{"id":255501,"date":"2021-10-12T16:00:17","date_gmt":"2021-10-12T10:30:17","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=255501"},"modified":"2021-10-29T11:26:51","modified_gmt":"2021-10-29T05:56:51","slug":"section-138-negotiable-instruments-act","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/12\/section-138-negotiable-instruments-act\/","title":{"rendered":"Law on S. 138 NI Act | Cheque dishonored, case filed under S. 138 NI Act: Can borrower raise defense that lender had no financial capacity to lend money? Complete report on ruling by Tis-Hazari Courts"},"content":{"rendered":"

Tis Hazari Courts, New Delhi: <\/strong>Devanshu Sajlan, MM NI Act-05, while noting the ingredients of Section 138 of the Negotiable Instruments Act, 1881 acquitted a person charged for offence punishable under Section 138 NI Act.<\/p>\n

Factual Matrix<\/span><\/h4>\n

Present complaint was filed under Section 138 of the Negotiable Instruments Act, 1881.<\/p>\n

Complainant had granted a friendly loan of Rs 21,00,000 to the accused for two months for some urgent need of the accused.<\/p>\n

To discharge the legal liability, the accused issued two cheques in favour of the complainant firm, but the same were returned by the bank as no balance was available in the account. Thereafter, Complainant sent a legal notice but the accused allegedly failed to pay the cheque amount and hence, the complainant filed the present complaint.<\/p>\n

Accused denied having taken a loan of Rs 21,00,000 from the complainant and instead stated that he took a loan of Rs 5,00,000 and had already paid the same. He added that he had given three blank signed cheques as security cheques which were misused by the complainant.<\/p>\n

Discussion<\/span><\/h4>\n

In the present matter, the complainant proved the original cheques that the accused had not disputed as being drawn on the account of the accused.<\/p>\n

Court stated that giving a blank signed cheque does not erase the liability under the NI Act. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may subsequently fill up the amount and other particulars (Bir Singh v. Mukesh Kumar<\/em>, (2019) 4 SCC 197<\/a>, \u00b6 34).). The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability.<\/p>\n

Legal Notice<\/span><\/p>\n

It is settled law that an accused who claims that she\/he did not receive the legal notice, can, within 15 days of receipt of summons from the court, make payment of the cheque amount, and an accused who does not make such payment cannot contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the General Clauses Act and Section 114 of the Evidence Act [C.C. Alavi Haji v. Palapetty Muhammed<\/em>, (2007) 6 SCC 555<\/a>).<\/p>\n

Maintainability | Complainant is an unregistered partnership firm<\/span><\/p>\n

It was contended that the present complaint was barred under Section 69(2) of the Indian Partnership Act. The firm was unregistered and hence the complaint was barred under the stated section.<\/p>\n

A simpliciter reading of Section 69(2) would show that it is intended to apply to only suits, and that it would have no application to a criminal complaint.<\/span><\/p><\/blockquote>\n

Hence, the bar imposed on unregistered firms under Section 69(2) of the Indian Partnership Act does not apply to a criminal complaint under Section 138 NI Act.<\/p>\n

Non-Existence of Debt<\/span><\/p>\n

Complainant is required to prove that the cheque in question was drawn by the drawer for discharging a legally enforceable debt.<\/p>\n

Court stated that as per the NI Act, once the accused admits signature in the cheque in question, certain presumptions are drawn, which result in shifting of onus on the accused and in the present matter, the issuance of cheques was not denied.<\/p>\n

The combined effect of Section 118(a) NI Act and Section 139 of the NI Act is that a presumption exists that the cheque was drawn for consideration and given by the accused of the discharge of debt or other liability.<\/p>\n

Rebuttal<\/span><\/p>\n