Purpose of Cheque, Role of Notice and Ways to Secure Acquittal under S.138 of Negotiable Instruments Act, 1881

Purpose of Cheque, Role of Notice and Ways to Secure Acquittal under S.138 of Negotiable Instruments Act, 1881

In the case of Coldspot v. Naik Hotels [2008] GCtR 6617 (Goa, Bombay), the issue was on S.138 of Negotiable Instruments Act, 1881. Acquittal was found justified.

Presumptions under Law

It is not in dispute that the cheques in question, were issued by the respondents. Being so, undoubtedly, the presumption under Section 139 of the NI Act would arise in relation to the said cheques.

Analysis of Facts and Purpose of Cheque

It was noted that the Perusal of the letter dated 3.9.01 which was issued by the Advocate and addressed to the accused, clearly discloses that certain air conditioners were installed at the hotel premises of the accused by the appellant and towards the payment of rental charges, three post-dated cheques were drawn by the respondents on Women's Co-operative Bank Ltd., Panaji dated 6 th June, 7 th June, and 8 th June, 2001 for Rs.1200/- each and on presentation for encashment, they were returned with the endorsement “Not arranged for” on 20.8.01. At the same time, the letter dated 25.5.01 discloses that the agreement of hire in relation to the air conditioners was terminated in the month of May, 2001 itself and that the rental charges in terms of the agreement which were payable were Rs.20/- per day for a A.C. Room in the hotel of the accused.

Effect of Civil Suit

Also, the suit filed by the appellant against the accused ex facie discloses the dispute regarding quantum of liability of the accused towards the claim of charges after termination of the agreement.

Rental Charges or AC Charges ?

In the background of these materials on record, it was clear that the cheques in question were in fact not relating to any rental charges, as was sought to be contended on behalf of the appellant. And, at the same time, it is not the contention of the complainant that apart from the rental charges, there were any dues payable to the appellant by the accused. On the contrary, as regards charges, if any, payable by the accused to the appellant, after termination of the agreement, there is a dispute between the parties and the Civil Court is seized with the matter in relation thereof. In the background of all these facts, there was hardly any scope to contend that the accused have not been able to rebut the presumption arising under Section 139 of the said Act in relation to the cheques in question.

Nature of Presumption under S.139 of NI Act, 1881

The rebuttal would not have to be conclusively established, but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man.

It was held that it is difficult for any prudent man to accept the contention that the cheques in question, related to the arrears of rent or the rental charges, when that was not the case of the Complainant himself either in the complaint or in the notice of demand. Rather the notice of demand clearly discloses that the cheques were post-dated cheques; whereas the notice dated 25.5.01 clearly reveals that the contract was put to an end by the said notice and there was no liability to pay rental charges thereafter. As regards other liability, if any, subsequent to termination of the agreement, already there is a dispute pending before the Civil Court in this regard and the matter is under adjudication.