2020 (1) TMI 1645 - HC - Indian Laws

Dishonor of Cheque - Failure to establish the guilt of the respondent and acquittal of the offence punishable under Section 138 of the Negotiable Instrument Act, 1881 - failure to consider that statutory presumptions that arose in favour of the appellant under Sections 118 and 139 of the Act - HELD THAT - The learned Judicial Magistrate, First Class had rightly concluded that there was manipulation in the loan application and besides the resolution to sanction the loan was even prior to the application for loan which improbabilised the case of the complainant or rather probabilised the case in defence that there was no such transaction whatsoever. The learned Judicial Magistrate, First Class had therefore, rightly concluded that the respondent had successfully rebutted the presumption under Section 139 of the Act and that the appellant/complainant had failed to prove its case beyond all reasonable doubt. The complainant had failed to lead any evidence to prove the signature of the respondent on the said document nor had the complainant got the signature examined through a handwriting expert. In the face of all these observations, the learned Judicial Magistrate, First Class therefore, categorically held and rightly so that the respondent was not guilty and acquitted him of the commission of the offence punishable under Section 138 of the Act. No interference is called for with the judgment under challenge - Appeal dismissed.

Summary

Issues:
Challenge to judgment of Judicial Magistrate under Section 138 of Negotiable Instrument Act for failure to establish guilt, Misdirection on facts and law, Statutory presumptions under Sections 118 and 139 not considered, Failure to evaluate evidence, Admission of signing cheque by respondent, Rebutting presumption under Section 139, Manager's role in loan application, Manipulation allegations, Defence of misappropriation, Alterations in loan application, Lack of proof of agreement, Non-payment of installments, Audit findings, Resolution for loan sanction, Manipulation in loan application dates, Absence of initials for alterations.

Analysis:
1. The appellant contested the judgment of the Judicial Magistrate, challenging the failure to establish guilt of the respondent under Section 138 of the Negotiable Instrument Act. The appellant argued misdirection on facts and law, highlighting the statutory presumptions under Sections 118 and 139 that were not considered. The appellant emphasized the respondent's admission of signing the dishonored cheque, indicating a legally enforceable debt. The appellant also raised concerns regarding the respondent's role as the manager during the loan application, refuting allegations of manipulation. The appeal sought interference based on these grounds.

2. The appellant's advocate reiterated the grounds in the appeal memo, emphasizing the need to overturn the judgment. The respondent's advocate countered, claiming the appellant failed to prove the cheque was issued for a legally enforceable debt. The Judicial Magistrate had found in favor of the respondent, stating the defense was probable, leading to the appellant's failure to establish guilt. The court considered both advocates' submissions before deciding on the appeal.

3. The respondent presented arguments of misappropriation in the appellant's society, alleging alterations in the loan application without initials, possibly by the chairman. The respondent contended that the appellant did not prove the alleged agreement, and non-payment of installments supported the defense's probability. The respondent's defense included testimony about a cousin taking blank signed cheques for job security, raising doubts about the loan application's authenticity.

4. The Judicial Magistrate analyzed the evidence, noting discrepancies in the loan application dates, lack of signature verification, and alterations without initials. The audit findings of misappropriation and inconsistencies in the resolution for loan sanction further supported the respondent's defense. The court concluded that the respondent successfully rebutted the presumption under Section 139, leading to the appellant's failure to prove guilt beyond a reasonable doubt. Consequently, the respondent was acquitted of the offense under Section 138.

5. The court dismissed the appeal, finding no merit in challenging the Judicial Magistrate's judgment. The decision upheld the respondent's successful defense and the lack of evidence to establish the appellant's case conclusively.