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2021 (1) TMI 380 - HC - Indian LawsDishonor of Cheque - acquittal of the accused - rebuttal of presumption - burden to prove - it is contended that the Trial Judge has committed an error in coming to the conclusion that the burden is on the complainant to establish the case against the accused beyond doubt - HELD THAT - It is settled law that once the cheque is admitted and there is no dispute with regard to the signature and so also notice was issued the Court has to draw mandatory presumption under Section 139 of the N.I. Act. No doubt in the case on hand the accused has given reply denying the issuance of the cheque. But in the cross-examination of D.W.1 he categorically admits that he issued the cheques and the contents of Ex.P1 cheques in both the cases are also written by him. It has to be noted that P.W.1 in the cross-examination admits that he filled up the contents of Ex.P1. It is also important to note that D.W.1 categorically admits that no ordinary prudent man would sign the cheque and keep it with him. It is the case of the accused that he lost bunch of papers and cheques and there is no any explanation as to why he singed the bunch of cheques and kept with him. It is also important to note that he relied upon Ex.D1 which does not specify the cheques that he lost. It appears that after the issuance of the cheques he gave the letter to the police which is not the complaint. He had only requested the police to inform him if they find the documents and the cheques which he had lost and to hand over. It is specifically mentioned that as on the date of borrowing the loan amount and issuing of the cheques accused Nos.2 and 3 were in charge and responsible for the conduct of the business of the Company and they are responsible for all financial transactions of the Company. Hence they are liable to be prosecuted under Section 138 of the N.I. Act. When a specific pleading has been made in para Nos.6 and 8 of the complaint that these accused persons were looking after the affairs of the company the Trial Court ought not to have come to the conclusion that Section 141 of the N.I. Act has not been complied. The cheque is also issued on behalf of the company. It is also important to note that the Trial Judge failed to take note of the B report filed by the police against the complaint-Ex.D2 and the very theory of the cheques having been stolen has not been proved by leading any probable evidence before the Trial Court. The cheque - Ex.P1 also bears the common seal of the Company. When such being the case the Trial Judge ought not to have come to the conclusion that accused has rebutted the case of the complainant relying upon the documents Ex.D1 and Ex.D2 - The very conclusion of the Trial Court that the accused has rebutted the case of the complainant is perverse as the Trial Judge has not considered the admission elicited from the mouth of D.W.1 with regard to the issuance of the cheques and the signature on the said cheques and so also that an ordinary prudent man would not sign and keep the cheque with him. He claims that not only the complaint on the cheques Ex.P1 and Ex.P2 has been filed but also several other complaints have been filed. But there is no explanation to the effect that if he has not issued the said cheques why he had signed and kept the bunch of cheques. Under the circumstances it requires interference of this Court. The impugned judgment of acquittal passed on the file of XIII Additional Chief Metropolitan Magistrate Bengaluru is hereby set aside - Appeal allowed.
Issues Involved:
1. Error in acquitting the accused under Section 138 of the Negotiable Instruments Act (N.I. Act). 2. Applicability of Section 139 of the N.I. Act regarding presumption. 3. Requirement of resolution by Directors for availing a loan. 4. Validity of the defense of stolen cheques. 5. Compliance with Section 141 of the N.I. Act. Issue-wise Detailed Analysis: 1. Error in Acquitting the Accused under Section 138 of the N.I. Act: The complainant alleged that the accused issued cheques for ?5,00,000 and ?3,00,000, which were dishonored with the endorsement "payment stopped by the drawer." The Trial Judge acquitted the accused, concluding that the complainant failed to establish the case beyond doubt. The High Court found this conclusion erroneous, emphasizing that the cheques bore the accused's signatures and the defense of stolen cheques was not substantiated with evidence. The High Court held that the Trial Judge failed to appreciate the evidence properly and wrongly acquitted the accused. 2. Applicability of Section 139 of the N.I. Act Regarding Presumption: The complainant argued that the Trial Judge failed to draw the presumption under Section 139 of the N.I. Act, which mandates that once the issuance of a cheque is admitted, it is presumed to be for the discharge of debt or liability. The High Court agreed, stating that the accused admitted the signatures on the cheques and the issuance of the cheques. Therefore, the presumption under Section 139 should have been drawn, and the burden was on the accused to rebut this presumption, which they failed to do convincingly. 3. Requirement of Resolution by Directors for Availing a Loan: The Trial Judge noted the absence of a resolution by the Directors to avail the loan. The High Court clarified that such a resolution is not mandatory for a private limited company. The complainant provided Ex.P15, a loan application signed by the accused, which sufficed to show the loan agreement. The High Court found that the Trial Judge erred in considering the lack of a resolution as a ground for acquittal. 4. Validity of the Defense of Stolen Cheques: The accused claimed the cheques were stolen and filed a complaint (Ex.D1) in 2004, which led to a 'B' report by the police. However, the High Court noted inconsistencies and delays in the accused's actions, such as filing the private complaint two years later and failing to provide a satisfactory explanation for the delay. The High Court found the stolen cheque defense unsubstantiated and not credible, particularly since the accused admitted to signing the cheques. 5. Compliance with Section 141 of the N.I. Act: The Trial Judge concluded that the complainant did not comply with Section 141, which deals with the offenses by companies. The High Court disagreed, pointing out that the complaint explicitly mentioned that accused Nos.2 and 3 were responsible for the company's financial transactions. The High Court held that the Trial Judge overlooked these specific averments, which were sufficient to implicate the accused under Section 141. Conclusion: The High Court allowed the appeals, setting aside the acquittal and convicting the accused under Section 138 of the N.I. Act. The accused were directed to pay fines of ?3,50,000 and ?5,50,000 in respective cases within eight weeks, failing which they would undergo simple imprisonment for one year. The Trial Court was instructed to secure the accused if they failed to pay the fines. The Registry was directed to transmit the records to the Trial Court immediately.
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