Case Note & Summary
The appellant, Kamal Babulal Sharma, filed a criminal appeal against the judgment and order dated 08/06/2001 passed by the 9th Judicial Magistrate, First Class, Akola, in Summary Criminal Case No. 14408 of 1998, acquitting the respondents, Ramkumar Sagarmal (HUF) through its Karta Sureshkumar Sagarmal Nevtia and Sureshkumar Sagarmal Nevtia, of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (the N.I. Act). The dispute arose from a cheque bearing No. 656523 dated 23/02/1998 for Rs. 25,000/- issued by respondent No. 1 (HUF) through its manager respondent No. 2 in favour of the appellant. The cheque was drawn on The Jintur Urban Co-operative Bank Ltd., Akola. According to the appellant, the cheque was issued towards repayment of a hand loan of Rs. 25,000/- given by him to the respondents. When the appellant presented the cheque on 20/03/1998 to his bank, The Akola Janta Comm. Co-op. Bank Ltd., Akola, it was returned on 21/03/1998 with the remark 'payment stopped by the drawer'. The appellant issued a statutory notice within the stipulated period, calling upon the respondents to pay the cheque amount. The respondents replied, admitting issuance of the cheque but claiming that the cheque was issued on the assurance that the appellant would later send the amount of the cheque, which he failed to do. The trial court acquitted the respondents, holding that the appellant failed to prove the existence of a legally enforceable debt. The appellant challenged the acquittal. The High Court framed the issue of whether the acquittal was proper when the cheque was returned due to stop payment and the respondents admitted issuance. The court noted that under Section 139 of the N.I. Act, there is a presumption that the cheque was issued for discharge of a legally enforceable debt. The respondents admitted issuance of the cheque, and their defence that the appellant failed to send the amount was not supported by any evidence. The court held that the stop payment instruction does not absolve the drawer of liability if the cheque was issued for a legally enforceable debt. The trial court's finding that the appellant failed to prove the debt was perverse, as it ignored the presumption and the admission. The High Court allowed the appeal, set aside the acquittal, and convicted the respondents under Section 138 of the N.I. Act. The respondents were sentenced to pay a fine of Rs. 35,000/- each, in default to undergo simple imprisonment for three months. Out of the fine amount, Rs. 25,000/- was ordered to be paid to the appellant as compensation.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Stop Payment Instruction - The court considered whether a drawer who issues a cheque and later stops payment can be held liable under Section 138 of the Negotiable Instruments Act, 1881. The court held that once the issuance of the cheque is admitted, a presumption under Section 139 arises that the cheque was issued for discharge of a legally enforceable debt. The drawer's instruction to stop payment does not absolve him of liability if the cheque was issued for a legally enforceable debt. The accused failed to rebut the presumption. (Paras 1-17) B) Negotiable Instruments Act - Presumption under Section 139 - Rebuttal - The court examined the burden of proof under Section 139 of the Negotiable Instruments Act, 1881. It held that the presumption of legally enforceable debt is in favour of the holder of the cheque. The accused must lead evidence to rebut this presumption. In this case, the respondents merely alleged that the appellant failed to send the amount of the cheque, but did not produce any evidence to support their claim. Therefore, the presumption stood unrebutted. (Paras 10-17) C) Criminal Procedure Code, 1973 - Appeal against Acquittal - Section 378 - The court considered the scope of interference in an appeal against acquittal. It held that if the trial court's findings are perverse or based on no evidence, the appellate court can reverse the acquittal. Here, the trial court ignored the presumption under Section 139 and the admission of issuance of cheque, leading to a perverse finding. Hence, the acquittal was set aside. (Paras 18-20)
Issue of Consideration
Whether the acquittal of the respondents for the offence under Section 138 of the Negotiable Instruments Act, 1881, was proper when the cheque was returned with the remark 'payment stopped by the drawer' and the respondents admitted issuance of the cheque.
Final Decision
The appeal is allowed. The judgment and order dated 08/06/2001 passed by the 9th Judicial Magistrate, First Class, Akola, in Summary Criminal Case No. 14408 of 1998 is set aside. The respondents are convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. Each respondent is sentenced to pay a fine of Rs. 35,000/-, in default of payment of fine, to undergo simple imprisonment for three months. Out of the fine amount, Rs. 25,000/- shall be paid to the appellant as compensation.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Stop payment instruction does not absolve drawer liability
- Burden of proof on accused to rebut presumption
- Legally enforceable debt or liability
