Cheque dishonour case fails as accused issued cheque for another's debt, not own liability under Section 138

The Bombay HC dismissed an appeal in a cheque dishonour case under section 138 of the NI Act. The court held that for prosecution under section 138, the cheque must be issued by someone who owes a legally enforceable debt. The accused was acquitted because the cheque was not issued to discharge the accused's own debt but allegedly for another person's liability. Without proper assignment of liability or nexus between the cheque issuance and accused's obligation to repay, the complainant failed to establish the required legal debt. The presumption under section 139 was successfully rebutted by the accused's plausible defence.

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Issues:
The legality, propriety, and correctness of the Judgment and Order dated 25 August 2011 passed by the Metropolitan Magistrate in Criminal Case No. 512/SS/2010, acquitting the accused of the offence under Section 138 of the Negotiable Instruments Act, 1881, is challenged in this appeal.

Details of the Judgment:

Issue 1: Liability of the Accused

The complainant, a private limited company, supplied diamond jewellery to M/s. D. B. Diamonds, with an outstanding amount of Rs. 10,02,980/- allegedly taken over by the accused, brother-in-law of the proprietor. The accused issued a post-dated cheque which was dishonored due to 'stop payment' instructions. The complainant filed a complaint under section 138 of the NI Act.

Issue 2: Trial Proceedings

The learned Magistrate recorded evidence and documents from both parties. The accused abjured guilt and claimed trial. The Magistrate acquitted the accused, leading to the present appeal by the complainant.

Issue 3: Arguments and Counter-arguments

The appellant contended that the accused's liability was proved beyond reasonable doubt, relying on legal notice receipt and dishonored cheque. The respondent argued that there was no evidence of the accused taking over liability, citing lack of written agreement and pointing to the role of Mr. Dhaval Bhatt in the transaction.

Issue 4: Presumption under Section 139 of the NI Act

The court analyzed Section 139, which presumes that the holder received the cheque for the discharge of a debt unless proved otherwise. The absence of a written assignment of debt and the accused's actions in stopping the cheque payment led to the conclusion that the accused did not take over Mr. Dhaval Bhatt's liability.

Conclusion:

The Court upheld the trial court's decision, stating that the complainant failed to prove that the dishonored cheque was issued by the accused for the discharge of liability. Consequently, the appeal was dismissed.

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