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2023 Supreme(Online)(Bom) 23464
BOMBAY HIGH COURT
BHARAT P. DESHPANDE, J
Shri Govind B. Prabhugaonkar – Appellant
Versus
Shri Rajendra Anant Varik – Respondent
CRIMINAL APPEAL NO.53 OF 2017 | Criminal Appeal No.72 of 2016 | Criminal Case No.29/NI/2014
For the Appellants/Petitioners: Shri V.A. Lawande, Shri Parimal Redkar
For the Respondents: Shri John A. Lobo
The presumption under Section 139 of the Negotiable Instruments Act can only be rebutted by the accused proving the non-existence of a legally enforceable debt, which was not established in this case.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Appeal against quashing of conviction - Complainant filed complaint after dishonour of cheques issued for repayment of a loan - Conviction by trial Court upheld by restoring the order after the First Appellate Court quashed it based on incorrect interpretation of money-lending activities - Presumption under Section 139 can be rebutted only if facts establish lack of enforceable debt - Accused did not prove repayment or rebut statutory presumption - Appeal allowed. (Paras 1, 10, 42, 60)
(B) Money-Lenders Act, 2001 - Definition of a money-lender and conditions for its application - Simply lending money to relatives without charging interest does not qualify as money lending business - Accused failed to substantiate claims of loan repayment. (Paras 36, 41, 60)
Facts of the case:
The complainant lent ₹2,00,000 to the accused who issued two cheques for repayment. Cheques bounced and a legal notice was sent which went unanswered. The trial Court held the accused guilty under Section 138 after which an appeal to the Sessions Court resulted in quashing the conviction, ruling it as a non-enforceable debt.
Findings of Court:
The appellate Court's judgment reversed; the trial Court's conviction restored based on established evidence and appropriate interpretation of law.
Issues: Whether the cheques were issued for a legally enforceable debt and if the presumption under Section 139 of the N.I. Act was rebutted by the accused.
Ratio Decidendi: The accused admitted to taking a loan and failed to prove the repayment. The presumption under Section 139 creates an obligation on the accused to demonstrate considerable evidence to overcome it, which he did not.
Result: Appeal allowed; conviction and sentence of the accused reinstated.
| Table of Content |
|---|
| 1. foundational facts of the case (Para 1 , 5 , 7 , 9) |
| 2. arguments concerning borrowed amount and repayment (Para 11 , 12 , 14 , 15 , 19) |
| 3. observations on rebuttal of presumption under ni act (Para 21 , 24 , 28 , 30 , 39) |
| 4. legal standards for rebutting presumption under ni act (Para 22 , 23 , 41) |
| 5. final ruling reversing lower court decision (Para 61) |
JUDGMENT:
1. The present appeal is filed by the appellant/original complainant thereby challenging the judgment and order passed by the First Appellate Court in Criminal Appeal No.72 of 2016 dated 09/12/2017 wherein the said appeal filed by the respondent was allowed and judgment and conviction passed by the trial Court under Section 138 of the Negotiable Instruments Act ('the N.I. Act' for short) was quashed and set aside.
2. Vide order dated 03/10/2017 in Criminal Misc. Application No. 184 of 2017, leave to file an appeal was granted. Accordingly, the appeal was registered.
3. Heard learned Counsel Shri V.A. Lawande along with Shri Parimal Redkar, for the appellant and learned Counsel Shri John A. Lobo for the respondent.
4. The parties are hereinafter called as complainant and accused as they were arrayed before the trial Court for the sake of convenience.
5. In nutshell, the complaint was filed before the learned Magistrate at Canacona against the accused which was registered as Criminal Case No.29/NI/2014. It was the complaint under Section 138 of the N.I. Act. In short, it is the case of the complainant that he knows the accused and both of ₹ them are distant relatives. The accused borrowed a sum of 2,00,000/- from the complainant for his personal needs. Towards repayment of such borrowed amount, the accused issued two cheques in favour of the complainant dated ₹ 04/06/2014 amounting to 1,00,000/- each, drawn on Corporation Bank, Loliem branch Canacona. The complainant presented both cheques for encashment on 15/07/2014. However, the cheques were returned with the endorsement "Account closed". This memorandum was received by the complainant on 15/07/2014. A legal notice dated 16/07/2014 was addressed to the accused through the registered post demanding the amount of ₹ 2,00,000/- within 15 days failing which action would be initiated under Section 138 of the N.I.Act. Though the accused received the notice on 18/07/2014, failed to comply with it. The accused replied to the said notice denying the liability and claimed a false defence. Accordingly, a complaint was lodged. Upon issuance of the process, the accused appeared before the trial Court and thereafter, the trial commenced. The complainant stepped into the witness box and produced both the cheques, cheque return memo, legal notice as well as reply received from the accused. One witness was examined by the complainant being the Branch Manager of Corporation Bank wherein the accused was having Savings Bank Account.
6. While answering the questions put to the accused under Section 313 of Cr.P.C., he admitted a relationship with the complainant and also borrowing ₹ of the amount of 2,00,000/- from the complainant while answering question Nos.1 and 2. The accused did not step into the witness box.
7. The learned Magistrate at Canacona in its judgment dated 05/08/20016 observed that the accused is guilty for the offence punishable under Section 138 of the N.I. Act as he issued the cheque for legally enforceable debt and failed to comply with the conditions of the notice when he was informed that such cheques bounced for the reason 'account closed'.
₹The accused failed to pay the said amount of 2,00,000/- within 15 days from the receipt of notice and also failed to rebut the presumption under Section 139 of the N.I. Act.
8. The learned Magistrate after holding the accused guilty for the said offence passed the sentence directing the accused to undergo sentence till the rising of the Court and to pay to the complainant compensation of ₹ 2,00,000-/- and further compensation of 30,000/- as costs and in default the acc
