Case Note & Summary
The appellant, Kiran Rameshlal Bhandari, filed two criminal appeals challenging the judgment and order dated 20.02.2017 passed by the learned Judicial Magistrate First Class, Aurangabad (Court No.1) in Summary Criminal Case No.5638 of 2013 and Summary Criminal Case No.5639 of 2013, whereby the accused/respondent, Narayan Purushottam Sarada, was acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that he had friendly relations with the accused, who requested loans of Rs.15,00,000 and Rs.6,00,000 for purchasing immovable property. The complainant extended the amounts, and in discharge of the debt, the accused issued two cheques: one for Rs.15,00,000 (Cheque No.442364 dated 25.03.2013) and another for Rs.6,00,000 (Cheque No.442365 dated 25.03.2013), both drawn on Nashik Merchants Co-operative Bank Limited, Aurangabad. When the complainant deposited the cheques, they were dishonoured with the remark 'refer to drawer'. The complainant issued two separate legal notices on 15.06.2013, which were received by the accused on 18.06.2013, but the accused neither replied nor paid the amount. Consequently, the complainant filed two complaints under Section 138 of the Negotiable Instruments Act. The trial court acquitted the accused, holding that the complainant failed to prove the existence of a legally enforceable debt. The High Court, after hearing both sides, framed the issue of whether the trial court erred in acquitting the accused despite the presumption under Section 139 of the Act. The court noted that the defence of the accused was that the cheques were given as security for a business transaction and not for a loan, but the accused did not lead any evidence to rebut the presumption. The High Court held that the presumption under Section 139 of the Negotiable Instruments Act operates in favour of the complainant, and the accused failed to rebut it by preponderance of probabilities. The trial court's approach was erroneous as it applied a standard of proof beyond reasonable doubt, which is not required in summary trials under the Act. The High Court allowed both appeals, set aside the acquittal, and convicted the accused under Section 138 of the Negotiable Instruments Act. The accused was sentenced to pay a fine of Rs.15,00,000 and Rs.6,00,000 respectively, with default sentences.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption under Section 139 - Rebuttal - The complainant extended friendly loans of Rs.15,00,000 and Rs.6,00,000 to the accused, who issued cheques which were dishonoured. The trial court acquitted the accused holding that the complainant failed to prove the debt. The High Court held that the presumption under Section 139 of the Negotiable Instruments Act, 1881 operates in favour of the complainant, and the accused failed to rebut it by preponderance of probabilities. The acquittal was set aside and the accused was convicted under Section 138 of the Act. (Paras 1-15) B) Negotiable Instruments Act - Summary Trial - Standard of Proof - The trial court applied a standard of proof beyond reasonable doubt, which is not required in summary trials under the Negotiable Instruments Act. The High Court clarified that the accused must rebut the presumption on a balance of probabilities, and the trial court's approach was erroneous. (Paras 10-15)
Issue of Consideration
Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881, despite the presumption under Section 139 of the Act in favour of the complainant, and whether the accused successfully rebutted such presumption.
Final Decision
Both appeals are allowed. The judgment and order of acquittal passed by the learned Judicial Magistrate First Class, Aurangabad (Court No.1) in Summary Criminal Case No.5638 of 2013 and Summary Criminal Case No.5639 of 2013 are set aside. The accused/respondent is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. In Criminal Appeal No.369 of 2017, the accused is sentenced to pay fine of Rs.15,00,000 (Rupees Fifteen Lakhs only), in default to suffer simple imprisonment for one year. In Criminal Appeal No.370 of 2017, the accused is sentenced to pay fine of Rs.6,00,000 (Rupees Six Lakhs only), in default to suffer simple imprisonment for six months. Out of the fine amount, Rs.14,50,000 and Rs.5,50,000 respectively shall be paid to the complainant as compensation.
Law Points
- Presumption of legally enforceable debt under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption by accused
- Standard of proof in summary trial
- Application of Section 118 of Negotiable Instruments Act
