2013 (9) TMI 1266 - HC - Indian Laws

High Court Convicts Respondent in NI Act Appeal, Imposes Fine & Compensation

The High Court allowed the appeal, set aside the Trial Court's judgment, and convicted the respondent under section 138 of the Negotiable Instruments Act. ... - Issues Involved:1. Whether the cheque was issued in discharge of a legal liability.2. Whether the notice u/s 138 was properly served.3. Whether the respondent had established that there was no legally enforceable debt.Summary:Issue 1: Whether the cheque was issued in discharge of a legal liability.The appellant, as the complainant, alleged that the respondent issued a cheque for Rs. 50,000/- which was dishonoured due to insufficient funds. The respondent contended that there was no transaction between them and that the cheque was misused. The Trial Court accepted the respondent's defense and acquitted her. The appellant argued that the presumption u/s 139 of the NI Act was in favor of the holder of the cheque, and the burden was on the respondent to prove the absence of legal liability. The High Court found that the Trial Court misinterpreted the evidence and the presumption u/s 139 was not properly considered. The High Court held that the cheque was indeed issued in discharge of a legal liability.Issue 2: Whether the notice u/s 138 was properly served.The respondent claimed that the notice was sent to an incorrect address and was defective as it demanded Rs. 70,000/- instead of Rs. 50,000/-. The High Court noted that the address used was the one in the complaint and that the respondent did not dispute this address. The High Court further stated that even if the notice was not served, the respondent could have tendered the cheque amount upon receiving the summons. Thus, the High Court found that the notice was properly served and the proceedings were valid.Issue 3: Whether the respondent had established that there was no legally enforceable debt.The respondent argued that she and her husband were financially well-off and did not need to borrow money. She also claimed that the cheque was tampered with, as it was filled in different inks and hands. The High Court rejected these contentions, stating that there is no legal requirement for a cheque to be filled in the same ink and hand. The High Court emphasized that the presumption u/s 139 is in favor of the holder and the burden was on the respondent to rebut this presumption. The High Court concluded that the respondent failed to establish that there was no legally enforceable debt.Conclusion:The High Court allowed the appeal, set aside the Trial Court's judgment, and convicted the respondent u/s 138 of the NI Act. The respondent was ordered to pay a fine of Rs. 90,000/-, of which Rs. 85,000/- was to be paid as compensation to the appellant within four weeks, failing which the respondent would face simple imprisonment for two months.