2016 (7) TMI 1610 - HC - Indian Laws

Dishonor of Cheque - Discrepancies as regards the transaction for which the disputed cheque is alleged to be given - applicability of section 118 r/w with section 139 of the Act - HELD THAT - It is now well settled that while the complainant is required to establish the case beyond reasonable doubt, the accused can discharge the burden on preponderance of probabilities. This can be done on the basis of the cross examination of the witness of the complainant and any other material available on the record and it is not necessary that for this purpose the accused should enter into the witness box. The question really is about the extent to which such presumption can operate and, can the benefit of such presumption be availed when the case set up by the complaint, is found to be not substantiated. At the cost of repetition, it is necessary to state that the case is that the amount of ₹ 2.50 crores was paid as consideration for purchase of iron ore which transaction never materialized and towards refund of the part of the consideration the cheque was passed. The poof of such a case presupposes that the payment by the respondent/complainant to the petitioner/accused is proved. In the present case admittedly the payment is made to Chowgule and Company and not to the accused and as noticed earlier, even that aspect is not proved on record, as has been admitted by PW 1 on basis of the statement Exhibit 58. Though the respondent claims that the said transaction is the same transaction as in Exhibit 51, the agreement on the contrary shows that it is between M/s. Grand Resources and the petitioner. The findings as recorded by the Courts below are against the weight of the evidence and not borne out of the record and are clearly unsustainable - Criminal Revision application is allowed.

Summary

Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act.
2. Presumption under Sections 118 and 139 of the Negotiable Instruments Act.
3. Variance in the complainant’s case and evidence.
4. Territorial jurisdiction and authority to depose.
5. Validity and service of legal notice.

Issue-wise Detailed Analysis:

1. Conviction under Section 138 of the Negotiable Instruments Act:
The petitioner was convicted by the Judicial Magistrate First Class for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, and sentenced to six months of simple imprisonment and payment of ?1.5 crores as compensation. The Sessions Judge upheld this conviction on appeal. The petitioner challenged this conviction and sentence in the High Court.

2. Presumption under Sections 118 and 139 of the Negotiable Instruments Act:
The petitioner argued that the presumption under Sections 118 and 139 cannot be the sole basis for conviction and claimed to have discharged the burden of proof on the preponderance of probability. The respondent contended that the petitioner failed to rebut this presumption as the petitioner did not testify or present any defense witnesses.

3. Variance in the Complainant’s Case and Evidence:
The High Court observed significant discrepancies between the complainant's case and the evidence presented. The complainant initially claimed that the petitioner agreed to supply iron ore worth ?2.5 crores, but the evidence revealed that the agreement was between the petitioner and M/s. Grand Resources, not the respondent. Additionally, the payment was made to M/s. Chowgule and Company, not directly to the petitioner. The High Court found that these discrepancies were not minor and struck at the root of the complainant’s case, leading to the conclusion that the complainant failed to prove the payment of ?2.5 crores to the petitioner.

4. Territorial Jurisdiction and Authority to Depose:
The High Court noted that the parties did not raise any issues regarding the territorial jurisdiction of the Magistrate or the authority of PW 1 to depose on behalf of the respondent. Therefore, these issues were not examined further.

5. Validity and Service of Legal Notice:
The High Court examined whether the legal notice was properly issued and served. The notice was addressed to M/s. Kalpana Mines & Minerals but not specifically to the proprietress, Kalpana Gawade. The Court emphasized that a proprietary firm has no independent legal existence, and the notice should have been addressed to the proprietress. The Court found that the summons in the complaint was correctly addressed, but the legal notice was not, leading to the conclusion that the notice was not properly served.

Conclusion:
The High Court found that the impugned judgments were based on a misappreciation of evidence and discrepancies that were not minor. The Court concluded that the respondent failed to establish the case beyond a reasonable doubt, and the petitioner successfully rebutted the presumption under Sections 118 and 139. Consequently, the High Court allowed the criminal revision application, set aside the judgments of the lower courts, acquitted the petitioner of the offence under Section 138 of the Negotiable Instruments Act, and canceled the petitioner’s bail bonds.