Case Note & Summary
The appellant, M. Ramesh Kumar, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against the respondent, Riyaz Ur Rehaman, alleging that the respondent had borrowed Rs.8,00,000 on 18.10.2007 and later an additional Rs.20,00,000 on 08.06.2008, totaling Rs.28,00,000. In repayment, the respondent issued a cheque for Rs.46,74,000 dated 17.05.2010, which was dishonoured. The trial court acquitted the accused on the ground that the legally enforceable debt was only Rs.28,00,000, less than the cheque amount of Rs.46,74,000, and therefore the cheque was not issued for a legally enforceable debt. The appellant appealed under Section 378(4) Cr.P.C. The High Court framed the issue: whether conviction under Section 138 is sustainable when the debt is less than the cheque amount. The court analyzed the presumption under Section 139, which raises a presumption that the cheque was issued for discharge of a debt or liability. The court held that the presumption applies to the existence of a legally enforceable debt, and the accused must rebut it. The court noted that the complainant had proved the loan transactions and the issuance of the cheque. The discrepancy in amount does not automatically invalidate the complaint; the cheque could include interest or other charges. The court found that the trial court erred in acquitting the accused solely on the ground of discrepancy. The court set aside the acquittal and convicted the accused under Section 138, sentencing him to pay a fine of Rs.46,74,000, with Rs.46,00,000 as compensation to the complainant and the rest as costs.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - The question was whether conviction under Section 138 is sustainable when the debt is less than the cheque amount. The court held that the presumption under Section 139 applies to the existence of a legally enforceable debt, and the accused must rebut it. The mere fact that the cheque amount exceeds the debt does not absolve the accused if the debt is proved. (Paras 1-10) B) Negotiable Instruments Act - Presumption under Section 139 - Burden of Proof - The court reiterated that the presumption under Section 139 is that the cheque was issued for discharge of a debt or liability. The accused must rebut this presumption with probable evidence. The complainant need not prove the exact debt amount; it is sufficient to show that a legally enforceable debt existed. (Paras 5-8) C) Negotiable Instruments Act - Section 138 - Discrepancy in Amount - The court held that a cheque issued for a sum exceeding the actual debt can still be for discharge of a debt or liability under Section 138, provided the debt is legally enforceable. The accused cannot escape liability merely because the cheque amount includes interest or other lawful charges. (Paras 9-10)
Issue of Consideration
When the legally enforceable debt due by the accused is less than the amount of the dishonoured cheque, whether he could be convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881?
Final Decision
Appeal allowed. Impugned order dated 26.08.2019 set aside. Respondent/accused convicted for offence under Section 138 of NI Act. Sentenced to pay fine of Rs.46,74,000, out of which Rs.46,00,000 to be paid as compensation to complainant and Rs.74,000 to be remitted to State as costs. In default, simple imprisonment for six months.
Law Points
- Presumption under Section 139 NI Act applies to existence of legally enforceable debt
- not just issuance of cheque
- burden on accused to rebut presumption
- discrepancy between debt and cheque amount does not automatically invalidate complaint
- Section 138 NI Act requires cheque to be issued for discharge of debt or liability
- which can be partly satisfied.
