Normally, if a cheque is dishonoured, it is presumed under Section 139 of the Negotiable Instruments Act that the cheque was issued for the discharge, in whole or in part, of any debt or other liability. This presumption is raised against the accused and the accused is required to disprove it.
However, in your case, you have mentioned that the complaint states that the cheque was issued to discharge a hand loan or a cash loan allegedly given to you, which was not reported in the Income Tax return of the complainant.
In this regard, it may be stated that in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54, the Supreme Court has held that
“Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.”
Therefore, the presumption under Section 139 is only that the cheque was for discharge of a debt, but there is no such presumption that it was for discharge of a legally recoverable debt, or that the debt was a legally recoverable debt.
As per Section 269-SS of the Income Tax Act, it is illegal to advance loan more than an amount of Rs. 20,000/- in cash. Further, under Section 271-D of the Income Tax Act, there is a penalty for failure to comply with the provisions of section 269-SS.
In these situations, if a cash loan of more than Rs. 20,000 is given and that too, if it is not reported in the Income Tax return, then it becomes an unaccounted loan and is in violation of the provisions of the Income Tax Act.
In these circumstances, there are judgments to show that such a loan is not legally recoverable debt, as is required to be proved in the case of a cheque dishonour under Section 138 of the Negotiable Instruments Act.
Some relevant judgments in this regard, are: (1) Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54; (2) Sanjay Mishra v. Kanishka Kapoor, 2009 Cri LJ 3777 (Bom); (3) Devender Kumar v. Khem Chand, (2015) 223 DLT 419 : (2015) 153 DRJ 214; (4) G. Pankajakshi Amma v. Mathai Mathew (Dead) Through LRs., (2004) 12 SCC 83.
In view of these reasons, the cheque bounce case that has been filed against you on the basis of a cash loan (which is not permissible under the Income Tax Act and which has not been reported in the Income Tax return), may not be valid.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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