2021 (12) TMI 274 - HC - Indian Laws

High Court affirms conviction under Section 138 NI Act for dishonoring cheques

The High Court upheld the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881, for dishonoring cheques. The court rejected ... Offence under Section 138 of the Negotiable Instruments Act - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Rebuttal on the touchstone of preponderance of probabilities - Territorial jurisdiction - Scope of revisional jurisdiction - Forcible issuance and forged signature defence - Arbitration clause not invokedOffence under Section 138 of the Negotiable Instruments Act - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Rebuttal on the touchstone of preponderance of probabilities - Forcible issuance and forged signature defence - Concurrent findings of guilt under Section 138 upheld as the presumption arising under Sections 118 and 139 was not rebutted on preponderance of probabilities. - HELD THAT: - The Magistrate found, on appreciation of oral and documentary evidence, that the applicants had not placed material to rebut the statutory presumption that the cheques were issued for a legal debt or liability. The defence asserted before the trial was that the cheques were forcibly obtained and that one partner's signature was forged, but no evidence was adduced to support either contention. The Sessions Court confirmed these findings, and this Court, on revision, found no reason to disturb the concurrent conclusion that the presumption under Sections 118 and 139 remained unrebutted. The Court further noted that the respondent had admittedly paid advances and that it was for the applicants to show satisfaction of any liability; given the nature of the defence actually taken at trial and the evidence (or lack thereof) led in support, the applicants failed to discharge the onus required to rebut the presumption. [Paras 6, 18, 22, 23, 24]Conviction under Section 138 affirmed; presumption under Sections 118 and 139 not rebutted and no interference warranted.Scope of revisional jurisdiction - Claim that the Sessions Court denied opportunity of oral argument was rejected and did not vitiate the impugned order. - HELD THAT: - The applicants contended they were not permitted to advance oral arguments before the Sessions Court, relying on the roznama and an affidavit. The Sessions Court's record and its judgment indicate that counsel for the applicants was heard. This Court held that the affidavit disputing the court record could not be used to overturn the finding that the applicants had an opportunity to be heard, and therefore there was no ground for revisional interference on this basis. [Paras 9, 12]No merit in the contention of denial of oral argument; revisional interference on this ground is unwarranted.Territorial jurisdiction - Objection as to territorial jurisdiction was not maintainable where no such objection was raised before the Magistrate and earlier Supreme Court rulings did not affect pending complaints. - HELD THAT: - The applicants argued that the complaint was filed in a forum without territorial jurisdiction to harass them. The Court observed that the objection to jurisdiction was not taken before the Magistrate and therefore the Sessions Court correctly refused to accept it. Further, the Court noted that the subsequent pronouncement in Dashrath Rupsingh Rathod did not affect complaints already filed and pending, and earlier precedents relied upon by the applicants were distinguishable. Consequently, the objection to territorial jurisdiction did not warrant interference in revision. [Paras 10, 13, 26]Territorial jurisdiction objection insufficient; no interference in revisional jurisdiction.Arbitration clause not invoked - Applicants' failure to invoke the arbitration clause or initiate civil proceedings on the question of quality of iron ore undermines their contention that there was no ascertainable legal liability related to the cheques. - HELD THAT: - Although the contract contained a provision for analysis and an arbitration clause, the applicants did not invoke arbitration or commence civil proceedings to challenge the respondent's claim about quality or return of the iron ore. The Court observed that the applicants' defence at trial was limited to forcible issuance and forgery, and they did not advance a case showing that the respondent had returned the iron ore or that liabilities had been satisfied. In that factual and procedural setting, the challenge that there was no ascertainable legal debt connected to the cheques could not be entertained in revision. [Paras 16, 19, 20, 24]Failure to invoke contractual remedy/ arbitration or to lead evidence showing satisfaction of liability precludes revisional acceptance of the contention that no legal debt existed.Applicability of precedents - Decisions relied upon by the applicants (Basalingappa and M/s. Jinarj Paper Udyog) were held not to assist their case on the facts before the Court. - HELD THAT: - The Court examined the authorities placed before it. Basalingappa was distinguished on facts because that case involved an impermissible insistence on negative evidence, which the Supreme Court corrected; but in the present matter the factual matrix differed and the accused here had not led evidence to support their specific defences. The M/s. Jinarj Paper Udyog decision on territorial jurisdiction was rendered before the Supreme Court's later pronouncement in Dashrath Rupsingh Rathod and therefore did not advance the applicants' position. Accordingly, the cited precedents did not justify interference with the concurrent findings. [Paras 11, 25, 26]Authorities relied upon are inapplicable to the facts; do not warrant revisional interference.Final Conclusion: The revision petition is dismissed; the concurrent findings of the Magistrate and Sessions Court convicting the applicants under Section 138 are upheld and no ground for interference in revisional jurisdiction is established. Issues Involved:1. Conviction under Section 138 of the Negotiable Instruments Act, 1881.2. Territorial Jurisdiction.3. Opportunity to present oral arguments.4. Presumption under Sections 118 and 139 of the Negotiable Instruments Act.5. Legal debt or liability.Detailed Analysis:1. Conviction under Section 138 of the Negotiable Instruments Act, 1881:The original accused challenged the concurrent findings of guilt under Section 138 of the Negotiable Instruments Act, 1881, for dishonouring two cheques amounting to Rs. 2,00,000 and Rs. 7,00,000. The Judicial Magistrate, First Class, sentenced the partners of the appellant firm to three months of simple imprisonment and directed them to pay Rs. 11,16,000 under Section 357(3) of the Cr.P.C. This judgment was confirmed by the Sessions Court.2. Territorial Jurisdiction:The applicants contended that the Magistrate at Bicholim lacked territorial jurisdiction, arguing that the complaint was filed to harass them. However, the Sessions Court found no merit in this argument, noting that the objection was not raised before the Magistrate. The High Court upheld this view, referencing the judgment in Dashrath Rupsingh Rathod Vs. State of Maharashtra, which clarified that existing complaints and proceedings were unaffected by changes in territorial jurisdiction law.3. Opportunity to Present Oral Arguments:The applicants argued that they were not given the opportunity to present oral arguments before the Sessions Court. However, the High Court found that the roznama and the judgment indicated that the applicants' counsel was indeed heard. The affidavit disputing this was not considered sufficient to challenge the Sessions Court's findings.4. Presumption under Sections 118 and 139 of the Negotiable Instruments Act:The Magistrate found that the presumption under Sections 118 and 139 was not rebutted by the applicants. The applicants failed to provide evidence to support their claims of forced issuance of cheques and forgery of signatures. The High Court agreed, noting that the applicants did not meet the preponderance of probabilities required to rebut the presumption.5. Legal Debt or Liability:The applicants argued that there was no material to ascertain the exact nature of the legal debt or liability related to the cheques. They claimed to have supplied 3000 metric tonnes of iron ore, while the respondent acknowledged only 1500 metric tonnes of low-grade iron ore. The High Court found that the applicants failed to prove the supply of the second installment of 1500 metric tonnes. The Court noted that the applicants did not invoke the arbitration clause or initiate civil proceedings regarding the quality dispute. The defense of forced issuance of cheques was unsupported by evidence.Conclusion:The High Court found no reason to interfere with the concurrent findings of the lower courts. The applicants' arguments regarding territorial jurisdiction, opportunity to present oral arguments, and the nature of legal debt or liability were rejected. The revision application was dismissed, upholding the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881.