Case Note & Summary
The appellant, M. Jayaram Shetty, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that the respondent, Vijay V. Haria, had taken a loan of Rs. 7,00,000 on 12 April 1998 and issued a cheque dated 3 July 1998 for the same amount towards repayment. The cheque was deposited on 5 August 1998 but was dishonoured with the endorsement 'Stop Payment Reported Lost'. The appellant issued a statutory notice on 13 August 1998, to which the respondent replied denying issuance of the cheque and claiming it was lost and misused. Since the respondent failed to pay, the appellant filed the complaint. The trial court, after examining the appellant and another witness, and the accused in defence, convicted the respondent and sentenced him to three months' imprisonment and compensation of Rs. 8,00,000. The respondent appealed to the Sessions Court, which allowed the appeal and acquitted him. The appellant then appealed to the High Court. The High Court considered whether the appellate court was justified in reversing the conviction. It noted that the respondent admitted his signature on the cheque, raising the presumption under Section 139 that the cheque was issued for a debt or liability. The respondent's defence that the cheque was lost and misused was not supported by any evidence, such as a police complaint or bank intimation. The appellate court had erroneously shifted the burden on the appellant to prove the loan, ignoring the presumption. The High Court held that the appellate court's judgment was perverse and set it aside, restoring the trial court's conviction and sentence.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - The complainant alleged that the accused issued a cheque for repayment of a loan, which was dishonoured due to stop payment instructions. The accused claimed the cheque was lost and misused. The trial court convicted the accused, but the appellate court acquitted. The High Court held that the appellate court erred in ignoring the presumption under Section 139 that the cheque was issued for discharge of a debt or liability, and the accused failed to rebut the presumption. The conviction was restored. (Paras 1-10) B) Negotiable Instruments Act - Rebuttal of Presumption - Section 139 - The accused must adduce evidence to rebut the presumption that the cheque was issued for a legally enforceable debt. Mere denial or claim of lost cheque without credible evidence is insufficient. The High Court found that the accused's defence was not probable and the appellate court's reasoning was perverse. (Paras 5-10)
Issue of Consideration
Whether the Appellate Court was justified in reversing the conviction under Section 138 of the Negotiable Instruments Act, 1881, by ignoring the presumption under Section 139 of the Act and the evidence on record.
Final Decision
The High Court allowed the appeal, set aside the judgment of the Sessions Court dated 16 June 2009, and restored the judgment of the trial court dated 7 October 2005 convicting the respondent under Section 138 of the Negotiable Instruments Act and sentencing him to three months' imprisonment and compensation of Rs. 8,00,000.
Law Points
- Presumption under Section 139 Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Burden of proof in cheque dishonour cases
- Stop payment instructions
- Dishonour of cheque for insufficiency of funds
