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2020 (11) TMI 885 - HC - Indian LawsDishonor of Cheque - privity of contract - main contention urged by the accused Company is that there was no transaction between the complainant and the accused - Whether the appellate Court has committed error in reversing the finding of the trial Court in coming to the conclusion that the accused ppersons-DWs.1 and 2 are not liable to pay the amount to the complainant? HELD THAT - It is clear that the Court has to see the wisdom of the legislature in bringing the enactment and while interpreting the law, the Court has to take note of the object and statement in bringing the enactment and the courts are meant to interpret the law with the object of special enactment. This Court has to draw the presumption in favour of the complainant under Section 139 of the Act. Accused Nos.1 and 2 have stepped into the witness box and adduced the evidence. The answers elicited from the mouth of D.Ws.1 and 2 is clear that they have issued the subject matter of cheque Ex.P.1 in discharge of the liability in respect of M/s. IGSL, wherein they were the Directors. The accused persons though set up the specific defence that the cheque was misused by collecting the same from the former employee of M/s. IGSL, the same has not been substantiated by placing any cogent evidence before the Court. The accused failed to place any plausible evidence before the Court to rebut the evidence of the complainant and hence the accused persons have failed in discharging their liability and discharging their burden rebutting evidence of the complainant. The Appellate Court has committed an error in coming to the occlusion that there was no legally recoverable debt and there was no transaction between the complainant and the accused and the admitted document is in respect of ₹ 86,00,000/- and the cheque is for an amount of ₹ 2,30,00,000/-. It is emerged in the evidence that they agreed to pay interest at the rate of 9% and in terms of memorandum to pay an amount of ₹ 36,00,000/- and also to issue the shares in respect of ₹ 50,00,000/-. It is the burden on the accused to show as to under what circumstances he has issued the cheque to the tune of ₹ 2,30,00,000/-, if there was no liability and the same is also not discharged and the accused has not explained in his evidence what made them to issue the cheque to the tune of ₹ 2,30,00,000/-. When such being the case, the Appellate Court ought not to have proceeded to make such an observation and acquit the accused. The Appellate Court failed to draw the presumption and nothing has been discussed with regard to the presumption available in favour of the complainant and whether the accused has rebutted the presumption has also not been discussed in the judgment. Hence, the impugned judgment of the Appellate Court requires to be interfered with and liable to be set aside. Having taken note of the fact that the cheque was issued in 2006 and now we are in 2020, it is not appropriate to interfere with the judgment of the Trial Court. Hence, there are no reasons to interfere with regard to the quantum of amount to be paid, as directed by the Trial Court. Appeal allowed.
Issues Involved:
1. Whether the appellate court erred in reversing the trial court's finding that the accused are not liable to pay the amount to the complainant. 2. What order should be passed? Issue-wise Detailed Analysis: 1. Whether the appellate court erred in reversing the trial court's finding that the accused are not liable to pay the amount to the complainant: The factual matrix shows that accused Nos. 1 and 2 issued a cheque dated 02.08.2006 for ?2,30,00,000/- to the complainant, which was dishonored due to 'funds insufficient'. The complainant issued a legal notice, to which the accused did not respond, leading to a complaint being filed. The trial court convicted the accused, but the appellate court reversed this decision, leading to the present appeal. The complainant argued that the issuance of the cheque by the accused was not disputed and that the appellate court erred in concluding that the accused were not liable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complainant emphasized that the accused admitted to signing the cheque, which should invoke the statutory presumption under Section 139 of the NI Act. The defense argued that the cheque was misused and not issued for legally recoverable debt, and highlighted pending civil suits. The court examined the evidence, noting that the complainant admitted there was no direct transaction with the accused company but claimed the cheque was issued to discharge the liability of M/s. IGSL, where the accused were directors. The trial court found this credible, but the appellate court did not. The court referred to the principles laid down in the judgments of the Madras High Court and the Supreme Court, emphasizing that a cheque issued for discharging another's debt is within the purview of Section 138. The court observed that the accused failed to substantiate their defense that the cheque was misused. The evidence showed that the accused admitted to signing the cheque and the associated documents. The appellate court's finding that there was no legally recoverable debt was deemed erroneous, as the accused did not effectively rebut the presumption under Section 139 of the NI Act. 2. What order should be passed: The court concluded that the appellate court committed an error in reversing the trial court's judgment. The appellate court failed to consider the presumption under Section 139 and the admissions made by the accused. The trial court's judgment, which directed the accused to pay ?3,00,00,000/-, was restored. The court found no reason to interfere with the quantum of the amount, considering the time elapsed since the issuance of the cheque. Order: (i) The appeal is allowed. (ii) The impugned judgment of acquittal dated 06.07.2010 passed in Criminal Appeal No.657/2009, is hereby set aside. (iii) The judgment of the Trial Court dated 27.05.2009 passed in C.C.No.26376/2007, is restored. (iv) The Registry is directed to pay the amount of ?3,000/- in favor of amicus curiae. (v) The Registry is directed to transmit the Trial Court records to the Trial Court forthwith.
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