2025 (8) TMI 248 - HC - Indian Laws

Conviction upheld under Section 138 NI Act for cheque dishonour due to insufficient funds and unpaid loan liability

Rakesh Kumar Versus Chattar Singh

Rakesh Kumar Versus Chattar Singh - 2025 : HHC : 23406 ISSUES: Whether the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act (NI Act) arises upon admission of signature on the cheque and issuance thereof for discharge of legal liability.Whether a cheque issued as security attracts the provisions of Section 138 of the NI Act.Whether the accused successfully rebutted the statutory presumption by adducing evidence or raising a probable defence.Whether the affidavit relied upon by the complainant was forged or manipulated.Whether the notice of demand was validly served upon the accused as required under Section 138 of the NI Act.Whether the revisional court can reappreciate evidence and interfere with concurrent findings of conviction by the Trial and Appellate Courts.Whether the sentence and compensation awarded under Section 138 of the NI Act were excessive or justified. RULINGS / HOLDINGS: The Court held that the signatures on the cheque being admitted, a presumption arises under Sections 118(a) and 139 of the NI Act that the cheque was issued in discharge of a legal liability; the burden shifts to the accused to rebut this presumption, which was not done.The Court affirmed that a cheque issued as security also attracts the provisions of Section 138 of the NI Act, and such a cheque is not invalid merely because it was issued as security.The accused failed to lead any evidence to rebut the presumption or establish a probable defence; mere denial or statement under Section 313 Cr.P.C. is insufficient to discharge the burden.The submission that the affidavit was forged or manipulated was rejected as the affidavit was not challenged in cross-examination, and the accused admitted his signature on it without alleging interpolation.The notice of demand was sent to the correct address and is presumed to be served; failure to pay within the stipulated period despite receipt of notice satisfies the requirements under Section 138.The revisional court cannot act as an appellate court to reappreciate evidence or disturb concurrent findings unless there is a patent error, perversity, or illegality; no such grounds were found.The sentence of one year's simple imprisonment and compensation amounting to approximately twice the cheque amount with interest was held to be appropriate and not excessive, considering the deterrent nature of Section 138. RATIONALE: The legal framework is grounded in the statutory presumptions under Sections 118(a) and 139 of the NI Act, which mandate that once the signature on the cheque is admitted, the cheque is presumed to have been issued for discharge of a legally enforceable debt or liability unless rebutted by the accused.Judicial precedents establish that the presumption under Section 139 is a rebuttable evidentiary presumption requiring the accused to raise a probable defence on a preponderance of probabilities standard, not beyond reasonable doubt.It is well-settled that a cheque issued as security falls within the ambit of Section 138, as the liability exists at the time of cheque issuance; the drawer's liability is not negated by the cheque being blank or filled in by another person.The principle of fair trial requires that allegations of forgery or manipulation of affidavits must be put to the witness in cross-examination; failure to do so precludes such challenges at later stages.Section 138 mandates issuance of a notice of demand to the drawer at the correct address; statutory presumptions under the General Clauses Act and Evidence Act apply to deem service valid in absence of contrary proof.The revisional jurisdiction under Sections 397 and 401 Cr.P.C. is supervisory and limited to correcting patent errors or jurisdictional defects; it does not permit reappreciation of evidence or substitution of concurrent findings absent perversity or illegality.Sentencing under Section 138 is intended to be deterrent; courts have consistently upheld sentences and compensation up to twice the cheque amount with simple interest to compensate the complainant for loss and litigation expenses.