2016 (3) TMI 1400 - HC - Indian Laws

Dishonor of Cheque - Friendly Loan - acquittal of the accused - Section 138 of the Negotiable Instrument Act - HELD THAT - The learned Magistrate has found that there are circumstances available on record which reasonably indicate that a businessman like the appellant would not advance a friendly loan of ₹ 3,40,000/- to a stranger like the respondent and that too without there being any receipt obtained from the respondent acknowledging the receipt of a friendly loan of ₹ 3,40,000/- by him. The learned Magistrate has found that the evidence of the complainant that although the accused i.e., respondent No. 1 had issued a receipt to him, the original receipt was handed over back by him to the respondent, is not inspiring any confidence. The learned Magistrate has observed that such version of the complainant or the appellant is hard to be believed as nobody would return such a conclusive and direct proof on mere acceptance of confirmation letter which is also not drafted happily. There are no perversity or arbitrariness in the learned Magistrate drawing a conclusion that the basic requirement of the offence punishable under Section 138 of the Negotiable Instrument Act that the cheque must be issued in discharge of a legally enforceable liability has not been proved beyond reasonable doubt. No doubt, there is a presumption that a cheque is issued in discharge of such a legally enforceable liability/debt, the facts and circumstances appearing in the evidence of the prosecution in this case go to show that the defence taken by the respondent that the cheque was for some other transaction is probable and therefore, one must say, the presumption has stood rebutted. Appeal dismissed.

Summary

Issues:
Appeal against acquittal under Section 138 of the Negotiable Instrument Act.

Analysis:
The case involved an appeal against the judgment and order of acquittal passed by the Metropolitan Magistrate, where the accused was acquitted of the offence punishable under Section 138 of the Negotiable Instrument Act. The appellant, a shop owner, had advanced a loan to the respondent for a company, and upon dishonor of a cheque issued by the respondent, a complaint was filed. The Magistrate found the evidence insufficient to prove the case under Section 138, leading to the appeal.

The High Court noted that the appeal had been pending for a long time, with the appellant being absent on several occasions. Despite the absence of both parties during the hearing, the Court proceeded to examine the record and the impugned judgment. The Court found that the Magistrate's view was reasonable and not arbitrary, as it considered the circumstances surrounding the loan transaction and the lack of proper documentation.

The Court highlighted the Magistrate's observations regarding the lack of a receipt for the loan amount and the questionable return of the original receipt by the complainant to the respondent. The Magistrate's conclusion that the cheque was not issued in discharge of a legally enforceable liability was supported by the evidence presented. The Court emphasized that while there is a presumption that a cheque is issued for a legally enforceable debt, in this case, the defense's claim that the cheque was for a different transaction was probable and rebutted the presumption.

Ultimately, the High Court found no grounds for interference in the Magistrate's judgment and order of acquittal. The appeal was dismissed, upholding the decision that the basic requirement of the offence under Section 138 of the Negotiable Instrument Act had not been proven beyond a reasonable doubt, given the circumstances and evidence presented in the case.