2023 (8) TMI 4 - HC - Indian Laws

Dishonour of Cheque - discharge of legally enforceable debt or not - false and fabricated cheque - rebuttal of presumption under Sections 118 and 139 the NI Act - service of demand notice - HELD THAT - With regard to the giving of notice and receipt of notice this court is of the view that it is amply clear from a bare reading of the sub-clause of Section 138 of the NI Act that on the part of the payee he has to make a demand by giving a notice in writing. If that was the only requirement to complete the offence on the failure of the drawer to pat the cheque amount within 15 days from the date of such giving the travails of the prosecution would have been very much lessened but the legislature says that failure on the part of the drawer to pay the amount should be 15 days of the receipt of the said notice. It is therefore clear that giving notice in the context is not the same as receipt of Notice. Giving is a process of which receipt is the accomplishment. It is an admitted fact that the wife of the respondent had duly received the Notice and it was nowhere pleaded by the respondent that he and his wife were living separately during the relevant point of time hence burden was upon the respondent to substantiate that he did not receive the Notice. It is submitted that just to evade the liability of Section 138 of the Negotiable Instruments Act 1881 the respondent has taken such umbrage of non-receipt of the Notice. Hence a reasonable presumption has to be drawn that the husband did have the knowledge regarding the receipt of notice as they were staying together. Thus it cannot be said that notice served on the wife is not served on the husband under Section 138 of NI Act. It has also been established that the cheque in question got the signature of the accused. It can be ascertained from this act of the respondent that he at some point of time intended to repay the complainant. This court is of the view that the mere acceptance of the signature on the part of the accused on the check implies that it is legally enforceable debt and hence the debt is admitted. There is no sufficient evidence in favour of the accused person to deny version of the complainant. The impugned judgment order set aside - appeal allowed.

Issues Involved:
1. Validity of the cheque issued by the accused.
2. Compliance with the legal requirements under Section 138 of the Negotiable Instruments Act, 1881.
3. Rebuttal of the presumption under Sections 118 and 139 of the Negotiable Instruments Act.
4. Adequacy of the notice served to the accused.
5. Financial capacity of the complainant to advance the loan.

Summary:

1. Validity of the Cheque:
The accused denied the issuance of the cheque, claiming it was false and fabricated. However, the court noted that the accused could not deny his signature on the cheque, which was drawn for Rs. 9,75,000/- on a bank account maintained by him.

2. Compliance with Section 138 of the NI Act:
The complainant had to prove the elements of Section 138, including that the cheque was drawn for a legally enforceable debt, was presented within its validity period, and was returned unpaid due to insufficient funds. The complainant also had to show that a demand for payment was made within 30 days of receiving the return memo from the bank and that the accused failed to pay within 15 days of receiving the notice.

3. Rebuttal of Presumption under Sections 118 and 139:
The court highlighted that under Sections 118 and 139, there is a presumption that the cheque was drawn for consideration and in discharge of a debt. The burden of proof shifts to the accused to rebut this presumption. The trial court found that the complainant failed to prove the source of the loan amount and did not disclose the loan in his Income Tax Return, raising doubts about the transaction.

4. Adequacy of Notice:
The trial court cited a precedent where service of notice to the wife of the respondent was deemed insufficient. However, higher courts have held that "giving notice" is not the same as "receipt of notice," and the prosecution must show that the notice was sent to the correct address. The High Court noted that the respondent's wife received the notice, and there was no evidence that they lived separately, thus implying the respondent had knowledge of the notice.

5. Financial Capacity of the Complainant:
The trial court questioned the complainant's financial capacity to advance the loan, noting the absence of documentary evidence to support the claim of having sufficient funds. The complainant did not provide bank statements or other proof to substantiate his ability to lend Rs. 9,75,000/- in cash.

High Court's Decision:
The High Court set aside the trial court's judgment, emphasizing that the presumption under Section 139 stands unless rebutted by the accused. The accused's admission of his signature on the cheque implies a legally enforceable debt. The High Court directed the respondent to pay the cheque amount within two months or face imprisonment for one year.

Conclusion:
The High Court allowed the appeal, setting aside the trial court's judgment and directing the respondent to pay the cheque amount, thereby reinforcing the legal presumptions under the Negotiable Instruments Act.

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