Case Note & Summary
The petitioner, Chandrakant Laxman Kerkar, was convicted under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of a cheque for Rs. 6,70,000 issued to Sai Mundra Finance Pvt. Ltd. The complainant alleged that the cheque was issued towards outstanding loan amount. The accused admitted taking a loan of Rs. 1,00,000 and giving blank cheques as security. He claimed that the cheque was misused and that only Rs. 1,38,000 was outstanding. The trial court convicted him, and the appellate court upheld the conviction. In revision, the High Court considered an application to bring on record a subsequent complaint filed by the complainant against the accused's son and daughter-in-law for a cheque of Rs. 3,89,000, which the accused argued related to the same transaction. The High Court held that the presumption under Section 139 NI Act applies to cheques issued as security, and the accused failed to rebut it. The court found that the accused's own statement and account statement showed an outstanding debt, and the cheque was issued for that debt. The court dismissed the revision application, upholding the conviction and sentence.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - Cheque issued as security for a loan can be considered as drawn for discharge of a legally enforceable debt if the debt exists and is recoverable. The presumption under Section 139 of the Negotiable Instruments Act, 1881 applies to such cheques, and the accused must rebut the presumption by proving that the cheque was not issued for a debt or liability. (Paras 5-6)
B) Negotiable Instruments Act - Presumption under Section 139 - Burden of Proof - The accused must rebut the presumption that the cheque was issued for a debt or liability. Merely stating that the cheque was given as security without proving that the debt was not due or that the cheque was misused is insufficient. The accused must lead evidence to show that the cheque was not issued for a legally enforceable debt. (Paras 5-6)
C) Criminal Procedure Code - Revision - Section 401 - Powers of High Court - The High Court in revision can consider additional evidence under Section 391 CrPC if it is necessary for the just decision of the case. However, the court must be satisfied that the evidence is relevant and could not have been produced earlier. (Para 5)
Issue of Consideration
Whether a cheque issued as security for a loan can be considered as drawn for discharge of a legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881, and whether the presumption under Section 139 of the Act applies to such cheques.
Final Decision
The High Court dismissed the revision application and upheld the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881.
Law Points
- Presumption under Section 139 NI Act
- Blank cheque as security
- Existence of legally enforceable debt
- Burden of proof on accused
Case Details
2005 LawText (BOM) (03) 52
Criminal Revision Application No. 13 of 2004
Shri V.A. Lawande and Ms. H. Fernandes for Petitioner; Shri S.D. Lotlikar, Senior Advocate with Ms. S. Naik for Respondent No.1; Shri S.N. Sardessai, Public Prosecutor for Respondent No.2
Shri Chandrakant Laxman Kerkar
Sai Mundra Finance Pvt. Ltd. and State
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Nature of Litigation
Criminal revision against conviction under Section 138 of the Negotiable Instruments Act, 1881 for cheque dishonour.
Remedy Sought
The petitioner (accused) sought to set aside his conviction and sentence under Section 138 NI Act.
Filing Reason
The petitioner was convicted for dishonour of a cheque of Rs. 6,70,000 issued to the complainant, which was returned unpaid due to insufficient funds.
Previous Decisions
The trial court (J.M.F.C., Ponda) convicted the accused and sentenced him to one year SI and compensation of Rs. 6,70,000. The appellate court (Ist Addl. Sessions Judge, Panaji) upheld the conviction and sentence.
Issues
Whether a cheque issued as security for a loan can be considered as drawn for discharge of a legally enforceable debt under Section 138 NI Act.
Whether the presumption under Section 139 NI Act applies to cheques issued as security.
Whether the accused successfully rebutted the presumption under Section 139 NI Act.
Submissions/Arguments
Petitioner argued that the cheque was given as blank security for a loan of Rs. 1,00,000 and was misused by the complainant; the outstanding amount was only Rs. 1,38,000, not Rs. 6,70,000.
Respondent argued that the cheque was issued towards outstanding loan amount and the accused failed to rebut the presumption under Section 139 NI Act.
Ratio Decidendi
A cheque issued as security for a loan is still a cheque drawn for discharge of a legally enforceable debt if the debt exists. The presumption under Section 139 NI Act applies, and the accused must rebut it by proving that the cheque was not issued for a debt or liability. The accused failed to do so.
Judgment Excerpts
The petitioner herein is accused in C.C. No. 64/02 who has been convicted and sentenced under Section 138 of the Negotiable Instruments Act, 1881...
The case of the complainant was that the accused had issued to the complainant a cheque dated 20.3.02 for Rs.6,70,000/ which sum was due to the complainant...
The accused also stated that he had taken a loan from the complainant of Rs.1,00,000/ after mortgaging his property... and at that time he had also given blank cheques to the complainant as security for its payment.
Procedural History
The complainant filed C.C. No. 64/02 before J.M.F.C., Ponda, which convicted the accused on 21.11.02. The accused appealed to the Ist Addl. Sessions Judge, Panaji in Criminal Appeal No. 24/03, which upheld the conviction. The accused then filed Criminal Revision Application No. 13 of 2004 before the High Court of Bombay at Goa.
Acts & Sections
- Negotiable Instruments Act, 1881: 138, 139
- Code of Criminal Procedure, 1973 (CrPC): 401, 391
