Dishonour of Cheque - Presentation of cheque for an amount greater than legally enforceable debt is impermissible

Himachal Pradesh High Court Upholds Acquittal in Cheque Bounce Case. Court Finds No Legally Enforceable Debt for Rs. 5 Lakh on Date of Cheque Presentation

In a significant judgment, the Himachal Pradesh High Court has upheld the acquittal of Akshat Jain in a cheque bounce case filed by Harpreet Kaur. The case revolved around a cheque issued for Rs. 5,00,000, which was dishonoured due to insufficient funds. Harpreet Kaur had filed a complaint under Section 138 of the Negotiable Instruments Act, alleging that the cheque was issued for a loan amount that was not repaid.

Justice Rakesh Kainthla, presiding over the case, dismissed the appeal filed by Harpreet Kaur seeking leave to appeal against the judgment of the Additional Chief Judicial Magistrate, Nalagarh, District Solan. The lower court had previously acquitted Akshat Jain, finding that no legally enforceable debt existed for the amount claimed at the time of cheque presentation.

The crux of the decision lay in the fact that Akshat Jain had made payments totaling Rs. 70,017.70 before the cheque was presented, which Harpreet Kaur failed to endorse on the cheque. The Supreme Court, in prior judgments, has established that any payments made before cheque encashment must be endorsed on the cheque, and the cheque should be presented for the remaining amount only.

Justice Kainthla noted that while there is a presumption of liability under Sections 118(a) and 139 of the Negotiable Instruments Act when a cheque is issued, this presumption disappears when contrary evidence is presented. In this case, Harpreet Kaur's admissions during cross-examination demonstrated that there was no outstanding liability of Rs. 5,00,000 on the date of cheque presentation, negating the presumption of debt or liability.

The judgment further highlighted that Akshat Jain had admitted to issuing the cheque and signing it, but presented evidence of prior payments, shifting the burden back to Harpreet Kaur to prove the existence of debt beyond reasonable doubt. The court ruled that Kaur failed to meet this burden, supporting the trial court's decision to acquit Jain.

The judgment referenced several Supreme Court decisions, including Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and Sunil Todi v. State of Gujarat, which clarify the requirements for a cheque to represent a legally enforceable debt at the time of presentation.

As a result of this decision, Harpreet Kaur's application for leave to appeal was dismissed, and the appeal was deemed infructuous.

Bottom Line:

Presentation of cheque for an amount greater than legally enforceable debt is impermissible - Presumption under Section 139 and 118(a) of the NI Act disappears when contrary evidence is adduced.

Statutory provision(s): Negotiable Instruments Act, 1881 Sections 138, 139, 118(a)

Harpreet Kaur v. Akshat Jain, (Himachal Pradesh) : Law Finder Doc id # 2782315