2014 (8) TMI 394 - SC - Companies Law

Supreme Court overturns High Court decision, acquits appellant under Section 138 NI Act, emphasizes reliable evidence

Ramdas S/o. Khelunaik Versus Krishnanand S/o. Vishnu Naik

The Supreme Court allowed the appeal and set aside the High Court's decision, reinstating the Trial Court's acquittal of the appellant under Section 138 ... Dishonour of cheque - offence punishable under Section 138 - proof of hand loan - Held that:- Accused appellant deals with sale and purchase of landed properties and the respondent-complainant works as a Lorry Driver under him with a salary of ₹ 2,500/- p.m. and ₹ 20/- per day towards miscellaneous expenses (bhatta). Admittedly, the Cheque in question was for ₹ 5,00,000/- and all the way the stand of the complainant was that he had given a hand loan of ₹ 1,75,000/- to the accused-appellant. We find no material on record in support of the claim of the complainant giving hand loan to the accused-appellant. There was also no calculation of account or stipulation of any interest on the alleged loan amount to show as to how the amount of ₹ 5,00,000/- was figured, in return of a hand loan of ₹ 1,75,000/-, if at all taken by the appellant from the complainant. In the absence of any authenticated and supporting evidence, we cannot believe that the complainantrespondent who is employed under the appellant-accused, has raised an amount of ₹ 1,75,000/- that too by obtaining loan of ₹ 1,50,000/- from a Bank, only to give hand loan to his employer. As the complainant himself admitted that his net savings in a year comes to about ₹ 10,000/-, it is not trustworthy that he was in a position to extend hand loan of such big amount to the appellant. - Looking at the corroborative evidence adduced by the defence witnesses and more particularly, in the absence of any material evidence in support of the claim of the respondent-complainant, we cannot uphold the impugned judgment - Appeal allowed with costs. Issues:Appeal against High Court judgment setting aside acquittal under Section 138 of the Negotiable Instruments Act, 1881.Analysis:1. Background: The appeal arose from a judgment by the High Court of Karnataka setting aside the acquittal of the appellant under Section 138 of the Negotiable Instruments Act, 1881, concerning a dishonored cheque for Rs. 5,00,000 issued by the appellant to the respondent.2. Facts and Trial: The respondent filed a complaint after the cheque was dishonored, alleging it was for repayment of a loan. The Trial Court acquitted the appellant, noting inconsistencies in the respondent's claim and lack of evidence. The respondent appealed to the High Court, which reversed the acquittal and imposed a fine on the appellant.3. Appellant's Contentions: The appellant argued that the cheque was part payment for a land purchase agreement, and the respondent's claim of a loan was fabricated. The appellant contended that the High Court erred in setting aside the acquittal based on unreliable evidence presented by the respondent.4. Respondent's Arguments: The respondent maintained that the cheque was meant for loan repayment, not a land purchase. The respondent asserted that the High Court correctly found the appellant guilty of deliberate dishonor of the cheque to avoid loan repayment.5. Supreme Court Decision: After considering the arguments, the Supreme Court found discrepancies in the respondent's claim and lack of evidence supporting the loan transaction. The Court noted corroborative evidence from defense witnesses and reinstated the Trial Court's judgment, allowing the appeal and setting aside the High Court's decision. The appellant was permitted to withdraw the deposited amount as per the Court's order.6. Conclusion: The Supreme Court's detailed analysis highlighted the lack of evidence supporting the loan claim, the presence of corroborative evidence favoring the appellant's version, and the erroneous judgment by the High Court. The judgment restored the Trial Court's decision, emphasizing the importance of reliable evidence in such cases.