Back
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. HEMALATHA, J.
M/s. Sastha Vasan Builders & Land Promoters, Represented by its Proprietor, S.M. Shiva, Erode – Appellant
Versus
G. Jeganathan – Respondent
Crl.A. No. 202 of 2022
Decided On : 03-08-2023
Negotiable Instruments Act - Construction Agreement - Section 138 - Section 138 of the Negotiable Instruments Act - Summary of Acts and Sections: Section 138 of the Negotiable Instruments Act - The court discussed the interpretation of Section 138 and its application in the case, highlighting key legal provisions and their influence on the decision.
Fact of the Case:
The appellant, a construction and land promoter, filed a case against the respondent for dishonoring a cheque issued as security. The trial court acquitted the respondent, leading to the appellant's appeal.
Finding of the Court:
The court found the respondent guilty of the offence under Section 138 of the Negotiable Instruments Act, overturning the trial court's acquittal.
Issues: The main issue was whether the dishonored cheque, issued as security, fell under the provisions of Section 138 of the Negotiable Instruments Act.
Ratio Decidendi: The court held that the respondent's claim that the cheque was given as security did not rebut the presumption of a legally enforceable debt under Section 138. The court also highlighted the necessity of adducing satisfactory evidence for making payments to rebut the presumption.
Final Decision: The appeal was allowed, the trial court's order was set aside, and the respondent was found guilty of the offence under Section 138 of the Negotiable Instruments Act.
JUDGMENT
(Prayer: Criminal Appeal filed under Section 378 of Criminal Procedure Code, 1973 to set aside the order of acquittal dated 17.09.2020 made in S.T.C.No.156/2019 on the file of the Judicial Magistrate Court (Fast Track Court -1), Erode.
1. This criminal appeal is filed against the Judgment and order of the Judicial Magistrate Court (Fast Track Court -1), Erode, made in S.T.C.No.156/2019, dated 17.09.2020, acquitting the accused of the offence under Section 138 of the Negotiable Instruments Act.
2. The case of the appellant/complainant is that he is doing construction and land promoter business in the name and style of Sri Sastha Vasan Builders & Land Promoters. According to him, he had purchased 2.58 acres of land at Varukurampatti Village in Tiruchengode Taluk and formed into a housing colony with house-sites ready for construction.
2.1. The respondent/accused and his wife entered into a construction agreement on 13.07.2015 for site No.58 ad-measuring 1500 sq.ft. and for constructing a house on the same to the extent of 957 sq.ft. for a total consideration of Rs.21,35,700/-. In order to facilitate the respondent''s wife to avail a loan from the bank a sale deed for the house site was registered on 15.11.2015 as Document No.4733/2015 on the file of Sub-Registrar, Tiruchengode.
2.2. According to the appellant/complainant, the accused had paid only a sum of Rs.12,47,000/- though the total cost agreed at Rs.21,35,700/- went up by another Rs.1,76,595/- which was acknowledged by the respondent.
2.3. House warming ceremony was conducted on 06.06.2016, at which time the balance amount receivable from the respondent was Rs.10,65,295/- against which the respondent had given a post dated cheque bearing No.000138 for a sum of Rs.4,80,000/- (Ex.P1) dated 14.02.2017 drawn on Karur Vysya Bank, Nathagoundampalayam Branch. The cheque was dishonoured when sent for collection vide a memo dated 05.03.2017 (Ex.P2) and the reason for the return was mentioned as ''Payment Stopped by Drawer''. This prompted the appellant to issue a legal notice on 16.03.2017 (Ex.P3) calling upon the respondent/accused to pay the cheque amount of Rs.4,80,000/- within 15 days from the date of receipt of the said notice. Though the respondent/accused received the said notice on 21.03.2017 (Ex.P4), he failed to make payment within 15 days from the date of receipt of the said notice thereby committing offences under Sections 138, 141 r/w.142 of Negotiable Instruments Act. In the meanwhile, there was also legal notice from the respondent''s counsel dated 25.02.2017 (Ex.P6).
2.4. The respondent/accused disputed the balance amount to be given as according to him, he had already remitted Rs.16,52,690/- and immediately after the completion of the work remitted Rs.4,83,690/- for which no receipt was given by the appellant/complainant. His contention is that cheque bearing No.000138 was given as security at the time of entering into the construction agreement (Ex.P5) and instead of returning the cheque he has misused the same keeping in mind the bitterness when he (respondent/accused) had expressed his dissatisfaction regarding the quality of construction. The petitioner/complainant therefore filed the case against the accused under Section 138 of N.I Act.
3. The learned Judicial Magistrate, Fast Track Court-I,Erode, after receipt of the complaint recorded the sworn statement of the complainant and also on perusal of the documents found that there was a prima facie case against the accused and took cognizance of offence under Section 138 of N.I Act and issued summons to the accused under Section 204(3) Cr.P.C. On appearance of the accused, the copies of the case records were furnished to him under Section 207 Cr.P.C., and when the accused was questioned with regard to the substance of accusation made by the complainant, he pleaded not guilty and therefore, the case was posted for trial.
4. In the trial Court, the appellant/
The main legal point established in the judgment is that the presumption of a legally enforceable debt under Section 138 of the Negotiable Instruments Act cannot be rebutted solely by claiming that a....
The main legal point established in the judgment is that a cheque issued as security for a legally enforceable debt or liability falls under Section 138 of the Negotiable Instruments Act.
The issuance of a cheque under a conditional agreement does not establish liability under Section 138 of the Negotiable Instruments Act if the condition is not fulfilled.
The issuance of a cheque signifies a legally enforceable debt under Section 138 of the N.I. Act, and the burden to prove otherwise lies with the accused, not the complainant.
The court held that failure to prove a legally enforceable debt invalidates a cheque under Section 138 of the Negotiable Instruments Act.
The presumption of debt under Section 139 of the Negotiable Instruments Act is not rebutted by mere denial; the accused must provide credible evidence to support their defense.
The burden of proof in a prosecution under Section 138 of the Negotiable Instrument Act lies on both the complainant and the accused. The court must analyze the evidence to establish liability and in....
Cheques issued in discharge of a lawful liability create a presumption of guilt under Section 138, which the accused must rebut to avoid conviction.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
