Dishonoured Cheque Case: Supreme Court Convicts Accused and Imposes Fine
The Supreme Court of India recently ruled in the case of Uttam Ram v. Devinder Singh Hudan & Anr., overturning the Himachal Pradesh High Court’s acquittal of the accused in a dishonoured cheque case under Section 138 of the Negotiable Instruments Act, 1881. The case revolved around the non-payment of Rs. 5,38,856 after a cheque issued by the respondent was dishonoured due to insufficient funds.
The appellant, an apple orchard owner from Kullu, Himachal Pradesh, had provided apple cartons and packing materials to the respondent on a credit basis. After the accounts were settled in September 2011, a cheque dated 2nd October 2011 was issued for the outstanding amount. However, the cheque was returned unpaid due to insufficient funds, leading the appellant to file a complaint under Section 138 of the Negotiable Instruments Act.
Arguments by the Appellant
The appellant contended that the accused had legally issued the cheque as part of a settled transaction and that the dishonour of the cheque was deliberate. The appellant supported his claims with documentary evidence and witness testimony, including that of Prem Chand, the accused’s agent, who confirmed the transaction and settlement of accounts.
Arguments by the Respondents
The respondent claimed that the cheque was misused and had been fraudulently filled in. He argued that his cheque book was lost, and an entry regarding the loss was recorded with the police in September 2011. However, he failed to produce any evidence of filing a First Information Report (FIR) regarding the stolen cheque book.
Supreme Court’s Verdict
A bench comprising Justices L. Nageswara Rao and Hemant Gupta ruled in favor of the appellant, stating that:
- The presumption under Sections 118(a) and 139 of the Negotiable Instruments Act is in favour of the complainant unless rebutted by the accused.
- The accused failed to prove that the cheque was not issued for a legally enforceable debt.
- The defence that the cheque was lost was unsubstantiated, as no FIR or substantial evidence was produced to support the claim.
The Court observed:
“A negotiable instrument carries a presumption of consideration. The burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.”
Final Ruling
The Supreme Court set aside the acquittal and convicted the respondent under Section 138 of the Negotiable Instruments Act. The Court directed the respondent to:
- Pay Rs. 10,77,712 as a fine (twice the cheque amount).
- Pay Rs. 1,00,000 as litigation costs.
- If the amount is not paid within three months, undergo six months of imprisonment.
This ruling reinforces the principle that the presumption of consideration in cheque transactions must be rebutted with substantial evidence and that mere claims of fraud without proof will not be entertained by the courts.
Petitioner Name: Uttam Ram.Respondent Name: Devinder Singh Hudan & Anr..Judgment By: Justice L. Nageswara Rao, Justice Hemant Gupta.Place Of Incident: Kullu, Himachal Pradesh.Judgment Date: 17-10-2019.
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