Bodh Raj Vs Veer Sen (Himachal Pradesh High Court)
Cheque Bounce Conviction Upheld Because Accused Failed To Rebut Statutory Presumption Under NI Act; Stop Payment Instruction Does Not Defeat Cheque Bounce Case Because Section 138 Still Applies; Revision Petition Dismissed Because Concurrent Findings Of Fact Showed No Perversity Or Legal Error; Complainant Need Not Independently Prove Loan Because Presumption Of Consideration Operates Under NI Act; Defence Of Third-Party Misuse Rejected Because Evidence On Issuance Of Cheque Was Inconsistent; Compensation Equal To Cheque Amount Upheld Because It Could Not Be Treated As Excessive.
In this case, the accused challenged the judgments of the Trial Court and the Appellate Court, both of which had convicted him under Section 138 of the Negotiable Instruments Act (NI Act) for dishonour of a cheque amounting to ₹2,26,000.
The complainant alleged that the accused had borrowed ₹2,26,000 and issued a cheque towards repayment of the liability. When the cheque was presented for encashment, it was returned unpaid with the endorsement “payment stopped by the drawer.” A legal demand notice was issued and received by the accused, but no payment was made thereafter. Consequently, a complaint under Section 138 of the NI Act was filed.
The Trial Court held that a cheque carries a statutory presumption that it was issued for consideration and towards discharge of a legally enforceable debt or liability. Since the accused failed to rebut the presumption, he was convicted and sentenced to three months’ rigorous imprisonment, directed to pay a fine of ₹2,26,000, and, in default, undergo further simple imprisonment. The fine amount was ordered to be released to the complainant as compensation. The Appellate Court upheld the conviction and sentence.
Before the High Court, the accused argued that he had neither issued the cheque to the complainant nor received any notice. He contended that the cheque had been taken by another person and that the complainant had failed to establish the existence of any debt or liability. It was also argued that since the complainant claimed to have advanced the amount in cash, there was no documentary proof of payment.
The High Court first examined the scope of revisional jurisdiction and reiterated that a revisional court is not expected to act as an appellate court. Interference is justified only where there is a patent defect, jurisdictional error, perversity, gross illegality, or a finding based on no evidence. Reappreciation of evidence merely because another view is possible is impermissible. Since both lower courts had concurrently appreciated the evidence and returned findings of fact, the scope of interference was extremely limited.
On merits, the Court found that the complainant had consistently stated that the accused had borrowed ₹2,26,000 and issued the cheque in repayment of the amount. During cross-examination, the complainant denied the suggestion that the cheque had been handed over to another person. The Court held that a denied suggestion does not constitute evidence.
The defence evidence was found to be contradictory. The accused claimed that another person had forcibly taken the cheque from him, whereas his own witness stated that the cheque had been voluntarily handed over as a security cheque in connection with a loan transaction. The Court observed that these versions were inconsistent and unreliable. Further, while the accused denied his signature on the cheque, his witness’s version implied that a signed security cheque had been handed over. Due to these contradictions, the Court held that the defence failed to create a credible or probable case.
The High Court held that the courts below were justified in accepting the complainant’s version and in invoking the presumptions under Sections 118(a) and 139 of the NI Act. Once the issuance of the cheque was established, the law presumed that it was issued for consideration and towards discharge of a debt or liability unless the accused rebutted the presumption through a probable defence. The Court found that the accused had failed to discharge this burden.
The Court also rejected the argument that the complainant was required to produce independent proof of advancing the loan amount. It observed that once the statutory presumptions under Sections 118(a) and 139 were attracted, the complainant was not required to separately prove the consideration unless the accused successfully rebutted the presumption. The Court emphasized that proceedings under Section 138 of the NI Act are not to be treated as ordinary civil recovery proceedings requiring proof of every aspect of the antecedent transaction.
The accused further argued that the alleged loan had been advanced in cash and therefore violated Section 269SS of the Income Tax Act. Rejecting this contention, the Court held that contravention of Section 269SS may attract a statutory penalty under Section 271D of the Income Tax Act, but such violation does not render the transaction void, illegal, or unenforceable. Consequently, a cash transaction exceeding the prescribed threshold does not by itself negate the existence of a legally enforceable debt or rebut the presumptions available under the NI Act.
Regarding dishonour of the cheque, the Court noted that the bank memo clearly recorded the reason as “payment stopped by the drawer.” Under the NI Act, the bank’s memo carries a presumption of correctness unless rebutted. No evidence was produced by the accused to challenge the memo. The Court further observed that dishonour due to stop-payment instructions is covered by Section 138 of the NI Act and cannot be used by a drawer to avoid penal consequences.
The Court also found that service of the legal notice was established. The accused admitted receiving the notice and claimed to have sent a reply, but no such reply was produced on record. He also did not claim to have made payment after receipt of the notice. Therefore, the statutory requirement relating to demand notice stood satisfied.
After examining the evidence and the legal position, the High Court concluded that all ingredients of the offence under Section 138 of the NI Act had been duly established. The accused had issued the cheque towards repayment of a debt, the cheque was dishonoured due to stop-payment instructions, a legal notice was served, and payment was not made despite receipt of the notice. The statutory presumptions remained unrebutted.
On the question of sentence, the Court observed that Section 138 serves a deterrent purpose by promoting the credibility of cheques and negotiable instruments. The sentence imposed by the Trial Court could not be considered excessive. The compensation awarded was only equivalent to the cheque amount of ₹2,26,000 and did not include any additional amount towards interest or litigation expenses. Therefore, there was no ground for interference with the compensation awarded.
Accordingly, the High Court dismissed the revision petition and upheld the conviction and sentence imposed by the courts below.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
