Finding that the accused has failed to take any action seeking return of the cheque either prior to service of legal notice or after the service of legal notice, the Delhi High Court upheld the conviction of accused under Section 138 of the Negotiable Instruments Act (NI Act) for issuing a cheque that bounced due to insufficient funds.

A Single Judge Bench of Justice Swarana Kanta Sharma observed that “the complainant had served a legal notice to the present petitioner calling for the discharge of his liability after the cheques had returned as dishonored. In this regard, it is pertinent to note that the petitioner had also admitted that he had received the legal notice and had not replied to the same. The petitioner had thus failed to rebut the claim of the complainant and had not sought the return of cheque, even when he considered it to be false”.

The Bench further noted that “the issuance of cheque is a serious business and if a cheuqe has not been issued in discharge of legally enforceable debt then the accused is supposed to take appropriate action seeking return of his cheque. If the accused fails to establish reason for issuance of cheque and as to why he did not seek the return of the cheque then it is to be assumed that he has failed to rebut the presumption”.

The Petitioner appeared in person, whereas Advocate Sampanna Pani appeared for the Respondent.

As per the brief facts, the complainant and the petitioner had a friendly relationship. The petitioner had requested a friendly loan of Rs. 1,50,000 from the complainant due to financial difficulties. The complainant provided this amount in cash to the accused. To repay the debt, the accused issued a cheque for Rs. 1,50,000. However, when the complainant attempted to cash the cheque, it bounced due to insufficient funds. Despite receiving a statutory demand notice, the petitioner failed to repay the amount within the specified time, leading to the filing of the complaint case.

The counsel for the petitioner argued that both the courts had failed to appreciate that there did not exist any legally enforceable debt or liability in favour of the complainant. It was further argued that the amount taken by the petitioner was returned after selling the property of the petitioner's wife. The counsel for the petitioner further argued that in order to attract Section 138 of the NI Act, the debt or liability had to be legally recoverable, which, in the present case, was not reflected since the petitioner had already returned the said amount.

After considering the submission, the Bench noted that since the petitioner had admitted to the signatures on the cheques, the presumption under Section 118(a) and 139 of the NI Act had arisen, and it was presumed that the cheques in question had been issued by the petitioner toward some legally enforceable debt.

The Bench observed that the contention of the petitioner that there was no legally recoverable debt had to be supported by material evidence in order to rebut the presumption that the cheques in question had been issued by the petitioner toward some legally enforceable debt.

The Bench further 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. In this regard, the petitioner had also admitted that he had received the legal notice and had not replied to it. The petitioner had thus failed to rebut the claim of the complainant and had not sought the return of the cheque, even when he considered it to be false.

“It is noted that the issuance of cheque is a serious business and if a cheque has not been issued in discharge of legally enforceable debt, then the accused is supposed to take appropriate action seeking return of his cheque,” added the Bench.

The Bench also observed that both courts had rightly noted that in case the petitioner took the plea that he had repaid the amount, the entire onus was on the him to establish that he had repaid the amount to the complainant.

The Bench found that no cogent evidence had been presented by the petitioner to discharge this onus, and resultantly, the presumption of Section 139 of the NI Act remained unrebutted.

Accordingly, presuming that the petitioner had issued the cheque in question regarding the repayment of the amount of Rs. 1,50,000, as claimed by the complainant, the High Court directed the petitioner to pay the remaining amount of fine/compensation as awarded by the MM and surrender within 15 days before the Trial Court concerned to serve the substantive sentence as awarded to him.

Cause Title: Satya Pal Dhawan v. Anil Kumar [Neutral Citation: 2023: DHC: 7604]

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Delhi High CourtJustice Swarana Kanta Sharma

Pankaj Bajpai