2020 (3) TMI 246 - HC - Indian Laws

Court Convicts Respondent for Dishonored Check in Loan Repayment Case, Emphasizes Legal Presumption

The High Court allowed the appeal against the respondent's acquittal under Section 138 of the Negotiable Instruments Act. The court convicted the ... Dishonor of Cheque - insufficiency of funds - acquittal of the accused - Rebuttal of presumption. HELD THAT:- Presumption is rebuttable, but from the evidence of the appellant side it is not rebutted and no evidence is adduced by the respondent to rebut the same. The respondent refused to take the notice issued to him and did not reply the notice, therefore, it can be said that the respondent has not made any offer to rebut the presumption. It is not a case where the respondent has not signed the cheque. A meaningful reading of the provisions of the Act, 1881 makes it ample clear that the person signed the cheque over to a payee remains liable and he may adduce any evidence to rebut presumption. Presumption will live, exist and survive and shall end only when contrary is proved by the accused/respondent. In the present case the trial Court recorded finding that advancing loan for a sum of ₹ 2 lakh in cash is contrary to the provisions of Section 269 SS & 271D of the Income Tax Act, 1981 and the appellant had lent a sum of ₹ 2 lakh without having licence under Money Lenders Act, 1934, therefore, presumption under Section 139 of the Act, 1881 is rebutted - When the respondent has not denied that he has not borrowed money from the appellant on oath, the statement made by the appellant on oath supported by documents is not rebutted. Presumption under Section 139 of the Act, 1881 will survive and no corroboration is required for the same, because corroboration is not a rule of law, but it is a rule of prudence and presumption under Section 139 of the Act 1881 is legal. Presumption has to be drawn by the court as per Section 139 of the Act, 1881. The matter related to income tax is an issue between the revenue and the assessee and same is not relevant in a matter of dishonour of cheque. Therefore, provisions of Income Tax Act is not relevant for deciding the issues. The amount was advanced on the basis of personal relation, therefore, other documents are not required and cheque issued by the respondent is the best document showing liability of the respondent. The respondent is convicted under Section 138 of the Act, 1881. The date of issuance of cheque is 02.4.2017. The appellant is entitled to interest 6% to the amount advanced by him - Appeal allowed. Issues Involved:Appeal against acquittal under Section 138 of the Negotiable Instruments Act, 1881 based on dishonored cheque for loan repayment.Analysis:Issue 1: Appeal against AcquittalThe appeal challenged the judgment of the trial court that acquitted the respondent of the offense under Section 138 of the Negotiable Instruments Act, 1881. The appellant claimed that the respondent borrowed a sum of Rs. 2 lakh for construction, failed to repay it, and issued a check that bounced due to insufficient funds. The appellant argued that the trial court's findings were not sustainable as it did not evaluate the evidence properly and sought the conviction of the respondent.Issue 2: Evidence and Legal ArgumentsThe appellant presented evidence through a witness and documents supporting the loan transaction and the dishonored check. The respondent, on the other hand, relied on an agreement signed by two persons to counter the appellant's claims. The appellant contended that the respondent did not return the money even after receiving a legal notice, establishing a case under Section 138 of the Act.Issue 3: Presumption under the ActThe court analyzed the provisions of the Negotiable Instruments Act, particularly Section 139, which presumes that a check is issued for the discharge of a debt unless proved otherwise. The court noted that the respondent did not provide evidence to rebut this presumption, especially after refusing to accept the legal notice and failing to respond. The court emphasized that the presumption under the Act remains until the contrary is proved by the accused.Issue 4: Legal Interpretation and FindingsThe court addressed the trial court's concerns regarding income tax laws and money lending regulations, clarifying that such issues were not relevant to the dishonor of the check case. The court emphasized that the absence of a money lender's license did not negate the presumption under the Act. It highlighted that the loan was based on personal relations, making the check the primary evidence of the respondent's liability.Issue 5: Judgment and ConvictionAfter a comprehensive assessment, the court found the trial court's decision against the weight of evidence and legal provisions. Consequently, the appeal was allowed, the respondent was convicted under Section 138 of the Act, and a fine of Rs. 2,40,000 was imposed. The court directed the trial court to ensure the payment of the fine, emphasizing that jail detention was for recovery, not satisfaction of liability.In conclusion, the High Court overturned the trial court's acquittal, convicted the respondent under Section 138 of the Act, and imposed a fine for the dishonored check, emphasizing the legal presumption and evidence presented by the appellant.