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IN THE HIGH COURT OF ALLAHABAD
Ram Manohar Narayan Mishra, J.
Bharat Singh Chauhan – Petitioner
Versus
State of U.P. and Another – Respondents
Matters Under Article 227 No. -12244 of 2022
Decided On : 02-02-2023
N.I. Act - Dishonour of Cheque - Section 138 - 138, 139 - The court discussed the provisions of Section 138 and 139 of the N.I. Act, which deal with the dishonour of cheques due to insufficiency of funds and the presumption of discharge of debt or liability. The court emphasized the requirement of a legally enforceable debt or liability for the offence under Section 138 to be attracted. It also highlighted the burden of proof on the accused to show the absence of debt or liability at the time of cheque presentation.
Fact of the Case:
The petitioner sought to quash the summoning order under Section 138 of the N.I. Act, contending that the cheque was issued as security pursuant to a compromise but was dishonoured due to a family dispute and lack of legal liability.
Finding of the Court:
The court dismissed the petition, affirming the summoning order, and emphasized the necessity of a legally enforceable debt or liability for the offence under Section 138 to be established.
Issues: The issues revolved around the nature of the debt or liability, the validity of the summoning order, and the burden of proof regarding the dishonour of the cheque.
Ratio Decidendi: The court held that the dishonour of a cheque under Section 138 requires a legally enforceable debt or liability, and the burden of proof lies with the accused to demonstrate the absence of such debt or liability at the time of cheque presentation.
Final Decision: The petition was dismissed, and the impugned order was affirmed, upholding the summoning order under Section 138 of the N.I. Act.
JUDGMENT :
1. Heard Sri Saurabh Singh, learned counsel for the petitioner, Sri Raj Kumar Kesari, learned counsel for the complainant, learned A.G.A. for the State and perused the material on record.
2. The present petition under article 227 of the Constitution of India has been filed by the petitioner in Complainant Case No. 895 of 2021 having its Computer No. 1240 of 2021 (Sushil Kumar Vs. Bharat Singh Chauhan) under Section 138 of the N.I. Act, Police Station Hapur Nagar, District-Hapur, pending in the court of Chief Judicial Magistrate, Hapur for quash the summoning order dated 16.9.2021 passed by the Chief Judicial Magistrate, Hapur as well as the impugned order dated 22.07.2022 passed by the Sessions Court, Hapur in Criminal Revision No. 146 of 2021 whereby the summoning order passed by the learned Magistrate has been affirmed.
3. The factual matrix of the case are that the complainant/respondent no.2 Sunil Kumar Chauhan filed a complaint to the court below under section 138 of the N.I. Act with the averment that the opposite parties had issued a cheque of Rs. 2 lacs in his favour in discharge of debt received by opposite party from the complainant in March, 2016. The complainant had lent Rs. 2 lacs to opposite party on his request, he had withdrawn the same from the account of his wife Sunita Chauhan from two different dates. The complainant had presented the said cheque to his banker on 29.12.2020 but the cheque was dishonoured with the advise of banker with endorsement "Payment stop by withdrawn". The complainant has informed the accused about this, he again presented the cheques on 19.01.2021 at S.B.I. Hapur Branch before his banker but same was again dishonoured with endorsement "Payment stop by the drawer". Thereafter, he issued notice to the accused demanding payment of the amount of cheque but accused did not pay any heed and the complaint was filed within statutory period.
4. The trial court has passed impugned summoning order dated 16.09.2021, placing reliance on statement of the complainant under section 200 Cr.P.C. and statement of witness under section 202 Cr.P.C. as well as documents available on record. The said summoning order section 200 Cr.P.C. was challenged by accused/opposite party before Sessions Court. However, Sessions Court dismissed the revision filed against the summoning order dated 22.07.2022 and affirmed the summoning order passed by the learned trial judge in the present petition. Opposite party-accused has challenged the orders of both the court.
5. Learned counsel for the petitioner submitted that the facts giving rise to the instant application are that the applicant (Bhatija) and the opposite party no. 2 (Chacha) are related as uncle and nephew and had cordial relationship. He further submitted that there was an on-going family dispute between the opposite party no. 2 and the father of the applicant regarding some property and bank locker. As such, the opposite party no. 2 for the reason of getting out of the dispute amicably, demanded an amount to the tune of Rs. 2,00,000/-(Two Lakh) and in pursuance of the same, promised to stay out of the disputed shares in favour of applicant's father namely Ashish Singh Chauhan. He submitted that for the reason aforesaid, applicant provided a signed cheque dated 22.12.2020 bearing cheque no. 000001 of HDFC Bank, Branch-Opp BSA College, Gaushala Road, Mathura of Rs. 2,00,000/-to the opposite party no. 2. But, after receiving the aforesaid cheque the intention of the opposite party no. 2 changed drastically and an undue demand of more money and share in the property was made by him. He submitted that the applicant being aware about the evil intentions of the opposite party no. 2 moved an appropriate application before his concerning HDFC bank and got the payment of the aforesaid Cheque stopped. It is further submitted that the parties are close relatives and the said cheque was issued by the petitioner to the respondent no. 2 as a security, pursuant to som
Strict construction of penal provisions, timing of complaint filing, and dishonour reasons under section 138 N.I. Act.
Dishonour of a cheque under Section 138 is actionable regardless of claims of stop payment or misplaced cheque, with legal presumptions favoring existence of debt or liability.
Dishonour of a cheque due to insufficient funds constitutes an offence under Section 138 of the N.I. Act, regardless of claims of theft, unless the evidence at trial proves otherwise.
The court established that for a complaint under Section 138 of the N.I. Act to be maintainable, specific procedural requirements must be met and reflected in the summoning order, including the prese....
A sole proprietor can be held individually liable under Section 138 of the N.I. Act, even if the cheque was issued as a security. Arguments regarding vicarious liability and misuse are insufficient f....
The legal presumption under Section 139 of the NI Act favors the complainant, and factual disputes must be resolved at trial, not pre-trial.
Point of Law : When cheque is dishonoured for reason account blocked, same constitutes an offence under Section 138 of the N.I. Act, there is divergence of opinion on this issue amongst High Courts.
A cheque returned with the endorsement 'account closed' constitutes dishonour under Section 138 of the N.I. Act, and the statutory presumption of liability under Section 139 applies unless rebutted b....
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