Case Note & Summary
The appellant, Sau. Dwaribai Nanakram Jivatramani, proprietor of Rajesh Agarbatti, filed a criminal appeal against the judgment and order of acquittal passed by the Judicial Magistrate, First Class, Court No.2, Akola, in Summary Criminal Case No.87 of 2005, acquitting the respondent, Rahul Trading Company through its proprietor Manoj K. Kalani, of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The appellant's case was that the accused used to purchase goods on credit from her proprietary firm and, in discharge of liability, issued a cheque bearing No.146912 drawn on Abhinandan Cooperative Bank Ltd., Amravati Branch, for Rs.37,826/- dated 17.11.2004. The cheque was presented for collection but was dishonoured on 19.11.2004 with the remark 'payment stopped by the drawer' as per memo Exh.36. A demand notice dated 26.11.2004 was sent to the accused, which was served, and the accused sent a reply dated 14.12.2004 denying liability. The appellant then filed a complaint under Section 138 of the Negotiable Instruments Act. The trial court acquitted the accused, leading to the present appeal. The legal issues were whether the presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued for a legally enforceable debt or liability stood rebutted, and whether the acquittal was proper. The appellant argued that the accused failed to rebut the presumption and that the dishonour due to 'payment stopped' attracts Section 138. The respondent contended that there was no legally enforceable debt and that the cheque was issued as security. The High Court analyzed the evidence, noting that the accused admitted the cheque and signature but merely denied liability without leading any evidence to rebut the presumption. The court held that the presumption under Section 139 is not rebutted by mere denial; the accused must prove by preponderance of probabilities that there was no debt or liability. Since the accused failed to do so, the court set aside the acquittal and convicted the accused under Section 138 of the Negotiable Instruments Act, sentencing him to pay a fine of Rs.50,000/- with default imprisonment.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - The court considered whether the accused had rebutted the presumption that the cheque was issued for a legally enforceable debt or liability. The accused merely denied liability but failed to lead evidence to rebut the presumption. Held that the presumption under Section 139 is not rebutted by mere denial; the accused must prove by preponderance of probabilities that there was no debt or liability. (Paras 1-6) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - 'Payment stopped' by drawer - The cheque was dishonoured with the remark 'payment stopped by the drawer'. The court held that such dishonour attracts Section 138 if the cheque was issued for a legally enforceable debt. The accused's act of stopping payment does not absolve him of liability under Section 138. (Paras 2-6) C) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Demand Notice - The complainant sent a demand notice dated 26.11.2004 which was served on the accused. The accused sent a reply denying liability. The court held that the notice complied with the requirements of Section 138(b) and the complaint was filed within the limitation period. (Paras 2-6)
Issue of Consideration
Whether the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 was proper given the presumption under Section 139 and the evidence on record.
Final Decision
The appeal is allowed. The judgment and order of acquittal passed by the learned Judicial Magistrate, First Class, Court No.2, Akola, dt.17.11.2008 in Summary Criminal Case No.87 of 2005 is set aside. The respondent/accused is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act and sentenced to pay a fine of Rs.50,000/- (Rupees Fifty Thousand only), in default to suffer simple imprisonment for three months.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption by preponderance of probabilities
- Burden of proof in cheque dishonour cases
- Validity of demand notice
- Dishonour due to 'payment stopped' by drawer
