Recently, the Jharkhand High Court comprising of a bench of Justice Anubha Rawat Choudhary observed that if the advance payment check is dishonoured, criminal responsibility under Section 138 shall not arise. (Rang Lal Ram vs The State of Jharkhand)
The bench noted that payment through cheque in the nature of advance payment indicated that at the time of drawl of the cheque, there was no existing liability and accordingly in such circumstances no case under section 138 of Negotiable Instruments Act , 1881 can be made out.
Facts of the case
The accused approached the complainant for financial accommodation. The accused agreed to give to the complainant 40% of the profit to be accrued out of said purchase orders accused and issued a cheque of Rs. 49,500/. But the same was dishonoured on account of insufficient fund. Further, the said notice was sent to the accused through the registered post as well as through courier service.
This criminal revision has been filed challenging the judgment, passed by learned Sessions Judge, Bokaro, whereby he has affirmed the judgment of conviction and the order of sentence, passed by the learned Judicial Magistrate, 1st Class, Bokaro whereby the petitioner has been convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881.
Contention of the parties
Learned counsel for the petitioner submitted that it was the specific case of the complainant himself that he was to invest in the business of the accused and in lieu of that, he would be entitled to get 40% profit. He further submitted that there have been no accounts regarding profit and the cheques were issued only by way of security and not against any existing debt or liability.
The further point which has been argued by the learned counsel for the petitioner was that it has come in the trial court’s judgment that the notice was served upon the son of the petitioner and therefore it was submitted that the notice was not served upon the petitioner. He submitted that these aspects of the matter have not been properly considered by the learned courts below and accordingly both the judgments are perversed and fit to be set aside.
Learned counsel appearing on behalf of opposite party-State submitted that there is no illegality or perversity in the impugned judgments passed by the learned courts below regarding finding of service of notice upon the petitioner. He submitted that there can be a number of ways in which the accused can avoid service of notice and in such situation, the Hon’ble Supreme Court has held that the moment the accused appears before the learned court below, he has an opportunity to pay the amount by stating that he had not received the notice regarding bouncing of cheque. He further submitted that there is no scope for re-appreciation of evidence particularly when the notice as per the petitioner himself was served upon his son who was residing with him.
Learned counsel appearing on behalf of opposite party No.-2 submitted that the learned courts below have rightly appreciated the materials on record and have come to concurrent findings of fact that all the basic ingredients for offence under Section 138 of the Negotiable Instruments Act, 1881 have been satisfied and accordingly, there is no scope for re-appreciation of evidence and coming to a different finding. He further submitted that otherwise also there is presumption of law in connection with existing debt when a cheque is issued and the reverse burden has not been discharged by the petitioner. He submitted that there is no illegality and perversity in the impugned judgments and therefore the present petition is fit to be dismissed.
Courts Observation & Judgment
The bench at the very outset observed, “This Court has considered both the judgments passed by the learned courts below and it is apparent therefrom, that the legal notice regarding bouncing of cheque was sent through registered post as well as through courier service and the learned trial court at para-8 of its judgment has considered the service of legal notice through registered post i.e. through post office as well as the notice sent through courier service.
Thus, this Court finds that notice was sent through two modes; once through registered post and another through courier service and so far as the registered post is concerned, the same was served upon the petitioner for which the certificate of the post office i.e. Exhibit-6 was exhibited and so far as the courier service is concerned, it is only this courier notice which was served upon the son of the petitioner. This Court finds that there is consistent finding of the learned courts below in connection with service of the registered notice regarding cheque bouncing upon the petitioner after due appreciation of the materials on record particularly Exhibit-5 and Exhibit-6. In the aforesaid view of the matter, the contention of the learned counsel for the petitioner that the notice was served upon the son of the petitioner and not upon the petitioner is devoid of any merit.”
The court Relied on the Apex court judgment in the case of Indus Airways Private Limited and Others vs. Magnum Aviation Private Limited and Another ((2014) 12 SCC 539), wherein it was held that payment through cheque in the nature of advance payment indicated that at the time of drawl of the cheque, there was no existing liability and accordingly in such circumstances no case under section 138 of Negotiable Instruments Act , 1881 can be made out.
The bench further observed, “In the instant case, the specific case of the complainant was that he was to invest in the business of the accused and in lieu of that it was agreed he would be entitled to get 40% of the profit and subsequently the accused inter alia issued the aforesaid two cheques. Admittedly, in the present case, the accused has not led any defence evidence. This Court is of the considered view that considering the nature of transactions between the parties and read with the presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued against discharge of existing debt or other liability, the argument of the petitioner that the same was issued by way of security has no legal basis and accordingly, this Court finds that the accused could not discharge his onus against the presumption of cheque having been drawn in discharge of liability.”
The Court further found that so far as the other point raised by the petitioner, that there have been no accounts regarding profit and the cheques were issued only by way of security and not any existing debt is concerned, the same is also fit to be rejected. The Court found that the learned court below has dealt with the plea of the petitioner regarding applicability of Sections 138 to 142 of the N.I. Act and in view of the presumption raised under Section 139 of the N.I. Act, the aforesaid plea of the petitioner has no legal basis. Admittedly, the petitioner did not adduce any defence evidence. There is no material on record to show that the reverse burden upon the petitioner regarding the cheque having been issued against a debt or any liability has not been discharged at all and therefore the presumption under section 139 of Negotiable Instruments Act, 1881 remained intact.
The court while dismissing the petition remarked, “Accordingly, both the points which have been raised by the petitioner during the course of argument are devoid of any merit and are hereby rejected in absence of any perversity or illegality in the impugned judgments passed by the learned courts below. This Court finds that the learned courts below have not committed any error, illegality or perversity in convicting the petitioner for bouncing of the aforesaid two cheques. Accordingly, this revision petition is dismissed. The bail bonds furnished by the petitioner is hereby cancelled.”
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