Closing Bank Account Within A Few Weeks Of Issuance Of Cheque Raises Serious Questions About Conduct & Intent Of Accused: SC Upholds Conviction In Cheque Bounce Case

The Court stated that when an accused had not disputed that he had handed over the cheques or signed them, it was incumbent upon the said accused to either take back a cheque or instruct the bank to not honour the concerned cheque the moment he claims the amount(s) were repaid.

A Bench of Justice Hima Kohli and Justice Ahsanuddin Amanullah observed, “When the respondent does not dispute that he has handed over the cheques or signed on them, it was incumbent upon him, the moment he claims the amount(s) were repaid to the appellant to have either taken back the cheques or instructed the bank concerned to not honour the concerned cheques. However, closure of the bank accounts within a few weeks of issuance of the cheque raises serious questions about the conduct and intent of the respondent.”

Advocate B Ragunath appeared for the appellant, while Sr. Advocate S Nagamuthu represented the respondent.

The case of the prosecution was that the accused (respondent) had allegedly borrowed several loans from the chit fund company (appellant) amounting to over 21 Lakhs including interest, after eight years. In order to partly discharge the loan amounts, the accused issued a cheque in favour of the complainant.

However, the cheque came to be returned with the endorsement ‘Account Closed’. Consequently, the complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (the N.I. Act). The trial court convicted the accused under Section 138 of the N.I. Act and sentenced him to pay a fine as compensation to the complainant.

The accused challenged the judgment of the trial court under Section 391 of the CrPC for letting in additional evidence, which the Appellate Court allowed. This order was challenged by the complainant before the Madras High Court which negatived such challenge and confirmed the order passed by the Appellate Court.

The Supreme Court observed, “The fact that the cheque was issued as a consequence of failure to repay the loan taken by the respondent from the appellant to which the interest was added would more or less settle the issue.”

The Bench noted that although the accused before the Trial Court had contended that there was no loan transaction between the parties, he marked receipts to show the re-payment of the loan before the appellate court.

“Even there, the respondent did not produce all the receipts showing total discharge of the loan amount, as was noted by the Appellate Court, and only the difference in the rates of interest as well as the finding that substantial amount has been repaid led to the acquittal of the respondent,” the Bench noted.

Consequently, the Court upheld the decision of the Trial Court as it had “meticulously gone into each and every issue while holding in favour of the appellant and the Appellate Court as also the High Court have only gone by scrutiny of the interest amount mentioned on the pronote and effected in the Statement of Accounts of the appellant and the evidence produced before the Appellate Court by the respondent to indicate that some repayment(s) was/were made. This, according to us, is erroneous and cannot be sustained.”

Accordingly, the Supreme Court allowed the appeal.

Cause Title: Sri Sujies Benefit Funds Limited v. M. Jaganathuan (Neutral Citation: 2024 INSC 602)

Appearance:

Appellant: Advocates B Ragunath and N.C. Kavitha; AOR Vijay Kumar

Respondent: Sr. Advocate S Nagamuthu; Advocate Ruhini Dey; AOR S. Yamunah Nachiar

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