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Section 138 Of The NI Act – Cheque Bounce Case Judgement

Submitted by Aranlaw on Wed, 08/17/2022 - 20:36

Cheque Bounce Case – Signature Dispute
An Undisputed Signature Alone Cannot Lead To Conviction Under Section 138 Of The NI Act – Excellent Cheque Bounce Case Judgement By The Punjab & Haryana High Court
Parveen Mehta Versus Vishal Joshi – Punjab and Haryana High Court

Cheque Bounce Case Complaint
The brief facts of the case, are that a cheque was issued for a sum of Rs.85,000/- and the same was returned with the remarks “insufficient funds”. A legal notice was served and the complaint under Section 138 of the Negotiable Instruments Act, 1881.

The cheque was issued only as security and repaid – Respondent’s Defense
The respondent argued that the security cheque was misused. According to the respondent, he only borrowed Rs.5,000/- from the complainant and repaid it within the prescribed time frame. However, the cheque was not returned by the complainant, despite repeated requests. Later, he was shocked to note that the legal notice was issued for the whopping amount of Rs.85,000/- and subsequently, the complaint was also filed against the respondent.

Income Tax Returns of the Complainant as defense evidence
The respondent relied upon the testimony of an official of the Income-tax Department and the income-tax returns filed by the complainant. Further evidence was adduced to show that the complainant was acting as a money lender. He had filed a number of complaints under Section 138 of the Act by misusing the security checks and if the amounts lent by him on loan are compared with his earnings in the income-tax returns, the amount advanced as the loan was much higher.

Acquittal of Respondent in Cheque Bounce Case by the Trial Court
According to the trial court, the respondent’s argument was convincing, and the complainant couldn’t prove his case. The trial court also acquitted the respondent on the ground that there is no dispute that the respondent signed the cheque.

Appeal against the Trial Court’s Order by the Complainant
In the Appeal before the High Court, the complainant argued that there is no dispute that the cheque was signed by the respondent. The financial capability of the complainant is not to be determined in the proceedings under Section 138 of the Act. So, he requested the court to set aside the trial court’s order and convict the respondent for not honoring the cheque issued to discharge his debt.

Appeal dismissed by the High Court
The High Court upheld that the contentions raised by the applicant do not enhance the case for grant of leave to file an appeal. The trial court has not determined the financial capability of the petitioner for lending the loan. The evidence adduced by the respondent was to substantiate the defense taken that the security cheque was misused and that the borrowed amount was Rs.5,000/- which was repaid.

The undisputed signatures of the respondent on the cheque are not sufficient for conviction under Section 138 of the Act. One of the ingredients for succeeding under Section 138 of the Act is that the cheque was issued for discharge of the debt or other liability. The respondent was successful in rebutting the presumptions raised against him under Section 139 of the Act and the appellant failed to discharge the onus cast upon him. The view taken by the trial court is a plausible view.

Legal Disclaimer: The information contained in this blog post is for general information and educational purposes only. Nothing contained in this blog post should be construed as legal advice from The Aran Law Firm or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter.

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