Case Note & Summary
The appellant, Sachin Food Processor, a registered partnership firm, filed a criminal complaint against the respondent, Sanjay T. Pathak, under Section 138 of the Negotiable Instruments Act, 1881, alleging that the respondent had purchased broiler chicken on credit from the appellant between June 1997 and June 1998, amounting to Rs. 2,69,000. Towards discharge of this liability, the respondent issued a cheque for Rs. 2,00,000, which was dishonoured upon presentation. After issuing a demand notice, the appellant filed a complaint before the Joint Judicial Magistrate First Class, Nashik. The trial court acquitted the respondent, holding that the appellant failed to prove that the cheque was issued towards discharge of an existing legal liability. The appellant appealed against this acquittal. The High Court considered the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act, which raise a presumption in favour of the holder of the cheque that it was issued for consideration and discharge of a legal liability. The court noted that the respondent admitted his signature on the cheque and its issuance, but failed to rebut the presumption by leading any evidence or examining himself. The mere suggestion that the cheque was given as security was insufficient to rebut the presumption. The High Court held that the trial court erred in shifting the burden of proof onto the complainant. Consequently, the appeal was allowed, the acquittal was set aside, and the respondent was convicted under Section 138 of the Negotiable Instruments Act, 1881, with a sentence of simple imprisonment for one year and a fine of Rs. 2,00,000, in default, further imprisonment for three months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption under Sections 118(a) and 139 - The court held that once the issuance of cheque and signature are admitted, the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 arises that the cheque was issued for consideration and discharge of a legal liability. The accused must rebut this presumption by raising a probable defence. The trial court erred in shifting the burden on the complainant to prove the existence of debt. (Paras 4-6) B) Negotiable Instruments Act - Dishonour of Cheque - Rebuttal of Presumption - The accused failed to rebut the presumption as he did not examine himself or any witness to deny the liability. The mere suggestion that the cheque was given as security or for some other purpose is insufficient to rebut the presumption. The trial court's acquittal was set aside and the accused was convicted under Section 138 of the Negotiable Instruments Act, 1881. (Paras 5-7)
Issue of Consideration
Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881, by failing to apply the presumption under Sections 118(a) and 139 that the cheque was issued for discharge of a legal liability.
Final Decision
Appeal allowed. The judgment and order of acquittal dated 17th April, 2001 passed by the Joint Judicial Magistrate First Class, Nashik in Summary Case No.1469 of 1998 is set aside. The respondent is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to suffer simple imprisonment for one year and to pay fine of Rs.2,00,000/-, in default, to suffer simple imprisonment for three months.
Law Points
- Presumption of consideration under Section 118(a) and Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption by accused
- Burden of proof in cheque dishonour cases
