2026 (2) TMI 464 - HC - Indian Laws

Dishonour of cheque presumption of debt enforces burden on drawer to rebut; failure to rebut upholds conviction and sentence

On dishonour of a cheque, the court applied the statutory presumption that the cheque was issued for discharge of a legally enforceable debt, placing on ... Negotiable Instruments Act - Dishonour Of cheque - Presumption u/s 139 - onus to rebut presumption of a legally enforceable debt - privity of contract and liability u/s 138 - limitation for complaint u/s 138 computed from cheque issuance/presentation and dishonour - limited scope of revisional jurisdiction under the Cr.P.C. - HELD THAT:- As per settled law, since execution of the cheque and the receipt of the legal notice are admitted, a presumption arises in favour of the holder of the cheque i.e. the respondent and that it was issued in discharge, either in whole or in part, of a legally enforceable debt or liability. Based thereon, the Cheque involved [Ex. CWI/B] is a valid instrument issued for dispensing a legal debt. As such, the presumption under Section 118(a) and Section 139 of the N.I. Act was attracted and the burden lay upon the petitioner to rebut the above presumption by raising a probable defence either by leading direct evidence or by pointing out serious contradictions or improbabilities in the respondent’s case, as held by the Apex Court in Rajesh Jain vs. Ajay Singh [2023 (10) TMI 418 - SUPREME COURT] In view thereof, since, admittedly, the signature affixed on the Cheque involved [Ex. CWI/B] was of the petitioner, as held by the Hon’ble Supreme Court in judgment Rangappa vs. Sri Mohan [2010 (5) TMI 391 - SUPREME COURT], it was ipso facto sufficient to presume the existence of a ‘legally enforceable debt’, for which the onus was upon the petitioner herein to rebut it. Since, undisputedly the petitioner refused to lead any evidence before the learned Trial Court, his defence was based on his statement under Section 313 of the Cr.P.C., which discloses that he was unable to establish his case beyond reasonable doubt. Since the Cheque involved [Ex. CWI/B] was issued under the name of M/s Farhan Empexo Export and Import Co., there was no requirement for the respondent to show his relationship with it. The petitioner can neither be allowed to reagitate the very same issues which have been duly negated twice over nor to raise any new/ fresh grounds herein. Finding no illegality and/ or perversity therein, no grounds are made out for setting aside of the impugned judgement dated 10.04.2024 passed by the learned ASJ. As such, the judgment dated 26.04.2022 as also the order on sentence dated 07.05.2022 passed by the learned Trial Court are upheld. Accordingly, in view of the foregoing, the present petition is hereby dismissed. Issues: (i) Whether the presumption under Section 118(a) and Section 139 of the Negotiable Instruments Act, 1881 is attracted in respect of the cheque and whether a 'legally enforceable debt' is established; (ii) Whether the Complaint under Section 138 of the Negotiable Instruments Act, 1881 is barred by limitation having regard to the date of the MoU; (iii) Whether this Court in revisional jurisdiction can and should interfere with the concurrent findings of the Trial Court and the Appellate Court.Issue (i): Whether the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 is attracted and a legally enforceable debt is established.Analysis: Execution of the cheque and receipt of the statutory legal notice are admitted; signature on the cheque is admitted; once Section 139 presumption is applied the evidential burden shifts to the accused to rebut it by leading evidence or demonstrating contradictions; the petitioner did not lead evidence and relied only on his Section 313 statement alleging theft of the cheque and lack of privity.Conclusion: Presumption under Section 118(a) and Section 139 is attracted and a legally enforceable debt is presumed; the petitioner failed to rebut the presumption. (In favour of Respondent)Issue (ii): Whether the Complaint under Section 138 NI Act is time-barred because the MoU was executed in 2009.Analysis: Limitation for a complaint under Section 138 is computed from the date of issuance/presentation and dishonour of the cheque, not from the date of an earlier agreement; the complaint was filed within the period measured from cheque issuance/dishonour.Conclusion: The complaint is not barred by limitation. (In favour of Respondent)Issue (iii): Whether revisional interference is warranted against the concurrent findings of the Trial Court and the Appellate Court.Analysis: Revisional jurisdiction under Sections 397/401 Cr.P.C. is limited to testing legality, correctness or propriety and is not a rehearing on merits; no illegality or perversity was shown and the petitioner sought to re-agitate issues negatived by both courts below.Conclusion: Revisional interference is not warranted; the impugned appellate judgment and trial conviction and sentence are upheld. (In favour of Respondent)Final Conclusion: The revision petition is dismissed and the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881 as affirmed by the Appellate Court are maintained.Ratio Decidendi: Where cheque execution and dishonour and service of statutory notice are admitted, the presumption under Section 139 of the Negotiable Instruments Act, 1881 shifts the evidential burden to the drawer to rebut existence of a legally enforceable debt; limitation for a Section 138 complaint is computed from cheque issuance/presentation/dishonour.