Accused convicted for dishonoring cheque in loan payment.

The accused was convicted under Section 138 of the Negotiable Instruments Act for dishonoring a cheque issued as part payment for a loan. The appellate court upheld the conviction, finding the complainant had the financial capacity to lend the amount and that the accused failed to rebut the presumption in favor of the cheque holder. The court dismissed the revision petition, confirming the conviction and sentence, and ordered the deposited amount to be released to the complainant.

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Issues Involved:
1. Legally recoverable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Financial capacity of the complainant to lend the amount.
3. Presumption under Sections 118 and 139 of the NI Act and its rebuttal.
4. Legality of the transaction in the context of money lending without a license.
5. Evaluation of evidence and cross-examination.
6. Consistency of the accused's defense.

Detailed Analysis:

1. Legally Recoverable Debt under Section 138 of the Negotiable Instruments Act, 1881:
The complainant alleged that the accused requested a hand loan of Rs. 2,00,000/- and issued a cheque for Rs. 1,85,000/- as part payment, which was dishonored with the endorsement "Payment was stopped by the drawer." The complainant issued a statutory legal notice, which the accused responded to falsely and did not pay the amount. The trial court convicted the accused under Section 138 of the NI Act, and this conviction was upheld by the appellate court.

2. Financial Capacity of the Complainant to Lend the Amount:
The petitioner argued that the complainant lacked the financial capacity to lend Rs. 2,00,000/- as he had no sources of income. The complainant, however, testified that he was an electrical contractor with an annual income of Rs. 2 to 2.5 lakhs and had borrowed money from his sister and her husband to lend to the accused. The trial court found this explanation credible, noting that the accused did not effectively challenge the complainant's financial capacity during cross-examination.

3. Presumption under Sections 118 and 139 of the NI Act and Its Rebuttal:
The court noted that under Sections 118 and 139 of the NI Act, there is a presumption in favor of the holder of the cheque. The accused admitted that the cheque belonged to his account and bore his signature. The court held that the accused failed to rebut this presumption effectively. The accused's defense that he lost his cheques and that the cheque in question was misused was not supported by any documentary evidence or credible testimony.

4. Legality of the Transaction in the Context of Money Lending without a License:
The petitioner contended that the transaction was illegal as it involved money lending without a license, which is not permissible by law. However, the court found that this argument did not hold merit in the context of the NI Act, which primarily focuses on the dishonor of cheques and the presumption of debt or liability.

5. Evaluation of Evidence and Cross-Examination:
The trial court evaluated the evidence, including the complainant's testimony and the documents marked as exhibits. The complainant's evidence was found to be consistent and credible. The accused's cross-examination did not effectively challenge the complainant's case. The court noted that the accused's defense was inconsistent and lacked supporting evidence, such as a formal complaint to the bank about the lost cheques.

6. Consistency of the Accused's Defense:
The accused's defense was found to be inconsistent. He initially claimed that he lost his cheque book, but later suggested that three specific cheques were lost and misused. The court found that the accused did not provide sufficient evidence to support his defense, such as notifying the bank about the lost cheques or providing details of the lost cheques.

Conclusion:
The court concluded that the complainant had successfully discharged the burden of proving his case, and the presumption under Sections 118 and 139 of the NI Act was in his favor. The accused failed to rebut this presumption effectively. The judgments of the trial court and the appellate court were found to be legally correct and were upheld. The revision petition was dismissed, and the conviction and sentence were confirmed.

Order:
The petition is dismissed. The judgment dated 23.03.2021 by the I Additional District and Sessions Judge, Uttara Kannada, Karwar, confirming the conviction and sentence dated 28.06.2019 by the I Addl. JMFC, Sirsi, in CC No.789/2012 for the offence under Section 138 of the NI Act, is confirmed. The trial court records are to be sent back, and the deposited amount is to be transmitted for withdrawal by the complainant after proper identification and verification.

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