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Sumeti Vij v. M/S Paramount Tech Fab Industries

Criminal Appeal · 2021 INSC 172Decided 9 Mar 2021
Criminal Appeal No. 292 of 2021
Justice Indu Malhotra · Justice Ajay Rastogi

Background

The appellant had purchased non-woven fabric from the respondent's factory on credit, worth about Rs.5,07,062 and Rs.5,10,000 under two invoices, and issued two cheques in payment. Both cheques bounced for "insufficient funds," and despite legal notices demanding payment, the appellant neither responded nor paid within the statutory period, leading the respondent to file two separate criminal complaints under Section 138 of the Negotiable Instruments Act. The trial court had acquitted the appellant, but the Himachal Pradesh High Court reversed that acquittal and convicted her, holding the offence proved; she appealed to the Supreme Court. During the appeal, the Court gave her repeated opportunities to settle by paying the cheque amount, but she chose to contest the case on merits instead.

Decision Breakdown

The Supreme Court examined the evidence on record and found that the High Court had not erred in reversing the trial court's acquittal and in convicting the appellant for cheque dishonour, since the statutory ingredients of Section 138, a legally enforceable debt, dishonour for insufficient funds, a valid demand notice, and failure to pay within the statutory period, were duly established. Having found no infirmity in the High Court's reasoning, the Court dismissed both appeals, directed cancellation of her bail bonds, and ordered her to either pay the fine or serve the sentence as per the High Court's judgment.

Lesson Learnt

In cheque-bounce cases under Section 138 of the NI Act, once the basic ingredients, a genuine debt, dishonour for insufficient funds, and non-payment despite a valid legal notice, are proved, courts will uphold conviction, and an accused who refuses a reasonable opportunity to settle by paying the cheque amount risks having to serve the sentence instead.

Official source (sci.gov.in)View Judgment (PDF)

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