{"id":255614,"date":"2021-10-14T16:18:45","date_gmt":"2021-10-14T10:48:45","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=255614"},"modified":"2021-10-29T11:21:38","modified_gmt":"2021-10-29T05:51:38","slug":"law-on-dishonour-of-cheque","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/14\/law-on-dishonour-of-cheque\/","title":{"rendered":"Law on Dishonour of Cheque | Loan given in cash, no documentary evidence available. Lender files a complaint under S. 138 NI Act: Read how \u2018presumption\u2019 under S. 118 (a) plays a role"},"content":{"rendered":"

Patiala House Courts, New Delhi: <\/strong>Prayank Nayak, MM-01 acquitted the accused of offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1885, holding that the accused successfully dislodged the statutory presumption.<\/p>\n

In the present matter, complaint was filed under Section 138 of the Negotiable Instruments Act, 1881 for the dishonour of cheque for an amount of Rs 6,82,000 and failure to pay the said amount despite legal demand notice.<\/strong><\/p>\n

Path Paving to this Matter<\/strong><\/span><\/p>\n

Complainant had given a loan of Rs 6,82,000 to the accused in cash and later the accused had issued a cheque for the repayment of the loan. Though the same was dishonored upon its presentation and no payment was made despite the receipt of legal demand notice.<\/p>\n

Analysis, Law and Decision<\/strong><\/span><\/p>\n

Offence under Section 138 of the Negotiable Instruments Act consists of the following ingredients:<\/p>\n

    \n
  1. The cheque was drawn by drawer on an account maintained by him with the banker for payment of any amount of money out of that account.<\/li>\n
  2. The said payment was made for discharge of any debt for other liability in whole or in part.<\/li>\n
  3. The said cheque was returned unpaid by the bank.<\/li>\n
  4. The cheque was presented to the bank within a period of 3 months from the date on which it was drawn or within the period of its validity whichever is earlier.<\/li>\n
  5. The payee or the Holder in due course of the cheque as the case may be makes a demand for the payment of the said amount of money by giving the notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.<\/li>\n
  6. The drawer of the cheque fails to make the payment of the said amount of money to the payee or as the case may be the Holder in due course of the cheque within 15 days of the receipt of the said notice.<\/li>\n
  7. The payee or the Holder in due course of the cheque shall make a complaint in writing within one month of the date on which the Cause of Action arises i.e., 15 days from the receipt of the notice by the drawer.<\/li>\n<\/ol>\n

    In the present matter, it was noted that the receipt of legal notice was accepted and the duly replied and the dishonour memo issued by the bank was also placed on record.<\/p>\n

    Court stated that by virtue of Section 146 of NI Act, the dishonour of cheque in question had to be presumed.<\/p>\n

    Onus to prove<\/span><\/h4>\n

    As per Section 118 (g) of NI Act, the holder of the cheque is presumed to be holder in due course, hence the accused has to prove that the cheque was not issued to the complainant.<\/p>\n

    Accused had admitted the signature on the cheque, thus presumption under Section 118(a) of the NI Act and Section 139 of NI Act will be drawn.<\/p>\n

    Delhi High Court\u2019s decision in Devender Kumar v. Khem Chand,<\/em>2015 SCC OnLine Del 12578<\/a>, it was held that:<\/p>\n

    \u201cHowever, in Rangappa v. Sri Mohan, (2010) 11 SCC 441<\/a>, a three judges\u2019 bench of the Supreme Court held that Section 138 of the N.I. Act includes the presumption enforceable debt or liability and that the holder of the cheque is presumed to have received the same in discharge of such debt or liability……. without doubt, the initial presumption is in favour of the complainant.\u201d (Para 20).<\/em><\/p>\n

    Whether the accused has been able to dislodge the presumption of liability as well as issuance on the basis of cross-examination of complainant and the evidence led by him?<\/span><\/strong><\/p>\n

    In the instant matter, it is very pertinent to note that there is no written\/documentary proof of loan and the complainant has also not mentioned any date of giving loan amount.<\/p>\n

    Due to the above-stated observation, Bench stated that as there was absence of documentary proof as well as the date of giving loan, the whole case seems to be doubtful.<\/p>\n

    What all makes this case doubtful?<\/span><\/strong><\/p>\n

    Court noted that complainant despite having friendly relations and extending friendly loan of large amount to the accused is not even aware about the name of wife of the accused nor could tell whether accused is having kids or not. Though it has been claimed by him that he knows the accused of around 5 years, but he has never gone inside the house of the accused.<\/p>\n

    The above stated makes it doubtful for the Court to believe that the relations between the parties were such that the complainant would lend the stated sum to the accused that too without any documentary evidence.<\/p>\n

    Discrepancy in complainant\u2019s oral testimony and bank statement was found along with discrepancy in photocopy of his Balance-Sheet and certified copy of the same.<\/p>\n

    The above-stated discrepancies strike the root of the complainant\u2019s case.<\/p>\n

    Complainant in his cross-examination admitted that he had to pay loans to various persons and institutions, this fact leads the Bench to the question of why a person himself being liable to pay loan to various persons would advance loan of more than Rs 6 lakhs to some other person.<\/p>\n

    Therefore, accused dislodged the presumption in favour of the complainant by impeaching his credit during cross-examination and due to the absence of documentary proof.<\/p>\n

    Complainant did not examine any witnesses to prove the loan transaction and the above discussion cast doubt over the complainant\u2019s version that he had given loan to the accused.<\/p>\n

    In Delhi High Court\u2019s decision, Kulvinder Singh v. Kafeel Ahmad, 2014 (2) JCC (NI) 100 it was observed that, <\/em><\/p>\n

