2017 (7) TMI 1433 - HC - Indian Laws

Dishonor of Cheque - discharge of legally enforceable debt or not - benefit of acquittal - benefit of the statutory presumption under Section 118(a) and Section 139 of the Negotiable Instruments Act - witnesses not examined - alleged liability is owed to a person other than the payee - offence under Section 138 of the Negotiable Instruments Act can be attracted or not - HELD THAT - From a reading of the complaints as well as the evidence of PW1, it can be seen that no iota of material evidence has been let in to prove the crucial fact that the complainant s husband had necessary source of funds at the relevant time to raise such a huge amount of Rs.15,00,000/- for being advanced to the accused. The Apex Court in the judgment in JOHN K. ABRAHAM VERSUS SIMON C. ABRAHAM ANOTHER 2014 (1) TMI 528 - SUPREME COURT has held that in order to enable the complainant to draw the benefit of statutory presumption envisaged under Section 118 (a) and Section 139 of the Negotiable Instruments Act, the burden is quite heavy on the complainant to prove that he had the requisite source of funds for making borrowal of the money for the transaction in question. PW1 has claimed in her deposition that there was written agreement between the complainant s husband and the accused which would show the alleged liability of Rs.15,00,000/- owed by the accused to her husband and that a photocopy of the said alleged sale agreement is available. But, the complainant has not produced either the original or photocopy of any such agreement. PW1 has also deposed that apart from her, there were two other independent witnesses who had seen the tendering of the three cheques by the accused to the complainant. But, none of such persons have been examined as witness in the instant case to prove such a fact. These aspects could also raise a serious suspicion in the mind of any criminal court about the very believability and genuineness of the case set up by the complainant - Except making such claims, no convincing evidence whatsoever has been let in in this case to prove even remotely any such factual aspects. Therefore, in the light of all these aspects, the irresistible conclusion that could have been arrived at by a criminal court is that it is highly unsafe to raise such a conviction in the light of serious deficiencies in prosecution of the present complaints. Both the courts below have shutout all these crucial and relevant aspects. This Court is of the firm view that the accused is entitled for the benefit of acquittal. The accused is acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act in these three complaints and he is set at liberty - petition disposed off.

Summary

Issues Involved:
1. Non-disclosure of material facts in the complaint.
2. Lack of evidence regarding the source of funds.
3. Absence of corroborative evidence.
4. Payee mismatch and its impact on Section 138 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Non-disclosure of Material Facts in the Complaint:
The judgments highlighted that the complaints only made a bald averment about the business transactions between the complainant’s husband and the accused, resulting in a liability of Rs.15,00,000/-. The complaints, statutory demand notice, and proof affidavit were silent on the specifics of these transactions, including dates and particulars. This non-disclosure was deemed a suppression of crucial facts, depriving the accused of a fair trial. The court referenced K.K.Divakaran v. State of Kerala, emphasizing that such suppression is intended to develop a story post-defense revelation, which is against the principles of a fair trial under Article 21 of the Constitution of India.

2. Lack of Evidence Regarding the Source of Funds:
The court noted that no material evidence was presented to prove that the complainant’s husband had the necessary funds to lend Rs.15,00,000/- to the accused. The Apex Court’s ruling in John K.Abraham v. Simon C.Abraham and K.Subramani v. K.Damodara Naidu was cited, which mandates that the complainant must prove the source of funds to draw the statutory presumption under Section 118(a) and Section 139 of the Negotiable Instruments Act. The absence of such evidence rendered it unsafe for the court to convict the accused.

3. Absence of Corroborative Evidence:
The complainant claimed there was a written agreement and independent witnesses to the cheque handover, but neither the agreement nor the witnesses were produced in court. This raised serious doubts about the credibility of the complainant’s case. The court noted that these deficiencies should have been considered by the lower courts, and their omission constituted a serious illegality.

4. Payee Mismatch and Its Impact on Section 138:
The court addressed the argument that the liability was owed to the complainant’s husband, but the cheques were made payable to the complainant. This discrepancy was argued to invalidate the charges under Section 138 of the Negotiable Instruments Act, as the payee was not the person to whom the liability was owed.

Conclusion:
The court concluded that the non-disclosure of material facts, lack of evidence regarding the source of funds, absence of corroborative evidence, and the payee mismatch collectively rendered the prosecution’s case unconvincing. The judgments of the lower courts were set aside, and the accused was acquitted of the charges under Section 138 of the Negotiable Instruments Act. The accused was ordered to be set at liberty, and certified copies of the order were to be produced before the trial court for necessary information.