2025 (8) TMI 323 - HC - Indian Laws

Conviction upheld under Section 138 NI Act for cheque dishonor; sentence modified to fine and brief imprisonment

The HC upheld the conviction under Section 138 of the NI Act, finding the accused guilty of cheque dishonor due to insufficient funds and rejecting ... Dishonor of cheque - insufficient funds - existence of legally enforceable debt or not - complainant has not proved his source to lend the money - shifting of burden to the accused to rebut the presumption - HELD THAT:- The decision cited by the learned counsel appearing for the accused is not applicable to the facts of the case. The main contention raised by the accused is regarding source. The other contention raised by the accused are concurrently found against the accused by the trial court and the appellate court. There is no reason to interfere in the same. The jurisdiction of this Court to interfere with the conviction and sentence invoking the powers of revisional jurisdiction is very limited. Unless there is illegality, irregularity and impropriety, this Court need not interfere with the finding of conviction and sentence. This Court anxiously considered the impugned judgments and the contentions of the Revision petitioner - there is nothing to interfere with the conviction and sentence imposed on the petitioner. The trial court and the appellate court considered the entire evidence and thereafter found that the petitioner was guilty under Section 138 of the NI Act. Therefore, there is nothing to interfere with the conviction imposed under Section 138 of the NI Act. What remains is the sentence imposed on the petitioner. The sentence is simple imprisonment for one month and to pay a fine of Rs.4,00,000/- in each case with a default sentence. Admittedly, it is a money transaction which leads to the prosecution. In such circumstances, a substantive sentence of imprisonment is not necessary. The same can be set aside. At this stage, the learned counsel for the petitioner seeks some time for payment of the fine amount. The conviction imposed on the petitioner as per the impugned judgments are confirmed - The sentence imposed on the petitioner as per the impugned judgments are set aside, and the revision petitioner is directed to undergo imprisonment till the rising of the court and to pay a fine of Rs.4,00,000/- in each case. In default of payment of compensation, the petitioner is directed to undergo simple imprisonment for one month in each case. If the fine amount is deposited, the same shall be paid to the 1st respondent under Section 357(1) Cr.P.C. - this Criminal Revision Petition is allowed in part. ISSUES: Whether the accused committed an offence under Section 138 of the Negotiable Instruments Act, 1881, by issuing cheques that were dishonoured for insufficiency of funds.Whether the complainant proved the existence of a legally enforceable debt and the source of the amount lent to the accused.Whether the accused rebutted the presumption under Section 139 of the Negotiable Instruments Act regarding the cheque being issued for discharge of debt.The extent of the Court's revisional jurisdiction to interfere with conviction and sentence under Section 138 of the Negotiable Instruments Act.Whether the sentence of imprisonment imposed is appropriate in a case arising from a money transaction under Section 138 of the Negotiable Instruments Act. RULINGS / HOLDINGS: The Court confirmed that the accused committed the offence under Section 138 of the Negotiable Instruments Act as the cheques issued were dishonoured for 'Funds Insufficient' and the accused failed to make payment after receiving statutory notice.The complainant sufficiently proved the existence of a legally enforceable debt and explained the source of the amount lent, stating it was obtained in cash from Ray Constructions of Refineries, which was not successfully rebutted by the accused.The presumption under Section 139 of the Negotiable Instruments Act was not rebutted by the accused, as the burden shifted to the accused to disprove receipt of the amount once the complainant provided a plausible source, invoking Section 118(a) of the Act.The revisional jurisdiction to interfere with conviction and sentence is limited and will not be exercised unless there is 'illegality, irregularity and impropriety'; none were found in the impugned judgments.The substantive sentence of imprisonment was set aside as 'a substantive sentence of imprisonment is not necessary' in a money transaction case, and the accused was directed to undergo imprisonment only till the rising of the court with a fine and default sentence conditions. RATIONALE: The Court applied the statutory provisions of the Negotiable Instruments Act, 1881, particularly Sections 138, 139, and 118(a), which establish the presumption that a cheque issued for discharge of debt is valid unless rebutted by the accused.The Court relied on precedent from higher courts which held that when the accused challenges the financial capacity of the complainant, the complainant must prove the source of the funds, and if a plausible explanation is given, the burden shifts back to the accused to disprove it.The Court emphasized that the accused did not adduce any defence evidence or rebut the complainant's explanation effectively, leading to confirmation of conviction.The Court acknowledged the limited scope of revisional jurisdiction, intervening only where there is a manifest error, which was absent here.Regarding sentencing, the Court recognized the nature of the offence as a 'money transaction' and exercised discretion to mitigate the sentence by setting aside substantive imprisonment, granting time for payment of fine, and suspending coercive measures during this period.