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IN THE HIGH COURT OF KERALA AT ERNAKULAM
M.B. SNEHALATHA, J.
Beena Kuruvila – Appellant
Versus
M/s.Standard Chartered Bank – Respondent
Crl.Rev.Pet No. 652 of 2018
Decided on : 09-10-2024
Negotiable Instruments - Section 138, 118(a), 139 of N.I. Act - The court interpreted the presumption of consideration for negotiable instruments and the implications of dishonor due to insufficient funds, affirming the conviction under Section 138.
Fact of the Case:
The accused issued cheques to the complainant bank for loan repayment, which were dishonored due to insufficient funds. The accused claimed the cheques were misused as security for the loan.
Finding of the Court:
The court upheld the conviction, finding that the accused failed to prove the cheques were issued without consideration and did not rebut the presumption of liability under the N.I. Act.
Issues: Whether the cheques were issued in discharge of a legally enforceable debt and if the conviction under Section 138 of the N.I. Act was justified.
Ratio Decidendi: The court emphasized that a cheque issued as security can still be presented for payment unless the underlying liability is discharged, and the presumption of consideration under Sections 118(a) and 139 of the N.I. Act was not rebutted.
Result: The conviction was confirmed, but the sentence was modified to maintain the original fine and imprisonment terms.
Certainly. Based on the provided legal document, here are the key points:
The court reaffirmed that the presumption of consideration in negotiable instruments remains unless it is rebutted by the accused, and that dishonor of a cheque can lead to liability under Section 138 of the Negotiable Instruments (N.I.) Act (!) (!) (!) .
The accused issued cheques as security for a loan, but the court held that unless the underlying liability was discharged, the holder can present the cheque for payment, and dishonor due to insufficient funds constitutes an offense under Section 138 (!) (!) .
The accused failed to prove that the cheques were issued without consideration or that they represented a part payment of the debt before presentation, especially since the evidence did not substantiate the claim that payments were made prior to dishonor (!) .
The court emphasized that the presumption of consideration under Sections 118(a) and 139 of the N.I. Act is rebuttable, but the accused did not successfully rebut this presumption (!) (!) .
The court upheld the conviction for the offense under Section 138 of the N.I. Act, finding that the dishonored cheques were issued in discharge of a debt or liability and that the accused failed to rebut the presumption of liability (!) .
Regarding sentencing, the appellate court's enhancement of punishment was found to be improper, as the law prohibits increasing the sentence in an appeal filed by the accused from a conviction (!) .
The original sentence imposed by the trial court was maintained, which includes a fine of Rs. 2 lakhs, with an alternative imprisonment of three months in case of default, and a direction that the fine amount, if realized, be paid as compensation to the complainant (!) (!) .
The court directed the trial court to execute the sentence and transmit the records accordingly (!) .
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ORDER :
Revision Petitioner, who is the accused in C.C.No.6251/2010 on the file of Judicial First Class Magistrate Court IV, Ernakulam assails the judgment of conviction and order of sentence against him in Crl.A No.372/2015 of Sessions Court, Ernakulam (Sessions Court VIII) for the offence punishable under Section 138 of Negotiable Instrument Act, 1881 (hereinafter referred to as ‘N.I Act’).
2. The parties shall be referred to as complainant and accused.
3. The complainant M/s.Standard Chartered Bank instituted the complaint alleging that in partial discharge of the amount due to the said bank, accused issued Exts.P2 and P3 cheques of Rs.91,009/-each drawn on Federal Bank Ltd., Muvattupuzha Branch in favour of the complainant bank. Though the complainant presented Exts.P2 and P3 cheques for encashment, the said cheques were dishonoured due to insufficient funds in the account of the accused. Though the accused accepted Ext.P5 lawyer notice, she failed to repay the amount covered by the said cheques and thereby committed the offence punishable under Section 138 of N.I.Act.
