Case Note & Summary
The appeals arose from a judgment of the High Court of Bombay which upheld the acquittal of the respondent-accused Sanjay Jain under Section 138 of the Negotiable Instruments Act. The appellant, M/s Shree Daneshwari Traders, supplied commodities to the respondent and received various cheques in payment, which were subsequently dishonoured. The appellant filed two complaints alleging that the cheques were issued for debts owed, but the trial court acquitted the respondent, finding inconsistencies in the appellant's claims and accepting the respondent's defence that the cheques were issued as security for cash payments made for the goods. The High Court affirmed this acquittal, leading to the present appeals. The Supreme Court found that the courts below failed to apply the statutory presumption under Section 139 of the Negotiable Instruments Act, which creates a presumption that a cheque is issued for the discharge of a debt. The Court noted that the appellant had provided sufficient evidence to establish that the cheques were issued for a legally enforceable debt. The Court rejected the respondent's defence as implausible and concluded that the acquittal could not be sustained. Consequently, the Supreme Court set aside the High Court's judgment, convicted the respondent under Section 138, and imposed a fine of Rs.2,97,150, with a default imprisonment of six months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Liability of Drawer - Section 138, 139 - The court held that the statutory presumption under Section 139 arises in favour of the holder of the cheque, and it is for the accused to rebut this presumption. The courts below erred in not raising the presumption and in disbelieving the evidence of the complainant regarding the issuance of cheques for the discharge of a legally enforceable debt (Paras 18-19).
Issue of Consideration
Whether the courts below were right in acquitting the respondent-accused by holding that the appellant-complainant failed to prove that the respondent owed him a debt and that the cheques were issued for the discharge of the said debt.
Final Decision
The Supreme Court set aside the High Court's judgment, convicted the respondent under Section 138 of the Negotiable Instruments Act, and imposed a fine of Rs.2,97,150, with a default imprisonment of six months.
Law Points
- Negotiable Instruments Act
- Section 138
- Section 139
- presumption of liability
- burden of proof
