Case BriefsHigh Courts

Bombay High Court: C.V. Bhadang, J., set aside an order passed by the Magistrate whereby process was issued against the petitioner for an offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881.

The complainant gave a flat to the petitioner on leave and license basis. According to the complainant, the petitioner handed-over to her a cheque in the sum of Rs 12,000 drawn on State Bank of India, towards payment of license fee for one month. However, when presented for encashment, the cheque was returned dishonoured on account of “insufficient funds”. In such background, the complainant filed a complaint under Section 138 against the petitioner, in which the impugned order of issue of process was passed.

Galileo Francisco Teles, Advocate represented the petitioner. On the other hand, John Abreu Lobo, Advocate appeared for the complainant.

The High Court noted that the petitioner simply handed over the cheque in question to the complainant, allegedly towards payment of one month’s license fee. It was not a case that the cheque was issued by the petitioner, much less on his account with SBI. There was letter produced from SBI stating that the account number on which the cheque was issued did not stand in name of the petitioner. The Court observed, “It is trite that a complaint under Section 138 of the Act, lies only against the drawer of the cheque, when the cheque issued by the drawer, on his account is dishonoured for want of funds. It was not seriously disputed during the course of the arguments at bar that the petitioner is neither a drawer nor the cheque is issued on his account. It is thus difficult to see as to how, process can be issued against the petitioner in the absence of the basic requirements of the offence under Section 138 of the Act being satisfied.” Stating thus, it was held that the impugned order was not sustainable and was therefore set aside. [Hiralal Govekar v. Sheela Surlakar, 2019 SCC OnLine Bom 507, dated 20-03-2019]

Case BriefsHigh Courts

Madras High Court: The Bench of P. Velmurugan J. convicted the accused under Section 138 of the Negotiable Instruments Act, 1881 (for dishonour of cheque) and sentenced him to undergo 6 months simple imprisonment and imposed a fine of Rs 1,50,000 to be paid to the complainant.

The complainant and the accused were running a partnership firm which was subsequently dissolved. The accused issued a cheque for a sum of Rs 1,50,000 in favour of the complainant in at the time of the settling of accounts. The cheque was presented in ICICI Bank and was returned due to insufficient funds. The complainant issued statutory notice to the accused but even after that repayment was not made. Therefore, the complainant initiated proceedings under Section 138. However, the trial court acquitted the accused. Aggrieved thereby, the present appeal was filed by the complainant.

The High Court noted that the accused admitted that the cheque was issued in favour of the complainant but contended that it was not for legally enforceable debt and was executed at the time of admitting him in the firm only for security purpose. The court observed, “once execution of cheque is admitted, it is a legal presumption under Section 139 of Negotiable Instrument Act. The cheque was issued for discharging legally enforceable debt. No doubt the presumption is rebuttable.” In the present case, the court found that the accused was not able to rebut the presumption in any manner known to law. The mere contention raised by him could not suffice. Finding the accused guilty for offence punishable under Section 138 , the Court set aside the impugned judgment of the trial court. The appeal was allowed and the accused was sentenced as mentioned above.[A.K. Mohammed Farook v. M. Syed Jaheer Hussain, 2019 SCC OnLine Mad 187, dated 19-1-2019]