The Himachal Pradesh High Court was dealing with a Criminal Revision Petition challenging a Session Judge’s decision affirming the conviction order passed by a Magistrate, whereby the petitioner-accused was found guilty under Section 138 of the Negotiable Instruments Act. The accused had been sentenced to undergo six months of simple imprisonment and pay compensation of ₹3,30,000.
Brief Facts:
The complainant alleged that the accused had issued a cheque of amount ₹3,06,997 to discharge his liability for purchasing iron bars etc. However, upon presenting, the cheque was returned via memo with the observation "Account Blocked". The accused failed to make the payment within the period stipulated in the legal notice. Hence, the complainant instituted a complaint under Section 138 of the NI Act.
High Court’s Observations:
The single-judge bench presided by Justice Sandeep Sharma observed that “since factum with regard issuance of cheque as well as signature thereupon never came to be refuted by the petitioner-accused, both the Courts below rightly invoked Sections 118 and 139 of the Act, which speaks about presumption in favour of holder of cheque that cheque in question was issued towards discharge lawful liability.”
The petitioner-accused claimed that cheque was issued by him as “security” and the same has been misused. The High Court stated that the law on dishonour of cheque issued as security is well settled in the light of the Supreme Court’s decision in the case titled Sripati Singh v. State of Jharkhand 2021 Latest Caselaw 531 SC, wherein it was observed that,
"16. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow."
The HC noted that while the NI Act does not define the term “security cheque”, it neither carves out an exception in respect of a “security cheque” saying that a complaint regarding such a cheque would not be maintainable.
The HC further noted that the accused was not able to bring any cogent evidence on record to “probablize” the defence that the security cheque had been misused.
Moreover, the HC found the accused had failed to point out any material irregularity committed by the Courts below, hence there was no reason for interference.
High Court’s Decision:
The HC found the Courts below had appreciated the evidence and there was no scope for interference of the High Court. Therefore, the High Court dismissed the petition being devoid of merit.
Read the Judgement @LatestLaws.com
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