2007 (11) TMI 700 - HC - Indian Laws

Summary

Issues Involved:
1. Conviction and Sentence u/s 138 of the Negotiable Instruments Act.
2. Execution and Validity of the Cheque.
3. Presumption u/s 118(a) and 139 of the N.I. Act.
4. Acquittal by the Lower Appellate Court.

Summary:

1. Conviction and Sentence u/s 138 of the Negotiable Instruments Act:
The appellant, the complainant in C.C. No. 297 of 1996, alleged that the accused borrowed Rs. 2 lakhs and issued a cheque (Ext. P1) which was dishonored due to insufficient funds. The trial court convicted the accused u/s 138 of the N.I. Act, sentencing him to six months of simple imprisonment. The accused appealed, and the Additional Sessions Judge, North Paravur, set aside the conviction and sentence, leading to the present appeal by the complainant.

2. Execution and Validity of the Cheque:
The trial court found that the cheque was issued in discharge of debt but was dishonored due to insufficient funds. However, the lower Appellate Court found that the complainant failed to prove the passing of consideration and the execution of the cheque. The accused admitted his signature but claimed the cheque was blank when handed over. The lower Appellate Court concluded that the complainant did not prove the execution of the cheque, thus denying the presumption u/s 118(a) and 139 of the N.I. Act.

3. Presumption u/s 118(a) and 139 of the N.I. Act:
The appellant argued that the statutory presumption u/s 118(a) and 139 favored the complainant and was not rebutted by the accused. However, the lower Appellate Court held that the presumption regarding consideration could only be drawn if the execution was proved. The complainant failed to establish the execution of the cheque and the passing of consideration, thus the presumption was not available.

4. Acquittal by the Lower Appellate Court:
The lower Appellate Court found that the complainant did not satisfy the conditions of being a 'holder' of the cheque as per Section 8 of the N.I. Act. It also noted that the dishonor of the cheque, issuance of notice, and non-payment did not assume importance due to the failure to prove execution and consideration. The court concluded that no offence u/s 138 was established, leading to the acquittal of the accused. The High Court upheld this decision, noting that the complainant failed to prove the execution of the cheque and the existence of a legally enforceable debt or liability.

Conclusion:
The High Court dismissed the appeal, affirming the lower Appellate Court's decision to acquit the accused, as the complainant failed to prove the execution of the cheque and the existence of a legally enforceable debt or liability.