2020 (11) TMI 892 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - burden to prove - legally enforceable debt or not - contravention of Section 269-SS of the Income Tax Act - view taken by the learned Magistrate thereby acquitting the accused is erroneous and not based on sound legal principles - HELD THAT - This Court has every power to re-appreciate, review and reconsider the evidence. After re-appreciating the evidence as above, the conclusion has been drawn that the judgment of acquittal rendered by the learned Trial Court is perverse. Now, when this Court has respondent/accused guilty of committing offence punishable under Section 138 of N.I. Act, the further act would ensue regarding imposition of quantum of punishment. It is clear from the aims and object for the enactment of Negotiable Instruments Act, that the penal provision was introduced to enhance the acceptability of cheque in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer. Honest drawers' interest who issue cheques is safeguarded in the Act itself. The appellant would also be interested in getting her amount back. Therefore, payment of compensation under Section 357 of the Code of Criminal Procedure to the complainant would be in the interest of justice. The punishment that can be awarded for an offence under Section 138 of N.I. Act is imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or both . The next step would be what could be the amount of fine. Here the cheque Exhibit-37 was drawn for ₹ 80,000/-. The complaint was filed in the year 2013 after the statutory notice. The amount became due to complainant from the date of notice. Accused has utilized the said amount till today. Therefore, some amount needs to be given to her above the cheque amount towards interest. Respondent/accused Aarti Uttam Chavan is hereby convicted for the offence punishable under Section 138 of Negotiable Instruments Act - Respondent/accused is hereby sentenced to pay fine of ₹ 1,10,000/- only. The said amount be deposited by respondent before learned Trial Court on or before 1 st of January 2021. In case of failure on the part of the accused to deposit the said amount within the aforesaid period, she should undergo simple imprisonment of three months - Appeal allowed.

Summary

Issues Involved:
1. Whether the complainant had extended a hand loan to the accused.
2. Whether the cheque issued by the accused was towards a legally enforceable debt or liability.
3. Whether the presumption under Section 139 of the N.I. Act was rebutted by the accused.
4. Whether the transaction was unaccounted for and in contravention of the Income Tax Act.
5. Whether the trial court erred in comparing the signatures under Section 73 of the Indian Evidence Act.
6. Whether the trial court's acquittal of the accused was justified.

Issue-wise Detailed Analysis:

1. Whether the complainant had extended a hand loan to the accused:
The complainant claimed to have extended a loan of ?80,000 to the accused, who issued a cheque in return. The complainant presented the cheque, which was dishonored due to insufficient funds. Despite issuing a statutory notice, the accused did not repay the amount. The complainant provided evidence, including her testimony and shop license, to support her claim of having the financial capacity to lend the amount.

2. Whether the cheque issued by the accused was towards a legally enforceable debt or liability:
The accused admitted to issuing the cheque but claimed it was given as security for a chit fund transaction, not a loan. However, the court noted that the accused's defense was inconsistent and unsupported by documentary evidence. The court held that the complainant had established the loan and that the cheque was issued towards a legally enforceable debt.

3. Whether the presumption under Section 139 of the N.I. Act was rebutted by the accused:
The accused's defense, including the testimony of a witness, was deemed inconsistent and unsupported by evidence. The court found that the accused failed to rebut the presumption under Section 139 of the N.I. Act, which states that a cheque is presumed to be issued for the discharge of a debt or liability unless proven otherwise.

4. Whether the transaction was unaccounted for and in contravention of the Income Tax Act:
The accused argued that the loan was unaccounted for and violated Section 269SS of the Income Tax Act. However, the court cited precedents stating that a transaction not shown in income tax returns does not automatically render it unenforceable. The court concluded that the complainant's failure to account for the loan in her tax returns did not invalidate the debt.

5. Whether the trial court erred in comparing the signatures under Section 73 of the Indian Evidence Act:
The trial court compared the signatures on the cheque with admitted signatures of the accused under Section 73 of the Indian Evidence Act. The appellate court found this unnecessary since the accused admitted to signing the cheque. The court stated that the complainant had the authority to complete the cheque under Section 20 of the N.I. Act.

6. Whether the trial court's acquittal of the accused was justified:
The appellate court found that the trial court's acquittal was based on erroneous legal principles and an improper appreciation of evidence. The trial court's reliance on the accused's inconsistent defense and the issue of unaccounted money was misplaced. The appellate court concluded that the complainant had proven the accused's guilt beyond reasonable doubt.

Conclusion:
The appellate court set aside the trial court's acquittal, convicted the accused under Section 138 of the N.I. Act, and imposed a fine of ?1,10,000, with ?1,00,000 to be paid as compensation to the complainant. The court emphasized that the period for depositing the fine would not be extended and that the trial court had no authority to extend this period. If the fine was not deposited, the accused would face three months of simple imprisonment.