In Brief
A chit-fund company sued an accused for dishonoring a cheque of Rs. 19 lakhs issued to repay loans, citing Section 138 of the Negotiable Instruments Act. The accused claimed the debt was illegal due to interest rates exceeding statutory limits. The Appellate and High Courts acquitted him based on interest rate discrepancies. The Supreme Court held that once a cheque's issuance is established, statutory presumptions apply. Mere discrepancies in interest rates do not negate a legally enforceable debt where the principal is undisputed. Challenges to interest rate validity must be pursued separately, not in summary NI Act proceedings. The Court restored the conviction and imposed a fine of Rs. 28.5 lakhs (1.5 times the cheque amount), waiving imprisonment given the accused's age.
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