Case Note & Summary
The case arises from a complaint filed by HMT (International) Limited, a public limited company, against M/s Nucor Wires Limited and its directors (the petitioners) under Section 138 of the Negotiable Instruments Act, 1881, for dishonour of a cheque for Rs.35 lakh dated 31.10.1996. The complainant had advanced Rs.80 lakh to the accused company under an agreement dated 22.2.1996. Upon failure of the accused to comply with contractual obligations, the complainant recalled the balance advance after adjusting certain amounts. The accused issued the cheque towards repayment, which was dishonoured. The trial court convicted the accused, and the appellate court confirmed the conviction. In revision, the High Court held that the presumption under Section 139 of the NI Act applies, and the accused failed to rebut it. The concurrent findings of fact were not interfered with as they were not perverse. The revision petition was dismissed.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - Cheque issued as security for advance of Rs.80 lakh - Complainant advanced Rs.80 lakh to accused company under agreement dated 22.2.1996 - Accused issued cheque for Rs.35 lakh dated 31.10.1996 towards repayment - Cheque dishonoured - Trial court convicted accused under Section 138 NI Act - Appellate court confirmed conviction - High Court in revision held that presumption under Section 139 NI Act applies and accused failed to rebut - Conviction upheld (Paras 2-5). B) Negotiable Instruments Act - Presumption of Debt - Section 139 - Burden of Proof - Once cheque and signature admitted, presumption of legally enforceable debt arises - Accused must prove lack of debt - Mere claim that cheque was security not sufficient - Held that accused did not lead evidence to rebut presumption (Paras 4-5). C) Criminal Procedure Code - Revision - Section 397 - Scope - Concurrent findings of fact not interfered unless perverse or illegal - High Court found no error in concurrent findings of courts below - Revision dismissed (Para 5).
Issue of Consideration
Whether the conviction of the petitioners under Section 138 of the Negotiable Instruments Act, 1881, for dishonour of a cheque issued as security for an advance, is sustainable in law.
Final Decision
The Criminal Revision Petition is dismissed. The conviction of the petitioners under Section 138 of the Negotiable Instruments Act, 1881 is upheld.
Law Points
- Presumption of legally enforceable debt under Section 139 of Negotiable Instruments Act
- 1881
- Cheque issued as security can attract Section 138 NI Act if debt existed
- Burden of proof on accused to rebut presumption
- Concurrent findings of fact not lightly interfered with in revision
