2016 (12) TMI 1872 - HC - Indian Laws

Dishonor of cheque - Legally enforceable debt or not - offence under Section 138 of the Negotiable Instruments Act proved beyond reasonable doubt, or not - acquittal of accused under Section 255(1) Cr.P.C. - HELD THAT - A perusal of Section 190 Cr.P.C. indicates that it permits anyone to approach the Learned Magistrate to file a complaint. In fact, it does not prescribe has any qualification for an individual eligible to prefer a complaint. No wonder, any one can set the Criminal Law in Motion by filing a complaint of facts constituting an offence before the Magistrate concerned, who is empowered to take cognizance. One cannot brush aside an important fact that an explicit assertion as to the knowledge of 'Power of Attorney Holder' about the transaction in issue must be stated in the complaint, as opined by this Court. If a 'Power of Attorney Holder' who is not possessing any knowledge as to the transaction in question, then, he cannot be examined as a witness in a given case. A 'Power of Attorney Holder' can adduce evidence before the Court concerned and also to prove the averments of the complaint, he can verify on oath, but the rider is that a 'Power of Attorney Holder' should have witnessed the transaction as an Agent of the Payee/Holder in Due Course should possess the requisite knowledge about the transaction in question - the strict liability under Section 138 of the Negotiable Instruments Act can be enforced only when cheque was issued in discharge of any legally enforceable debt or other liability partly or wholly. However, the onus to establish that cheque was not issued against a legally enforceable debt was on the Respondent/Accused. There is no two opinion of an important fact that a cheque must be issued in respect of either post or existing debt or other liability. One of the essential ingredients of an offence under Section 138 of the Negotiable Instruments Act is that the cheque was drawn for discharge in whole or part of liability. If this aspect is not covered in the complaint petition, then, it will be a fatal one. Furthermore, an offence as defined in Section 2(n) of the Criminal Procedure Code includes not only the doing of possible act, but by omitting to do something as well - Under the Negotiable Instruments Act, the arising of cause of action is not mere presentation of cheque nor mere dishonour of cheque alone, real cause of action is non payment of cheque sum or non compliance of demand through notice by the 'Drawer' within the statutory period. The strict liability under Section 138 of the Negotiable Instruments Act, 1881 could be enforced only when cheque was issued in discharge of any legally enforceable debt or other liability, partly or wholly the burden to prove the cheque was not issued against the legally enforceable debt, of course is on the Respondent/Accused. Moreover, the term 'Payee' means the party to whom a bill of exchange, cheque or note is payable - this Court is of the considered view that in the instant case, based on the materials available on record, it is not possible for this Court o pronounce a Judgment and therefore opines that 'Remand of the Matter' is just, fair and necessary, otherwise there would be a failure of Justice. Also that, this Court is of the earnest opinion that the evidence of the Complainant is necessary to prosecute the complaint (filed by P.W.1) in order to render a correct Judgment in the case. The Criminal Appeal is allowed.

Summary

Issues Involved:
1. Legality of the Judgment of Acquittal.
2. Examination of Financiers.
3. Authority of the Appellant/Complainant.
4. Admissibility and relevance of evidence.
5. Applicability of Sections 138 and 139 of the Negotiable Instruments Act.
6. Role of Power of Attorney Holder.
7. Existence of legally enforceable debt.

Detailed Analysis:

1. Legality of the Judgment of Acquittal:
The Appellant/Complainant challenged the trial court's judgment of acquittal, arguing that the decision was based on "presumptions, surmises, and conjectures" and that the evidence of P.W.1 was not adequately considered. The trial court had acquitted the Respondent/Accused on the grounds that the financiers were not examined to prove the debt amount, and there was no authorization for debt collection, leading to suspicion on the Complainant's case.

2. Examination of Financiers:
The trial court observed that the financiers, who allegedly lent money to the Respondent/Accused, were not examined, and their details were not provided. The Appellant argued that the trial court failed to consider Ex. P2 (Confirmation Letter) and that the execution of this document was undisputed. The Respondent/Accused contended that the Appellant did not have the authority to recover the loan amount and that the financiers' details were not disclosed.

3. Authority of the Appellant/Complainant:
The Appellant claimed to be the Holder of Ex. P2 (Confirmation Letter) and Ex. P3 (Case Cheque) under Section 8 of the Negotiable Instruments Act, 1881, and therefore entitled to recover the amount. The Respondent/Accused argued that the Appellant was not authorized by the financiers to recover the loan amount and that the principal was not disclosed, referring to Sections 195 and 226 of the Indian Contract Act, 1872.

4. Admissibility and Relevance of Evidence:
The trial court did not consider the evidence of P.W.1 (Power Agent of the Complainant) adequately. The Appellant argued that the Respondent/Accused admitted to availing the loan and that the amount was credited to his account, as reflected in Ex. D1 (Bank Statement). The Respondent/Accused claimed that the amount was repaid and that the Appellant's case was based on misused blank cheques.

5. Applicability of Sections 138 and 139 of the Negotiable Instruments Act:
The trial court held that the offence under Section 138 of the Negotiable Instruments Act was not proved beyond reasonable doubt, and the presumption under Section 139 was rebutted. The Appellant argued that the trial court failed to consider the ingredients of Section 50 (Effect of Endorsement) and that the Respondent/Accused had executed Ex. P2 under Section 187 of the Indian Contract Act, 1872.

6. Role of Power of Attorney Holder:
The court noted that a Power of Attorney Holder can file a complaint but cannot be examined as a witness in the capacity of the Complainant. The Appellant's brother, as the Special Power of Attorney Holder, filed the complaint, but the Complainant himself was not examined as a witness. The court emphasized that the Power of Attorney Holder must have knowledge of the transaction to be examined as a witness.

7. Existence of Legally Enforceable Debt:
The court highlighted that the existence of a legally recoverable debt is not a matter of presumption under Section 139 of the Negotiable Instruments Act. The cheque must be issued in discharge of a legally enforceable debt. The Respondent/Accused argued that there was no privity of contract with the Appellant and no legally enforceable debt.

Conclusion:
The court concluded that the matter should be remanded for fresh disposal, as the evidence of the Complainant and the financiers was necessary to render a correct judgment. The trial court was directed to provide an opportunity to the Appellant/Complainant to examine himself and the financiers, and to allow the Respondent/Accused to adduce rebuttal evidence. The trial court was instructed to dispose of the case within three months, adhering to the principles of natural justice. The criminal appeal was allowed, and the judgment of acquittal was set aside.