Honavar Taluka Primary Co-Operative Agricultural and Rural Development Bank v. Ganesh

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The Tax Publishers 2018 TaxPub(CL) 0934 (Karn-HC) Honavar Taluka Primary Co-operative Agricultural and Rural Development Bank v. Ganesh NEGOTIABLE INSTRUMENTS ACT, 1881 --Dishonour of cheque for insufficiency, etc., of funds in account --Appeal against acquittal of drawerCheque issued by drawer in discharge of debt due and payable by his father--Liability of drawer on dishonour of cheque--When drawer issued cheque in discharge of debt due and payable by his father to avert sale or confiscation of movable and immovable properties of his father in which the drawer was vitally interested, then, the drawer was liable for offence punishable under section 138 on dishonour of the cheque.--Father of drawer borrowed a loan from bank, but he failed to repay loan amount. Therefore, the drawer issued cheque to bank for discharge of debt due and payable by his father, but the same was dishonoured for insufficient funds. Bank filed complaint under section 138 against the drawer. Trial Court dismissed the complaint and acquitted the drawer on the ground that the drawer was neither principal borrower nor a guarantor for the loan availed by his father. Further that, the cheque was not issued by the drawer in discharge of his debt, as he was not owing any debt, which he was liable under law to pay to the bank. Bank filed an appeal against the order on the ground that the drawer issued the cheque in discharge of the debt due and payable by his father. Therefore, he was answerable for charges under section 138. *Held:* On date of issuance of the cheque by the drawer, a legally enforceable debt was due by his father. Therefore, the cheque was issued in discharge of this debt. Drawer issued the cheque to avert sale or confiscation of movable and immovable properties of his father in which the drawer was vitally interested. Therefore, it could not be said that the cheque was issued by the drawer without any lawful consideration. Drawer admitted the issuance of the cheque and the bank had proved the existence of a legally recoverable debt. Further that, the drawer had failed to rebut presumption engrafted under section 139 with cogent and acceptable evidence that the cheque was not issued by him in discharge of his debt. Hence, the order of the Trial Court was set aside and the drawer was held guilty of offence punishable under section 138. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers 2018 TaxPub(CL) 0934 (Karn-HC)

Honavar Taluka Primary Co-operative Agricultural and Rural Development Bank v. Ganesh

NEGOTIABLE INSTRUMENTS ACT, 1881

--Dishonour of cheque for insufficiency, etc., of funds in account --Appeal against acquittal of drawerCheque issued by drawer in discharge of debt due and payable by his father--Liability of drawer on dishonour of cheque--When drawer issued cheque in discharge of debt due and payable by his father to avert sale or confiscation of movable and immovable properties of his father in which the drawer was vitally interested, then, the drawer was liable for offence punishable under section 138 on dishonour of the cheque.--Father of drawer borrowed a loan from bank, but he failed to repay loan amount. Therefore, the drawer issued cheque to bank for discharge of debt due and payable by his father, but the same was dishonoured for insufficient funds. Bank filed complaint under section 138 against the drawer. Trial Court dismissed the complaint and acquitted the drawer on the ground that the drawer was neither principal borrower nor a guarantor for the loan availed by his father. Further that, the cheque was not issued by the drawer in discharge of his debt, as he was not owing any debt, which he was liable under law to pay to the bank. Bank filed an appeal against the order on the ground that the drawer issued the cheque in discharge of the debt due and payable by his father. Therefore, he was answerable for charges under section 138. Held: On date of issuance of the cheque by the drawer, a legally enforceable debt was due by his father. Therefore, the cheque was issued in discharge of this debt. Drawer issued the cheque to avert sale or confiscation of movable and immovable properties of his father in which the drawer was vitally interested. Therefore, it could not be said that the cheque was issued by the drawer without any lawful consideration. Drawer admitted the issuance of the cheque and the bank had proved the existence of a legally recoverable debt. Further that, the drawer had failed to rebut presumption engrafted under section 139 with cogent and acceptable evidence that the cheque was not issued by him in discharge of his debt. Hence, the order of the Trial Court was set aside and the drawer was held guilty of offence punishable under section 138.