2021 (4) TMI 651 - HC - Indian Laws

Dishonor of Cheque - acquittal of accused - dishonoured cheque were towards the discharge of a liability or not - legally enforceable debt for attracting presumption, present or not - rebuttal of presumption or not - applicability of Money Lenders Act - HELD THAT - The evidence on record clearly leads to the conclusion that though the endorsement on the cheque return memo states that the signatory to the account had changed, the real fact borne from the evidence is that concerned cheque was dishonoured as there were no sufficient funds in the account nor was any arrangement made to cover the said cheque. Whether the Judgment passed by the learned JMFC contrary to law and resulted in gross miscarriage of justice by acquitting the respondents/accused? - HELD THAT - It appears that the cheque bears a word Self in place of payee's name. The learned trial Judge held that even self cheque would come within the ambit of Section 138 of the NI Act and held that the complainant is the holder in due course. Whether the cheques have been issued for the discharge in whole or in part of any debt or other liability? - HELD THAT - It is now well settled that the complainant is required to establish the case beyond reasonable doubt whereas the accused can discharge the burden on preponderance of probabilities. This can be done on the basis of cross examination of the witnesses of the complainant and any other material available on the record and it is not necessary for this purpose the accused should enter into the witness box - The question really is about the extent to which such presumption can operate and can the benefit of such presumption be availed then the case set up by the complainant is found to be not substantiated. Application of Money Lenders Act - HELD THAT - A common proposition emerges that when offence under section 138 is in respect of a company section 141 comes into play. It is a penal provision creating vicarious liability and must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in the complaint that the director (arrayed as an accused)in charge of and responsible to the company for the conduct of the business of the company. The complaint should spell out as to how and in what manner the accused was in charge of or was responsible to the company for the conduct of its business. It is matter of record that on all the 12 cheques the signatories are not the same. On six cheques as shown in the chart are issued under the signature of Fredrick and S. Kumar and six under the signature of Fredrick and Kurien. However, in all the 12 complaints all the three persons were made as respondents/accused. Apart from this there is no specific averments who is the director responsible for the affairs of the accused no.1 company. Thus it transpires that complainant himself is not sure as to who were the directors and responsible person - the acquittals of the respondents herein is perfectly justified. It reveals from the record that accused nos.3, 4,5 and 6 are not the signatories to the cheques in dispute. There are no specific averments against these accused that they are connected or responsible to the affairs of the company. The signatories were already resigned and or authority thereof is withdrawn by the company which is made clear giving reply to the notice inspite of that all the nine respondents are arrayed as accused. So far as application of money-lending Act is concerned, in view of Section 6 of the Goa Money-Lenders Act, 2001, every person who is engaged in business of money lending, should apply for licence to the Registrar of money-lending before the prescribed date and in prescribed form annually - there are various transactions of the loan as per the complainant's contention itself. If that would be the case, for his past transactions of money lending, he ought to have after coming into force of the said Act of money lending, registered with the Registrar of money-lending within 15 days. Such transactions cannot be termed as hand loan. He is also claiming that he has received 24% interest. As such, without registration or intimation to the Registrar as per the Goa Money-Lenders Act, the amount so advanced, cannot be termed as legally enforceable debt. Criminal Misc. Applications are allowed.

Summary

Issues Involved:
1. Whether the judgment passed by the learned JMFC is contrary to law and resulted in gross miscarriage of justice by acquitting the respondents/accused.
2. Whether the required ingredients to attract Section 138 of the NI Act were in existence.
3. Whether the appellant proved that the said cheque was issued towards discharge of a legally enforceable debt for attracting presumption in its favor.
4. Whether the appellant has proved that the person committing the offence under Section 138 of the NI Act is a company and every person at the time the offence was committed was in charge of, and was responsible for, the conduct of the business of the company.
5. Whether the Money Lenders Act is applicable in the present circumstances.

Detailed Analysis:

1. Whether the judgment passed by the learned JMFC is contrary to law and resulted in gross miscarriage of justice by acquitting the respondents/accused:
The appeals challenge the judgment of acquittal of the respondents/accused under Section 138 of the Negotiable Instruments Act (NI Act) by the learned Judicial Magistrate First Class (JMFC). The appellant contends that the learned JMFC failed to examine the evidence on record based on the presumption of law under the NI Act and erroneously concluded that the dishonored cheques were not towards the discharge of a liability. The trial court's conclusion that the loan transaction was not proved and that a "self cheque" could not be considered towards the discharge of an enforceable debt or liability was also challenged.

2. Whether the required ingredients to attract Section 138 of the NI Act were in existence:
The court summarized the required ingredients to attract Section 138 of the NI Act, including the issuance of a cheque for the discharge of any debt or other liability, presentation of the cheque within six months, and return of the cheque unpaid due to insufficient funds or other reasons. The court found that the cheques bore the word "Self" in place of the payee's name and held that the complainant is the holder in due course. However, it was necessary to establish that the cheques were issued for the discharge of a debt or liability.

3. Whether the appellant proved that the said cheque was issued towards discharge of a legally enforceable debt for attracting presumption in its favor:
The appellant failed to produce any document to show that he advanced a loan amount to the respondent's company. The alleged loan amount was not reflected in the income tax returns or books of accounts. The court noted that the complainant did not make any efforts to verify whether the accused persons were the directors of the company or examine the Chartered Accountant who allegedly advised the complainant. The court held that the complainant failed to establish that the cheques were issued in discharge of any legal liability or part thereof.

4. Whether the appellant has proved that the person committing the offence under Section 138 of the NI Act is a company and every person at the time the offence was committed was in charge of, and was responsible for, the conduct of the business of the company:
The court found that there were no specific averments against the accused persons that they were responsible for the affairs of the company. The signatories to the cheques had resigned or their authority was withdrawn by the company. The court held that the complainant failed to establish that the accused persons were in charge of and responsible for the conduct of the business of the company at the time of the commission of the offence.

5. Whether the Money Lenders Act is applicable in the present circumstances:
The court noted that under the Goa Money-Lenders Act, 2001, every person engaged in the business of money lending must apply for a license and register past transactions with the Registrar of money-lending. The complainant's contention that he advanced various amounts on different occasions indicated that these were not hand loans but transactions requiring registration under the Money-Lenders Act. The court held that without registration or intimation to the Registrar, the amounts advanced could not be termed as legally enforceable debts.

Conclusion:
The court concluded that the complainant failed to establish that the cheques were issued in discharge of any legal liability or part thereof. The accused respondents established their defense on the basis of preponderance of probabilities. The court found no reason to interfere with the judgment and order passed by the learned JMFC acquitting the accused persons. All the appeals were dismissed.

Order:
1. All the Criminal Misc. Applications are allowed.
2. All the appeals stand dismissed with this common judgment.
3. No order as to costs.