Case Note & Summary
The appellant-complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that the accused-respondent issued a cheque for Rs.2,22,000/- towards repayment of deposits made by the complainant. The complainant had deposited various sums with the accused between 1990 and 1991, and when he demanded repayment in March 1996, the accused issued a cheque dated 5.12.1996. The cheque was dishonoured on 12.12.1996 due to insufficient funds. The complainant sent a legal notice on 16.12.1996, which was received by the accused on 24.12.1996, but the accused failed to pay within 15 days. The trial court acquitted the accused, holding that the complainant failed to prove the existence of a legally enforceable debt. The High Court allowed the appeal, holding that the presumption under Section 139 of the Act applied, and the accused failed to rebut it. The court noted that the accused's defence that the cheque was given as a blank cheque was not supported by evidence. The court convicted the accused under Section 138 and sentenced him to simple imprisonment for three months and directed payment of Rs.2,22,000/- as compensation.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption under Section 139 - Rebuttal - The complainant proved issuance of cheque and its dishonour, raising presumption under Section 139 of the Negotiable Instruments Act, 1881 that the cheque was issued for discharge of a debt or liability. The accused failed to rebut this presumption by preponderance of probabilities, as his defence of blank cheque was not supported by evidence. Held that the trial court's acquittal was erroneous and liable to be set aside (Paras 2-10).
Issue of Consideration
Whether the trial court erred in acquitting the accused despite the presumption under Section 139 of the Negotiable Instruments Act, 1881, and whether the accused successfully rebutted the presumption that the cheque was issued for discharge of a debt or liability.
Final Decision
The appeal is allowed. The judgment of acquittal passed by the Judicial Magistrate First Class, Court No. 2, Nagpur in Complaint Case No. 82/1997 is set aside. The accused is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to suffer simple imprisonment for three months and to pay compensation of Rs.2,22,000/- to the complainant, in default, to suffer further simple imprisonment for one month.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Burden of proof in cheque dishonour cases
- Validity of notice under Section 138
Case Details
2006 LawText (BOM) (09) 157
Criminal Appeal No.367 of 2004
Shri V.R. Mundra for appellant, Shri Dinesh Purohit for respondent no. 1, Shri J.B. Jaiswal, A.P.P. for respondent no. 2
Purushottam S/o Maniklal Gandhi
Manohar K. Deshmukh and The State of Maharashtra
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Nature of Litigation
Appeal against acquittal in a complaint under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheque.
Remedy Sought
The appellant-complainant sought conviction of the accused for the offence under Section 138 of the Negotiable Instruments Act, 1881.
Filing Reason
The cheque issued by the accused for repayment of deposits was dishonoured due to insufficient funds, and the accused failed to pay despite legal notice.
Previous Decisions
The trial court (Judicial Magistrate First Class, Court No. 2, Nagpur) acquitted the accused in Complaint Case No. 82/1997.
Issues
Whether the presumption under Section 139 of the Negotiable Instruments Act, 1881 applies in favour of the complainant?
Whether the accused successfully rebutted the presumption that the cheque was issued for discharge of a debt or liability?
Submissions/Arguments
Appellant argued that the trial court erred in not applying the presumption under Section 139 of the NI Act and that the accused failed to rebut it.
Respondent argued that the cheque was given as a blank cheque and not towards any legally enforceable debt.
Ratio Decidendi
Once the issuance of the cheque and its dishonour are proved, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises that the cheque was issued for discharge of a debt or liability. The accused must rebut this presumption by preponderance of probabilities; mere denial or assertion of blank cheque without evidence is insufficient.
Judgment Excerpts
The complainant approached the Court of Judicial Magistrate First Class Nagpur with a complaint of offence punishable under Section 138 of Negotiable Instrument Act on the following facts.
Since the amount deposited with the accused was to bear interest and the accused represented to the complainant that he will be able to refund the amount only in December, 1996, the complainant accepted cheque No. 51719 dated 5.12.1996 issued by the accused for a sum of Rs.2,22,000/- drawn on Nagpur District Central Cooperative Bank Limited, Ramnagar Branch, Nagpur.
Procedural History
The complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 before the Judicial Magistrate First Class, Nagpur, which was registered as Complaint Case No. 82/1997. The trial court acquitted the accused. Aggrieved, the complainant filed Criminal Appeal No. 367 of 2004 before the High Court of Judicature at Bombay, Nagpur Bench, which allowed the appeal and convicted the accused.
Acts & Sections
- Negotiable Instruments Act, 1881: 138, 139
