Case Note & Summary
The appeal arises from a judgment of the Sessions Court, Amravati, which set aside the conviction of the accused under Section 138 of the Negotiable Instruments Act, 1881. The complainant, M/s Sai Auto Agencies, a tractor dealer, entered into an agreement with the accused on 19.09.2009, whereby the accused agreed to sell tractors on commission. The accused issued a cheque for Rs.10,50,000/- which was dishonoured. The trial court convicted the accused and sentenced him to simple imprisonment for three months and compensation of Rs.10,50,000/-. The Sessions Court acquitted the accused on the ground that the complainant had admitted recovering Rs.3,90,000/- prior to the cheque issuance, and thus the presumption under Section 139 stood rebutted. The High Court held that the Sessions Court erred; partial recovery does not automatically rebut the presumption. The cheque was for the balance due, and the accused failed to prove that the cheque was not for a legally enforceable debt. The High Court allowed the appeal, restored the conviction and sentence, and directed the accused to pay compensation of Rs.10,50,000/-.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Partial Recovery - The issue was whether the complainant's admission of recovering Rs.3,90,000/- prior to the issuance of the cheque rebutted the presumption of a legally enforceable debt. The High Court held that the Sessions Court erred in holding that the presumption stood rebutted merely because a part of the debt was recovered earlier. The cheque was issued for the balance amount, and the presumption under Section 139 continues to operate unless the accused proves otherwise. The conviction was restored. (Paras 2-10) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Rebuttal of Presumption - Burden of Proof - The Sessions Court had held that the complainant was not entitled to present the cheque because he had recovered part of the amount earlier. The High Court held that there is no legal requirement to return the cheque and take a fresh one for the balance. The accused must rebut the presumption by leading evidence that the cheque was not for a legally enforceable debt. The acquittal was set aside. (Paras 2-10)
Issue of Consideration
Whether the recovery of a part of the debt prior to the issuance of the cheque rebuts the presumption under Section 139 of the Negotiable Instruments Act, 1881, and whether the complainant is required to return the cheque and take a fresh one for the balance amount.
Final Decision
The appeal is allowed. The judgment of the Sessions Court dated 05.01.2022 is set aside. The conviction and sentence imposed by the trial court are restored. The accused is directed to pay compensation of Rs.10,50,000/-.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- Section 139 Negotiable Instruments Act
- presumption of legally enforceable debt
- rebuttal of presumption
- partial payment before cheque issuance
- burden of proof on accused
