2022 (8) TMI 155 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - burden to prove - Section 118 ad 139 of the Negotiable Instruments Act - HELD THAT - It is not in dispute that an initial burden is cast upon the complainant to prove the transaction led to execution of the cheque, in order to canvass the benefit of presumption under Section 118 ad 139 of the Negotiable Instruments Act. In such cases, how far the evidence of power of attorney holder is reliable is a relevant question. The law is settled on the point that a complaint alleging commission of offence under Section 138 of the Negotiable Instruments Act can be presented through the power of attorney holder and the power of attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee or holder in due course or possess due knowledge regarding the said transaction. It is required by the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who had no knowledge regarding the transactions cannot be examined as a witness in the case. When PW1 was examined after remand of the matter, he had given evidence supporting the transaction and execution of the cheque, but during further cross examination, he reiterated his earlier stand stating that he had only hearsay knowledge about the transaction. Now comes the significant question as to whether the appellant succeeded in proving the transaction and execution of the cheque. The evidence of PW1 discussed in detail would indicate that PW1 repeatedly given evidence during cross-examination that he had no direct knowledge about the transaction. Therefore, no credence can be given to the evidence of PW1, in the matter of transaction and execution of the cheque. Thus, in the case on hand, the complainant miserably failed to adduce convincing evidence to prove the transaction led to execution of Ext.P2 cheque in this case. Therefore, the trial court rightly recorded acquittal and the same need not be revisited. The appeal fails and is dismissed.

Summary

Issues:
1. Allegation of offence under Section 138 of the Negotiable Instruments Act.
2. Conviction and sentence by the trial court.
3. Appeal against conviction and sentence.
4. Examination of witnesses.
5. Reliability of evidence of the power of attorney holder.
6. Legal principles regarding the power of attorney holder in proving transactions.
7. Failure to prove transaction and execution of the cheque.

Analysis:

1. The case involved an allegation of an offence under Section 138 of the Negotiable Instruments Act, where the complainant accused the respondent of borrowing a significant amount and issuing a cheque that got dishonored due to insufficient funds, leading to a legal dispute.

2. The trial court initially convicted and sentenced the accused under Section 138 of the NI Act based on the evidence presented by the complainant and witnesses.

3. The accused appealed the conviction and sentence, leading to the Sessions Court setting aside the conviction primarily due to the lack of direct knowledge of a key witness, the power of attorney holder, regarding the transaction.

4. Following the remand, the trial court further examined witnesses, including the power of attorney holder and defense witnesses, to ascertain the veracity of the transaction and the execution of the cheque.

5. The reliability of the evidence provided by the power of attorney holder, as a crucial witness, was questioned, especially regarding his direct knowledge of the transaction and the cheque's execution.

6. Legal principles regarding the role of the power of attorney holder in proving transactions were discussed, emphasizing the need for explicit assertions of the witness's knowledge in the complaint and the requirement for the witness to have witnessed the transaction or possess due knowledge about it.

7. Ultimately, the court found that the complainant failed to provide convincing evidence to prove the transaction and the execution of the cheque, as the key witness, the power of attorney holder, repeatedly stated during cross-examination that he had no direct knowledge of the transaction. Therefore, the trial court's decision to acquit the accused was upheld, dismissing the appeal.

In conclusion, the judgment highlighted the importance of reliable and direct evidence in proving transactions under the Negotiable Instruments Act, emphasizing the role of key witnesses like the power of attorney holder and the necessity of explicit assertions in complaints to establish the credibility of evidence presented in court.