2018 (9) TMI 841 - HC - Indian Laws

Dishonor of Cheque with remarks exceeds arrangement - repayment of loan - Section 138 of Negotiable Instruments Act - Whether the order of acquittal passed by the Lower Appellate Court is manifestly erroneous warranting interference? Held that - With regard to the material alteration, the evidence given by D.W.1 is contradictory in nature. In the trial Court, through the evidence of D.W.3, it was established, previous to the date in which the cheque was dishonoured, the respondents issued another 4 cheques for various amounts. Further, the same were acknowledged by the appellant through Ex.P.8. In the trial Court, it was the case of the respondents that the entire due was paid to the appellant through various cheques, for which, the copy of the accounts pertaining to the respondents was marked as Ex.P.6. On close scrutiny of the said document reveals that the cheques contained the serial number earlier to the date, in which, the cheque was issued has been presented and the same was collected. Further, as per Ex.R.7, ₹ 35,000/- was paid to the appellant. Likewise, as per Ex.P.8, ₹ 15,636/- was paid to the appellant through demand draft. The said facts are admitted by the complainant. Furthermore, it is an admitted fact that the date, in which, the cheque was issued is a Holiday. Both the respondents are running the Company, issuing the cheque in the Holiday is also create a doubt, whether the transaction as stated by the appellant had happened or not. Further, at the time of filing the complaint, before the trial Court, the appellant did not enclose the copy of invoice to show his bonafide. However, only during the time of trial, he produced the invoice. In the business community, it is the common practice to receive the blank cheque or filled cheque immediately after sending the materials. But in this case, the evidence of P.W.1 shows such practice is not adopted in this case - The case of the appellant suffers through two reasons; i the material alteration stated by the respondents has not been properly explained, and ii the respondents raised a reasonable doubt in respect of his liability. Hence, there is no need to interfere with the findings arrived at by the trial Judge. The order of acquittal is hereby confirmed - appeal dismissed.

Summary

Issues:
1. Conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Appeal against the acquittal by the V Additional Sessions Judge.
3. Material alteration in the cheque.
4. Existence of a legally enforceable debt.
5. Presumption under Section 139 of the Negotiable Instruments Act.

Issue 1: Conviction under Section 138 of the Negotiable Instruments Act, 1881:
The appellant, a partnership firm, filed a complaint against the respondents/accused for dishonoring a cheque issued to discharge a liability. The trial court convicted the accused, but the V Additional Sessions Judge acquitted them. The appellant appealed against this acquittal.

Issue 2: Appeal against the acquittal by the V Additional Sessions Judge:
The appellant contended that the lower appellate court erred in finding the accused not guilty under Section 138 of the Act. The appellant argued that the alteration in the cheque was not adequately explained, and the presumption under Section 139 was not applied correctly. The respondents justified the lower court's decision.

Issue 3: Material alteration in the cheque:
The crucial point was the alleged alteration in the cheque's date from 1999 to 2000. The First Appellate Court found that the alteration was not done by the respondents, leading to the reversal of the conviction. The respondents argued that obtaining the drawer's signature near the correction was necessary, which was absent in this case.

Issue 4: Existence of a legally enforceable debt:
The complainant failed to prove the debt's existence in 2000, as no document was presented to establish the liability. The respondents claimed that the cheque was issued in 1999 and altered later, casting doubt on the debt's validity.

Issue 5: Presumption under Section 139 of the Negotiable Instruments Act:
The judgment referred to the duty of the respondents to rebut the presumption under Section 139. The evidence presented by the bank officials and the lack of supporting documents from the appellant influenced the court's decision.

In conclusion, the High Court dismissed the Criminal Appeal filed by the appellant, confirming the order of acquittal by the V Additional Sessions Court. The judgment highlighted the importance of proving a legally enforceable debt, addressing material alterations in cheques, and the burden of proof under Section 139 of the Negotiable Instruments Act. The court found that the respondents raised reasonable doubts about their liability, leading to the dismissal of the appeal.