Case Note & Summary
The appellant, Ramdas Anant Naik, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against respondent Jacob Fernandes, alleging that the respondent had taken a friendly loan of Rs. 7,50,000 and issued a cheque dated 26-6-1997 drawn on Canara Bank, Chandor, which was dishonoured due to insufficient funds. After statutory notice, the respondent failed to pay, leading to the complaint. The trial court acquitted the respondent, holding that the presumption under Section 139 was rebutted as there was no subsisting debt or liability. The appellant appealed. The High Court found that the respondent had raised inconsistent defences: initially claiming the cheque was issued as a director of a company, then that the company owed the money, and later that the cheque was for a property transaction that did not materialize. The court held that such inconsistent pleas did not rebut the presumption under Section 139. The court also noted that the trial court's finding that the cheque was blank was not supported by evidence. Consequently, the High Court allowed the appeal, set aside the acquittal, and convicted the respondent under Section 138, sentencing him to pay a fine of Rs. 7,50,000, with default simple imprisonment for six months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The accused raised multiple inconsistent defences (loan, company debt, property transaction) which failed to rebut the presumption that the cheque was issued for a debt or liability. The trial court's acquittal was set aside and the accused was convicted. (Paras 3-5) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Burden of Proof - The initial burden on the complainant to prove the existence of debt or liability is light, and the presumption under Section 139 shifts the burden to the accused to prove otherwise. Inconsistent defences do not discharge this burden. (Paras 3-5)
Issue of Consideration
Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881, by holding that the presumption under Section 139 was rebutted, despite the accused raising inconsistent defences.
Final Decision
Appeal allowed. The judgment and order of acquittal dated 11th February 2004 passed by the Judicial Magistrate, First Class at Margao in Criminal Case No. 335/N/97/D is set aside. The respondent is convicted for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to pay a fine of Rs. 7,50,000, in default to undergo simple imprisonment for six months.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption by accused
- Inconsistent defences
- Burden of proof
- Dishonour of cheque for insufficiency of funds
