Case Note & Summary
The appellant, Smt. Kiran w/o Yugalkishore Bhattad, filed a criminal appeal against the judgment of the 7th Judicial Magistrate, First Class, Nagpur (Special Court under the Negotiable Instruments Act) in Criminal Complaint Case No. 4334 of 2005, whereby the accused, Smt. Sushila w/o Ramcharan Kattamwar, was acquitted of the offence under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that she advanced a hand loan of Rs. 50,000 to the accused on 21st January 2002 for her business. In discharge of that debt, the accused issued a cheque bearing no. 039654 dated 22.4.2002 for Rs. 50,000 drawn on Bank of India, Sitabuldi branch, Nagpur. The cheque was presented within its validity period in June 2002, but on 5.6.2002 it was dishonoured with the remark 'funds insufficient'. The complainant issued a legal notice to the accused, but the accused failed to pay the amount within the statutory period, leading to the filing of the complaint. The trial court acquitted the accused on the ground that the loan was not legally enforceable. The High Court framed the issue of whether the acquittal was justified. The court noted that the complainant proved the issuance of the cheque and the signature of the accused. The presumption under Section 139 of the NI Act that the cheque was issued for a legally enforceable debt or liability arose. The accused did not lead any evidence to rebut this presumption. The mere suggestion that the cheque was given for security or other purpose was not sufficient. The court held that the hand loan was a legally enforceable debt and the accused failed to discharge her burden. The appeal was allowed, the acquittal was set aside, and the accused was convicted under Section 138 of the NI Act. The accused was sentenced to pay a fine of Rs. 60,000, out of which Rs. 55,000 was to be paid as compensation to the complainant, and in default, simple imprisonment for three months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption of Legally Enforceable Debt - The complainant advanced a hand loan of Rs. 50,000 to the accused, who issued a cheque which was dishonoured due to insufficient funds. The trial court acquitted the accused on the ground that the loan was not legally enforceable. The High Court held that the presumption under Section 139 of the NI Act applies and the accused failed to rebut it. The appeal was allowed and the accused was convicted. (Paras 1-10) B) Negotiable Instruments Act - Rebuttal of Presumption - Section 139 - Standard of Proof - The accused must raise a probable defence to rebut the presumption of legally enforceable debt. Mere denial or suggestion that the cheque was given for security or other purpose is insufficient. The accused did not lead any evidence to show that the loan was not advanced or that the debt was not legally enforceable. (Paras 5-8) C) Negotiable Instruments Act - Legally Enforceable Debt - Hand Loan - A hand loan is a legally enforceable debt unless it is shown to be void or illegal. The complainant proved the advancement of loan by oral evidence and the cheque was issued towards discharge of that debt. The accused did not challenge the loan transaction or the signature on the cheque. (Paras 3-6)
Issue of Consideration
Whether the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 was justified when the complainant proved the issuance of cheque and the accused failed to rebut the presumption of legally enforceable debt or liability.
Final Decision
The appeal is allowed. The judgment and order of acquittal passed by the 7th Judicial Magistrate, First Class, Nagpur in Criminal Complaint Case No. 4334 of 2005 is set aside. The accused is convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881. The accused is sentenced to pay a fine of Rs. 60,000, out of which Rs. 55,000 shall be paid as compensation to the complainant, and in default of payment of fine, the accused shall undergo simple imprisonment for three months.
Law Points
- Presumption of legally enforceable debt under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption by accused
- Standard of proof in cheque dishonour cases
- Validity of hand loan as legally enforceable debt
