Bhawish Chand Sharma v. Bawa Singh

NEGOTIABLE INSTTUMENTS ACT, 1881

--Dishonour of cheque --Insufficiency of funds Existence of legally recoverable debt ----Where complaint was filed against the buyer for dishonour of cheque and that the seller had proved beyond all reasonable doubt that the cheque in question was issued by the buyer in discharge of a legally recoverable debt, then, conviction of buyer for commission of the offence under section 138 was justified. --Seller filed a complaint under section 138 on the ground that the buyer purchased the property from him, therefore, the buyer issued a cheque to him towards the balance sale consideration. When the cheque was presented before bank, the same was dishonoured due to insufficient funds. Buyer contended that the cheque was given as security to the third party towards outstanding electricity dues in respect of the property and the same was handed over to the seller by the third party. Therefore, the Magistrate acquitted the buyer on the ground that there was no legally recoverable liability on the part of buyer. Seller filed an appeal against the order of acquittal. Held: Since there was no obligation on part of the buyer to clear the outstanding electricity dues, there was no reason for the buyer to issue the same towards “security”. Seller placed documents on record to show that there were no outstanding dues in respect of the electricity connection at the time of sale. Moreover, buyer had no explanation for issuing the cheque to the third party for liability of the seller, thus, the defence of the buyer was not probablised and did not rebut the presumption arose in favour of the seller. Seller had proved beyond all reasonable doubt that the cheque in question was issued by the buyer in discharge of a legally recoverable debt. Hence, buyer was held guilty and convicted for commission of the offence under section 138.