Delhi High Court Upholds Conviction In Section 138 Cheque Dishonour Case, Confirms Presumption Under Section 139

A single-judge bench of Justice Saurabh Banerjee heard a revision petition under Sections 401 and 397 Cr.P.C. read with Section 482 Cr.P.C. challenging an order of the Additional Sessions Judge that had dismissed an appeal against conviction in a complaint under Section 138 of the Negotiable Instruments Act. The petitioner sought setting aside of the trial court’s conviction and sentence in relation to a dishonoured cheque issued in purported discharge of a debt. 

The Court dismissed the revision petition and upheld the trial court and appellate orders, holding that the presumption under Sections 118(a) and 139 of the N.I. Act was attracted once execution of the cheque and receipt of the statutory notice were admitted. The Court noted that the onus lay on the accused to rebut the presumption and observed that the petitioner had declined to lead evidence to discharge that burden. The Court, in its reasoning, observed: "54. ... ...Once the presumption under Section 139 was given effect to, the courts ought to have proceeded on the premise that the cheque was, indeed, issued in discharge of a debt/liability. The entire focus would then necessarily have to shift on the case set up by the accused, since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138. If the court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking aid of the presumption. The court would then take an overall view based on the evidence on record and decide accordingly." The judge further observed that the admitted signature on the cheque was sufficient to attract the statutory presumption and that limitation ran from the date of presentation and dishonour of the cheque, not the date of the underlying Memorandum of Understanding. 

Background 

The dispute arose from a Memorandum of Understanding dated 22.05.2009 between the respondent and the petitioner’s brother for joint construction of a property at Batla House, Jamia Nagar, New Delhi, with profit sharing after sale. The petitioner and his brother allegedly sold the constructed property without paying the respondent his share. The petitioner issued Cheque No. 563207 dated 14.03.2017 for Rs. 8,00,000 drawn on Standard Chartered Bank, which was dishonoured on 18.05.2017 with the remark "Account Closed." The respondent issued a legal notice dated 07.06.2017; the complaint under Section 138 N.I. Act followed when no payment was received. 

At trial, the respondent led evidence and the petitioner appeared but did not call witnesses. In his Section 313 Cr.P.C. statement the petitioner contended that the cheque was stolen by the respondent, that there was no privity between him and the respondent as the MoU was between the respondent and his brother, and that the claim was time-barred because the MoU dated 2009 predated the complaint. The trial court convicted and sentenced the petitioner on 26.04.2022 and imposed a fine of Rs. 12,50,000 payable within one month, failing which he would undergo simple imprisonment for six months. The petitioner’s appeal (Criminal Appeal No. 79/2022) was dismissed by the learned ASJ on 10.04.2024. 

Before the High Court, counsel for the petitioner argued absence of a legally enforceable debt against the petitioner, lack of privity, limitation, and deficiency of proof regarding the respondent’s proprietorship of the company. Counsel for the respondent relied on the statutory presumption and the petitioner’s failure to lead evidence. The High Court applied settled law including the decisions cited by the parties, held that admission of execution of the cheque and receipt of notice attracted Section 139 presumption, and agreed with the ASJ that limitation was to be computed from cheque issuance and dishonour. The Court observed that, because the cheque was in the name of M/s Farhan Empexo Export and Import Co., the complainant need not prove his relationship with the firm for maintainability. The High Court noted its revisional jurisdiction as limited and refused to reappraise evidence that had been considered twice. Finding no illegality or perversity, the High Court dismissed the revision petition and upheld the conviction and sentence; no costs were ordered. 

Case Details: 

Case No.: CRL.REV.P. 633/2024 

Case Title: Ompal Yadav v. Farhan Empexo Export and Import Co. 

Appearances: 

For the Petitioner(s): Mr. Piyush Pahuja and Mr. Upender Kumar, Advocates 

For the Respondent(s): Mr. Raj Kumar and Mr. H. Rehman, Advocates