    \u201cThe basis principle in Criminal law is that the guilt of respondent\/accused must be proved beyond reasonable doubt and if there is slightest doubt about commission of an offence then the benefit has to accrue to him\u201d.<\/em><\/p>\n

    \n

    \u00a0<\/em>\u201c\u2026Benefit of doubt has to accrue to the accused.\u201d<\/strong><\/span><\/p>\n<\/blockquote>\n

    \u00a0<\/strong>Court acquitted the accused for the offence under Section 138 NI Act. [Balwant Singh v. Angad Makol, R. No. 55576 of 2016<\/a>, decided on 5-10-2021]<\/p>\n","protected":false},"excerpt":{"rendered":"

    Patiala House Courts, New Delhi: Prayank Nayak, MM-01 acquitted the accused of offence under Section 138 (dishonour of cheque) of the Negotiable <\/p>\n","protected":false},"author":8808,"featured_media":39981,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,4721],"tags":[28514,2862,34313,29785,47522,32937,23584,33580,44446],"class_list":["post-255614","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-district-court","tag-cheque","tag-dishonour_of_cheque","tag-documentary-evidence","tag-law","tag-presumption-of-liability","tag-section-118-ni-act","tag-section-138-ni-act","tag-section-139-ni-act","tag-signature"],"yoast_head":"\nLaw on Dishonour of Cheque | Loan given in cash, no documentary evidence available. 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CMM Court considers","author":"Bhumika Indulia","date":"December 6, 2021","format":false,"excerpt":"Court of XX Addl. Chief Metropolitan Magistrate, Bengaluru City: Bhola Pandit, XX Addl. CMM, convicted a person who presented a cheque to repay a loan but the same was dishonored due to insufficient funds. Instant complaint was filed under Section 200 of Code of Criminal procedure against the accused of\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/05\/City-Civil-Court-Bengaluru.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/05\/City-Civil-Court-Bengaluru.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/05\/City-Civil-Court-Bengaluru.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/05\/City-Civil-Court-Bengaluru.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/05\/City-Civil-Court-Bengaluru.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":255925,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/21\/presumption-and-rebuttal-under-ni-act\/","url_meta":{"origin":255614,"position":1},"title":"Presumption and Rebuttal under NI Act: Read Court’s verdict discussing onus of proof and nature of defence where “payment stopped by drawer”","author":"Bhumika Indulia","date":"October 21, 2021","format":false,"excerpt":"Additional Chief Metropolitan Magistrate, Mayo Hall Unit, Bengaluru: Vani A. Shetty, XVII Additional Judge, Court of Small Causes & ACMM, addressed a matter with respect to the liability of the accused in a case of dishonour of cheque under Section 138 of the Negotiable Instruments Act, 1881. In the present\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/05\/DISHONOUR-OF-CHEQUE.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/05\/DISHONOUR-OF-CHEQUE.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/05\/DISHONOUR-OF-CHEQUE.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/05\/DISHONOUR-OF-CHEQUE.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/05\/DISHONOUR-OF-CHEQUE.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":257091,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/11\/15\/dishonour-of-cheques-2\/","url_meta":{"origin":255614,"position":2},"title":"Dishonour of Cheque | Not filling details in cheque, Non-filing of ITR by complainant, Handing over cheque as security, etc.: Delhi Court discards all defence, orders conviction under S. 138 NI Act \u00a0","author":"Bhumika Indulia","date":"November 15, 2021","format":false,"excerpt":"Saket Courts, Delhi: Swati Gupta, Metropolitan Magistrate (South) NI Act, convicted the accused for an offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881. While delivering the judgment, the Court reiterated the well-settled position of law and discarded various defence taken by the accused. Factual Matrix\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Saket Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":255796,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/18\/dishonour-of-cheque-3\/","url_meta":{"origin":255614,"position":3},"title":"Mere denial is useless, Presumption under S. 138 NI Act can be rebutted only by leading cogent evidence: Court holds accused guilty where “payment stopped by drawer”","author":"Bhumika Indulia","date":"October 18, 2021","format":false,"excerpt":"Saket Courts, New Delhi: Swati Gupta, Metropolitan Magistrate reiterated what is expected of an accused to rebut the statutory presumption against him in cases of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881. Brief facts Complainant and accused had entered into an agreement to sell the property\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Saket Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":266987,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/18\/a-blank-cheque-leaf-voluntarily-signed-and-handed-over-towards-some-payment-dishonour-of-cheque-section-138-ni-act\/","url_meta":{"origin":255614,"position":4},"title":"A blank cheque leaf voluntarily signed and handed over towards some payment: Would it attract presumption under S. 139 NI Act in absence of cogent evidence? Dwarka Courts explains","author":"Bhumika Indulia","date":"May 18, 2022","format":false,"excerpt":"Dwarka Courts, New Delhi: Deeksha Sethi, MM (NI Act)\u201406, reiterated that, even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, 1881. In the present matter, Raj Singh was referred to\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":266804,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/13\/law-on-liability-of-guarantor-dishonour-of-cheque-section-138-ni-act\/","url_meta":{"origin":255614,"position":5},"title":"Liability of Guarantor for Cheque Dishonour: Can lender enforce his right against either principal borrower or his guarantor? Dwarka Courts answers","author":"Bhumika Indulia","date":"May 13, 2022","format":false,"excerpt":"Dwarka Courts, Delhi: Rahul Jain, Metropolitan Magistrate, while addressing a matter regarding dishonour of cheque, held that mere assertion of non-receipt of legal notice cannot help the accused in escaping liability under Section 138 Negotiable Instruments Act, 1881. It was alleged in complaint that accused had approached the complainant to\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/06\/Dwarka-Court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/255614","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/8808"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=255614"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/255614\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/39981"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=255614"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=255614"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=255614"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}