2021 (10) TMI 760 - HC - Indian Laws

Conviction overturned due to lack of evidence in service of legal notice

The court set aside the conviction of the petitioner under Section 138 of the Negotiable Instruments Act, citing lack of evidence regarding the legal ... Dishonor of Cheque - insufficiency of funds - condition precedent for constituting an offence under Section 138 of N.I. Act has been satisfied or not - service of legal notice - HELD THAT:- From the case records, it appears that the prosecution had exhibited the cheques and also proved the postal receipt and successfully proved that the cheques were issued by the petitioner, which had bounced due to insufficient funds. Service of legal notice - HELD THAT:- Neither any date of dispatch of the legal notice has been mentioned in the evidence, nor the legal notice has been exhibited, much less, any evidence or finding regarding service of legal notice/deemed service of legal notice is on record. This court is of the considered view that mere bouncing of the cheque coupled with a further statement that legal notice was issued but in-spite of its service the amount was not paid are not enough to constitute an offence under section 138 of N.I. Act. The time lines as prescribed under the N.I. Act which has been fully explained by the Hon'ble Supreme Court are essential ingredients to be proved for convicting the accused under section 138 of N.I. Act. Further, in absence of the legal notice brought on record by way of exhibit, it certainly cannot be assumed that the document which was sent through registered post was the legal notice pursuant to bouncing of the cheques - Mere bouncing of cheque signed by the accused does not constitute an offence unless other ingredients of the offence under section 138 of N.I. Act are also proved. In the aforesaid facts and such circumstances of this case, the basic ingredient to constitute an offence under Section 138 of N.I. Act have not been proved by the prosecution. There is no doubt that there is presumption in connection with a cheque in favour of the holder of the cheque under Section 139 of N.I. Act, but that presumption by itself is not sufficient to constitute an offence under Section 138 of N.I. Act, unless the other ingredients have been proved - this court is of the considered view that the conviction of the petitioner for offence under section 138 of N.I. Act is perverse and suffers from material irregularity which calls for interference in revisional jurisdiction to meet the ends of justice. Revision application is allowed. Issues Involved:1. Validity of conviction under Section 138 of the Negotiable Instruments Act, 1882 (N.I. Act).2. Compliance with the procedural requirements under Section 138 of the N.I. Act.3. Examination of evidence and legal notice service.Detailed Analysis:1. Validity of Conviction under Section 138 of the N.I. Act:The petitioner was initially convicted under Section 138 of the N.I. Act by the Judicial Magistrate, 1st Class, Palamau, and sentenced to one year of simple imprisonment with a fine of Rs. 2,000/-. The Additional Sessions Judge-I, Palamau, modified the sentence to a fine of Rs. 2,10,000/- with a default imprisonment of six months. The petitioner challenged the conviction, arguing that the condition precedent for constituting an offence under Section 138 was not satisfied, particularly the service of legal notice.2. Compliance with Procedural Requirements under Section 138 of the N.I. Act:The petitioner contended that the legal notice regarding the bouncing of cheques was not exhibited before the court, and there was no finding regarding the date of dispatch or service of the legal notice. The court found that the complaint lacked material particulars such as the date of knowledge of cheque bouncing, the date of issuance of the legal notice, and the date of service of the notice. The legal notice was not exhibited, and the postal receipt marked as Ext-2 did not prove the dispatch of the legal notice.3. Examination of Evidence and Legal Notice Service:The court examined the evidence presented, including the cheques and the postal receipt. The defence did not examine any oral witnesses but provided certain documents. The trial court acquitted the petitioner under Section 420 IPC but convicted him under Section 138 of the N.I. Act based on documentary evidence. The appellate court upheld this conviction, noting that the legal requirements for Section 138 were satisfied and that the defence failed to rebut the presumption of debt or liability.Findings of the Court:The court found that the essential dates regarding the issuance and receipt of the legal notice were not mentioned in the complaint or evidenced in court. The legal notice was not brought on record, and there was no evidence or finding regarding its service. The court referred to the Supreme Court judgment in Yogendra Pratap Singh vs. Savitri Pandey, which outlined the conditions for constituting an offence under Section 138. The court held that mere bouncing of the cheque and a statement that a legal notice was issued were insufficient to constitute an offence under Section 138 without proving the essential ingredients, including the service of the legal notice.Conclusion:The court concluded that the conviction was perverse and suffered from material irregularity. The court set aside the judgments of the trial court and the appellate court, acquitting the petitioner of the offence under Section 138 of the N.I. Act. The revision application was allowed, and the lower court records were ordered to be sent back to the concerned court.Final Orders:- The impugned judgments of conviction by the trial court and appellate court were set aside.- The petitioner was acquitted of the offence under Section 138 of the N.I. Act.- The revision application was allowed.- Pending interlocutory applications were closed.- The lower court record was to be sent back forthwith, and the order communicated to the concerned court through fax/email.