2007 (10) TMI 713 - HC - Indian Laws

High Court reverses acquittal, convicts accused for dishonored cheque under Section 138

Vishnu Bhat Versus Narayan R. Bandekar and Ors.

The High Court reversed the JMFC's acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881. The accused, as Managing Director ... - Issues Involved:1. Acquittal under Section 138 of the Negotiable Instruments Act, 1881.2. Service of notice.3. Issuance of cheque in personal capacity.4. Compounding of the offence.Summary:1. Acquittal under Section 138 of the Negotiable Instruments Act, 1881:The Complainant appealed against the acquittal of the accused by the JMFC, Vasco-da-Gama. The accused, as Managing Director of accused no. 2 and partner of accused no. 3, issued a cheque for Rs. 30,000/- which was dishonoured due to insufficient funds. Despite receiving notice, the accused failed to make the payment within 15 days. The trial court acquitted the accused, concluding that the Complainant had received the due amount post-filing the complaint and had an intention of grabbing extra money. The High Court found this conclusion unreasonable, stating that the offence under Section 138 is completed upon failure to comply with the notice of demand, and subsequent payments do not absolve the accused of criminal liability.2. Service of Notice:The statutory notice was addressed to three different entities in one envelope, which was returned as 'refused.' The High Court held that the notice was deemed to have been refused by the accused and was thus considered good service. The presumption of service under Section 27 of the General Clauses Act was not rebutted by the accused's mere denial.3. Issuance of Cheque in Personal Capacity:The cheque was issued from the accused's personal account. The Complainant admitted receiving the cheque in the accused's personal capacity but claimed it was for the liabilities of accused nos. 2 and 3. The High Court referred to Section 138 and Section 139 of the Act, stating that the cheque could be for the liability of another person, and the presumption of liability applies. The accused, as the alter ego of the company and firm, could not claim the cheque was without consideration.4. Compounding of the Offence:The accused filed for compounding the offence, which the Complainant opposed. The High Court rejected the application, stating that compounding requires mutual agreement and cannot be imposed unilaterally. The Court emphasized that the Complainant cannot be forced into a compromise.Conclusion:The High Court reversed the acquittal, convicting the accused under Section 138 of the Negotiable Instruments Act, 1881. The accused was directed to pay compensation of Rs. 20,000/- to the Complainant, with a default sentence of three months' simple imprisonment. The compensation was to be deposited within three weeks, failing which the trial court would execute the sentence.