- Case
- HITENDRA VINAYAKRAO UAPDHAYAY v. SHANKAR RAJRAM GAUD (Bombay High Court, 08-01-2025)
- Law
- Negotiable Instruments Act, Indian Evidence Act, Code of Criminal Procedure.
Facts: The complainant, a partner in a country liquor shop, agreed to transfer the shop's license and goodwill to the accused for Rs. 25,00,000, to be paid via cheques. The accused issued five cheques, which were dishonored upon deposit. The accused claimed the cheques were given as security. The Trial Court dismissed the complaint, acquitting the accused, stating there was no legal liability on the accused to pay.
Procedural Posture: The complainant appealed the Trial Court's judgment to the High Court, arguing that the Trial Court failed to consider the presumption under Section 138 of the Negotiable Instruments Act, 1881, and did not properly appreciate the evidence.
Issue: Whether the accused issued the cheques for a legally enforceable liability, and whether the Trial Court's judgment acquitting the accused was illegal and required interference. Specifically, whether the presumption under Section 139 of the Negotiable Instruments Act applies, placing the burden on the accused to disprove the liability.
Holding: The High Court allowed the appeal, set aside the Trial Court's judgment, and convicted the accused under Section 138 of the Negotiable Instruments Act, sentencing him to three months simple imprisonment and a fine of Rs. 50,00,000, with four months rigorous imprisonment in default of payment.
Reasoning: The High Court reasoned that the accused admitted to issuing the cheques, thus discharging the complainant's initial burden of proof. The presumption under Section 139 of the N.I. Act then applied, shifting the onus to the accused to prove that the cheques were not issued for a legally enforceable debt. The accused failed to enter the witness box to present his defense and disprove the complainant's evidence, leading to an adverse inference against him under Section 114 of the Indian Evidence Act, 1872. The Court also invoked the principle of qui approbat non reprobat, stating that the accused, having benefited from the transaction, could not deny his liability. The Court relied on Dashrath Rupsingh Rathod V. State of Maharashtra to emphasize that an offense under Section 138 is committed when a cheque is dishonored due to insufficient funds or exceeding the arrangement with the bank.
