2010 (2) TMI 1279 - HC - Indian Laws

Summary

Issues Involved:
1. Legally enforceable debt or liability u/s 138 of the Negotiable Instruments Act.
2. Statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act.
3. Defense of misuse of cheque.
4. Financial soundness of the complainant.
5. Sentence and compensation.

Summary:

1. Legally enforceable debt or liability u/s 138 of the Negotiable Instruments Act:
The appellant challenged the acquittal of the respondent by the Judicial Magistrate, First Class, Akola, for the offence punishable u/s 138 of the Negotiable Instruments Act. The trial court acquitted the respondent on the grounds that the complainant failed to prove that the cheque was issued for the discharge of a legally enforceable debt or liability.

2. Statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act:
The appellant argued that the statutory presumptions u/s 118 and 139 of the Negotiable Instruments Act were in favor of the complainant, and the trial court should have presumed that the cheque was drawn for consideration. The appellant relied on the ruling in Balaji Agencies Pvt. Ltd. v. Vilas Bagi & Anr. to substantiate the claim.

3. Defense of misuse of cheque:
The respondent's defense was that the cheque was misused by the complainant, as it was taken by the complainant's brother for election purposes in 2006. The respondent cited the ruling in Krishna Janardan Bhat v. Dattatraya G. Hegde, arguing that the existence of a legally recoverable debt is not a matter of presumption u/s 139 of the Act.

4. Financial soundness of the complainant:
The trial court questioned the financial soundness of the complainant to lend Rs. 45,000/-. The complainant admitted he was not an income-tax payer and had not shown the amount in his income-tax return. However, the court noted that the complainant was not asked to produce his bank pass-books during the trial, and the defense did not call upon the complainant to produce them.

5. Sentence and compensation:
The High Court found the respondent guilty of the offence punishable u/s 138 of the Negotiable Instruments Act. The respondent was sentenced to undergo imprisonment till the rising of the court and to pay compensation of Rs. 45,000/- plus Rs. 10,000/- as prosecution costs to the complainant within two months. In default of payment, the respondent would undergo simple imprisonment for three months. The respondent was ordered to appear before the Judicial Magistrate, First Class, Akola, on 2.3.2010, and compensation, if not paid, would be recovered as a fine.