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The High Count Lays Down That Section 139 Of The Ni Act Establishes A Presumption Favoring Complainants That Cheques Are In Discharge Of Debt, Placing The Burden Of Rebuttal On The Accused

diya dhall ,
  14 September 2023       Share Bookmark

Court :
Calcutta High Court
Brief :

Citation :
2022 SCC OnLine Cal 3693.

Case title:

Environ Energy – Tech Service Ltd. v. State of West Bengal

Date of Order:

22nd November, 2022

Bench:

Hon'ble Justice Shampa Dutt 

Parties: 

Petitioner: Environ Energy - Tech Service Ltd. 

Respondent: State of West Bengal & Ors.

SUBJECT 

The honourable High court set aside the judgment of the Learned Judicial Magistrate and held that the presumption under Section 139 of the N. I. Act is in the complainant's favor. The alleged defendants made no attempt to refute the assumption in any way. Neither the plaintiff nor the defendants have made any statements about the purpose or justification for the cheque's issuance.

IMPORTANT PROVISIONS

Section 138 of NI Act- Dishonour of cheque

Section 139 of NI Act- Presumption in favour of holder

OVERVIEW

  • In order to satisfy their obligation, the defendants issued an Account Payee Cheque with the Cheque No. 102631 dated 07-09-2009 for Rs. 1,10,980/-, drawn on United Bank of India, Kali Temple Road Branch Kolkata, in favor of the appellant/complainant. The Account Payee Cheque was duly signed and sealed by the defendants. 
  • The cheque was placed with the Complainant company's banker, United Bank of India, Thakurpukur Branch, on September 7, 2009, for encashment, however it was returned dishonoured with the endorsement "Fund Insufficient" pursuant to Memo for Returning Cheques dated 09-09-2009
  • The complainant served a Demand Notice in accordance with Proviso (b) to Section 138 of the Negotiable Instrument Act, 1881, upon learning of the dishonor of the aforementioned cheque, with acknowledgement due on September 23, 2009, through their learned attorney.
  • On November 3, 2009, the learned attorney for the complainant got a registered letter from one Subrata Guhathakurta, an attorney for the respondents/accused, in which he absolutely refused to pay any money and denied any responsibility to the petitioner.
  • The complainant asserts that the accused intentionally violated Section 138 of the Negotiable Instrument Act of 1881 by failing and/or neglecting to refund the amount sought by submitting an advocate's letter dated 30-20-2009.
  • After the trial was over, the trial court issued a judgment and order acquitting the accused, finding them not guilty.

ISSUES RAISED

Whether the accused could be acquitted if the complainant is not able to provide evidence for the reason of issuance of cheque?

JUDGEMENT ANALYSIS

  • The court determined that the complainant only sent a notice of demand in response to the cheque being returned. The facts that led to the issuing of the cheque are not mentioned in either the petition of complaint or the demand notice. Only their responsibility has been challenged by the accused. No oral or written evidence has been presented to support the claim that the cheque was written to settle the debt.
  • However, the presumption under Section 139 of the N. I. Act is in the complainant's favor. The alleged defendants made no attempt to refute the assumption in any way. Neither the plaintiff nor the defendants have made any statements about the purpose or justification for the cheque's issuance.
  • Therefore, the Learned Magistrate's conclusions are obviously unlawful and in violation of Section 139 of the N.I. Act.
  • The principle of Natural Justice dem+ands that the complaint case be sent back to the trial court for a new trial in light of the fact that, as is admitted, none of the parties have filed any pleadings or evidence relating to the cheque being issued in discharge of debt or liability, and that the complainant is presumed to be right under Section 139 of the N.I. Act even though neither pleadings nor documents have been filed by the complainant.

CONCLUSION

Section 139 of the Negotiable Instruments Act, 1881 is a provision that presumes that the holder of a cheque received the cheque for the discharge of any debt or other liability. This means that if a cheque is dishonoured, the person who issued the cheque is assumed to be liable unless he or she can prove otherwise. Section 139 is related to section 138, which deals with the penalties for dishonouring a cheque.
 

 
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