4. Accused pleaded not guilty to the accusation and denied issuance of Exts.P2 and P3 cheques in discharge of any debt or liability. The defence canvassed by the accused was that at the time of availing loan from the complainant bank, the bank had obtained 32 signed cheques from her as a security to the loan and Exts.P2, P3 are two of such cheques misused by the complainant.
5. Evidence consists of the oral testimonies of PW1, DW1 and documents marked as Exts.P1 to P7 and Exts.D1 to D4.
6. After trial, the learned Magistrate found the accused guilty of the offence punishable under Section 138 N.I Act and he was convicted and sentenced to pay a fine of Rs.2 lakhs and in default of payment of fine, to undergo simple imprisonment for a period of three months with a further direction that if the fine amount is realised, the entire amount shall be paid to the complainant as compensation under Section 357(1)(b) Cr.P.C.
7. In the appeal preferred by the accused as Crl.A No.372/2015, the learned Sessions Judge, confirmed the conviction but altered the sentence and the accused was sentenced to undergo imprisonment till the rising of the court and to pay a fine of Rs.2 lakhs and in default of payment of fine to undergo simple imprisonment for one month with a direction that the fine amount if realised shall be given to the complainant as compensation under Section 357(1)(b) Cr.P.C.
8. The learned counsel for the revision petitioner contended that there was no valid consideration for Exts.P2, P3 cheques that Exts.P2, P3 cheques were given as security at the time of availing the loan; that the trial court and the appellate court failed to appreciate Ext.D4 series receipts which would show that the accused made subsequent payments to the loan after the issuance and dishonour of Exts.P2, P3 cheques.
9. The point for consideration in this revision is whether the judgment impugned needs any interference by this Court.
10. PW1, who was examined on the side of the complainant Bank has testified that the accused, who was a customer of the said bank had availed a loan of Rs.25 lakhs from the said bank agreeing to repay the same in instalments. In partial discharge of the amount due to the complainant bank, accused issued Ext.P2 cheque dated 1.11.2008 and Ext.P3 cheque dated 1.1.2009 of Rs.91009/- each drawn on Federal Bank Ltd., Muvattupuzha Branch; that upon presentation of Exts.P2 and P3 cheques, both cheques were dishonoured due to insufficient funds in the account of the accused. Ext.P4 is the memo issued from the bank. Ext.P5 is a copy of the lawyer notice sent to the accused. Exts.P6 and P7 are the acknowledgement cards. According to PW1, in spite of receipt of Ext.P5 lawyer notice, accused failed to pay the amount covered by Exts.P2 and P3 cheques.
11. The contention of the accused is that at the time of availing the loan, the bank had obtained 32 signed cheques as a security to th
AI
The presumption of consideration in negotiable instruments remains unless disproven, and dishonor of a cheque can lead to liability under Section 138 of the N.I. Act.
The presumption under Section 139 of the Negotiable Instruments Act mandates that a cheque is deemed issued in discharge of debt unless the accused can prove otherwise, with liability established at ....
The presumption of liability under the Negotiable Instruments Act is upheld unless conclusively disproven by the accused.
The court upheld that a dishonored cheque creates a presumption of liability unless adequately rebutted, reinforcing the legal principles under Sections 118 and 139 of the Negotiable Instruments Act.
The statutory presumptions under Sections 138, 118, and 139 of the Negotiable Instruments Act are critical in dishonour cases, determining the burden of proof.
Admission of cheque issuance raises presumption of liability under NI Act Ss.118/139; rebuttal requires evidence beyond CrPC 313 denial. Revisional jurisdiction limited to patent errors, not evidence....
The presumption of issuance of a cheque for consideration under Section 139 of the Negotiable Instruments Act is not rebutted by mere denial of the transaction without evidence.
Concurrent findings under Section 138 NI Act upheld; no interference absent perversity in evidence evaluation.
Admission of cheque signature triggers presumption under Sections 118(a) and 139 NI Act of debt discharge; security cheques attract Section 138 liability on dishonour; accused must rebut with evidenc....
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