2020 (11) TMI 890 - HC - Indian Laws

Dishonor of Cheque - acquittal of accused - Privity of Contract - main grounds urged in the appeal is that the Trial Court had earlier convicted the accused based on the very same material available on record and there are no changed circumstances - HELD THAT - The complainant has not made out a case for legally recoverable debt payable by the accused. It is also important to note that in the cross-examination he categorically admitted that while filing the complaint, he did not mention anything about the transaction between him and Srinivas at the instance of the accused and the same was suppressed. Only during the course of cross-examination, it is elicited that all these transactions had taken place between the parties. Even though the accused has taken the contention that the subject matter of the cheque was stolen, which was kept in the bag and also not led any rebuttal evidence, the answers elicited from the mouth of P.W.1 is clear that there was no legally recoverable debt and also the admissions elicited from the mouth of P.W.1 regarding receipt of payment from the said Srinivas and also the accused has paid the amount to Srinivas - the Trial Judge has not committed any error in acquitting the accused considering the material available on record i.e., the admission of P.W.1 and no defence evidence has been adduced. The accused has made out the case that there was no material to disclose that there was a legally recoverable debt from the accused. The Trial Court comes to the conclusion that the said amount is not legally recoverable debt between the complainant and the accused on the date of the issuance of the cheque. The observation that the same is recoverable within three years, is not correct. However, the definite conclusion that there is no privity of contract between the complainant and the accused in respect of this transaction of issuance of cheque in coming to the conclusion that there was no legally recoverable debt. This Court cannot find fault with the reasoning assigned by the Trial Court. The complainant has not made out a case and the presumption was rebutted by the accused in effectively cross-examining P.W.1 and plausible evidence has been placed before the Court that there was no liability on the part of the accused in issuance of those two cheques. The second mode of rebutting the case of the complainant has been successfully made out by the accused and rebutted the case of the complainant - This Court has already held that the findings of the Trial Court cannot be reversed unless the appreciation of the evidence available on record prima-facie is perverse and there was a glaring error on the part of the Trial Court in appreciating the material and the same should be apparent on record and this Court does not find the same. Appeal dismissed.

Summary

Issues Involved:
1. Error in acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act.
2. Determination of legally recoverable debt.

Issue-wise Detailed Analysis:

1. Error in acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act:

The complainant alleged that the accused received an advance amount of ?9,50,000/- for purchasing a site and issued two cheques totaling this amount. These cheques were dishonored due to "account closed/transferred to." The complainant issued a legal notice, but the accused did not pay the amount, leading to the filing of the complaint under Section 138 of the Negotiable Instruments Act.

The Trial Court initially convicted the accused, but on appeal, the conviction was set aside and remanded for the accused to present his defense. Despite no new evidence from the accused, the Trial Court acquitted him. The complainant argued that the Trial Court erred by not considering the lack of rebuttal evidence from the accused and by accepting the defense that the cheques were stolen without any material proof.

The High Court re-examined the evidence, noting the accused did not provide any rebuttal evidence and relied on cross-examination of P.W.1 (complainant). The complainant admitted to several facts during cross-examination, including the strained relationship with the accused and the involvement of a third party, Srinivas, in the transaction. The High Court found that the Trial Court did not err in acquitting the accused, as the complainant's admissions and lack of direct evidence of a recoverable debt weakened his case.

2. Determination of legally recoverable debt:

The complainant claimed that the accused owed a legally recoverable debt. However, the evidence showed that the complainant paid ?9,75,000/- to the accused, who then paid it to Srinivas for a site purchase. The sale agreement between the complainant and Srinivas was canceled, and the complainant received part of the amount and a cheque from Srinivas, which was dishonored. The complainant admitted to filing a complaint against Srinivas and withdrawing it after a settlement.

The High Court noted that the complainant did not mention the transaction with Srinivas in his initial complaint or affidavit, which emerged only during cross-examination. This omission and the admissions during cross-examination indicated no legally recoverable debt from the accused. The High Court emphasized that the presumption under Section 139 of the Act could be rebutted by effective cross-examination, which the accused successfully did.

The High Court concluded that the Trial Court's judgment was not perverse and did not contain glaring errors. The findings were based on the evidence and admissions of P.W.1, showing no legally recoverable debt. Therefore, the High Court upheld the Trial Court's acquittal of the accused.

Order:
The appeal is dismissed.