Case Note & Summary
The appellant, Bapurao s/o Motiram Mankar, a senior citizen, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against respondent No.1, Shri Vyankatesh Housing Agency through its proprietor Mangesh Govindrao Supare, alleging dishonour of a cheque. The appellant intended to purchase a plot from the respondent for his daughter and paid Rs. 41,000 as earnest money. The respondent issued a cheque for Rs. 1,40,000 dated 29.02.2008 drawn on District Central Cooperative Bank Limited, Hudkeshwar Branch, Nagpur, which was dishonoured due to insufficient funds. A legal notice was served but payment was not made. The trial court acquitted the accused on the ground that the complainant failed to prove that the cheque was issued for discharge of a legally enforceable debt or liability. The appellant challenged this acquittal. The High Court held that the trial court erred in ignoring the presumption under Section 139 of the N.I. Act. Since the signature on the cheque was admitted, the presumption arose that the cheque was issued for a legally enforceable debt. The accused did not adduce any evidence to rebut this presumption. The High Court set aside the acquittal and convicted the accused under Section 138, sentencing him to pay a fine of Rs. 1,50,000, with Rs. 1,40,000 as compensation to the complainant and the remaining as costs.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 and 139 - Presumption of Legally Enforceable Debt - Where the signature on the cheque is admitted, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises that the cheque was issued for discharge of a legally enforceable debt or liability. The burden then shifts to the accused to rebut the presumption. In the absence of rebuttal evidence, the accused is liable for conviction. (Paras 5-7) B) Negotiable Instruments Act - Dishonour of Cheque - Rebuttal of Presumption - The accused must adduce evidence to rebut the presumption under Section 139. Mere denial or suggestion that the cheque was given as security or for some other purpose is insufficient. The trial court's finding that the complainant failed to prove the debt was erroneous as it ignored the statutory presumption. (Paras 5-7)
Issue of Consideration
Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881, by not properly applying the presumption under Section 139 of the Act that the cheque was issued for discharge of a legally enforceable debt or liability.
Final Decision
The appeal is allowed. The impugned judgment and order of acquittal dated 06.04.2009 is set aside. The accused (respondent No.1) is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to pay a fine of Rs. 1,50,000. In default of payment of fine, the accused shall undergo simple imprisonment for three months. Out of the fine amount, Rs. 1,40,000 shall be paid to the appellant as compensation, and the remaining Rs. 10,000 shall be deposited with the State as costs.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Burden of proof on accused to rebut presumption
- Dishonour of cheque for insufficiency of funds
- Legally enforceable debt or liability
