Case Note & Summary
The appellant, the original complainant, filed an appeal against the acquittal of the accused in a case under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that he had friendly relations with the accused, who needed Rs.90,000 for business and repayment of loans. On 1st July 2007, the complainant advanced the amount by cash, and the accused issued a cheque dated 18th January 2008 for Rs.90,000 drawn on Akola Urban Co-operative Bank Ltd. The cheque was dishonoured on 21st January 2008 due to insufficient funds. The complainant issued a legal notice, but the accused failed to pay. The trial court acquitted the accused, holding that the complainant failed to prove the source of funds for the loan. The High Court examined the evidence and found that the accused admitted his signature on the cheque and its issuance. The court reiterated that under Section 139 of the NI Act, there is a presumption that the cheque was issued for a legally enforceable debt. The accused did not lead any evidence to rebut this presumption. The trial court's reasoning that the complainant must prove the source of funds was erroneous. The High Court allowed the appeal, set aside the acquittal, and convicted the accused under Section 138 NI Act, sentencing him to pay a fine of Rs.1,10,000, with Rs.1,00,000 as compensation to the complainant.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - The complainant advanced a loan of Rs.90,000 to the accused, who issued a cheque which was dishonoured. The trial court acquitted the accused on the ground that the complainant failed to prove the source of funds. The High Court held that once the issuance of cheque and signature are admitted, the presumption under Section 139 arises, and the accused must rebut it. The accused failed to rebut the presumption. (Paras 1-10) B) Negotiable Instruments Act - Rebuttal of Presumption - Section 139 - The accused merely denied the transaction but did not lead any evidence to rebut the presumption. The trial court's approach was erroneous. The appeal was allowed, and the accused was convicted under Section 138 NI Act. (Paras 8-10)
Issue of Consideration
Whether the trial court erred in acquitting the accused despite the presumption under Section 139 of the Negotiable Instruments Act, 1881, and whether the accused successfully rebutted the presumption of legally enforceable debt.
Final Decision
The appeal is allowed. The judgment of acquittal passed by the trial court is set aside. The accused is convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881, and sentenced to pay a fine of Rs.1,10,000, in default to undergo simple imprisonment for three months. Out of the fine amount, Rs.1,00,000 shall be paid to the complainant as compensation.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Burden of proof
- Acquittal appeal
- Section 138 NI Act
