2019 (10) TMI 1578 - HC - Indian Laws

Accused fails to rebut statutory presumption in cheque dishonour case under Section 138 Negotiable Instruments Act

Naresh Verma Versus Narender Chauhan

The HC dismissed the accused's petition in a dishonour of cheque case under Section 138 of the Negotiable Instruments Act. The accused failed to ... Dishonour of Cheque - Presumption not rebutted successfully - discharge of legally enforceable debt or not - HELD THAT:- This Court is in total agreement with the complainant that the cheque in question, Ext. CW-1/C was issued by the accused for consideration in discharge of her debt/liability. Since presumption as referred to herein above has not been successfully rebutted by the accused, she rightly came to be held guilty of having committed offences punishable u/s 138 of the Act - Once signatures on the cheque are not disputed rather stand duly admitted, aforesaid plea with regard to cheque having not been issued towards discharge of lawful liability, rightly came to be rejected by learned Courts below. S. 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability - True it is that to rebut aforesaid presumption, accused can always raise probable defence either by leading positive evidence or by referring to material, if any, adduced, on the record by the complainant, but, in the case at hand, accused has miserably failed to raise probable defence, much less sufficient defence to rebut the presumption available in favour of the complainant under Ss. 118 and 139 of the Act. Close scrutiny of material available on record compels this Court to agree with learned senior counsel for the complainant, that there is absolutely no evidence available on record to probabilise the defence so projected by accused that blank cheques were issued to the complainant and one of the cheques has been misused. Mere statement of the accused is not sufficient to prove that the cheque in question has been misused, rather the accused, with a view to rebut the presumption available in favour of the holder, is/was under obligation to prove by leading positive evidence that the cheque in question was issued as a security. Hon'ble Apex Court in M/s. Laxmi Dyechem vs. State of Gujarat, [2012 (12) TMI 106 - SUPREME COURT], has categorically held that if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. To raise probable defence, accused can rely upon the material submitted by the complainant. Needless to say, if the accused/drawer of cheque in question neither raises a probable defence nor is able to contest existence of a legally enforceable debt or liability, statutory presumption under S. 139 of the Act regarding commission of the offence comes into play. The petition at hand is dismissed being devoid of merit. Issues Involved:1. Validity of the judgment/order of conviction and sentence under Section 138 of the Negotiable Instruments Act.2. Legality of the enhancement of compensation from Rs. 7.00 Lakh to Rs. 8.50 Lakh.3. Admissibility and sufficiency of evidence regarding the issuance and dishonor of the cheque.4. Presumption under Sections 118 and 139 of the Negotiable Instruments Act.5. Rebuttal of statutory presumption by the accused.Detailed Analysis:1. Validity of the judgment/order of conviction and sentence under Section 138 of the Negotiable Instruments Act:The complainant alleged that the accused issued two cheques for the payment of apple boxes, which were dishonored due to insufficient funds. The trial court convicted the accused under Section 138 of the Negotiable Instruments Act, sentencing her to two months of simple imprisonment and a compensation of Rs. 7.00 Lakh. The Sessions Judge dismissed the accused's appeal and upheld the conviction, enhancing the compensation to Rs. 8.50 Lakh. The High Court found no illegality or infirmity in the judgments of the lower courts, confirming the conviction and sentence.2. Legality of the enhancement of compensation from Rs. 7.00 Lakh to Rs. 8.50 Lakh:The complainant appealed for an enhancement of the compensation, which the Sessions Judge granted, increasing the amount to Rs. 8.50 Lakh. The High Court upheld this enhancement, noting that the accused had failed to comply with multiple opportunities to make the payment as ordered by the court.3. Admissibility and sufficiency of evidence regarding the issuance and dishonor of the cheque:The complainant successfully proved the issuance of the cheque and its dishonor due to insufficient funds. The evidence included the complainant's testimony, the statement of account, and the statutory demand notice. The accused admitted to borrowing money and signing the cheque but claimed the amount was not filled by her. The court found this defense insufficient to rebut the presumption of lawful liability.4. Presumption under Sections 118 and 139 of the Negotiable Instruments Act:The court emphasized that once the execution of the cheque is admitted, a presumption arises under Section 139 that the cheque was issued for the discharge of debt or liability. This presumption is rebuttable, but the accused must provide sufficient evidence to do so. The accused's admission of signing the cheque and the lack of evidence to support her claim of misuse of blank cheques led the court to uphold the presumption in favor of the complainant.5. Rebuttal of statutory presumption by the accused:The accused attempted to rebut the presumption by claiming the cheque was issued as a security and not for the discharge of a debt. However, she failed to provide convincing evidence to support this claim. The court cited precedents, including Hiten P. Dalai v. Bratindranath Banerjee and Basalingappa vs. Mudibasappa, to highlight that the standard for rebutting the presumption is the preponderance of probabilities. The accused's defense was deemed improbable and insufficient to rebut the statutory presumption.Conclusion:The High Court dismissed the revision petition, upholding the judgments of the lower courts. The accused was directed to surrender and serve the sentence. The court reiterated the principles regarding the presumption under Sections 118 and 139 of the Negotiable Instruments Act and the burden on the accused to rebut this presumption with sufficient evidence.