LI Network
Published on: October 20, 2023 at 20:10 IST
In a recent ruling, the Delhi High Court affirmed the conviction of an accused individual under Section 138 of the Negotiable Instruments Act (NI Act) for issuing a cheque that bounced due to insufficient funds.
The court’s decision was based on the accused’s failure to take any action to seek the return of the cheque, either before or after receiving a legal notice from the complainant.
The case, presided over by Justice Swarana Kanta Sharma, highlighted that the accused failed to respond to the legal notice sent by the complainant, which demanded the discharge of the financial liability resulting from the dishonored cheques.
Furthermore, the accused admitted to receiving the legal notice but did not provide any response or seek the return of the cheque, even when he believed the claim to be false.
The court emphasized the seriousness of issuing a cheque, especially if it is not intended to discharge a legally enforceable debt. In such cases, the accused is expected to take appropriate action to recover the cheque.
The accused’s failure to establish the reason for issuing the cheque and not seeking its return led to the court assuming that the accused failed to rebut the presumption that the cheque was issued for a legitimate debt.
The case revolved around a friendly relationship between the complainant and the accused, where the latter had requested a loan of Rs. 1,50,000 due to financial difficulties. The complainant provided the requested amount in cash.
To repay the debt, the accused issued a cheque for the same amount. However, when the complainant attempted to cash the cheque, it bounced due to insufficient funds. The accused did not repay the amount within the specified time after receiving a statutory demand notice, leading to the filing of the complaint case.
The petitioner’s counsel argued that there was no legally enforceable debt in favor of the complainant and claimed that the amount had been returned after selling the petitioner’s wife’s property.
To invoke Section 138 of the NI Act, the debt or liability had to be legally recoverable, which, according to the petitioner, was not the case since the amount had already been returned.
The court, however, pointed out that the petitioner had admitted to the signatures on the cheques, triggering the presumption under Section 118(a) and 139 of the NI Act that the cheques had been issued for a legally enforceable debt.
To challenge this presumption, the petitioner needed to provide material evidence that there was no legally recoverable debt associated with the cheques.
The court also noted that the complainant had served a legal notice to the petitioner, calling for the discharge of his liability after the cheques had been returned as dishonored. The petitioner admitted to receiving the legal notice but failed to respond to it or seek the return of the cheque.
The court concluded that if a cheque had not been issued in discharge of a legally enforceable debt, the accused must take appropriate action to recover the cheque.
In this case, no compelling evidence was presented by the petitioner to prove that he had repaid the amount, and as a result, the presumption under Section 139 of the NI Act remained unchallenged.
Case Title: Satya Pal Dhawan v. Anil Kumar
