2021 (10) TMI 761 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - existence of debt or not - onus to prove - rebuttal of presumption of innocence - HELD THAT - It is clear that Sita Ram Verma was not authorized as per the resolution of the Board of Directors' of the Company nor he was a Principal Officer of the Company and his title to maintain the present complaint was to be considered vis- -vis. his capacity to depose in the Court of law. Though, this Court may proceed with the presumption that he was having authority to proceed with the complaint as he was working with the Company. Whether the onus which shifted on the complainant that the cheque was not issued for consideration and it was only a security amount has been discharged? - HELD THAT - The answer is that onus was not discharged as the Company which is supposed to maintain the accounts of which are to be maintained in the regular course of business for all intents and purposes should have shown the sale and those documents should have been produced by the complainant company in the Court, as the sale would have been the consideration for the cheque. Failure of the same shows that the cheque was only issued as a security. The witnesses of the complainant nowhere able to prove that the cheque was for the supplies made and it was for consideration - this Court holds that after applying the law that the findings as recorded by the learned court below call for no interference even after re-appreciating the evidence. It has been held in K PRAKASHAN VERSUS PK SURENDERAN 2007 (10) TMI 551 - SUPREME COURT , that when two views are possible, appellate Court should not reverse the judgment of acquittal merely because the other view was possible. When judgment of trial Court was neither perverse, nor suffered from any legal infirmity or non consideration/mis-appreciation of evidence on record, reversal thereof by High Court was not justified. Thus, the appellant/complainant-Company has failed to prove the guilt of the accused conclusively and beyond reasonable doubt. There is no illegality and infirmity in the findings, so recorded by the learned trial Court - appeal dismissed.

Summary

Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act, 1881.
2. Authority of the complainant to file the complaint.
3. Issuance of cheque for consideration or as security.
4. Validity of the evidence presented by the complainant.
5. Appellate court's power to review the trial court's acquittal.

Detailed Analysis:

1. Maintainability of the Complaint:
The appellant challenged the trial court's judgment, which dismissed the complaint as not maintainable due to being filed after the prescribed period of limitation. The appellant argued that the cheque was presented again and dishonoured on 28.08.2002, with the complaint filed within the prescribed period. The court considered the law laid down by the Supreme Court in MSR Leathers Vs. S. Palaniappan, which allows a complaint to be maintained after the second dishonour of a cheque, provided the process is followed as per the Negotiable Instruments Act.

2. Authority of the Complainant to File the Complaint:
The respondent-accused contended that the complaint was not filed by an authorized person, as Madan Sharma was not proven to be the Managing Director, and Sita Ram Verma lacked the authority to file the complaint. The court examined the evidence and found that Sita Ram Verma was not authorized by a resolution of the Board of Directors nor was he a Principal Officer of the company. His capacity to depose in court was also questioned.

3. Issuance of Cheque for Consideration or as Security:
The court emphasized that the cheque should have been issued for consideration, and the complainant needed to prove this when the accused claimed it was given as security only. The complainant failed to produce documents showing the sale of goods, which would have been the consideration for the cheque. The court concluded that the cheque was issued as security, not for consideration.

4. Validity of the Evidence Presented by the Complainant:
The court analyzed the testimony of various witnesses, including Sita Ram Verma and bank officials, who confirmed the dishonour of the cheque due to insufficient funds. However, the court found that the complainant did not discharge the onus of proving that the cheque was issued for consideration. The complainant's failure to produce relevant business records further weakened their case.

5. Appellate Court's Power to Review the Trial Court's Acquittal:
The court referred to Supreme Court judgments, including K. Prakashan vs. P.K. Surenderan and Chandrappa vs. State of Karnataka, which outline the principles for appellate courts when dealing with appeals against acquittals. The appellate court must bear in mind the double presumption of innocence in favour of the accused and should not disturb the trial court's findings if two reasonable conclusions are possible.

Conclusion:
The court held that the appellant/complainant failed to prove the guilt of the accused beyond reasonable doubt. The trial court's judgment of acquittal was neither perverse nor suffered from any legal infirmity. Therefore, the appeal was dismissed, and the findings of the trial court were upheld. The record of the trial court was ordered to be sent back, and pending miscellaneous applications were disposed of.