Case Note & Summary
The appeal arose from a judgment of the Bombay High Court, Nagpur Bench, which reversed the acquittal of the appellant under Section 138 of the Negotiable Instruments Act, 1881, and convicted him, imposing a fine of Rs.5,00,000/- and costs of Rs.20,000/-. The appellant and respondent had entered into an Agreement of Sale dated 28.02.2012, under which the respondent paid an advance of Rs.2,50,000/-. The agreement could not be fructified, and the appellant issued a cheque for Rs.2,50,000/- from the account of a firm named Synergy and Solution Incorporation to refund the earnest money. The cheque was dishonoured with the endorsement 'Account Closed'. The respondent filed a complaint under Section 138 of the NI Act. The Trial Court acquitted the appellant on the ground that the cheque was issued from a firm account not in the appellant's name and that the account was closed in 2006. The High Court reversed the acquittal, holding that the appellant did not dispute his signature on the cheque and failed to rebut the statutory presumption under Section 139 of the NI Act. The Supreme Court upheld the conviction, finding no ground to interfere, as the appellant's contention that the cheque was removed from his office table was unsupported by evidence. However, the Court reduced the fine from Rs.5,00,000/- to Rs.2,80,000/- plus costs of Rs.20,000/-, noting that the cheque amount was only Rs.2,50,000/- and the fine was on the higher side. The Court directed that the respondent, who had already received Rs.2,50,000/- plus Rs.20,000/-, should receive an additional Rs.30,000/-, and the balance of Rs.2,20,000/- be returned to the appellant with accrued interest.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Liability of Drawer - Cheque issued from firm account - The appellant issued a cheque from a firm account to refund earnest money. The High Court reversed acquittal, holding that the appellant did not dispute his signature and failed to rebut the presumption under Section 139. The Supreme Court upheld the conviction, noting that the appellant's contention that the cheque was removed from his office table was unsupported by evidence. (Paras 3-7) B) Negotiable Instruments Act - Quantum of Fine - Section 138 - Reduction of Fine - The cheque amount was Rs.2,50,000/- but the High Court imposed a fine of Rs.5,00,000/- plus costs. The Supreme Court reduced the fine to Rs.2,80,000/- plus costs, considering the facts and circumstances, while upholding the conviction. (Para 8)
Issue of Consideration
Whether the High Court was justified in reversing the acquittal and convicting the appellant under Section 138 of the Negotiable Instruments Act, 1881, and whether the fine amount imposed was excessive.
Final Decision
The Supreme Court upheld the conviction of the appellant under Section 138 of the Negotiable Instruments Act, 1881, but reduced the fine amount from Rs.5,00,000/- to Rs.2,80,000/- plus costs of Rs.20,000/-. The Court directed that the respondent, who had already received Rs.2,50,000/- plus Rs.20,000/-, should receive an additional Rs.30,000/-, and the balance of Rs.2,20,000/- be returned to the appellant with accrued interest.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- Section 139 Negotiable Instruments Act
- Statutory presumption
- Rebuttal of presumption
- Dishonour of cheque
- Account closed
- Fine quantum
