Case Note & Summary
The appeal was filed by the original complainant, Smt. Nanda w/o Dharam Nandanwar, against the judgment and order dated 26th March 2009 passed by the learned Judicial Magistrate First Class, Nagpur in Criminal Complaint Case No. 9037/2007, whereby the respondent-accused, Nandkishor s/o Talakram Thaokar, was acquitted of the charge under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complainant alleged that she was in the business of lending money to needy persons. The accused approached her on 3.2.2006 and 8.4.2006 for loans of Rs. 18,000 and Rs. 19,000 respectively, agreeing to pay interest at 21% per annum, and executed two promissory notes before a guarantor. On 17.11.2006, the accused issued a cheque for Rs. 40,000 drawn on Canara Bank, Sadar Bazar, Nagpur, towards repayment of the loan amount and part of interest. The complainant presented the cheque on 4.5.2007 to the State Bank of Indore, Gandhibagh, Nagpur, but it was dishonoured on 5.5.2007 with the remark 'funds insufficient'. The complainant sent a notice dated 21.5.2007 demanding payment within 15 days, which the accused received on 22.5.2007 but failed to pay. Consequently, the complainant filed a complaint on 26.6.2007. The accused admitted issuing the cheque but claimed it was given as security for a loan taken from a third party, not for any debt owed to the complainant. The trial court acquitted the accused, holding that the complainant failed to prove the existence of a legally enforceable debt. On appeal, the High Court considered the presumption under Section 139 of the NI Act that the cheque was issued for a legally enforceable debt or liability. The court noted that the accused admitted his signature on the cheque and its issuance. The accused's defence that the cheque was given as security was not supported by any evidence; he did not examine the alleged third party or produce any documents. The court held that the accused failed to rebut the presumption on a preponderance of probabilities. Therefore, the High Court allowed the appeal, set aside the acquittal, and convicted the accused under Section 138 of the NI Act, sentencing him to pay a fine of Rs. 55,000, with Rs. 50,000 to be paid as compensation to the complainant and the default sentence being simple imprisonment for three months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption of Legally Enforceable Debt - The complainant alleged that the accused issued a cheque for Rs. 40,000 towards repayment of loan and interest. The cheque was dishonoured due to insufficient funds. The accused admitted issuance of cheque but claimed it was given as security for a loan from a third party. The trial court acquitted the accused. On appeal, the High Court held that the presumption under Section 139 of the NI Act that the cheque was issued for a legally enforceable debt or liability applies. The accused failed to rebut this presumption on preponderance of probabilities. The acquittal was set aside and the accused was convicted under Section 138 NI Act. (Paras 1-10) B) Negotiable Instruments Act - Rebuttal of Presumption - Section 139 - Standard of Proof - The accused must rebut the presumption under Section 139 by raising a probable defence. Mere denial or suggestion that the cheque was given as security is insufficient. The accused did not examine the alleged third party or produce any evidence to support his defence. Therefore, the presumption remained unrebutted. (Paras 8-10)
Issue of Consideration
Whether the acquittal of the accused for offence under Section 138 of the Negotiable Instruments Act, 1881 was proper in light of the presumption under Section 139 of the Act and the evidence on record.
Final Decision
Appeal allowed. The judgment and order of acquittal dated 26th March 2009 passed by the Judicial Magistrate First Class, Nagpur in Criminal Complaint Case No. 9037/2007 is set aside. The respondent-accused is convicted for offence under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to pay a fine of Rs. 55,000, in default to undergo simple imprisonment for three months. Out of the fine amount, Rs. 50,000 shall be paid as compensation to the complainant.
Law Points
- Presumption of legally enforceable debt under Section 139 NI Act
- Rebuttal of presumption requires preponderance of probabilities
- Dishonour of cheque for insufficiency of funds
- Notice of demand within 30 days
- Failure to pay within 15 days of notice
