2024 (2) TMI 811 - HC - Indian Laws

Accused convicted for cheque dishonour after failing to rebut Section 139 presumption despite documentary evidence of loan default

VPK Urban Cooperative Society Ltd., Versus Shri Sidheshwar Janardhan, State Of Goa

Bombay HC allowed appeal against accused's acquittal in cheque dishonour case. Trial court erroneously acquitted accused despite failure to rebut Section ... Dishonour of Cheque - acquittal of accused - rebuttal of presumption - Whether Respondent No. 1 succeeded in rebutting presumption under Section 139 of Negotiable Act? - HELD THAT:- There is a clear statement by PW-1 and that too in the cross-examination that the amount of loan was disbursed thought the account of the Accused. He also denied the suggestion that he failed to produce sufficient documents to show the liability of the Accused. The cross-examination of this witness is basically on the aspect of instalments and the amount paid by the Accused in such instalments. The specific suggestion was put to this witness which he denied - There is no dispute raised by the Accused that such notice was never received by him. Besides, the notice is addressed to the registered address of the Accused. The mandate of Section 138 of the Negotiable Instruments Act is to send notice to the Accused on his registered address, which has been complied with by the Complainant. No defence has been raised about such notice. No reply was given by the Accused to such legal notice. There is absolutely no defence raised by the Accused on receipt of legal notice issued by the Complainant. Thus once the signature on the cheque is admitted, the Court is duty bound to presume in favour of the Complainant that the cheque was issued for legally enforceable debt. In the case of BIR SINGH VERSUS MUKESH KUMAR [2019 (2) TMI 547 - SUPREME COURT], the Apex Court considering the statutory presumption under Section 139 of the Negotiable Instruments Act and observed that on meaningful reading of the provision of the Negotiable Instruments Act, it makes amply clear that the person who signs the cheque and makes it over to the payee, remains liable himself unless he adduces evidence to rebut the presumption that the Cheque had been issued for payment of debt or in discharge of liability. It is immaterial that the cheque may have been held in by any person other then the drawer, if the cheque is duly signed by the Drawer. If the cheque is otherwise valid penal provision of the Section 138 would be attracted. In the present matter the documentary evidence placed on record clearly proves that the Accused obtained loan of Rs. 6,00,000/- with an undertaking to repay it in 60 instalments together with an interest at the rate of 15% per annum - There is no other material to show that prior to the date Ninety-Eight. 30.10.2012 any repayment was made by the Accused. Thus the amount outstanding in the loan ledger account is much more than the one mentioned in the cheque - This documentary evidence is sufficient enough to strengthen the case of the Complainant. Such material cannot be disbelieved only because representative of the Society was unable to give the bifurcation of the amount or the fact that he paid some instalments prior to the date of the cheque. The learned Magistrate has completely ignored the fact that repayment was with 15% interest. Therefore, even if some amount was paid, the amount outstanding shown in the ledger account and that too maintained during their regular business activities could not have been disbelieved. Apart from some discrepancies found in the deposition of PW1, there is absolutely no material to show that the Accused succeeded in rebutting presumption under Section 139 of the Negotiable Instruments Act. The Complainant established that the loan was sanctioned and availed by the Accused to the tune of Rs. 6,00,000/- (Rupees Six Lakhs only) and the amount mentioned in the cheque is certainly less than the outstanding amount shown in the ledger book. Thus, there was absolutely no material in favour of the Accused to claim the rebuttal evidence. The presumption stands in favour of the Complainant and accordingly, the only option with the learned Magistrate was to hold Accused guilty. By ignoring the settled proposition and the documentary evidence and giving unnecessary importance to oral testimony the learned magistrate committed an error in acquitting the Accused. The Impugned order is accordingly quashed and set aside - Appeal allowed. Issues Involved:1. Whether Respondent No. 1 succeeded in rebutting presumption under Section 139 of Negotiable Instruments ActRs.Summary:Issue 1: Rebutting Presumption under Section 139 of Negotiable Instruments ActBy this appeal, the Appellant/Complainant challenges the impugned Judgment dated 31.07.2013, where the learned Magistrate acquitted the Accused/Respondent No. 1 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.The Complainant, a registered Society engaged in financial business, claimed that Respondent No. 1/Accused, a member of the Society, obtained a loan of Rs. 6,00,000/- and issued a cheque for Rs. 3,36,000/- towards part payment. The cheque was returned unpaid, and despite a legal notice, the Accused did not pay the amount or reply, leading to the complaint being filed.The Complainant produced documents like the loan agreement and demand promissory note, which were not disputed in cross-examination. The Accused admitted to signing blank cheques, but the Magistrate found that the presumption under Section 139 was rebutted.Mr. Sawant for the Appellants argued that the findings were perverse, as the Accused admitted to signing the cheques and obtaining the loan. The documents showed an outstanding amount of more than Rs. 5,00,000/-. Mr. Shet for the Respondent No. 1 countered that the cross-examination destroyed the Complainant's case and justified the outstanding amount.The court observed that the Complainant's documents, such as the loan agreement and ledger, proved the loan and outstanding amount. The Accused's defence of handing over blank cheques was deemed an eye wash. The signature on the cheque was admitted, and no serious dispute was raised about the loan or legal notice.The court referred to the case of Bir Singh V/s Mukesh Kumar, emphasizing that once the signature on the cheque is admitted, the presumption under Section 139 stands unless rebutted by the Accused. The documentary evidence showed the outstanding amount, and the Magistrate's findings were against settled law and considered perverse.In conclusion, the court found the Accused guilty under Section 138 of the Negotiable Instruments Act, quashed the impugned order, and kept the matter for hearing on the point of sentence.