2020 (9) TMI 637 - HC - Indian Laws

Dishonor of Cheque - offence punishable under Section 138 of Negotiable Instruments Act, 1881 - Whether the complainant has proved beyond reasonable doubt that the accused has committed an offence punishable under Section 138 of N.I.Act as alleged in the complaint? - HELD THAT - In the instant case, apart from the legal presumption as per Section 139 of the N.I. Act coming into operation, the complainant through oral and documentary evidence has also shown that the supplies of goods to the accused were made and towards the same, the accused was in arrears of payment of money, towards which, he had issued the cheques at Exs.P-3 and P-4. Therefore, the finding of the Trial Court that PW-1 had no authority to lead evidence and the complainant failed to establish the existence of a legally recoverable debt proves to be an erroneous finding. The complainant has proved that the accused towards legally enforceable debt, had issued two cheques at Exs.P-3 and P-4, which came to be returned due to the closure of the account of the drawer and the complainant has complied the statutory requirements of issuance of notice within time. The Trial Court judgment deserves to be set aside and the accused is held to be guilty of the offence punishable under Section 138 of the N.I. Act. Appeal allowed.

Summary

Issues:
1. Proof of offence under Section 138 of Negotiable Instruments Act
2. Interference with the trial court judgment

Analysis:

Issue 1: Proof of offence under Section 138 of Negotiable Instruments Act
The complainant, a dealer, supplied goods to the accused on credit. The accused issued two cheques which were dishonored due to the closure of the account. The complainant sent a legal notice, but the accused did not respond. The trial court acquitted the accused. The appellant argued that the legal presumption under Section 139 of the Act should apply. The witness, PW-1, detailed the transactions and presented evidence of the cheques and legal notice. The defense claimed misuse of blank cheques. However, the evidence supported the complainant's claim. The appellate court held that the complainant proved the issuance of cheques, the debt, and compliance with legal requirements. The trial court judgment was set aside, and the accused was convicted under Section 138.

Issue 2: Interference with the trial court judgment
The trial court acquitted the accused based on the legal recoverable debt not being proved. The appellant argued that subsequent judgments clarified the legal presumption under the Act. The appellate court found that the complainant established the debt, cheques issuance, and notice compliance. The trial court's finding on lack of proof of recoverable debt was deemed erroneous. The accused was convicted under Section 138, and a fine was imposed. In case of default, a prison sentence was ordered. The judgment was to be transmitted to the trial court promptly.

This analysis highlights the key points of the judgment, including the evidence presented, legal arguments, and the appellate court's decision to convict the accused under Section 138 of the Negotiable Instruments Act.