Appellant's victory as court finds accused guilty under Section 138 of the Negotiable Instruments Act
In a significant judgment, the Kerala High Court has overturned a lower court's acquittal in a cheque bounce case, establishing a vital precedent regarding the issuance of legal notices under the Negotiable Instruments Act, 1881. The judgment, delivered by Justice A. Badharudeen, found the accused, U.P. Mohammed, guilty of the offence under Section 138, in a case brought by complainant Sreekumaran Namboodiri.
The case originated from an allegation that Mohammed had borrowed Rs.90,000 from Namboodiri, issuing a cheque dated January 5, 2005, as repayment. This cheque was dishonored due to insufficient funds, prompting Namboodiri to issue a demand notice, which was returned marked 'unclaimed'. The trial court had acquitted Mohammed, doubting the issuance of the notice and the credibility of the transaction due to minor discrepancies in witness testimony.
However, the High Court emphasized the sufficiency of notice issuance if sent to the correct known address, even if returned unclaimed, aligning with the precedent set by the Supreme Court in Alavi Haji v. Palappetty Muhammed. The court underscored that the accused failed to provide convincing evidence that the notice was sent to an incorrect address, thereby deeming the notice as served.
Furthermore, the court addressed the presumption under Section 139 of the NI Act, noting that once the complainant proves the transaction and execution of the cheque, the burden shifts to the accused to rebut this presumption with substantial evidence. With no defence evidence presented, the court found the presumption unrebutted, thereby holding Mohammed guilty.
The judgment also dismissed concerns over minor discrepancies in the complainant's description of his relationship with the accused, ruling these as immaterial to the case's outcome. Consequently, the High Court sentenced Mohammed to simple imprisonment for a day until the court rises and imposed a fine of Rs.1,30,000. The accused is required to comply by July 7, 2026, failing which further imprisonment may ensue.
This judgment reinforces the robustness of legal provisions under the NI Act regarding notice issuance and reinforces the complainant's burden of proof, providing clarity for future cases involving cheque dishonour disputes.
Bottom line:-
Issuance of legal notice under Section 138(b) of the Negotiable Instruments Act is deemed sufficient if sent to the correct known address of the drawer of the cheque, even if returned with the endorsement 'unclaimed'.
Statutory provision(s): Section 138, Section 139 of the Negotiable Instruments Act, 1881
Sreekumaran Namboodiri v. U.P. Mohammed, (Kerala) : Law Finder Doc id # 2923699
