2018 (11) TMI 1936 - HC - Indian Laws

Appeal reversal convicts respondent under Section 138 for cheque dishonor, upholds bank transaction integrity.

Laxmi Chand Goyal Versus Gajanand Burange 

The appeal was allowed, reversing the acquittal and convicting the respondent under Section 138 of the Negotiable Instruments Act. The court found the ... Dishonour of Cheque - insufficient funds - Misuse of cheque - rebuttal of presumption u/s 118 and 139 of NI Act, 1881 - HELD THAT:- It is not a case of the respondent that cheque was not issued in favour of the appellant. As per case of the respondent earlier he borrowed Rs.4,00,000/- from the appellant in the year 2003 which was returned by him and he had drawn four cheques for that loan amount and one cheque is misused by the complainant/appellant for filing this complaint. As per Section 146 of the Negotiable Instruments Act, 1881, the Court shall, in respect of every proceeding under this Chapter, on production of bank’s slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved. As the bank's slip is not disproved by the respondent, it is clearly established that cheque is dishonoured for insufficient fund. The cheque was issued by the Bank of Baroda in the present case and it was submitted before the same Bank. The purpose of enactment of the Act, 1881 is to maintain confidence of Bank transactions. It is clearly established that the cheque was issued to clear the liability of the year 2005 and therefore, argument advanced on behalf of the respondent regarding no transaction took place between the parties after 2003 is not sustainable. Again, cheque is presented before same Bank which issued the cheque and it is not a case where any manipulation is done in the said cheque. When even after notice the respondent did not pay the amount, the appellant had no option but to file criminal complaint case against the respondent as envisaged under Section 138 of the Act, 1881. Finding arrived at by the trial Court is not sustainable. The respondent is convicted for offence under Section 138 of the Negotiable Instruments Act, 1881 and awarded sentence of fine to the tune of Rs.3,00,000/- - the appeal is allowed reversing the acquittal. Issues:1. Acquittal appeal against judgment under Section 138 of the Negotiable Instruments Act, 1881.Analysis:The appellant/complainant alleged that the respondent borrowed a sum of Rs.2,50,000/- and issued a cheque which was dishonored. The appellant argued that under Sections 118 and 139 of the Act, unless proven otherwise, it is presumed that the negotiable instrument was issued for consideration. The respondent claimed that the cheque was misused and the defense was an afterthought. The trial Court acquitted the respondent, but the appellant contended that the dishonor of the cheque should be presumed for insufficient funds. The appellant sought reversal of the acquittal and conviction of the respondent under Section 138 of the Act.The respondent argued that the wrong account number was mentioned in the cheque, and one of the cheques issued earlier was misused by the appellant. The respondent contended that the trial Court's findings were based on proper evidence evaluation and should not be interfered with on appeal. The respondent denied issuing the cheque in 2005 and claimed that the appellant's evidence supported the issuance of the cheque in 2005. The respondent's defense was rebutted by the appellant's statement and the document showing the date of issuance of the cheque.The Court analyzed Section 118 and Section 146 of the Act, which provide presumptions regarding negotiable instruments and dishonor of cheques. The Court found that the evidence established the issuance of the cheque in 2005 to clear the liability, contradicting the respondent's claim of no transaction after 2003. The Court held that the dishonor of the cheque for insufficient funds was established as per the bank's slip, and the purpose of the Act is to maintain confidence in bank transactions. Consequently, the appeal was allowed, the acquittal was reversed, and the respondent was convicted under Section 138 of the Act, with a fine imposed for Rs.3,00,000/- to be paid to the appellant against the liability of the respondent.