2021 (11) TMI 455 - HC - Indian Laws

Dishonor of Cheque - manner in which the loan has been advanced - whether there has been compliance with the loss relating to the Income Tax Act? - HELD THAT - Learned Appellate Court acted on a letter of the Advocate and interfered with the order of conviction passed by the Learned Trial Court. On the face of it, the Learned Appellate Court unnecessarily gave importance to a G.D. Entry number which was reflected in the notice although the original G.D. Entry was never brought on record. The Appellate Court s finding on the subject so far as the issue of debt or liability is concerned are not on accepted principles of law so far as the provisions of Negotiable Instruments Act is concerned. The Appellate Court should have been cautious as a belated plea taken by an accused cannot be given undue importance in cases where presumption under Section 118 and 139 of the Negotiable Instruments Act exist. The manner in which the learned Appellate Court set aside the order of the learned Magistrate calls for interference of this court as the same is against the settled principle of law relating to Negotiable Instruments Act and as such the same is liable to be set aside - Application allowed.

Issues Involved:
1. Appeal against acquittal under Section 138 of the Negotiable Instruments Act (N.I. Act).
2. Compliance with statutory requirements of the N.I. Act.
3. Presumption of debt or liability under Sections 118 and 139 of the N.I. Act.
4. Impact of evidence and procedural compliance on the judgment.
5. Scope of appellate court’s interference with trial court’s findings.

Issue-wise Detailed Analysis:

1. Appeal against acquittal under Section 138 of the N.I. Act:
The appeal was preferred against the judgment and order of acquittal dated 31.08.2015 by the Additional Sessions Judge, Bolpur, Birbhum, which set aside the conviction under Section 138 of the N.I. Act by the ACJM, Bolpur. The ACJM had initially convicted the accused, sentencing him to one year of simple imprisonment and a fine of ?7,00,000, failing which another year of simple imprisonment was imposed.

2. Compliance with statutory requirements of the N.I. Act:
The genesis of the case involved a complaint under Section 138 of the N.I. Act, where the complainant alleged that the accused issued a cheque for ?7,00,000, which was dishonored due to "account closed." The complainant sent a demand notice, which was not complied with by the accused. The trial court took cognizance of the offence, issued process, and, after examining evidence, convicted the accused. The prosecution presented evidence including the cheque, dishonor memo, demand notice, postal receipt, and envelope with A/D card.

3. Presumption of debt or liability under Sections 118 and 139 of the N.I. Act:
The trial court relied on the statutory presumptions under Sections 118 and 139 of the N.I. Act, which presume the existence of a legally enforceable debt or liability unless rebutted by the accused. The defense questioned the manner of loan advancement and compliance with the Income Tax Act but did not dispute the issuance of the cheque. The appellate court, however, found that the prosecution failed to prove the debt or liability and noted non-compliance with the Income Tax Act.

4. Impact of evidence and procedural compliance on the judgment:
The appellate court acquitted the accused, emphasizing the failure of the prosecution to establish debt or liability and the alleged misuse of a lost cheque. The appellate court relied on a notice marked as Ext. 4, which stated the cheque book was lost and reported to the police. The appellate court held that the accused rebutted the presumption under Sections 118 and 139 by preponderance of probabilities, citing various judgments.

5. Scope of appellate court’s interference with trial court’s findings:
The High Court noted that the appellate court should only interfere with an acquittal if there are substantial and compelling reasons. The High Court found that the appellate court gave undue importance to a belated plea and a G.D. Entry number without the original G.D. Entry being on record. The High Court emphasized that the appellate court's findings were not based on accepted principles of law under the N.I. Act and set aside the appellate court's judgment, reinstating the trial court's conviction and sentence.

Conclusion:
The High Court allowed the appeal, set aside the acquittal, and reinstated the conviction and sentence by the ACJM, Bolpur. The accused was directed to surrender within seven days, failing which the trial court was authorized to execute the sentence. The High Court emphasized the importance of statutory presumptions under the N.I. Act and the need for substantial reasons to overturn a trial court's findings.

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