Case Note & Summary
The revision petition was filed by the accused against his conviction under Section 138 of the Negotiable Instruments Act, 1881, for dishonour of a cheque for Rs. 5 lakhs. The complainant alleged that the accused borrowed a hand loan of Rs. 5 lakhs in July 2002 and issued a cheque dated 29.12.2004 towards repayment. The cheque was dishonoured with the endorsement 'funds insufficient'. The accused denied the loan and contended that the cheque was given as security for a business transaction with a third party. The trial court convicted the accused, and the appellate court confirmed the conviction. In revision, the High Court examined whether the complainant had proved the existence of a legally enforceable debt and proper service of demand notice. The court noted that the complainant failed to produce any documentary evidence of the loan, such as a promissory note or receipts, and the accused's defence that the cheque was given as security was plausible. The court also found that the demand notice was sent to an address where the accused did not reside, and the postal endorsement 'not claimed' did not prove service. The High Court held that the presumption under Section 139 was rebutted by the accused, and the concurrent findings were perverse. Consequently, the court allowed the revision petition, set aside the conviction and sentence, and acquitted the accused.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - The complainant must prove that the cheque was issued for a legally enforceable debt or liability; mere issuance of cheque does not automatically lead to conviction. Held that the complainant failed to establish the loan transaction and the accused successfully rebutted the presumption under Section 139 by showing that the cheque was given as security for a different transaction. (Paras 2-6) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Service of Notice - The complainant must prove proper service of demand notice under Section 138(b); mere endorsement of 'not claimed' on the postal cover is insufficient to prove service. Held that the complainant did not prove that the notice was sent to the correct address or that the accused refused to accept it. (Paras 7-8) C) Criminal Procedure Code - Revision - Section 397 - Scope of Interference - The revisional court can interfere with concurrent findings of fact if they are perverse or based on no evidence. Held that the findings of the courts below were perverse as they ignored the accused's defence and the lack of proof of debt and notice. (Paras 9-10)
Issue of Consideration
Whether the conviction under Section 138 of the Negotiable Instruments Act was sustainable when the complainant failed to prove the existence of a legally enforceable debt and proper service of demand notice?
Final Decision
Revision petition allowed. The judgment of conviction and sentence dated 20.10.2010 passed by the Fast Track Court, Mangalore in Crl.A. No.181/2006 and the order dated 20.05.2006 in CC No.1267/2005 on the file of the V-JMFC, Mangalore are set aside. The petitioner is acquitted of the offence under Section 138 of the Negotiable Instruments Act.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act is rebuttable
- burden of proof shifts to accused to show no debt existed
- service of notice under Section 138 must be proved by complainant
- concurrent findings of fact cannot be lightly interfered with in revision unless perverse
