2022 (9) TMI 107 - HC - Indian Laws

Dishonor of Cheque - existence of legally enforceable debt or not - rebuttal of the presumption - production of cogent evidence to show as to when the disputed cheque was issued to payoff legally enforceable debt or any other liability - cross-examination of witnesses - cheque kept as security was misused by the complainant to harass the respondent company in the year 2004, after 15 years - section 138 of NI Act - HELD THAT - The contention of the accused respondent is that the cheque was kept as security with the complainant s company and the business of the accused was closed down in the year 1990 as also the bank account was closed in the year 1990 and it is a fact that the appellant could not prove a single document to show that there was a business transaction between the accused and the complainant between the period 1990 to 2004, i.e. the year when the alleged disputed cheque dated 21st July, 2004 was issued - Exhibit 6/3 is a cheque bearing no. 087106 dated 6.11.1989; Exhibit 6/4 is a cheque bearing no. 067107 dated 17.11.1989; Exhibit 6/5 is a cheque bearing no. 087108 dated 27.11.1989 and Exhibit 6/6 is a cheque bearing no. 087109 dated 28.11.1989. All these four cheques were issued by the accused in favour of the complainant in the year 1989. Surprisingly the disputed cheque bearing no. 087110 in the next cheque in the cheque book was allegedly issued on 21.07.2004. It is thus found that after the cheque being Exhibit 6/6 was issued, the next cheque in the same Cheque Book being disputed cheque marked as Exhibit 1 was issued after fifteen years. This is totally unbelievable and as such the said fact totally supports the case of the accused respondent and also supports all the contention of the accused respondent that the cheque was handed over to the complainant as a security and was not issued to meet off any legally enforceable debt or any other liability towards the complainant. The presumption against the accused in respect of the said cheque could not be proved in view of the evidence as discussed. Considering the materials on record this Court finds that it has been clearly proved before the Court that the accused respondent s bank account was closed in the year 1990 and his business was also closed in the same year. There has been no business transaction between the parties to this case from 1990 to 2004. Exhibit 6/6, is the cheque just prior to the disputed cheque marked as Exhibit 1, the gapping period between the said two cheques is fifteen years. This goes against the case of the complainant and totally supports the defence of the accused respondent - It has been clearly proved that there was absolutely no business transaction between them from the year 1990 and 2004 and the disputed cheque marked as Exhibit 1 had been kept as security and was misused by the complainant to harass the respondent company in the year 2004, after 15 years. This Court finds no reason to interfere with the judgement and order under appeal - Appeal dismissed.

Summary

Issues:
Appeal against acquittal under Section 138 of N.I. Act - Failure to appreciate evidence-on-record - Serious miscarriage of justice - Dispute over cheque issuance and liability - Business closure in 1990 - Security cheque misuse.

Analysis:
The appeal challenges the judgment acquitting the respondent/accused under Section 138 of the Negotiable Instruments Act. The appellant contends that the trial court erred in not considering the evidence properly, leading to a miscarriage of justice. The complainant alleged that the accused issued a cheque to settle an enforceable debt, which was dishonored, leading to the legal action. However, the defense argued that the business was closed in 1990, and the disputed cheque was a security measure misused by the complainant after 15 years. The defense presented documents supporting the closure of the business and lack of transactions post-1990, undermining the complainant's case.

The prosecution witness testified regarding the cheque deposit, dishonor, and subsequent legal notices, while the defense witness asserted the business closure in 1990 and misuse of the security cheque. The defense produced documents indicating the cessation of business activities and lack of transactions between the parties after 1990. The court noted the absence of evidence supporting business dealings between 1990 and 2004, casting doubt on the complainant's claim of a legally enforceable debt.

The court examined the series of cheques issued by the accused in 1989, followed by the disputed cheque in 2004, highlighting the significant gap in transactions. The defense's argument that the cheque was a security measure, not intended for debt settlement, found support in the absence of post-1990 business interactions. Ultimately, the court upheld the acquittal, concluding that the evidence favored the accused's defense of business closure in 1990 and misuse of the security cheque, dismissing the appeal against the acquittal under Section 138 of the N.I. Act.

The judgment emphasized the lack of business transactions between the parties from 1990 to 2004, the extended gap between the last transaction and the disputed cheque issuance, and the misuse of the security cheque. The court found no grounds to overturn the acquittal, affirming the defense's position and the closure of the business in 1990. The lower court records and a copy of the judgment were directed to be sent to the trial court for information and further action, if necessary.