2021 (5) TMI 808 - HC - Indian Laws

Dishonor of Cheque - cheque on presentation was dishonoured for want of sufficient funds - acquittal of the accused - rebuttal of presumption - Sections 118, 138 and 139 of the NI Act - HELD THAT - The complainant admittedly is a Public Limited Company incorporated under the Companies Act engaged in the business of manufacturing and selling tea. It is also not in dispute that accused is a distributor of the complainant company at Calicut. The case of the complainant is that it used to supply tea to the accused on credit basis and towards the discharge of the amount due, the cheque in question was issued. In order to prove the transaction as well as the issuance and execution of the cheque, two witnesses were examined on the side of the complainant as PW1 and PW2. PW1 is the Accounts Officer and power of attorney holder of the complainant company. Ext.P13 is the copy of the minutes of the company authorizing PW1 as the PA holder of the complainant company. He gave evidence in tune with the pleadings in the complaint - The Court below on appreciation of evidence found that the evidence of PW1 and PW2 is insufficient to prove the transaction and execution of the cheque. The Court below further found that the amount shown in Ext.P3 cheque does not tally with Ext.P15 tax invoice and Ext.P9 ledger extract. The presumption under S. 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of S. 138. Once signature, execution and handing over of the cheque are satisfactorily proved, the presumption u/s. 139 of the NI Act would come into play and remain in force until the accused discharges the burden. The complainant has successfully established the signature, execution and handing over of the cheque. There is absolutely no evidence adduced to rebut the said presumption available to the complainant u/s. 139 of the NI Act. No evidence has been adduced by the accused to substantiate that the cheque in question was issued in blank as the security at the commencement of the business transaction between him and the complainant company. In spite of the receipt of the lawyer notice, the accused did not send any reply also. There is absolutely no evidence or circumstances probabilising the defence set up by the accused. The impugned judgment of acquittal, thus, cannot be sustained and is liable to be set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against acquittal u/s. 378(4) of Cr.P.C. in a case under section 138 of the Negotiable Instruments Act.

Analysis:
The judgment involves an appeal against acquittal in a case under section 138 of the Negotiable Instruments Act. The complainant alleged that a cheque issued by the accused towards a credit purchase was dishonored, leading to the initiation of legal proceedings. The complainant argued that the execution of the cheque was proven through witness testimonies and documents, invoking the presumption under Sections 118 and 139 of the NI Act. However, the court below found the evidence insufficient to establish the transaction and execution of the cheque, resulting in the acquittal of the accused.

The court highlighted the legal provisions under Sections 118(a) and 139 of the Negotiable Instruments Act, emphasizing the presumption of consideration and in favor of the holder of a cheque. Citing various legal precedents, including Supreme Court judgments, the court reiterated that the burden shifts to the accused once the signature on the cheque is admitted, activating the 'reverse onus' clause. The accused's defense of the cheque being a security misused by the complainant was not substantiated with evidence, leading to the presumption that the cheque was issued for a legally enforceable debt.

The court meticulously analyzed the evidence presented, including witness testimonies and documentary proof, to establish the transaction, execution, and issuance of the cheque. Despite discrepancies in the amounts mentioned in various documents, the court noted that the overall debt owed by the accused to the complainant supported the issuance of the cheque. The court found that the complainant successfully proved the signature, execution, and handing over of the cheque, while the accused failed to rebut the presumption under Section 139 of the NI Act.

Consequently, the court set aside the judgment of acquittal, finding the accused guilty of the offense under section 138 of the NI Act. The accused was convicted and sentenced to pay a fine, with provisions for compensation to the complainant under the Criminal Procedure Code. The court emphasized the importance of appreciating prosecution evidence correctly and intervened due to the failure of justice in the acquittal judgment.