2008 (7) TMI 1129 - HC - Indian Laws

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the order of acquittal passed by the trial court is incorrect, illegal, perverse, and capricious.

2. Whether the discrepancy in the amount stated in figures and words on the cheque invalidates the cheque under Section 18 of the Negotiable Instruments Act (N.I. Act).

3. Whether the notice issued by the appellant was in conformity with Section 138(b) of the N.I. Act, given the discrepancy in the amount demanded.

4. Whether the presumption under Sections 118 and 139 of the N.I. Act was correctly applied by the trial court, and whether the respondent successfully rebutted this presumption.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of the Trial Court's Acquittal Order

The primary issue was whether the trial court's acquittal was based on a correct interpretation of the law and facts. The High Court analyzed whether the trial court erred in its judgment by focusing on technicalities rather than the substantive intent of the N.I. Act.

2. Discrepancy in Figures and Words on the Cheque

The legal framework under Section 18 of the N.I. Act states that if the amount is stated differently in figures and words, the amount in words prevails. The Court noted that the discrepancy between Rs. 75,000 (figures) and 'Rupees Seventy Thousand Only' (words) on the cheque does not invalidate it. The Court cited the precedent in Devi Tyres v. Nawab Jan, which held that such discrepancies are not fatal to the prosecution.

3. Compliance with Section 138(b) of the N.I. Act

The trial court had acquitted the respondent on the grounds that the notice sent by the appellant was not in compliance with Section 138(b) of the N.I. Act due to the incorrect amount mentioned. However, the High Court referenced the Devi Tyres case, emphasizing that a divergence in the figures is not fatal. The Court concluded that the notice was valid, and the trial court erred in its interpretation.

4. Presumption under Sections 118 and 139 of the N.I. Act

Sections 118 and 139 of the N.I. Act create a presumption in favor of the holder of the cheque that it was issued for a legally recoverable debt. The appellant had presented evidence, and the respondent failed to rebut this presumption as he did not present any evidence or testimony. The trial court had incorrectly focused on the appellant's capacity to lend money, which was irrelevant once the cheque was admitted. The High Court found that the trial court failed to apply the presumption correctly and did not require the respondent to disprove the presumption.

SIGNIFICANT HOLDINGS

The High Court held that the trial court's judgment was flawed due to its misinterpretation of the provisions of the N.I. Act. The Court emphasized the following principles:

"Merely because there is a discrepancy in the cheque and there is a difference in the amount mentioned in words and figures, the cheque cannot be termed as invalid."

"A divergence in figures mentioned in the notice of demand is not fatal to the prosecution."

The High Court set aside the trial court's order of acquittal, convicting the respondent under Section 138 of the N.I. Act. The respondent was sentenced to pay a fine of Rs. 80,000, with a default sentence of three months of simple imprisonment. The fine amount, upon deposit, was to be released to the appellant-complainant as compensation.