Case Note & Summary
The appellant, Dharampeth Mahila Urban Credit Cooperative Society Limited (now Dharampeth Mahila Multi State Cooperative Society Limited), filed a criminal appeal against the acquittal of the respondent, Rambahadur s/o Brijmohan Yadav, by the Judicial Magistrate First Class, Nagpur in Summary Complaint Case No.4357 of 2007. The appellant had advanced a loan of Rs. 6,90,000 to the respondent, a member/shareholder, for purchase of a vehicle in April 2004. The respondent was irregular in repayment, and eventually issued a cheque for Rs. 7,79,380 dated 24-01-2007 towards the outstanding amount. The cheque was dishonoured with the remark 'account closed'. The appellant issued a statutory notice and filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 on 03-04-2007. The trial court acquitted the respondent, holding that the appellant failed to prove the existence of a legally enforceable debt and that the cheque was not signed by the respondent. The High Court found that the trial court had erred in ignoring the presumption under Section 139 of the Act, which raises a presumption that the cheque was issued for discharge of a debt or liability. The respondent did not adduce any evidence to rebut this presumption; mere denial of signature on the cheque was insufficient. The High Court allowed the appeal, set aside the acquittal, and convicted the respondent under Section 138 of the Act, sentencing him to pay a fine of Rs. 7,79,380 with default simple imprisonment for three months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption under Section 139 - Rebuttal - The trial court acquitted the accused on the ground that the complainant failed to prove the existence of a legally enforceable debt, ignoring the presumption under Section 139 of the Negotiable Instruments Act, 1881 that the cheque was issued for discharge of a debt or liability. The High Court held that the presumption under Section 139 is mandatory and the accused must rebut it with evidence; mere denial or suggestion that the cheque was not signed by the accused is insufficient. The acquittal was set aside and the accused was convicted under Section 138 of the Act. (Paras 6-10)
Issue of Consideration
Whether the trial court erred in acquitting the respondent under Section 138 of the Negotiable Instruments Act, 1881 by improperly appreciating the evidence and ignoring the presumption under Section 139 of the Act.
Final Decision
The appeal is allowed. The judgment and order dated 08-09-2016 passed by the trial court is set aside. The respondent is convicted for offence under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to pay a fine of Rs. 7,79,380, in default to suffer simple imprisonment for three months.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Burden of proof in cheque dishonour cases
- Section 138 Negotiable Instruments Act
