2020 (12) TMI 1006 - HC - Indian Laws

Dishonor of Cheque - funds insufficient - rebuttal of presumption - acquittal of the accused - Section 118 and Section 139 of Negotiable Instrument Act - HELD THAT - The accused contended that cheque in question was a post dated cheque issued for security purposes. Which means accused admitted his signature on cheque and its issuance to complainant. Consequently presumption under Section 118 and 139 of N.I. Act would be available to complainant as per KISHAN RAO VERSUS SHANKARGOUDA 2018 (7) TMI 101 - SUPREME COURT and RANGAPPA VERSUS SRI MOHAN 2010 (5) TMI 391 - SUPREME COURT . As accused failed to substantiate his contention by cogent evidence, it has to be held that he failed to rebut presumption in favour of complainant. The reasons assigned by the trial Court firstly that complainant has failed to prove passing of consideration amount to accused for issuing cheque. The trial court observed that no man of ordinary prudence would lend huge amount of rupees two lakhs, without obtaining any document for security of said amount. The said reason is ex-facie perverse. When there is no dispute about signature on cheque and its issuance, the complainant is entitled for presumption about the same being issued towards discharge of existing debt, and therefore, the complainant is not required by law to prove the said fact. Further, it is the complainant's case that the money was lent against receipt of cheque in question, which was a post dated cheque. The impugned judgment passed by trial Court is set aside, accused is convicted of offence punishable under Section 138 of Negotiable Instruments Act, 1881 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against acquittal under Section 138 of the Negotiable Instruments Act, 1881.

Analysis:
The appeal was filed against the judgment of the Principal Civil Judge and JMFC, Ballari, acquitting the accused of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused borrowed a sum of ?2,00,000 as a hand loan and issued a post-dated cheque which was dishonored due to insufficient funds. The trial court framed relevant points for consideration, including the issuance of the cheque, presentation for encashment, and the commission of the offence. The trial court acquitted the accused after answering the issues in the negative and affirmative as per the judgment.

The complainant challenged the acquittal, arguing that all necessary ingredients of the offence under Section 138 were proven with supporting documents. The defense contended that the burden to prove consideration for the cheque lay with the complainant, and the acquittal was justified. The court examined the evidence presented, including the complainant's testimony and exhibits, to determine the veracity of the claims.

The court noted discrepancies in the trial court's reasoning for acquittal, particularly regarding the passing of consideration and the financial capacity of the complainant. It emphasized the presumption available to the complainant under Section 118 and 139 of the N.I. Act in case of a post-dated cheque issued for security. The court highlighted the complainant's obligation to establish specific facts to prove the offence under Section 138, which were deemed to be fulfilled in this case.

The court rejected the defense's reliance on a previous case, stating that the circumstances and issues differed. Ultimately, the appeal was allowed, and the accused was convicted under Section 138 of the N.I. Act based on the evidence and legal principles discussed in the judgment.

In the sentencing phase, the court considered the financial circumstances of both parties and imposed a fine instead of imprisonment, in line with the compensatory nature of the offence under Section 138. The accused was ordered to pay a fine of ?4,00,000 and compensate the complainant with ?3,90,000, with the remaining amount to be allocated towards prosecution expenses as per Section 357 of the Cr.P.C.