2021 (6) TMI 469 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - contradictions in evidences - HELD THAT - The entire evidence of PW-1 is contradictory within itself on several counts and does not inspire any confidence to believe that the accused had issued the cheque at Ex. P-1 to the complainant towards any legally enforceable debt or liability, more particularly towards Ex. P-9. If according to the complainant the accused had entered into several agreements with him of not less than three to four in number and there were several transactions between them and since he could not able to co-relate Ex. P-1 with Ex. P-9, on the contrary, he himself has contradicted the alleged loan transaction and the liability in several manner, it cannot be presumed that there existed any legally enforceable debt payable by the accused in favour of the complainant, as such, towards the same, the accused had issued a cheque at Ex. P-1 to him. On the other hand, the defence taken by the accused that the cheque in question given as a security was misused by the complainant without returning the same even after completion of the sale transaction of the house, appears to be more probable. Both the trial Court and the Sessions Judge's Court without appreciating these aspects, have carried away by the fact that the complainant has produced the dishonoured cheque at Ex. P-1 and an agreement at Ex. P-9 and held that the alleged guilt against the accused has stood proved. Since the said finding now proves to be perverse and erroneous, the same deserves to be set aside - Criminal revision petition allowed.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Evidence and contradictions in the complainant's testimony.
3. Misuse of the blank cheque by the complainant.
4. Proper appreciation of evidence by the trial and Sessions courts.

Detailed Analysis:

1. Legally Enforceable Debt under Section 138 of the Negotiable Instruments Act, 1881:
The core issue was whether the accused issued the cheque in question towards a legally enforceable debt. The complainant alleged that the accused issued a cheque for ?5,31,875 to repay a loan of ?4,70,000. However, the accused contended that the cheque was given as a blank cheque for security purposes and was misused by the complainant.

2. Evidence and Contradictions in the Complainant's Testimony:
The complainant, examined as PW-1, provided conflicting statements regarding the loan and the cheque. Initially, he claimed the loan was given in cash and documented in an agreement dated 19.09.2008 (Ex. P-9). However, in cross-examination, he stated that he did not collect any cheque or agreement on the date the loan was given. Further contradictions arose when PW-1 mentioned that the cheque related to an agreement dated 19.02.2008, not 19.09.2008. These inconsistencies cast doubt on the existence of a legally enforceable debt.

3. Misuse of the Blank Cheque by the Complainant:
The accused and her husband (DW-1 and DW-2) testified that the cheque was given as a blank cheque for security during a property sale transaction and was not returned after the sale was completed. The accused did not take any legal action for the alleged misuse of the cheque, which further complicated the matter. The court found the accused's version more probable, given the inconsistencies in the complainant's testimony.

4. Proper Appreciation of Evidence by the Trial and Sessions Courts:
The trial court and the Sessions Judge's court convicted the accused based on the dishonoured cheque and the agreement (Ex. P-9). However, the High Court found that these courts did not properly appreciate the contradictions and inconsistencies in the complainant's evidence. The High Court concluded that the findings of the lower courts were perverse and erroneous, warranting interference.

Conclusion:
The High Court allowed the Criminal Revision Petition, setting aside the judgments of the trial court and the Sessions Judge's court. The accused was acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The court directed the registry to transmit copies of the order to the trial court and the Sessions Judge's court along with their respective records.