Appellate court convicts some, acquits others in criminal appeal under Section 138 NI Act.

The appellate court partially allowed the criminal appeal, setting aside the acquittal judgment for respondents 1 to 3 and convicting them under Section 138 of the Negotiable Instruments Act. Respondents 4 to 6 were acquitted as they were not partners of the first respondent firm during the relevant time. Respondents 2 and 3 were directed to appear before the court for questioning on the sentence.

---

---

Issues Involved:
1. Whether the respondents were liable under Section 138 of the Negotiable Instruments Act for the dishonor of a cheque.
2. Whether the presumption under Sections 118 and 139 of the Negotiable Instruments Act was rebutted by the respondents.
3. Whether the non-examination of attestors to the promissory note was fatal to the complainant's case.
4. Whether the complainant had the financial capacity to lend the amount in question.
5. Whether the judgment of acquittal by the Trial Court was perverse and liable to be set aside.

Issue-wise Detailed Analysis:

1. Liability under Section 138 of the Negotiable Instruments Act:
The appellant filed a complaint under Section 138 of the Negotiable Instruments Act, alleging that the second respondent, on behalf of the first respondent firm, issued a cheque for Rs. 4,00,000/- which was dishonored due to insufficient funds. The Trial Court acquitted the respondents, but the appellant contended that the issuance of the cheque and the signature were admitted, entitling him to a presumption under Sections 118 and 139 of the Negotiable Instruments Act.

2. Presumption under Sections 118 and 139 of the Negotiable Instruments Act:
The appellant argued that once the issuance of the cheque and the signature were admitted, a presumption under Sections 118 and 139 should apply, indicating the cheque was issued for discharging a legally subsisting liability. The Trial Court, however, held that the appellant failed to prove the cheque was issued for such a liability. The appellate court noted that the presumption under Section 139 is rebuttable and the respondents failed to rebut it by a preponderance of probabilities.

3. Non-examination of Attestors:
The Trial Court found the non-examination of the attestors to the promissory note (Ex.P.10) to be fatal to the complainant's case. The appellate court, however, noted that the second respondent admitted the signatures on Ex.P.10 and the cheque (Ex.P.1). The non-examination of attestors was not deemed fatal as the presumption under Section 139 was not rebutted.

4. Financial Capacity of the Complainant:
The respondents argued that the complainant did not have the financial capacity to lend Rs. 4,00,000/-. The appellate court referred to various precedents, noting that the burden of proving the financial capacity lies with the complainant. However, the court found that mere denial by the respondents was insufficient to rebut the presumption under Section 139.

5. Judgment of Acquittal by the Trial Court:
The appellate court held that the Trial Court's judgment was perverse due to the non-application of the legal presumption under Section 139. The Trial Court focused on the promissory note without considering the statutory presumption. The appellate court found the judgment to be against the weight of evidence and thus set it aside.

Conclusion:
The appellate court allowed the criminal appeal partly, setting aside the judgment of acquittal for respondents 1 to 3 and convicting them under Section 138 of the Negotiable Instruments Act. The respondents 4 to 6 were acquitted as they were not partners of the first respondent firm during the relevant time. The respondents 2 and 3 were directed to appear before the court for questioning on the sentence.

---