The Rajasthan High Court set aside the acquittal of an accused in multiple cheque-bouncing cases under Section 138 of the Negotiable Instruments Act, restoring convictions in all matters. The case involved dishonoured cheques allegedly issued for repayment of a loan, and the Court highlighted that issuance of cheques, even for time-barred debts, creates a valid enforceable liability under Section 25(3) of the Indian Contract Act, 1872, reinforcing statutory presumptions in favour of the payee.
The matter arose when the complainant, Ratiram Yadav, filed complaints under Section 138 of the NI Act against Gopal Sharma for dishonour of four cheques issued in connection with a loan. The accused allegedly failed to repay the loan despite issuance of the cheques, which were dishonoured due to insufficient funds. Following service of legal notices, complaints were filed, and the accused faced trial. While the trial court convicted the accused, the appellate court acquitted him in three cases and reduced the sentence in one, prompting the current revision petitions.
The complainant’s counsel argued that the appellate court erred in acquitting the accused, as the cheques were voluntarily signed and constituted a valid promise to repay, even if the underlying debt was time-barred. Relying on Section 25(3) of the Indian Contract Act and statutory presumptions under Sections 118 and 139 of the NI Act, counsel contended that the accused failed to rebut the presumption that the cheques were issued in discharge of a liability.
The accused, through counsel, argued that the loan had already been repaid and that the cheques were given merely as security. He further contended that the cheques were undated and presented after the limitation period, making the liability unenforceable. Counsel also argued that revisional courts should not re-appreciate evidence unless the trial court’s findings were perverse or legally untenable.
The Court emphasized that statutory presumptions under Sections 118 and 139 of the NI Act arise once the execution of a cheque is admitted. These presumptions place the burden on the drawer to rebut the presumption of liability. The Court observed, “A person who signs a cheque and delivers it to the payee remains liable unless he successfully rebuts the statutory presumptions. Even if the cheque is issued as security, it cannot be considered a worthless piece of paper. The cheque constitutes a promise under Section 25(3) of the Indian Contract Act, reviving enforceability of time-barred debts.”
Referring to the Apex Court in A.V. Murthy v. B.S. Nagabasavanna, S. Natarajan v. Sama Dharman, and Bir Singh v. Mukesh Kumar, the High Court reiterated that cheques issued towards a time-barred debt are enforceable if they form a written promise to pay. The Court noted that the accused failed to present credible evidence of repayment or demonstrate that the cheques were mere security, leaving the statutory presumption intact.
The Court also highlighted that the appellate court had ignored the legal effect of Section 25(3) and the NI Act presumptions, which rendered the acquittal unsustainable.
The Court allowed the revision petitions filed by the complainant, set aside the acquittals, and restored the trial court’s convictions and sentences in all cases. The revision petition filed by the accused challenging his conviction was dismissed. Consequently, the Court reaffirmed that statutory presumptions under the NI Act are robust, and cheques issued, even for time-barred debts, create enforceable liabilities unless successfully rebutted.
Case Title: Ratiram Yadav vs. Gopal Sharma
Case No.: S.B. Criminal Revision Petition No. 1305/2018
Coram: Justice Pramil Kumar Mathur
Advocate for Petitioner: Adv. Mithlesh Kumar, Vivek Choudhary
Advocate for Respondent: Adv. Vivek Choudhary, Mithlesh Kumar
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