2017 (8) TMI 45 - HC - Indian Laws

Offence under Section 138 of the Negotiable Instruments Act - liability against accused - whether the 3rd accused is also liable for the act committed on behalf of the Firm? - Held that - In the absence of cogent, convincing and acceptable evidence that the 3rd accused was also actively participated in the day-to-day affairs of the 1st accused Firm, criminal liability cannot be fastened on her. Merely because she happened to be the wife of the 2nd accused and since she accompanied her husband at the time of borrowal, it cannot be presumed that she was also actively participated in the day-to-day affairs of the Firm. The Courts below failed to appreciate the evidence in that regard before imposing conviction against the 3rd accused. Accordingly, this Court hold that the conviction and sentence imposed against the 3rd accused for the offence under Section 138 of the Negotiable Instruments Act, are not proper and the same is not sustainable in law. Hence, the conviction and sentence imposed on the 3rd accused/ 3rd revision petitioner is liable to be set aside. In the result, the Criminal Revision case is allowed in part. The conviction and sentence imposed against the 3rd accused/ 3rd revision petitioner alone are set aside. The fine amount, if any, paid by the 3rd accused/ 3rd revision petitioner is directed to be refunded to her. The bail bond, if any, executed by her, shall stand cancelled. However, the conviction and sentence imposed by the Courts below on the other accused are confirmed. Nature of the imprisonment would be the same as ordered by the Courts below in the impugned judgments. The period of sentence already undergone by the 2nd accused, if any, is ordered to be set off. The trial Court is directed to take steps to secure the 2nd accused to undergo the remaining period of sentence, if any.

Summary

Issues:
1. Conviction and sentence under Section 138 of the Negotiable Instruments Act
2. Burden of proof and statutory presumption

Issue 1: Conviction and Sentence under Section 138 of the Negotiable Instruments Act:
The case involves the conviction and sentence of the accused under Section 138 of the Negotiable Instruments Act. The accused, a husband and wife running a Motorcycle company, borrowed a sum of ?10,00,000/- from the complainant for business purposes in 2005. A cheque issued by the 2nd accused was dishonored due to insufficient funds, leading to legal action. The accused's defense was that blank cheques given to an employee were misused. However, the courts found the accused guilty based on evidence of presentation and dishonor of the cheque, statutory notices, and lack of evidence supporting the defense. The courts established that the cheque was issued to discharge a legally enforceable debt, leading to the presumption of guilt under Section 138.

Issue 2: Burden of Proof and Statutory Presumption:
The defense argued that there was no privity of contract between the accused and the complainant, and the burden to prove the debt's enforceability was not met. The accused claimed the blank cheques were misused, but the evidence did not support this claim. The courts emphasized that once a signed cheque is dishonored and notice sent within the statutory period, the offense under Section 138 is presumed. The accused's defense introduced during trial lacked credibility, as key evidence contradicted their claims. The courts concluded that the accused failed to rebut the statutory presumption attached to the cheque. Additionally, the liability of the 3rd accused, the wife, was questioned as there was no evidence of her active involvement in the firm's affairs. The conviction against the 3rd accused was set aside due to lack of evidence supporting her criminal liability.

In conclusion, the High Court partially allowed the Criminal Revision case by setting aside the conviction and sentence of the 3rd accused while confirming the same for the other accused. The judgment highlighted the importance of evidence, burden of proof, and statutory presumptions in cases involving negotiable instruments, ultimately leading to a detailed analysis of each issue raised during the legal proceedings.