2019 (8) TMI 1788 - SC - Indian Laws

Dishonor of Cheque - insufficient funds - discharge of legally enforced debt or not - acquittal of the accused - HELD THAT - In the present case, the appellant, accused was acquitted by the Trial Court inter alia on the ground that the respondent had not established that there was a legally enforceable debt. Since the appellant was convicted only in the High Court, the appellant had substantial ground to raise in the criminal appeal filed before this Court. Because of the reversal of the acquittal by the High Court and the conviction recorded only by the High Court, the appellant had opportunity of negotiating for settlement in this Court after filing the appeal. In such facts and circumstances of the case, this is not a case where cost is to be imposed. In view of the settlement arrived at between the parties, the conviction of the appellant under Section 138, N.I. Act in Criminal Appeal Nos. 588 and 589 of 2018 is set aside and the appellant is acquitted of the charges under Section 138 of the N.I. Act. Appeal allowed.

Summary

Issues:
Appeal against conviction under Section 138 of the Negotiable Instruments Act, 1881 based on insufficiency of funds in presented cheques. Settlement agreement between parties during pendency of appeal leading to acquittal.

Analysis:
The appeals before the Supreme Court arose from a judgment by the High Court convicting the appellant under Section 138 of the Negotiable Instruments Act, 1881. The respondent had filed a complaint under Section 138 based on two cheques with insufficient funds. The Trial Court had initially acquitted the appellant, stating that the complainant had not proven the cheques were issued to discharge a legally enforceable debt. However, the High Court reversed this decision and convicted the appellant, imposing imprisonment and fines.

During the appeal process, the parties reached a mutual settlement agreement. The appellant made payments to the respondent as per the settlement terms, and both parties agreed to withdraw all cases filed against each other. The appellant's counsel argued that due to the settlement, the conviction under Section 138 should be set aside, relying on previous court guidelines on compromises in such cases. The appellant had a strong ground for appeal as the conviction was based solely on the High Court's decision, following the Trial Court's acquittal.

Considering the settlement and the circumstances of the case, the Supreme Court set aside the conviction under Section 138 of the Negotiable Instruments Act and acquitted the appellant. The Court noted the mutual agreement to withdraw all cases, thereby bringing the legal proceedings between the parties to a close. The appeals were allowed accordingly, bringing an end to the legal dispute.