Dishonor of cheque creates legally enforceable liability with a ...

Dishonored cheque attracts liability; respondent failed to rebut presumption. Offense committed under NI Act. Interest rate discrepancy immaterial.

Case Laws     Indian Laws

August 16, 2024

Dishonor of cheque creates legally enforceable liability with a rebuttable presumption, requiring the respondent to introduce evidence to rebut it. The respondent failed to justify the reason for not adducing evidence initially. The presumption remains undislodged, yet the accused was acquitted. An offense u/s 138 of the Negotiable Instruments Act is committed when a cheque is dishonored for insufficient funds. The discrepancy over the interest rate, whether 1.8%, 2.4%, or 3% per month, was insufficient to disbelieve the appellant's claim. Even at 1.8% per month, the interest exceeded the prescribed cap of 12% per annum under the Tamil Nadu Act. The respondent, being a subscriber to a chit fund company, should have challenged the interest rate. The Appellate Court's order and the impugned judgment are set aside, restoring the Trial Court's order with a modification directing the respondent to pay a fine amounting to one and a half times the cheque amount.

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