Case Note & Summary
The appellant, VPK Urban Co-operative Credit Society Limited, filed a criminal appeal against the acquittal of the accused, Narayan S. Naik, by the Judicial Magistrate First Class, Ponda, in a complaint under Section 138 of the Negotiable Instruments Act, 1881. The society had granted a loan of Rs. 50,000 to the accused on 17-6-2000. Towards part repayment, the accused issued a cheque dated 19-3-2008 for Rs. 58,000 drawn on the Goa State Co-operative Bank Ltd. The cheque was dishonoured with the endorsement 'exceeds arrangement'. The society sent a statutory notice dated 19-4-2008, which the accused received on 25-4-2008, but he failed to pay. The complaint was filed on 29-5-2008. The trial court acquitted the accused on two grounds: limitation and that the cheque was given at the time of sanctioning of the loan, not for a legally enforceable debt. The High Court examined the limitation issue and found that the cause of action arose on 11-5-2008 (15 days after notice), and the complaint filed on 29-5-2008 was within 30 days. The court also held that the accused failed to rebut the presumption under Section 139 of the NI Act that the cheque was issued for a legally enforceable debt. The accused did not examine himself and merely suggested that the cheque was given at the time of loan sanction, which was not sufficient to rebut the presumption. The court further noted that the society was a body corporate capable of lending money and the accused's membership was not seriously disputed. 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. 1,00,000, with Rs. 58,000 to be paid as compensation to the society.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Limitation - Section 138 - The complaint was filed within limitation as the period of 30 days from the date of cause of action (expiry of 15 days from notice) ended on 11-5-2008 and the complaint was filed on 29-5-2008, which is within 30 days. The trial court erred in holding that the complaint was time-barred. (Paras 7-9) B) Negotiable Instruments Act - Presumption of Legally Enforceable Debt - Section 139 - Once the issuance of cheque and signature are admitted, the presumption under Section 139 arises that the cheque was issued for a legally enforceable debt. The accused failed to rebut this presumption by merely stating that the cheque was given at the time of sanctioning of loan, without examining himself or producing evidence. (Paras 10-12) C) Co-operative Societies Act - Capacity to Lend - Sections 48, 49 of Maharashtra Co-operative Societies Act, 1960 - A co-operative society is a body corporate capable of lending money to its members. The complainant society was governed by the said Act and had the capacity to grant loans. The accused's membership was not seriously disputed. (Paras 6, 13)
Issue of Consideration
Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 was barred by limitation and whether the accused successfully rebutted the presumption that the cheque was issued for a legally enforceable debt.
Final Decision
The High Court allowed the appeal, set aside the acquittal, and convicted the accused under Section 138 of the Negotiable Instruments Act, 1881. The accused was sentenced to pay a fine of Rs. 1,00,000, out of which Rs. 58,000 shall be paid as compensation to the complainant society, and in default, to undergo simple imprisonment for three months.
Law Points
- Limitation under Section 138 NI Act
- burden of proof under Section 139 NI Act
- presumption of legally enforceable debt
- co-operative society's capacity to lend
- membership of society
