2022 (11) TMI 854 - HC - Indian Laws

Dishonor of Cheque - acceptance of evidence - acquittal of accused - rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act - HELD THAT - The purpose of Section 138 of Negotiable Instruments Act is twofold. Firstly, it shows that even if on any count the negotiable instrument is not honoured by the bank, notice is mandatory to be given to the drawer of the cheque by the payee or the holder about reasons of dishonouring of the cheque and alongwith it, calling upon such drawer by way of demand for payment of the amount of money mentioned in the cheque. Failure on the part of drawer to comply with the said notice on either way must be considered strictly as such failure is going to affect the drawer in the matter filed under Section 138 of Negotiable Instruments Act. It is so because, Section 138 of Negotiable Instruments Act draws a presumption in favour of the payee or the holder in due course that such cheque was issued for the discharge in whole or in part of any debt or other liability, unless contrary is proved. Such presumption is necessarily to be drawn once it is found that the cheque is issued by the drawer. The words unless contrary is proved comes into play only during trial and not at the stage of pre-trial proceedings - when a complaint is lodged under Section 138 of Negotiable Instruments Act and complainant/holder of the cheque produces the material before the Court that such cheque was drawn/signed by the accused, presented within its validity and dishonoured for the reasons stated in the memo issued by the bank and that in spite of issuing notice to the accused, he failed to pay the amount mentioned in the cheque, the Court is bound to draw presumption under Section 139 of Negotiable Instruments Act in favour of the complainant. Only then the accused is required to prove contrary in order to rebut such presumption. The reasoning of the learned trial Court are totally tangent to the presumptive value of section 139 of Negotiable Instruments Act - The so-called defence raised by the accused during cross-examination of the complainant and her witness, specifically in absence of any reply to the legal notice, cannot be considered as probable defence and certainly not a defence showing preponderance of probability in favour of the accused so as to rebut statutory presumption. Appeal allowed.

Issues Involved:
1. Whether the learned Magistrate committed a patent error in accepting the respondent's evidence as rebuttal evidence under Section 139 of the Negotiable Instruments Act.
2. Whether the presumption under Section 139 of the Negotiable Instruments Act was correctly applied by the trial court.
3. Whether the trial court's findings were perverse and against the settled proposition of law.
4. The appropriate punishment for the respondent upon finding guilt under Section 138 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Patent Error in Accepting Respondent's Evidence:
The appellant challenged the dismissal of her complaint and the acquittal of the respondent by the learned Magistrate. The appellant's counsel argued that the cheque bearing the respondent's signature and its return unpaid should draw a presumption under Section 139 of the Negotiable Instruments Act. The respondent did not reply to the legal notice, nor did he provide a plausible defense initially. The counsel contended that the respondent's failure to examine himself and the lack of specific defense during cross-examination should have strengthened the presumption under Section 139. The appellant's counsel emphasized that the respondent's suggestion during cross-examination about repaying the loan in cash implied an admission of taking the loan, which should have been proven by the respondent.

2. Presumption Under Section 139:
The appellant's counsel cited several Supreme Court judgments, including Rangapa v. Sri Mohan and Bir Singh v. Mukesh Kumar, to support the argument that the presumption under Section 139 should be in favor of the complainant once the cheque's issuance and dishonor are established. The respondent's counsel argued that the scope of the court in an appeal challenging acquittal is limited and that the presumption under Section 139 can be rebutted by showing inconsistencies in the complainant's evidence. The respondent's counsel relied on decisions like Geeta Devi v. State of U.P and Kumar Exports v. Sharma Carpets to argue that the accused need not examine himself to rebut the presumption and can rely on the complainant's evidence.

3. Trial Court's Findings:
The High Court reviewed the trial court's findings, considering the legal position regarding appeals under Section 378 of Cr.P.C. The High Court noted that the trial court failed to draw the necessary presumption under Section 139 in favor of the complainant. The trial court's reasoning was found to be tangential to the presumptive value of Section 139. The High Court emphasized that the accused's failure to reply to the legal notice and the lack of a probable defense indicated the merit of the complainant's case. The High Court relied on Supreme Court judgments, including Rangapa and Kalamani Tex, to support its conclusion that the trial court committed a patent error of law and caused a grave miscarriage of justice.

4. Appropriate Punishment:
Upon finding the respondent guilty under Section 138 of the Negotiable Instruments Act, the High Court considered the amount mentioned in the cheque (Rs. 7,00,000) and the age of the matter (2013). The respondent was sentenced to undergo simple imprisonment for one month and to pay compensation double the amount of the cheque (Rs. 14,00,000) within one month. Failure to pay the compensation would result in an additional simple imprisonment of 15 days. The respondent was directed to surrender before the learned Magistrate within two weeks, failing which a warrant would be issued to comply with the court's orders.

Conclusion:
The appeal was allowed, the trial court's judgment was quashed, and the respondent was found guilty under Section 138 of the Negotiable Instruments Act. The High Court emphasized the importance of the presumption under Section 139 and the need for the accused to provide a plausible defense to rebut it. The respondent was sentenced appropriately considering the facts of the case.

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