance Company Limited, for purchasing one JCB 3DX (Machinery) vide registration No- TR01R0524. The creation of this agreement has not been denied by the accused-petitioner - Exhibit-2 which is the original cheque bearing No- 686379 shows that a cheque of Rs. 22,12,141/- was issued by Sri Manik Lal Das in favour of Shriram Transport Finance Company Limited and his signature is inscribed in the cheque. It also reveals that the cheque was issued against the account of the accused petitioner maintained in the United Bank of India, Kaman Chowmuhani Branch, Agartala. Whether the cheque was issued by the accused petitioner for discharging a legally enforceable debt? - HELD THAT - A conjoint reading of provisions of Section 118 and the Section 139 of the NI Act shows that a presumption is attached in regard to each and every negotiable instrument that the same was drawn for consideration and was issued against for due discharge of the liability. But this presumption is rebuttable and the burden of proof lies heavily upon the accused petitioner to rebut this presumption - The essential ingredient which requires to be established is that the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. It is established cheque No-686379 dated 20/02/2016, for an amount of Rs. 22,12,141/-, was issued by the accused in the account maintained by him with United Bank of India, Kaman Chowmuhani Branch and that the said cheque was dishonored as the account of the accused petitioner was closed. The cheque was issued on 20.02.2016 and the same was presented to the Bank of the same date. So, it can be concluded that the cheque was presented within its validity for encashment - Thus all the ingredients of Section 138 of Negotiable Instruments Act, 1881 are satisfied. Whether it is a fit case for releasing the convict on admonition or probation of good conduct under the Probation of Offender's Act, 1958? - HELD THAT - While imposing a sentence, it has to be borne in mind the nature of the offence and the manner in which the offence has been committed. The case is a result of breach of commitment on the part of the convict which led to pecuniary loss to the complainant. The convict is matured person and committed the offence intentionally knowing the consequences of such an act. Therefore, considering the above, the convict cannot be granted the benefit provided in the Probation of Offender's Act, 1958. The entire case runs around the legally enforceable debt. Admittedly, learned senior counsel appearing for the petitioner has not denied with regard to the payment received and the cheque issued and he has not even advanced any evidence with regard to the issuance of post dated cheques. Further, he has not placed any evidence before this Court with regard to the non-compliance of the notice issued by the complainant show that the recipient is a stranger - The argument advanced on the point of arbitration is not applicable in the facts and circumstances of this case since, it governs under the special statute of Central Act under Section-138. Since the point regarding legal enforceable debt has not been demolished by the counsel appearing for the petitioner, this Court has no hesitation to confirm the orders passed by the learned Courts below. The Ld. Trial court has rightly held the accused Manik Lal Das guilty and convicted him for the offence under Section-138 of the Negotiable Instruments Act, 1881. This Court also finds no infirmity in the decision of Ld. Trial court in so far as it has sentenced the petitioner to pay a fine of Rs. 22,12,141/-, and in default to suffer simple imprisonment for one year and that the fine money, if realized shall be paid in full to the complainant as compensation - As the petitioner herein has failed to make out his case before the Courts below, this Court has no hesitation to say that in the revision, appreciation of the factual issues is not permissible. The instant revision petition is dismissed.

Summary

Issues Involved:
1. Jurisdiction of the trial court.
2. Validity of the arbitration clause.
3. Whether the complainant had the authority to lodge the complaint.
4. Whether the cheque was issued for discharging a legally enforceable debt.
5. Compliance with the statutory requirements under Section 138 of the NI Act.
6. Applicability of the Probation of Offenders Act, 1958.
7. Technical discrepancies in the cheque number.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Trial Court:
The petitioner argued that the trial court lacked territorial jurisdiction since the loan agreement and cheque issuance occurred in Agartala. However, the court held that the cheque was deposited in the payee's account at SBI Udaipur Branch, thus granting jurisdiction to the trial court in Udaipur. The court cited that the trial court, being a Judicial Magistrate First Class situated within Udaipur, had jurisdiction to try the case.

2. Validity of the Arbitration Clause:
The petitioner contended that the arbitration clause in the agreement mandated arbitration for disputes. The court ruled that an arbitration clause cannot oust the jurisdiction of a criminal court. It cited Section 28 of the Indian Contract Act, which voids any agreement that restricts a party from enforcing their rights under any contract. Thus, the arbitration clause could not prevent the criminal court from adjudicating the matter.

3. Authority of the Complainant to Lodge the Complaint:
The petitioner argued that the complainant lacked written authorization to file the complaint. The court found that the complainant, being the manager of the company, had implied authority to lodge the complaint. It noted that the NI Act does not mandate written authorization for lodging a complaint on behalf of a company. The court held that the complainant, connected with the company's affairs, had the implied authority to file the complaint.

4. Legally Enforceable Debt:
The petitioner claimed that the cheque was issued as security and not for discharging a debt. The court referred to Sections 118(a) and 139 of the NI Act, which presume that a negotiable instrument is drawn for consideration and issued for discharging a debt unless proven otherwise. The petitioner failed to substantiate his claim of issuing 35 post-dated cheques as security. The court held that the petitioner did not provide concrete evidence to rebut the statutory presumption, thus affirming that the cheque was issued for discharging a legally enforceable debt.

5. Compliance with Statutory Requirements under Section 138 of the NI Act:
The court examined whether all statutory requirements under Section 138 were met. It was established that the cheque was presented within its validity period, dishonored due to a closed account, and a demand notice was sent and received by the petitioner. The petitioner failed to repay the amount within 15 days of receiving the notice. Hence, all conditions under Section 138 were satisfied.

6. Applicability of the Probation of Offenders Act, 1958:
The court considered whether the petitioner could be released on probation. It concluded that the nature of the offense, involving a breach of commitment and resulting in pecuniary loss, did not warrant probation. The petitioner, being a mature individual, committed the offense intentionally, and thus, the court denied the benefit of the Probation of Offenders Act, 1958.

7. Technical Discrepancies in the Cheque Number:
The petitioner pointed out a discrepancy in the cheque number mentioned in the legal notice. The court deemed this argument as too technical to deny justice. It held that such minor discrepancies do not carry significant weight and upheld the validity of the legal notice.

Conclusion:
The court affirmed the conviction and sentence imposed by the trial court and the appellate court. The petitioner was sentenced to pay a fine of Rs. 22,12,141/- and, in default, to suffer simple imprisonment for one year. The fine, if realized, was to be paid in full to the complainant as compensation. The revision petition was dismissed, and the judgment and order dated 11.06.2019 were upheld.