Case Note & Summary
The case involves a criminal revision application filed by the accused, M/s. Cabral & Co. and its proprietor Francis Simon Cabral, against their conviction under Section 138 of the Negotiable Instruments Act, 1881. The complainant, William Rosario Fernandes, had entered into two agreements with the accused: an Agreement of Sale dated 30.12.1999 for purchase of a hotel complex, and an Agreement of Settlement of Accounts dated 01.10.2001, under which the accused issued seven cheques. The first five cheques were honoured, but cheque no. 156749 dated 15.02.2002 and cheque no. 082601 dated 15.03.2002 were dishonoured. The complaint pertained to the first cheque. The trial court convicted the accused, and the appellate court confirmed the conviction. In revision, the accused argued that the cheque was not issued for a legally enforceable debt as the original agreement had failed. The High Court held that the settlement agreement created a fresh liability, and the cheque was issued in discharge of that liability. The presumption under Section 139 NI Act applied, and the accused failed to rebut it. The court dismissed the revision, upholding the conviction and sentence.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - Cheque issued under a settlement agreement constitutes a legally enforceable debt - The court held that the settlement agreement created a fresh liability, and the cheque was issued in discharge of that liability, thus attracting Section 138 NI Act (Paras 3-5). B) Negotiable Instruments Act - Presumption under Section 139 - Rebuttal - The presumption that the cheque was issued for a legally enforceable debt is rebuttable - The accused failed to produce any evidence to rebut the presumption, and the mere denial of liability is insufficient - Held that the conviction was proper (Paras 6-8).
Issue of Consideration
Whether the cheque issued under a settlement agreement constitutes a legally enforceable debt and whether the accused has rebutted the presumption under Section 139 of the Negotiable Instruments Act, 1881.
Final Decision
The revision application is dismissed. The conviction and sentence of the accused under Section 138 of the Negotiable Instruments Act, 1881 are upheld.
Law Points
- Cheque issued in settlement of accounts constitutes legally enforceable debt
- presumption under Section 139 NI Act applies
- burden on accused to rebut
- conviction under Section 138 NI Act upheld
