Recently, the Chhattisgarh High Court set aside the trial court’s dismissal of a cheque bounce complaint under Section 138 of the NI Act, holding that the statutory presumption stood unrebutted as the execution of the cheque and loan agreement remained undisputed. The Court observed that mere denial or absence of direct evidence was insufficient to displace the presumption under Sections 118 and 139.
Brief Facts:
The appellant (complainant) alleged that the respondent had borrowed ₹2,48,000 for domestic needs. To discharge this liability, the respondent issued a cheque. The cheque was deposited on 02.02.2019 in the appellant’s account at SBI, but was dishonoured the same day due to insufficient funds. The appellant served a legal notice on 14.02.2019, received by the respondent on 02.03.2019, but no payment was made. Consequently, the appellant filed a complaint under Section 138 of the N.I. Act before the Chief Judicial Magistrate. The trial court dismissed the complaint on 21.05.2024, holding that the complainant failed to prove that the cheque was issued towards a legally enforceable debt, as there was no corroborating bank record or testimony from witnesses to the agreement. Hence, the present appeal.
Contentions of the Appellant:
The appellant contended that the trial court committed grave error by ignoring the fact that the cheque and the loan agreement bore the respondent’s admitted signatures. The complainant’s testimony and supporting documents remained unshaken in cross-examination. It was argued that the statutory presumption under Sections 118 and 139 of the N.I. Act was not rebutted, and hence, the trial court’s rejection of the complaint was perverse and illegal.
Contentions of the Respondent:
The respondent argued that the complainant failed to produce any evidence of the actual loan transaction, such as a bank statement or acknowledgment of receipt. It was contended that the legal notice was not served in the prescribed time, and that the complaint was filed without fulfilling the procedural requirements of Section 138.
Observations of the Court:
The Court noted that the cheque and the loan agreement were not denied by the respondent and that the accused did not allege any coercion or misuse of the cheque. Relying on Sunil Todi v. State of Gujarat and Bansalingappa v. Mudibasappa, the Court reaffirmed that once a cheque is shown to have been issued and signed by the accused, a presumption arises that it was issued for consideration and discharge of a debt, unless rebutted. Mere denial or absence of direct evidence of loan disbursal is insufficient to rebut the statutory presumption.
The Court observed that the finding of the learned trial Court that the complainant is unable to establish that he has given Rs. 2,48,000/- mentioned in the agreement as he did not submit bank statement or receipt given by the accused is illegal and perverse as the accused has not denied the execution of agreement or has not led any evidence to substantiate that the said agreement has been executed by adopting coercive method
The decision of the Court:
The High Court, allowing the appeal, convicted the respondent under Section 138 of the N.I. Act, and sentenced him to pay ₹2,48,000 (cheque amount) and ₹25,000 as compensation to the complainant.
Case Title: Devnath Thakur vs. Mukesh Gavde
Coram: Hon’ble Justice Narendra Kumar Vyas
Case No.: ACQA No. 808 of 2024
Advocate for the Appellant: Ms. Sweksha Sharma
Advocate for the Respondent: Mr. B.P. Singh
Read Judgment @LatestLaws.com
Picture Source :
