9911796707🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
⚠️ This portal will be discontinued on 31-07-2025
If you encounter any issues or problems while using the new portal,
please
let us know via our feedback form
so we can address them promptly.
Follow us:
|
Home
2025 (7) TMI 405 - HC - Indian LawsDishonour of Cheque - insufficient funds - existence of sufficient reasons to summon the accused or not - presumption u/s 118(a) and Section 139 of the NI Act would arise that the cheque was issued in discharge of the legal liability for consideration or not - failure to rebut the presumption - burden of proof - 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 the 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. In the present case the accused has not provided any explanation in his statement recorded under Section 313 of CrPC. regarding the issuance of the cheque to the complainant. He did not step into the witness box to prove his version that the cheque was issued by him as security to the complainant. It was held in Sumeti Vij v. Paramount Tech Fab Industries 2021 (3) TMI 383 - SUPREME COURT that the accused has to lead defence evidence to rebut the presumption and mere denial in his statement under Section 313 of Cr.P.C. is not sufficient to rebut the presumption - Therefore the statement of the accused under Section 313 of Cr.P.C. was not sufficient to prove the plea taken by him that the cheque was issued as a security. Thus there was no requirement to produce the record regarding the payment of money to the accused and the complainant s case cannot be faulted because such a record was not produced before the Court. In the present case the learned Trial Court had awarded an amount of Rs.15, 000/- as compensation on the amount of Rs.15, 000/- and the same is not excessive keeping in view the time elapsed between the issuance of the cheque and the date of dishonour - there is no infirmity in imposing a sentence of imprisonment in case of default in the payment of compensation. The present revision fails and the same is dismissed.
Issues Presented and Considered
The core legal questions considered in the judgment are:
Issue-Wise Detailed Analysis 1. Nature of Dishonour and Effect on Cause of Action Legal Framework and Precedents: The dispute concerned whether the cheque was dishonoured on the ground "payment stopped by the drawer" or "insufficient funds." The Supreme Court in Modi Cements Ltd. v. Kuchil Kumar Nandi and subsequent cases has held that dishonour on the ground of "stop payment" instructions attracts Section 138 liability. Further, MSR Leathers v. S. Palaniappan and Kamlesh Kumar v. State of Bihar clarified that successive presentation of a cheque and issuance of successive notices is permissible and does not bar prosecution. Court's Interpretation and Reasoning: The Court rejected the petitioner's contention that the cause of action was complete on the first dishonour and notice and could not be revived by subsequent presentation. The Court emphasized that the NI Act contains no bar on repeated presentation or issuance of notices. The dishonour on "payment stopped" and later "insufficient funds" was held to attract Section 138 liability. Application of Law to Facts: The complainant presented the cheque twice; the first time it was dishonoured with "payment stopped by the drawer," and the second time with "insufficient funds." The accused failed to pay despite notice(s). Hence, the offence was complete. Conclusion: The complaint was not barred by limitation, and successive presentation and notice are valid under the NI Act. 2. Presumption under Sections 118(a) and 139 of the NI Act and Burden of Proof Legal Framework and Precedents: Sections 118(a) and 139 create a statutory presumption that a cheque is issued for discharge of a legally enforceable debt or liability. The burden shifts to the accused to rebut this presumption on a preponderance of probabilities, not beyond reasonable doubt. Key precedents include K. Bhaskaran v. Sankaran Vaidhyan Balan, Basalingappa v. Mudibasappa, Kalamani Tex v. P. Balasubramanian, Bir Singh v. Mukesh Kumar, and Rajesh Jain v. Ajay Singh. Court's Interpretation and Reasoning: The Court noted the accused admitted issuance of the cheque and the signature thereon. No substantive evidence was led by the accused to rebut the presumption. Mere denial in the statement under Section 313 Cr.P.C. was held insufficient. The accused's plea that the cheque was issued as security was unsupported by evidence and rejected based on binding precedent. Key Evidence and Findings: The accused admitted business dealings and issuance of the cheque. No evidence was produced to show payment or absence of liability. The complainant's evidence and documents were accepted as proof of debt. Application of Law to Facts: Since the accused did not rebut the presumption, the Court held the presumption under Sections 118(a) and 139 applied, establishing the existence of legal liability. Conclusion: The accused failed to discharge the evidentiary burden, and the presumption of a legally enforceable debt was rightly drawn. 