Person might not honour thr check

sameerchandra (Querist) 15 January 2013 This query is : Resolved
Hello sir,
Been into a business on partnership and decided to part ways . Been subjected to severe disturbances as there were no documents for either of us. After inviting police informally with written complaint i've got check rs.80k which was drawn.
As final installment i've been given a payee check dated 14-01-13. Now owing to someother reasons he messaged me he would not honour my check even if it bounces in case i dont oblige him in a issue which goes against my interest.
Is there any fool proof way to get my money safely. pls help me out.
regards,
sameerchandra.

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prabhakar singh (Expert) 15 January 2013
When you did not think of making simple proofs initially how can any of us make fool proofs way now for you looks a great task.You can file a case of check bounce proving the partnership business and his liability under accounting by adducing oral evidence.It would be his burden to prove,why he issued check to you thanklessly for no consideration.

Guest (Expert) 15 January 2013
The initial burden is on the complainant to adduce evidence to prove the legal liability of the accused. Once this burden is sufficiently discharged the further burden to disprove the liability shifts on to the accused. If you do not have the documentary evidence to vouch for his liability the case will not stand out in the court. Oral evidence will not suffice.

Ashish Davessar

Advocate
Supreme Court of India
Punjab and Haryana High Court
District Courts, Amritsar & Chandigarh

prabhakar singh (Expert) 15 January 2013
There is presumption of consideration by law in respect of all negotiable instruments and cheques are one among other negotiable instruments.

I do not know the law that bars an oral testimony to prove a fact in issue,although
weight of written testimony is always treated greater than oral one but in case of dispute of a word or sentence in a written paper also, only oral testimony of witnesses is taken into consideration.

(an advocate without name and fame
from a very little town practicing
in mufsils with no desire to advertise )

prabhakar singh (Expert) 15 January 2013
one should read section 118 of the Act which runs as under"The Negotiable Instruments Act, 1881

118. Presumptions as to negotiable instruments of consideration

Until the contrary is proved, the following presumptions shall be made:-

(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date- that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance- that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;

(d) as to time of transfer.- that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of endorsements - that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamps-that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."

SO Special Rules of evidence is that:
Until the contrary is proved, the following presumptions shall be made in case of all negotiable instruments. In other words the following need not be proved as they are presumed to exist in every negotiable instrument. These rules apply only as between parties to the instrument and those claiming under them.
Consideration
It shall be presumed that every negotiable instrument was made or drawn, for consideration. Every such instrument when it has been accepted, negotiated or transferred was accepted, endorsed negotiated or transferred for considerations.
Presumption arises only when due execution of the instrument is established. Presumption continues until it is rebutted. It is for defendant to prove its non existence. This the defendant can prove by establishing existence of fraud. Undue influence unlawful consideration, etc. Once the defendant proves that consideration is absent, onus then shifts on the plaintiff to establish its existence.
The statutory presumptions envisaged in section 118 (a) are rebuttals by the defendant proving that the instrument was not supported by considerations by adducing (1) direct evidence (2) circumstantial evidence and by (3) relying upon presumptions of fact mentioned in section 114 of the evidence Act or others similar provisions of law raising presumptions of fact in his favor.
Section 118 only says for considerations it does not say consideration as stated in the negotiable instrument. The words for consideration are quite general and they have to be applied in their full literal sense. Therefore, hand note is not invalidated when another consideration is proved to exist. In a suit in hand note when the consideration set up in the plaint is different from that set out in the instrument presumption under section 118 (a) in favor of the plaintiff that the instruments was made for consolidation is not destroyed merely because the consideration set out in the instruments is found to be wrong, because the presumption that is raised under section 118(a) is not respect of the consideration mentioned in the negotiable instrument but the presumptions is in favor of there being a consideration for the negotiable instrument any consideration which is a valid considerations in law.
Under section 118(a) until the contrary is proved presumptions shall that every negotiable instrument was made for consideration. Once there is admission of execution of the promissory note, or the same is proved to have seen executed the presumptions under Section 118 (a) is raised that it is supported by consideration. However, where Plaintiff pleads different considerations the presumption under section 118(a) is not available.
Negotiable instruments are thus an exception to the general rule that the plaintiff must show that contract was entered into for consideration because contract law does not presume considerations. In case of contract on negotiable instruments considerations is presumed until contrary is proved. Presumption exists irrespective of the consideration mentioned in the instruments or not.
Negotiable instruments made etc; without considerations. A negotiable instrument made drawn, accepted endorsed or transferred without consideration or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if such party has transferred the instrument with or without endorsement to a holder for considerations such holder and every subsequent holder deriving title from him, may recover the amount due on the such instrument for consideration or any prior party thereto.
Illustration:
A is the holder of the bill. A Transfers it without consideration to B. B transfers it without considerations to C. C transfers is for value to D, D transfers it without consideration to E. E gave no considerations. He has therefore no right against D. But E recovers the amount of the bill from A B and C in the same manner as D would have been entitled to, even though E gave no value.

One should read the word "debt or other liability" used in 138 with reference to its explanation given in the section itself
and that is only one that must be enforceable at law,eg,not time barred.

Hence complainants' oral statement on oath,even if there is no partnership deed,to the effect that that there was an accounting between parties upon which a liability was fixed on accused for which the cheque was issued would be sufficient to discharge the burden.

I say matter as not fool proof only on one doubt full ground that in view of section 69 of the partnership Act,a suit between partners for any such dispute would be barred as not legally enforceable.Then how to register that partnership now???????Although registration is required for claiming through suit only and that is disabling provision.Law requires registration before suit and not at the time of the transaction.

