2025 (12) TMI 1665 - HC - Indian Laws

Cheque dishonour case under NI Act s.138: accused failed to rebut debt presumption; conviction and cheque-amount compensation upheld.

In revision against conviction under s.138 NI Act, the dominant issue was whether the accused rebutted the presumptions under ss.118(a) and 139. Since the ... Dishonour of Cheque - funds insufficient - accused failed to controvert the allegations made in the notice by sending a reply - rebuttal of presumptions u/s 118(a) and 139 of the N.I. Act - HELD THAT:- It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh 2022 (7) TMI 1455 - SUPREME COURT] that a revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was held in Kishan Rao v. Shankargouda [2018 (7) TMI 101 - SUPREME COURT] that it is impermissible for the High Court to reappreciate the evidence and come to its conclusions in the absence of any perversity. The accused admitted in his statement recorded under Section 313 of the Cr.PC that the cheque bears his signature. He also admitted this fact in his statement on oath. He volunteered to say that the cheque did not contain his complete signatures. It was laid down by the Hon'ble Supreme Court in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers [2020 (2) TMI 629 - SUPREME COURT], that when the issuance of a cheque and signature on the cheque are not disputed, a presumption would arise that the cheque was issued in discharge of the legal liability. It was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd. [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. In the present case, no payment was made, and the plea that notice was not received by the accused will not help him - the learned Trial Court had rightly held that all the ingredients of the commission of an offence punishable under Section 138 of N.I. Act, were duly satisfied and learned Trial Court had rightly convicted the accused of the commission of an offence punishable under Section 138 of the NI Act. It was laid down by the Hon'ble Supreme Court in Kalamani Tex v. P. Balasubramanian [2021 (2) TMI 505 - SUPREME COURT] that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. The compensation of ₹2,50,000/- on the cheque amount of ₹2,50,000/- is not excessive - revision dismissed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether, upon the accused admitting his signature on the cheque, the statutory presumptions under Sections 118(a) and 139 of the N.I. Act arose, and whether the accused rebutted them by a probable defence (including the plea of a misplaced/lost cheque and alleged misuse). (ii) Whether the cheque dishonour for 'funds insufficient' and the related foundational facts were proved, satisfying the ingredients of the offence under Section 138 of the N.I. Act. (iii) Whether the statutory demand notice was proved to have been delivered/served, and whether the accused could rely on a plea of non-service or 'wrong notice' in the absence of payment and reply. (iv) Whether the complaint was premature on the footing that the statutory 15-day period from receipt of notice had not expired before filing. (v) Whether, within the limited scope of revisional jurisdiction, any perversity, jurisdictional error, or patent illegality existed warranting interference with concurrent findings; and whether the sentence and compensation imposed were excessive. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Presumptions on admitted signature and rebuttal by defence of lost/misplaced cheque Legal framework: The Court considered the operation of presumptions under Sections 118(a) and 139 of the N.I. Act once execution/signature on the cheque is admitted, and noted that such presumptions are rebuttable by the accused by raising a probable defence. Interpretation and reasoning: The accused admitted the cheque bore his signature (both in his statement and on oath), notwithstanding a volunteered claim that the cheque did not contain 'complete signatures.' The Court held that this admission justified drawing the statutory presumption that the cheque was issued for consideration and in discharge of a legally enforceable liability. The defence that the cheque was misplaced/lost and misused was found improbable because the accused's version was silent on any prompt reporting of loss to the bank or steps such as stopping payment-conduct the Court considered expected of a prudent person. The accused also led no other evidence to substantiate loss/misuse beyond his own testimony. Conclusion: The presumption under Sections 118(a) and 139 validly arose and remained unrebutted; the accused failed to establish a probable defence that could displace the presumption of liability. Issue (ii): Proof of dishonour for 'funds insufficient' and satisfaction of Section 138 ingredients Legal framework: The Court identified the essential ingredients constituting the offence under Section 138, including dishonour due to insufficient funds and failure to pay after demand notice. Interpretation and reasoning: The Court accepted the complainant's version of dishonour as corroborated by bank-related evidence produced through a witness, including an account statement showing the account balance as zero on the relevant date. This supported the finding that the cheque was returned unpaid for insufficiency of funds. Coupled with the Court's findings on presumption of liability, notice delivery, and non-payment, the Court held the statutory components stood satisfied. Conclusion: Dishonour for 'funds insufficient' was duly proved and, with the other established elements, completed the offence under Section 138. Issue (iii): Delivery/service of demand notice and effect of plea of non-service/wrong notice Legal framework: The Court examined proof of delivery through the envelope/registered article details and applied the principle that a drawer who claims non-receipt cannot avoid liability if no payment is made within the relevant period after summons/complaint. Interpretation and reasoning: The accused acknowledged receiving an envelope and notice. The Court relied on matching registered article particulars on the envelope and postal receipt to conclude that the notice dispatched by the complainant was delivered to the accused. The accused's assertion that he received a different notice (bearing a different name) was rejected because he sent no reply to the sender alleging a wrong notice, and the complainant denied the suggestion of sending any different notice; the Court held a denied suggestion did not constitute proof. Additionally, since no payment was made, the accused could not successfully take advantage of the plea of non-service. Conclusion: Delivery/service of the demand notice was proved; the accused's 'wrong notice/non-service' plea was not accepted and did not defeat the complaint. Issue (iv): Allegation that the complaint was premature Legal framework: The Court considered the statutory scheme requiring a 15-day period after receipt of notice for payment and the permissible window thereafter for filing. Interpretation and reasoning: The Court treated the postal delivery stamp on the envelope as indicating delivery on 23.06.2016. On that basis, the accused had 15 days from receipt to pay. The Court found as a fact that the complaint was instituted after expiry of the 15-day period and within the permissible filing period thereafter, and therefore rejected the argument that the complaint was filed prematurely. Conclusion: The complaint was not premature; it was filed after the statutory waiting period and within time. Issue (v): Revisional interference with concurrent findings; proportionality of sentence and compensation Legal framework: The Court reiterated that revisional jurisdiction is supervisory and narrow, permitting interference only to correct patent defects, jurisdictional errors, legal errors, or perversity, and not to reappreciate evidence where concurrent findings exist. Interpretation and reasoning: Applying these parameters, the Court found no perversity or illegality in the concurrent findings upholding conviction under Section 138. On sentencing, the Court held one year's simple imprisonment was not excessive, noting the deterrent nature of Section 138. Regarding compensation of Rs.5,00,000/- on a cheque amount of Rs.2,50,000/-, the Court considered the long lapse of about seven years, loss of interest opportunity, and litigation expenses, and held the compensation was not excessive in the circumstances. Conclusion: No ground for revisional interference was made out; conviction was sustained, and both the custodial sentence and compensation were upheld as not excessive.