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adarsh mishra (member)     21 October 2009

sec 138, legally enforceble debt defination

IF A FILES a suit against B under sec 138 as says that A have given money as a help to B and got the cheque which have bounced. While actual situation is that B have agreed to give him white money by CHEQUE to A as a loanas A was a govt servant and have substantial income by bribes .A never put up a Cheque. After 2 Year he produced the cheque  and get it bounced. will this attract 138 how to go ahead to get ride of 138. as infact there was no money involvement.



Learning

 7 Replies


(Guest)

Before the Hon'ble supreme court decision in the case of Krishna Janardhan Bhat persons like "A" in the present case used to suceed in 138 case.  However after the decision in the case of Krishna Jnaradhan Bhat things have become difficult for persons like "A" to succeed as they will have to prove the original transaction with convincing evidence.

adarsh mishra (member)     21 October 2009

can you give the details of the case

adarsh mishra (member)     21 October 2009

in fact B had Given the blank cheque to C. who in turn have given to A and A puts up in the bank and falsely claiming the Money. In fact A has no relationship with B. A is a friend of C. what should be our course of action.

Anil Agrawal (Retired)     21 October 2009

 I find that the drama of giving signed blank cheque is growing. Are they so guillible and are they illiterate. Such people seem to have unfathomable confidence in themselves and the holder of the cheque. Please remember that there is no remedy for such a situation except to prove your innocence in the court. A cheque is a cheque and is a cheque.

Let me give an example. Three brother were partners in a firm. One of the branches was at Mumbai. The eldest brother was managing the firm from its head office at Bangalore and had blank signed cheques of the Mumbai brother. This arrangement was working for 20 years. Following the law of nature to split, the partnership was dissolved but the blank signed cheques remained with the eldest brother. He wrote to him to return all such cheques but he never cared.

At the first opportunity, he filled the gaps in the cheque, deposited it in the bank and got is bounced. Filed a case u/s 138 and without looking left and right, the man was convicted.

They are the children of the same parents. You talk of friends etc. etc. Remember that the cheques drawn in payment of your electricity and telephone bills too attract 138. 

We see so many ads on electronic and print media. It may read out of this world but there should be ads regularly on TV warning the drawers of the cheque of the consequences. Yes, no body puts up an ad about Sec.302 IPC and people are supposed to know the law.

If that is the case, why the income tax department regularly reminds us to pay our tax by the due date, get PAN card, register for service tax, etc. etc. Here also, people are supposed to know the law.

santhosh (member)     21 October 2009

if cheque is issued and instructed to present before the bank for encahment 138 will attract

Anil Agrawal (Retired)     22 October 2009

 Please remember one word: CHEQUE. All other words are inconsequential.


(Guest)

Title

Krishna Janardhan Bhat Vs. Dattatraya G. Hegde

 

Coram

S.B. SINHA, HARJIT SINGH BEDI


Act

Negotiable Instruments Act


Subject

Negotiable Instruments Act, 1881; Ss. 13(1), 118 (a), 138 and 139:

Dishonour of Cheque - Commission of an offence u/s.138 - Presumption under S.139 r/w S.118 of the Act - Rebuttal - Burden to prove - Held: S.139 merely raises a presumption in favour of holder of Cheque that it has been issued in discharge of debt/liability and it could not be extended to existence of a debt - Courts below erred in proceeding on the basis that the accused required to step into the witness box to prove his defence - Burden could be discharged on the basis of material on record - In a case where false implication cannot be ruled out, background facts and conduct of parties required to be taken into consideration - In the instant case, four cheques allegedly drawn on the same day by business partner of accused from his cheque book and allegedly misused in collusion with complainant - Under the circumstances, Courts below required to draw an inference as to the probability of respondent-complainant allegedly advancing a huge sum of Rs.1.5 lakhs to accused by merely asking and even without keeping any documentary proof in connection thereof and accused issuing the cheque in question towards repayment of loan so advanced, and the Cheque could not be realized for insufficiency of funds in the bank - The Courts below also failed to notice that advance taken by way of loan exceeding Rs.20,000/- if not made by way of A/c Payee Cheque, it attracts penalty on the drawer of the Cheque in terms of s.271D of the Income Tax Act - Though provisions u/s.139 has been inserted to regulate trade activities and to safeguard the faith of creditor on the drawer of Cheque but the Courts shall not turn a blind eye to ground realities - Existence of legally recoverable debt not a matter of presumption u/s.139 of the Act - Hence, the Courts below acted wrongly in applying legal principles in the fact situation of the case - In view of the peculiar facts and circumstances of the case, High Court should have entertained the revision application filed by the accused - Income Tax Act, 1961 - Ss.269 SS and 271D.

Full Judgement available on LCI web page


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