2026 (2) TMI 116 - HC - Indian Laws

Dishonour of cheque and statutory presumptions under negotiable instruments law lead to conviction under criminal cheque provisions.

Dishonour of cheque engages statutory presumptions in favour of the holder under negotiable instruments law; the court drew the presumptions as the ... Dishonour of cheque - Presumption in favour of holder under Section 139 of the Negotiable Instruments Act - Presumptions as to negotiable instruments u/s 118 (rebuttable presumption) - Probable defence proven on preponderance of probabilities - Signed blank cheque and filling of particulars by third party - Failure to rebut statutory presumption resulting in conviction u/s 138 - Punitive and compensatory object of proceedings u/s 138 - HELD THAT:- It is pertinent to note that though the accused having received the statutory notice, has not chosen to send reply immediately and after lodging of the private complaint, the accused sent the reply notice on 16.02.2016 under Ex.P.5. It is pertinent to note that the complainant as P.W.1 and her husband as P.W.4 gave evidence reiterating the complaint contentions and deposed about the liability of the accused, issuance of cheque therefor, dishonor of cheque, issuance of statutory notice and the failure of the accused to pay the amount within stipulated time. On considering the evidence of P.W.1 and also the admission of the accused with respect to Ex.P.1 (cheque) and the signature found therein, this Court has no other option but to draw a presumption under Sections 118 and 139 of the NI Act. No doubt, as rightly contended by the learned counsel appearing for the accused, the presumptions available under Sections 118 and 139 of the NI Act are rebuttable in nature. It is settled law that the accused, in order to rebut the presumption drawn in favour of the complainant under Sections 118 and 139 of the NI Act, is not required to adduce any evidence and he can very well prove his probable defence through the evidence adduced by the complainant and that the standard of proof required is of preponderance of probabilities. Even assuming that the contents of cheque were not filled by the accused, the same is wholly irrelevant. As rightly contended by the learned counsel appearing for the complainant, despite lengthy cross-examination, the testimony of P.W.1 and the evidence of P.W.4 remained unshaken and the defence failed to elicit any material discrepancies or doubts that could undermine the prosecution case. This Court is satisfied that the accused has failed to rebut the presumption drawn in favour of the complainant under Sections 118 and 139 of the NI Act. The learned Magistrate's findings are perverse, having relied on immaterial factors, while overlooking crucial evidence. Consequently, this Court concludes that the impugned judgment of acquittal is liable to be set aside and that the accused is guilty of the offence punishable under Section 138 of the NI Act. Taking into account the nature of the offence and the cheque amount, the accused is sentenced to pay a fine within a period of two months from the date of receipt of copy of this judgment, in default, to undergo simple imprisonment for six (6) months. Upon payment, the trial Court shall disburse the fine as compensation to the complainant under Section 357 Cr.P.C. In the result, the Criminal Appeal is allowed. Issues: Whether the impugned judgment of acquittal in S.T.C.No.87 of 2016 dated 29.06.2018 is liable to be set aside and the accused held guilty for the offence under Section 138 of the Negotiable Instruments Act, 1881.Analysis: The Court examined the statutory presumptions in Sections 118 and 139 of the Negotiable Instruments Act which create a presumption that a signed cheque given to the holder is for discharge of debt or liability; these presumptions are rebuttable on the preponderance of probabilities. The complainant adduced evidence including the cheque (Ex.P.1), records of dishonour, statutory notice and postal acknowledgement. The accused admitted issuance of the cheque and his signature and relied on a defence that the cheque was a security instrument and that he had repaid earlier loans. The accused did not produce credible contemporaneous evidence to prove repayment or otherwise rebut the statutory presumption; testimony relied upon by the defence was inconsistent and did not satisfactorily demonstrate discharge of liability. The Court considered binding precedents on (i) the scope and effect of presumptions under Sections 118 and 139, (ii) the standard for rebuttal being preponderance of probabilities, and (iii) irrelevance of whether cheque particulars were filled by a third party where the cheque is signed. Applying these principles, the Court found the presumption in favour of the complainant un rebutted and held that the trial court erred in acquitting the accused by relying on immaterial factors while overlooking critical evidence supporting the complainant's case.Conclusion: The impugned judgment of acquittal is set aside; the accused is held guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The accused is sentenced to pay a fine of Rs. 28,00,000/- to be disbursed as compensation to the complainant under Section 357 Cr.P.C., failing which simple imprisonment for six months shall follow.