(an advocate without name and fame
from a very little town practicing
in mufsils with no desire to advertise )

prabhakar singh (Expert) 15 January 2013
But on a careful perusal of Section 69 in The Indian Partnership Act, 1932 which runs as under :
69. Effect of non- registration.
(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person
alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
(3) The provisions of sub- sections (1) and (2) shall apply also to claim of set- off or other proceeding to enforce a right arising from contract, but shall not affect-
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court under the Presidency- towns Insolvency Act, 1909 , (2 of 1909 ). or the Provincial Insolvency Act, 1920 , (5 of 1920 ). to realise the property of an insolvent partner.
(4) This section shall not apply-
(a) to firms or to partners in firms which have no place of business in 1[ the territories to which this Act extends], or whose places of business in 2[ the said territories] are situated in areas to which, by notification under 3[ section 56], this Chapter does not apply, or
(b) to any suit or claim of set- off not exceeding one hundred rupees in value which, in the Presidency- towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882 , (15 of 1882 ). or, outside the Presidency- towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 , (9 of 1887 ). or to any pro- ceeding in execution or other proceeding incidental to or arising from any such suit or claim.

I FIND THAT IN VIEW OF FOLLOWING PHRASE USED IN THE SECTION "but shall not affect-
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or" THE SUIT CAN BE BROUGHT EVEN WITHOUT REGISTRATION OF FIRM AS IT HAS STOOD DISSOLVED HENCE COMPLAINT UNDER SECTION 138 SHALL PROCEED EVEN ON STRENGTH OF ORAL TESTIMONY AS THERE IS NO LAW THAT LAYS THAT A PARTNERSHIP CONTRACT OR ITS' DISSOLUTION MUST, AS OF LEGAL NECESSITY, BE IN WRITING .

(an advocate without name and fame
from a very little town practicing
in mufsils with no desire to advertise )

V R SHROFF (Expert) 15 January 2013
THE SUIT CAN BE BROUGHT EVEN WITHOUT REGISTRATION OF FIRM AS IT HAS STOOD DISSOLVED

""HENCE COMPLAINT UNDER SECTION 138 SHALL PROCEED"" EVEN ON STRENGTH OF ORAL TESTIMONY AS THERE IS NO LAW THAT LAYS THAT A PARTNERSHIP CONTRACT OR ITS' DISSOLUTION MUST, AS OF LEGAL NECESSITY, BE IN WRITING

I add:
[1] 138 ni is Complaint, and not a SUIT.

SO EVEN UNREGISTERED PARTNERSHIP FIRM CAN LODGE A 138 N I COMPLAINT.

[2] As dispute between the partners, can appoint Arbitrator, and it's AWARD is binding, becomes legal liability.

[3] Though accused will take Defence that messages were sent not to deposit cheque, Who stop you to issue Notice?? & Depending on Reply , or no reply, lodge 138 complaint: Let him defend himself. As rightly advised, Oral Evidence , with a issued Cheque will suffice.

Raj Kumar Makkad (Expert) 15 January 2013
I do endorse the advice of experts.

prabhakar singh (Expert) 15 January 2013
@Mr.V R SHROFF!

I understand your anxiety that proceedings u/s 138 ni act are criminal complaint and not a suit but the same can be lodged only and only when such "debt or other liability" is a legally enforceable debt or other liability.meaning thereby that if such debt is not recoverable by a suit due to bar of any law say by law of limitation,then criminal complaint shall also not lie in view of explanation appended in section 138 ni ACT which reads"Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability]."

Raj Kumar Makkad (Expert) 15 January 2013
*Mr. Singh! I think you have overlooked many aspects covered under the reply of shroff. He has not disputed anywhere the enforceability of the criminal complaint. This is a settled law that only legally enforceable debt can be got recovered through cheque and criminal complaint can also be based upon the same principle.

prabhakar singh (Expert) 15 January 2013
Just to give you an additional chance of addenda.You are trying to explore what has not been understood by you.

sameerchandra (Querist) 16 January 2013
sir,
lemme give few more insights into this:
matter resolved in presence of few influential elders and i've been payed rs.1.25 lac in 4 months period as against agreed 45 days. [its been more than 4 months since we've parted by then].
Amount pending : rs.2.50 lac. As they were trying to persuade me into foul play by messaging in foul language and threatening calls in the nights(have them stored in mobile) i was forced to move to local PS where a written complaint was taken and issue was resolved after much bargain and payments to police personnel to Rs.1.80 lacs. The amount was okied to be payed in installments of 80k & 1 lac, out of which 80K check was given and i've withdrawn it.
Now the final due of Rs.1 lac was a post dated check for JAN 14,2013 as against agreed Dec 25,2012.
Now he send me a message which reads :
"DO not deposit the check as i've final issues with u in PS and i will only deposit amount after u come to PS. If u wish to deposit the check then its gonna bounce and i shall not pay u the amount for sure then"
I've spent too much time and money in this regard as i'm still in final year of my B.tech and i've lost enough. These persons have literally tortured me for believing in them and leaving the business without taking even a stamp paper with amount supposed to be paid to me. For i dint know people behave so cheaply for others free money"
Thereby i request you to throw some light on how can i claim at least this final payment with out further loss.
Regards,
Sameerchandra.

Devajyoti Barman (Expert) 16 January 2013
Agree with Singhji..and appreciate your desire to work without seeking publicity.

ajay sethi (Expert) 16 January 2013
if cheque of rs 1 lakh bounces issue legal notice for dishonour under section 138 NI

Person might not honour thr check

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