3. Liability for Cheques Issued as Security Legal Framework and Precedents: The Court referred to Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited, Sripati Singh v. State of Jharkhand, and other authorities holding that a cheque issued as security also attracts Section 138 liability if dishonoured, provided a subsisting debt or liability exists on the date of the cheque. Court's Interpretation and Reasoning: The Court held that the plea that the cheque was issued as security does not absolve the drawer from liability under Section 138. The cheque was not "waste paper," and the accused was liable unless he proved the debt was discharged or no liability existed. Application of Law to Facts: The accused did not produce evidence to show the cheque was merely security or that the debt was discharged. The complainant's case that the cheque was issued towards discharge of debt was accepted. Conclusion: The cheque issued as security attracted Section 138 liability upon dishonour, and the accused was liable. 4. Scope of Revisional Jurisdiction of the High Court Legal Framework and Precedents: The Court extensively referred to Supreme Court rulings in Malkeet Singh Gill v. State of Chhattisgarh, State of Gujarat v. Dilipsinh Kishorsinh Rao, Kishan Rao v. Shankargouda, Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke, and Bir Singh v. Mukesh Kumar. The principle is that revisional jurisdiction is supervisory and limited to correcting patent errors, jurisdictional errors, or gross miscarriages of justice, and does not permit reappreciation of evidence or substitution of concurrent findings of fact. Court's Interpretation and Reasoning: The Court emphasized that concurrent findings of conviction by trial and appellate courts cannot be lightly disturbed in revision unless there is perversity or illegality. The present revision did not demonstrate such grounds. Application of Law to Facts: The trial and appellate courts had carefully considered evidence and reached concurrent findings. The revisional court declined to reappraise evidence or interfere without a well-founded error. Conclusion: The revisional petition was dismissed as the courts below did not commit any patent illegality or error warranting interference. 5. Sentence and Compensation Legal Framework and Precedents: The Court referred to Bir Singh v. Mukesh Kumar, Kalamani Tex v. P. Balasubramanian, K.A. Abbas v. Sabu Joseph, Hari Singh v. Sukhbir Singh, Vijayan v. Sadanandan K., and related judgments. Section 138 is deterrent in nature. Courts may impose imprisonment and compensation up to twice the cheque amount with interest. Imprisonment in default of payment of compensation is permissible under Section 357(3) Cr.P.C. and related provisions. Court's Interpretation and Reasoning: The Court held the sentence of six months imprisonment was not excessive despite the small cheque amount, as the provision is deterrent. Compensation of Rs.30,000/- (twice the cheque amount) was reasonable given the long delay and litigation expenses. Imprisonment in default of compensation payment was valid and supported by precedent. Application of Law to Facts: The sentence and compensation awarded by the trial court were upheld. The accused's plea for reduction was rejected. Conclusion: The sentence and compensation were appropriate and lawful. Significant Holdings "A prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default, which was followed by a statutory notice and a failure to pay had not been launched." "Section 139 of the NI Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque for the discharge, in whole or in part, of any debt or other liability." "The presumption under Section 139 is rebuttable, and the accused is required to raise a probable defence on the preponderance of probabilities." "A cheque issued as security towards repayment of a loan or liability attracts the provisions of Section 138 of the NI Act if dishonoured." "Dishonour of cheque on the ground 'payment stopped by the drawer' attracts Section 138 liability and the presumption under Section 139." "The revisional jurisdiction of the High Court under Section 397 Cr.P.C. is limited to correcting patent illegality, jurisdictional error, or gross miscarriage of justice and does not permit reappreciation of evidence or substitution of concurrent findings." "The sentence of imprisonment imposed under Section 138 of the NI Act is deterrent in nature, and compensation up to twice the cheque amount with interest is appropriate." "Courts can impose sentence of imprisonment in default of payment of compensation awarded under Section 357(3) Cr.P.C." "The complainant is not required to prove the advancement of loan or financial capacity at the threshold; the accused must rebut the presumption by adducing evidence." "Mere denial in the statement under Section 313 Cr.P.C. is not sufficient to rebut the presumption under Section 139 of the NI Act."
|
