2017 (11) TMI 1768 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - repayment of friendly loan - Section 138 of the Negotiable Instruments Act, 1881 - Held that - The parties were in fiduciary relationship and heavy burden was on the complainant to prove that he had advanced a loan of ₹ 15,00,000/- to his client without obtaining any writing and that he has not misused any blank cheque of his client. Such loan was not shown in the income tax return of the complainant. The case of the complainant becomes highly doubtful and is not beyond all reasonable doubts. Therefore, no presumption under Section 138 of the Negotiable Instruments Act, 1881 can be raised - Both the courts below erred in holding the accused- petitioner guilty for the commission of offence punishable under Section 138 of the Negotiable Instruments Act, 1881. Decided against petitioner.

Summary

Issues:
1. Conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Reduction of sentence by the Addl. Sessions Judge.
3. Appeal challenging the conviction and sentence.

Analysis:

Issue 1: Conviction under Section 138 of the Negotiable Instruments Act, 1881

The case involved a loan advanced by the complainant, an Income Tax and Sales Tax Practitioner, to the accused-petitioner, who issued a cheque that bounced due to insufficient funds. The accused was convicted by the Judicial Magistrate and later had the sentence reduced by the Addl. Sessions Judge. The High Court analyzed the evidence, including the relationship between the parties, the circumstances of the loan, and the filling of the cheque by the complainant. It was observed that the complainant failed to prove beyond reasonable doubt that the loan was advanced and that the cheque was not misused. The court concluded that no presumption under Section 138 of the Act could be raised, leading to the accused-petitioner being acquitted.

Issue 2: Reduction of sentence by the Addl. Sessions Judge

The Addl. Sessions Judge had reduced the accused's sentence from one year to six months but maintained the compensation amount. The High Court reviewed this decision in light of the evidence and circumstances of the case. Ultimately, the High Court found that the accused's acquittal was warranted based on the doubts raised regarding the loan transaction and the misuse of the cheque. Consequently, the judgments of the lower courts were set aside, and the accused was acquitted.

Issue 3: Appeal challenging the conviction and sentence

The accused-petitioner had filed an appeal challenging his conviction, while the complainant sought to set aside the sentence reduction by the Addl. Sessions Judge. After hearing arguments from both parties and examining the case file, the High Court carefully analyzed the evidence, the relationship between the parties, and the burden of proof on the complainant. The court ultimately allowed the accused's appeal, dismissed the complainant's appeal, and acquitted the accused-petitioner, setting aside the previous judgments and discharging the bail bonds.

This comprehensive analysis of the judgment highlights the key issues, the legal reasoning applied, and the final decision reached by the High Court in the case.