PRAKASH MADHUKARRAO DESAI V/S DATTATRYA SHESHRAO DESAI
CRIMINAL APPEAL NO. 795/2018
Facts:
1.Complainant had advanced a handloan of Rupees One Lakh Fifty Thousand to the respondent-accused. In lieu of that the accused issued a cheque for the aforesaid amount dated 19.05.2016 drawn in favour of the complainant.
2.The said cheque was dishonoured for want of sufficient funds as per the Bank Advice dated 11.07.2016. On 13.07.2016 a statutory notice was issued under Section 138 of the Act of 1881. The trial Court dismissed the said complaint principally on the ground that the amount stated to be advanced to the accused had not been shown in the Income Tax returns of the complainant.
3.Being aggrieved by the aforesaid adjudication the complainant has preferred the present appeal under Section 378(4) of the Code of Criminal Procedure, 1973.
Issue: “Whether in case the transaction, is not reflected in the Books of account and/or the Income Tax Returns of the holder of the cheque in due course and thus is in violation to the provisions of Section 269-SS of the Income Tax Act, 1961 whether such a transaction, can be held to be “a legally enforceable debt” and can be permitted to be enforced, by institution of proceedings under Section 138 of the Negotiable Instruments Act ?”
Arguments:
Appellant:
1.Counsel appearing for the complainant referred to the judgments rendered by the learned Single Judges that have led to the making of the reference. Relying upon the decisions in Krishna P. Morajkar, Bipin Mathurdas Thakkar and Pushpa Sanchalal Kothari he submitted that there was no legal bar for seeking enforcement of the liability that is incurred on the dishonour of an instrument notwithstanding the fact that the amount advanced is not shown in the Income Tax returns of the person advancing such amount.
2.Counsel submitted that Mere absence of the amount advanced/lent to the drawer of the cheque being shown in the Income Tax returns would not be of such importance so as to preclude the holder of the cheque from seeking to recover such liability. The breach of statutory provisions ought not to benefit the drawer by holding such amount to be not a legally enforceable liability. In such circumstances, it could not be said that the amount in question that had been advanced was under a void.
transaction.
Respondent:
1.Counsel for the respondent-accused submitted that the question as referred for being answered was required to be answered in the negative. According to him, the view as taken in Krishna Janardhan Bhat (supra) as followed by the learned Single Judge in Sanjay Mishra (supra) ought to be accepted since the object behind that view was to prevent the recovery of such amount that was stated to have been advanced without being reflected in the Income Tax returns of the complainant. Having violated the provisions of the Act of 1961, the complainant could not seek to take advantage of the situation in such manner.
Decision:
Rationale:
1.Hon’ble court noted that the ratio of the decision in Rangappa vs. Sri Mohan” (2010) 11 SCC 441 is clear that the presumption mandated by Section 139 of the Act of 1881 includes the presumption as regards existence of a legally enforceable debt or liability. This presumption has been held to be in the nature of a reverse onus clause that has been included in furtherance of the legislative object of improving the credibility of the negotiable instruments.
2.Once the execution of the cheque/instrument is admitted, the initial presumption under Section 139 of the Act of 1881 favours the complainant that there exists a legally enforceable debt or liability. While rebutting such presumption it would always be open for the accused to raise all permissible defences including the defence that the complainant had failed to disclose the amount that has been stated to have been advanced/lent to the accused in his Income Tax returns.
3.It held that Violation of Sections 269-SS and/or Section 271-AAD of the Act of 1961 would not render the transaction unenforceable under Section 138 of the Act of 1881.
Order Copy:
