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2020 (1) TMI 381 - HC - Indian LawsDishonor of cheque - insufficiency of funds - acquittal for the offence - section 138 of the Negotiable Instruments Act - existence of loan - existence of legally enforceable debt or not - whether the non-production of any licence for providing loan is fatal to the complainant's case? - whether there was existence of any legally recoverable debt and how it has to be considered? HELD THAT - The issue is covered in the case of H. Narasimha Rao. Vs. Venkataram 2006 (10) TMI 504 - KARNATAKA HIGH COURT where it was held that once the cheque is proved that the same was issued with reference to any debt, even if it is a time barred debt, in such an eventuality such stand is not available to the accused that there is no existence of any debt or liability. Therefore, on the said ground, the acquittal recorded by the trial court is not proper. So far as the proceedings u/s.138 of the Negotiable Instruments Act is concerned, the question of the complainant having money lending licence does not arise - acquittal of the accused on the above said ground by the trial court is also not proper and correct. The judgment of acquittal for the offence punishable under Section 138 of the Negotiable Instruments Act is hereby set aside - Appeal allowed.
Issues:
Appeal against judgment of acquittal under Section 138 of Negotiable Instruments Act. Analysis: The appeal was filed against the judgment of acquittal passed by the XVIII ACMM and XX ASCJ, Bengaluru City in a case involving an offence under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused borrowed a sum of money for film production, and when the cheque issued by the accused was dishonored, the complainant filed a complaint. The trial court acquitted the accused on the grounds that the complainant had no license for lending money and failed to prove the existence of a legally recoverable debt. The trial court raised a presumption in favor of the complainant under Section 139 of the Act but acquitted the accused after finding that the presumption was rebutted. The High Court analyzed the evidence presented during the trial, noting that the complainant admitted to the issuance and presentation of the cheque, as well as sending a legal notice to the accused. However, discrepancies arose during cross-examination regarding the date of the loan and the complainant's financial records. The accused admitted to issuing the cheque but claimed it was for a different individual, Swaminathan, and not the complainant. The High Court focused on whether the absence of a money lending license was fatal to the complainant's case and the existence of a legally recoverable debt. Referring to previous judgments, the High Court emphasized that the issuance of a cheque implies an agreement to pay a debt, even if it is time-barred. The court cited cases where the absence of a money lending license did not affect the validity of the debt claim under Section 138 of the Act. The High Court overturned the trial court's acquittal, stating that the accused could not be acquitted based on the absence of a license or the time-barred nature of the debt. The court imposed a fine on the accused, ordering compensation to the complainant and confiscation of a portion of the fine towards litigation expenses. In conclusion, the High Court allowed the appeal, setting aside the judgment of acquittal and convicting the accused under Section 138 of the Negotiable Instruments Act. The accused was sentenced to pay a fine with provisions for imprisonment in default, and compensation was awarded to the complainant. The judgment highlighted the legal principles regarding the issuance of cheques, time-barred debts, and the necessity of proving a legally enforceable debt in cases under Section 138 of the Act.
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