Case Note & Summary
The appellant, Vishal Nagari Sahakari Pat Sanstha Maryadit, a cooperative society registered under the Maharashtra Cooperative Societies Act, 1960, filed a criminal appeal against the acquittal of the respondent, Damodar Rajeram Thakre, for an offence under Section 138 of the Negotiable Instruments Act, 1881. The society had advanced a loan of Rs.1,00,000/- to the respondent on 16/01/2003, who was a shareholder. The respondent failed to repay the loan in installments as agreed. Towards part payment of the outstanding dues, the respondent issued a cheque for Rs.1,61,918/- dated 09/11/2006 drawn on Bank of Maharashtra, Jaripatka Branch, Nagpur. The cheque was dishonoured on 11/11/2006 due to insufficient funds. A demand notice was sent on 05/12/2006 and served on 13/12/2006, but the respondent did not comply or reply. The trial court acquitted the respondent, holding that he proved the cheque was not issued for any liability. The High Court considered whether the respondent had rebutted the presumption under Section 139 of the Act. The court noted that the respondent did not examine himself or any witness, and merely suggested that the loan documents were fabricated. The court held that the presumption under Section 139 is mandatory and the accused must rebut it with evidence on a preponderance of probabilities. Since the respondent failed to produce any evidence, the presumption stood. The court also noted that the respondent did not dispute his signature on the cheque or the loan documents. The High Court allowed the appeal, set aside the acquittal, and convicted the respondent under Section 138 of the Act, sentencing him to simple imprisonment for three months and directing payment of compensation of Rs.1,61,918/- to the appellant.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The appellant-society claimed that the respondent-accused issued a cheque for Rs.1,61,918/- towards part payment of a loan of Rs.1,00,000/- taken on 16/01/2003. The cheque was dishonoured due to insufficient funds. The trial court acquitted the accused holding that he proved the cheque was not issued for any liability. The High Court reversed, holding that the accused failed to rebut the presumption under Section 139, as he did not produce any evidence to show that the loan documents were forged or that the cheque was not for a legally enforceable debt. The court emphasized that the presumption under Section 139 is a mandatory presumption and the accused must rebut it with probable evidence. (Paras 1-13) B) Evidence Act - Burden of Proof - Section 103 - The court noted that the accused did not examine himself or any witness to rebut the presumption. The mere suggestion that the loan documents were fabricated was insufficient to discharge the burden. The court held that the accused failed to prove that the cheque was not issued for a legally enforceable debt, and thus the offence under Section 138 was made out. (Paras 10-13)
Issue of Consideration
Whether the respondent-accused successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act, 1881 that the cheque was issued for discharge of a legally enforceable debt or liability.
Final Decision
The High Court allowed the appeal, set aside the acquittal, and convicted the respondent under Section 138 of the Negotiable Instruments Act, 1881, sentencing him to simple imprisonment for three months and directing payment of compensation of Rs.1,61,918/- to the appellant.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Burden of proof on accused to rebut presumption
- Standard of proof for rebuttal is preponderance of probabilities
- Dishonour of cheque for insufficiency of funds
- Liability for loan repayment
