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2023 (9) TMI 1246 - HC - Indian LawsDishonour of Cheque - interference with the order of acquittal of the accused - vicarious liability of the Directors of a company - personal liability of the drawer of cheques - failure to prove charge under Section 138 of the N.I Act - HELD THAT - There is absolutely no evidence from which criminal law under Section 138 of the N.I Act could be attributed to respondent No. 3. Therefore, recording of the order of acquittal in favour of respondent No. 3 by the learned Magistrate cannot be called into question. The learned Advocate for the respondents has laid enough stress on the approach of the appellant court while deciding an appeal against the order of acquittal passed in favour of respondents. Series of decisions quoted above are cited by the learned Counsel for the accused. The law on this point is no longer res integra and settled by the Hon ble Supreme Court in a Three Judges Bench decision in RAJESH PRASAD VERSUS THE STATE OF BIHAR AND ORS. 2022 (1) TMI 1396 - SUPREME COURT - an order of acquittal can be interfered with on the ground of (a) perversity (b) non-consideration of incontrovertible evidence (c) disbelieving the testimony of witnesses on an unrealistic conjecture (d) non-consideration of direct and cogent accounts of eye-witnesses (e) non-consideration of the testimony of natural witnesses on the ground of interestedness (f) imposition of unrealistic standard of implicit proof rather than that of the proof beyond reasonable doubt (g) rejection of circumstantial evidence on exaggerated and capricious theory (h) rejection of circumstantial evidence based on an exaggerated and capricious theory which are beyond the plea of the accused (i) order of acquittal resulting in gross miscarriage of justice (j) perfunctory consideration of evidence (k) acquittal caused on the ground of delay etc. Learned Magistrate held that the complainant gave loan to the company to M/s Amba Complex Private Limited and not the Directors of the company in their personal capacity. Therefore, the company was the principal accused under Section 138 read with Section 141 of the N.I Act - As drawer of the cheque respondent No. 1 is liable to be under Section 138 of the N.I Act. If the Managing Director or Joint Director of the company takes personal responsibility to discharge the debt or liability which the company owed and issued cheque in his/their capacity, the said person is solely liable as drawer of the cheque - this Court finds that the learned Magistrate recorded an order of acquittal on misreading of evidence and the evidence on record is sufficient to hold the respondent No. 2 liable for committing offence under Section 138 of the N.I Act. The respondent No. 1 is held guilty for committing offence under Section 138 of the N.I Act. The order of acquittal passed in favour of respondent No. 3 is not interfered with and the order acquitting the respondent No. 3 passed by the learned Magistrate is affirmed - order of acquittal is set aside - respondent No. 2 is convicted accordingly and sentenced to undergo simple imprisonment for a period of six months - appeal allowed.
Issues Involved:
1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act. 2. Vicarious liability of the directors under Section 141 of the N.I. Act. 3. Acquittal of the respondent No. 3 and the legal principles guiding appellate review of acquittal. Summary: Issue 1: Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act The appellant filed a complaint under Section 138 of the N.I Act alleging that the respondents, as directors of M/s Amba Complex Private Limited, issued cheques which were dishonored due to "account closed". The complainant issued statutory notice demanding repayment, but the respondents failed to comply. The learned Magistrate concluded that the complainant failed to prove the charge under Section 138 of the N.I Act, resulting in an acquittal. Issue 2: Vicarious liability of the directors under Section 141 of the N.I. Act The respondents argued that the complainant lent money to the company, not to them personally, thus the company should be the main accused. The learned Magistrate held that the opposite party Nos. 2 and 3, being separate entities from the company, could not be held liable for the company's debt. The Magistrate also found that the respondent No. 3 was not involved in the transactions. The presumption under Section 139 of the N.I Act was rebutted sufficiently by the respondents. Issue 3: Acquittal of the respondent No. 3 and the legal principles guiding appellate review of acquittal The appellate court noted that there was no evidence attributing criminal liability to respondent No. 3. The court emphasized the principles guiding the review of acquittal, including the presumption of innocence and the need for compelling reasons to overturn an acquittal. The appellate court found that the learned Magistrate misread the evidence and that the evidence on record was sufficient to hold respondent No. 2 liable under Section 138 of the N.I Act. Conclusion: The appellate court allowed the appeal, setting aside the acquittal of respondent No. 2, who was found guilty under Section 138 of the N.I Act and sentenced to six months of simple imprisonment and directed to pay compensation of Rs. 36 lakhs. The acquittal of respondent No. 3 was affirmed. The court directed respondent No. 2 to surrender before the trial court to undergo the sentence, with provisions for issuing a warrant if he fails to appear within 10 days.
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