Re: Rangappa v Sri Mohan – By the Supreme Court Of India– Date of Judgment – 07/05/2010 – Citation-  100 SCL 389 (SC)
Sub : Issuance of blank cheque in consideration of a hand loan which was later contended as lost and misused by the Respondent-Complainant and raising of probable defense that creates doubt about existence of a legally enforceable debt or liability under Section 139 of the Negotiable Instruments Act, 1881.
Facts of the case
The Appellant (accused) engaged the services of the Respondent (Complainant), a civil engineer, for the purpose of supervising the construction of his house. The Complainant had filed a complaint under Section 138 of the NI Act, on the ground that payment of cheque issued by accused towards repayment of hand loan given to him by complainant for construction expenses had been stopped and that the accused had failed to honour the cheque within the statutory prescribed period inspite of notice to which no reply was given. The accused had raised the defence that the cheque in question was a blank cheque bearing this signature which had been lost and that it had come into the hands of the complainant who had then tried to misuse it. The accused also claimed that there was no legally enforceable debt or liability between the parties since he had not asked for a hand loan as alleged by the complainant.
Decision of the Trial Court
The trial court acquitted the Appellant-accused by taking note of some discrepancies in the complainant’s version.
Appeal to the High Court
The High Court reversed the findings of lower court and convicted the appellant. The High Court in its order noted that in the course of the trial proceedings, the accused had admitted that the signature on the impugned cheque was indeed his own. Once this fact has been acknowledged, Section 139 of the Act mandates a presumption that the cheque pertained to a legally enforceable debt or liability. This presumption is of a rebuttal nature and the onus is then on the accused to raise a probable defence. With regard to the present facts, the High Court found that the defence raised by the accused was not probable. Furthermore, a perusal of the record shows that the accused had belatedly taken up the defence of having lost a blank cheque at the time of his examination during trial. Prior to the filing of the complaint, the accused had not even replied to the notice sent by the complainant since that would have afforded an opportunity to raise the defence at an earlier stage.
Appeal to the Supreme Court
In light of the facts discussed, the Supreme Court is in agreement with the respondent that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. Upholding the High Court's view, the SC held that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the `stop payment' instructions to his bank. Furthermore, the instructions to `stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant was not able to contest the existence of a legally enforceable debt. In conclusion, the SC found no reason to interfere with the final order of the High Court, which recorded a finding of conviction against the appellant.