2021 (1) TMI 439 - HC - Indian Laws

Dishonor of cheque - acquittal of accused - only defence taken is that the accused has given the said cheque in favour of one Krishnappa while availing loan of 30, 000/- for him and the same has been misused - HELD THAT -It is the specific case of the complainant that notice was sent through UCP was served and through out the cross- examination of PW.1 nothing is elicited with regard to non-service of notice sent through UCP. Though he denies the address claiming that till 2004 he was residing in the address mentioned in the complaint but in the cross-examination he categorically admits that his wife residing in the said address and any notice sent to that address his wife would intimate the same. The first contention that no notice was served on him cannot be accepted for the answer elicited from the mouth of DW.1 and notice sent to him was returned with an endorsement the notice is not claimed. With regard to the other defence is concerned he has not handed over the cheque to the complainant. First of all nothing has been elicited in the cross-examination of PW.1 and also it is important to note that it is not his case that he has not filed the insolvency case marked at Ex.P.8 and also it is the contention that except the amount of 30, 000/- borrowed from Krishnegowda he has not received any amount. On perusal of Ex.P.8 in his own insolvency petition he has listed out in the schedule including the name of this complainant. There is no any explanation with regard to the schedule where he mentioned the list of the creditors in his insolvency petition. It is specifically mentioned that the liability of 3, 00, 000/- in respect of this petitioner it is also important to note that in the cross-examination the accused was gone to the extent of denying his own signature and also same is not specific denial but he is having doubt about his signature. When all these materials are elicited from the mouth of this accused the Trial Judge ought not to have come to the conclusion that he was not having the financial capacity to pay the amount. If the accused was not having any acquaintance with the complainant what made him to make him as party in the insolvency case and also what made him to list out the due payable to the complainant. The very documentary proof placed before the Trial Court is ignored by the Trial Court. It is nothing but perverse judgment and not considered the material on record and also the admissions elicited from the mouth of DW.1. When the cheque has been issued when the notice has been issued and though the accused admits the signature and not disputed the same the Trial Judge ought to have invoked the Section 139 of Negotiable Instrument Act 1881 ( the N.I. Act for short) to draw the presumption. No discussion in the judgment even for drawing the presumption under Section 139 of the N.I. Act. The findings given by the Trial Court is erroneous and the same is against the material available on record and hence the judgment of the trial Court requires interference of this Court. Appeal allowed.

Summary

Issues Involved:
1. Whether the Trial Judge committed an error in acquitting the accused?
2. What order should be passed by the High Court?

Issue-wise Detailed Analysis:

1. Whether the Trial Judge committed an error in acquitting the accused?

The factual matrix of the case involves the accused, who was a friend of the complainant, borrowing a loan of ?3,00,000/- and issuing a cheque dated 19.12.2005, which was dishonored due to insufficient funds. The complainant issued a legal notice, which was returned unclaimed or marked as "addressee shifted," but a notice sent through the certificate of posting was served. The accused did not comply, leading to the complaint.

The Trial Judge acquitted the accused, citing the complainant's lack of financial capacity and acquaintance with the accused. The complainant argued that the accused admitted his signature on the cheque and failed to substantiate his defense that the cheque was misused by another individual, Krishnappa. The complainant also presented insolvency proceedings initiated by the accused, where he admitted owing ?3,00,000/- to the complainant.

The High Court noted that the accused admitted his signature on the cheque and failed to provide evidence supporting his defense. The accused's claim that the cheque was given to Krishnappa was not substantiated, and no legal action was taken against the alleged misuse. The insolvency petition (Exs.P.8 to P.10) listed the complainant as a creditor, contradicting the accused's defense.

The High Court found that the Trial Judge erred in doubting the complainant's financial capacity and acquaintance with the accused. The Trial Judge also failed to draw the presumption under Section 139 of the Negotiable Instruments Act, 1881, which assumes the cheque was issued for discharging a debt or liability unless proven otherwise. The High Court deemed the Trial Judge's findings erroneous and contrary to the material on record.

2. What order should be passed by the High Court?

The High Court allowed the appeal, setting aside the Trial Judge's judgment of acquittal. The accused was convicted under Section 138 of the Negotiable Instruments Act and directed to pay a fine of ?4,00,000/- within eight weeks. Failure to pay would result in simple imprisonment for one year. The Trial Judge was instructed to secure the accused and enforce the sentence if the payment was not made. The registry was directed to transmit the trial court records promptly.