Case Note & Summary
This is an appeal by the complainant against the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881. The complainant, William Rosario Fernandes, had entered into two agreements with the accused, Francise Simon Cabral, proprietor of M/s. Cabral & Co. The first agreement was an Agreement of Sale dated 30.12.1999 for the purchase of a hotel complex, and the second was an Agreement of Settlement of Accounts dated 01.10.2001, under which seven cheques were issued. The first five cheques were honoured, but the sixth and seventh cheques were dishonoured. The sixth cheque was the subject of another case that ended in conviction. The present case concerns the seventh cheque for Rs. 57,67,873 dated 15.03.2002, which was dishonoured with the remark 'funds insufficient'. The complainant filed a complaint under Section 138 of the Act. The trial court acquitted the accused, holding that the complainant failed to prove that the cheque was issued for a legally enforceable debt. The complainant appealed. The High Court noted that the accused admitted the settlement agreement and the issuance of the cheque. The court held that the presumption under Section 139 of the Act applies, and the accused failed to rebut it. The court found that the debt was legally enforceable. The appeal was allowed, the acquittal was set aside, and the accused was convicted under Section 138 of the Act. The accused was sentenced to pay a fine of Rs. 57,67,873, with a default sentence of one year simple 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. The complainant proved the execution of the cheque and its dishonour. The accused failed to provide evidence to rebut the presumption. Held that the presumption under Section 139 stands unless rebutted by the accused, and the acquittal was set aside (Paras 5-10). B) Negotiable Instruments Act - Legally Enforceable Debt - Settlement Agreement - The court examined whether the cheque was issued for a legally enforceable debt. The accused admitted the settlement agreement and issuance of cheques. The court found that the debt was legally enforceable as the settlement was valid. Held that the cheque was issued for a legally enforceable debt (Paras 2-4).
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 failure of the accused to rebut it.
Final Decision
Appeal allowed. The acquittal of the accused is set aside. The accused is convicted under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to pay a fine of Rs. 57,67,873, in default to undergo simple imprisonment for one year.
Law Points
- Presumption under Section 139 of the Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Burden of proof on accused
- Dishonour of cheque
- Legally enforceable debt
