2024 (1) TMI 666 - HC - Indian Laws

Conviction upheld under Negotiable Instruments Act for dishonoured cheque with insufficient funds despite non-receipt claims

Ved Parkash Versus Babu Ram Sharma

HC upheld conviction under Negotiable Instruments Act for dishonoured cheque due to insufficient funds. Accused admitted cheque dishonour in statement ... Dishonour of Cheque - insufficient funds - discharge of legal liability or cheque issued towards the security - HELD THAT:- The accused admitted in his statement recorded under Section 313 of Cr.P.C. that the cheque was dishonoured due to ‘insufficient funds’. Therefore, this fact is not in dispute otherwise also Amrander Kumar (CW2) stated that cheque No.713405 was dishonoured due to insufficient funds and it was returned to the collecting bank with the memo. He admitted in his cross-examination that he was not posted in the bank at the time of the receipt of the cheque. However, that is not material because there is a presumption under Section 146 of the Negotiable Instrument Act regarding the correctness of the memo of dishonour. The accused has not disputed this fact in his statement recorded under Section 313 Cr.P.C. and the presumption has not been rebutted; therefore, it was duly proved that the cheque was dishonoured due to insufficient funds. The complainant stated that he had not received the notice. Learned Trial Court had rightly pointed out that the person, who claimed that he had not received a notice as to pay the amount within 15 days from the receipt of the summons of the Court. It was laid down in CC. ALAVI HAJI VERSUS PALAPETTY MUHAMMED [2007 (5) TMI 335 - SUPREME COURT] that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. The accused has not paid any money to the complainant, and it was duly proved that the accused had failed to pay the money despite the receipt of the notice - Thus, it was duly proved that the cheque was issued in discharge of the legal liability which was dishonoured due to insufficient funds and the accused failed to make the payment despite the receipt of a valid notice of demand; hence, the complainant had succeeded in proving its case beyond the reasonable doubt. In the present case, the amount awarded by the learned Trial Court as affirmed by the learned Sessions Judge is inadequate but in the absence of any appeal regarding the enhancement of sentence, no interference is required with the same. The present revision fails and the same is dismissed. Issues Involved:1. Validity of the cheque issued under Section 138 of the Negotiable Instruments Act (NI Act).2. Financial capacity of the complainant to lend the money.3. Receipt of legal notice by the accused.4. Presumption of legal liability under Section 139 of the NI Act.5. Adequacy of the sentence and compensation awarded.Summary:1. Validity of the Cheque Issued under Section 138 of the NI Act:The complainant filed a complaint for the commission of an offence punishable under Section 138 of the NI Act, asserting that the accused issued a post-dated cheque for Rs. 2,00,000/- which was dishonoured due to insufficient funds. The Trial Court found sufficient reasons to summon the accused, who pleaded not guilty. The cheque was presented for collection, dishonoured, and returned with a memo indicating 'insufficient balance'. The accused admitted the dishonour of the cheque but claimed it was issued to his brother-in-law, who had financial transactions with the complainant.2. Financial Capacity of the Complainant to Lend the Money:The accused argued that the complainant failed to produce any written document showing the advancement of Rs. 2,00,000/- and did not have the financial capacity to lend such an amount. However, the courts held that the financial capacity of the complainant was not disputed by the accused during the trial. The complainant's cross-examination revealed that he had known the accused for 13-14 years and had advanced the loan in cash without obtaining a receipt.3. Receipt of Legal Notice by the Accused:The complainant issued a legal notice to the accused, which was sent through registered post. The accused claimed he did not receive the notice. The Trial Court held that the plea of non-receipt of notice was not acceptable, citing the presumption under Section 27 of the General Clauses Act that a notice sent to the correct address is deemed to have been delivered. The accused failed to repay the amount within 15 days of making an appearance in court, thus this defence was not available to him.4. Presumption of Legal Liability under Section 139 of the NI Act:The courts held that once the signatures on the cheque are admitted, a presumption under Section 139 of the NI Act arises that the cheque was issued in discharge of legal liability. The accused failed to rebut this presumption with credible evidence. The courts relied on precedents which established that the burden shifts to the accused to disprove the existence of a legally enforceable debt or liability.5. Adequacy of the Sentence and Compensation Awarded:The Trial Court sentenced the accused to one month of simple imprisonment and a fine of Rs. 2,35,000/- as compensation. The courts emphasized that the penal provision of Section 138 is deterrent in nature to instil confidence in the public regarding cheque transactions. The compensation awarded was deemed inadequate but was not interfered with due to the absence of an appeal for enhancement.Conclusion:The revision petition was dismissed, upholding the concurrent findings of the Trial Court and the Appellate Court that the cheque was issued in discharge of legal liability, dishonoured due to insufficient funds, and the accused failed to make the payment despite receiving a valid notice. The sentence and compensation awarded were found to be appropriate under the circumstances.