2021 (1) TMI 21 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - acquittal of accused - grounds urged in the appeal are that the Trial Judge has committed an error in coming to the conclusion that the complainant was insolvent even though there were no material to declare him as insolvent - HELD THAT - The evidence of P.W.1 does not inspire the confidence of the Court that loan transaction was taken place between the complainant and the accused. The accused has led the probable defence by examining D.W.2 and also setting up the defence immediately after the receipt of notice and gave the reply in terms of Ex.P.8 that the cheque given to Raghupathi Bhat on 26.03.2007 was misused by the complainant. No doubt, though the complaint filed by the accused was registered, after the investigation 'B' report was filed. The Court has to take note of the material on record. The very contention that the Appellate Court ought to have drawn the presumption in favour of the accused, cannot be accepted. Mere signature found in Ex.P.1 is not a ground to draw the presumption. Instead the accused has made out the case leading probable defence rebutting the evidence of the complainant. There are no error committed by the Appellate Court in re-appreciating the evidence available on record. However, committed an error in coming to the conclusion that the complainant is insolvent and the Appellate Court ought not to have made such an observation. But the documentary proof discloses that the complainant was not having sufficient amount in his account and also in his wife's account to lend the money during the particular period. However, it does not mean that the complainant became insolvent - there are no error committed by the Appellate Court in coming to the conclusion that the accused rebutted the case of the complainant. Appeal dismissed.

Summary

Issues Involved:
1. Whether the Appellate Court committed an error in acquitting the accused for the offence punishable under Section 138 of the N.I. Act?
2. What order should be passed?

Detailed Analysis:

Issue 1: Error in Acquitting the Accused under Section 138 of the N.I. Act

The complainant alleged that the accused borrowed ?2,80,000 and issued a post-dated cheque, which was dishonored due to "funds insufficient." The Trial Court convicted the accused, but the Appellate Court reversed the conviction and acquitted the accused. The complainant argued that the Appellate Court erred by assuming he was insolvent without material evidence and failed to consider the strong presumption in favor of the complainant due to the accused's admitted signature on the cheque.

The complainant's counsel contended that the accused's defense of borrowing from Raghupathi Bhat and the cheque being misused was unsubstantiated, as Raghupathi Bhat was not examined. The Appellate Court's reasoning that the complainant did not file income tax returns or examine his wife was flawed. The complainant's counsel emphasized that the Appellate Court wrongly concluded that the complainant was insolvent.

Conversely, the accused's counsel argued that the complainant's claim of withdrawing money from his wife's account was unsubstantiated. The accused's defense of borrowing ?50,000 from Raghupathi Bhat and the cheque being misused was consistent, and a complaint was filed against the complainant and Raghupathi Bhat, which resulted in a 'B' report after police investigation.

The Court re-appreciated the material on record. The complainant's evidence was inconsistent regarding the dates and amounts lent. The complainant claimed to have withdrawn money from his wife's account, but bank statements (Ex.P.20) showed insufficient funds during the relevant period. The complainant's inconsistent statements about the source of funds (sale proceeds of a hotel, business savings, and vehicle sale) further weakened his case.

The accused's defense was supported by D.W.2, who testified about the loan from Raghupathi Bhat. The accused admitted to filing a complaint against the complainant and Raghupathi Bhat, which resulted in a 'B' report. The evidence suggested that the complainant did not have the financial capacity to lend ?2,80,000.

The Court found that the Appellate Court did not err in acquitting the accused. The complainant's evidence lacked credibility, and the accused provided a probable defense. The Appellate Court's observation about the complainant's insolvency was unnecessary, but the overall conclusion of acquittal was upheld.

Issue 2: Order

The appeal was dismissed, affirming the Appellate Court's judgment of acquittal. The Court found no error in the Appellate Court's re-appreciation of evidence and concluded that the accused successfully rebutted the complainant's case.