2017 (12) TMI 1761 - HC - Indian Laws

Appellate Court Reversed in Section 138 Case: Judgment Emphasizes Evidence & Legal Formalities

M/s Wockhardt Limited Versus D.K. Chandel and another

The judge overturned the lower Appellate Court's acquittal of the respondent in a case under Section 138 of the Negotiable Instruments Act. The judge ... Dishonor of cheque - acquittal of accused - ignorance of presumption that arose for dishonor of cheque - HELD THAT:- It is not in dispute that the cheque in the sum of ₹ 4,17,148/- was issued by respondent No.1-accused as was duly proved by the complainant and the said cheque was dishonored. It is also not in dispute that the appellant had issued a legal notice under Section 138 of the NI Act, on 09.06.1999 but that was not even replied to by respondent No.1-accused and the accused had failed to make payment also - The complainant entered the witness-box and proved all the above facts and not only that he also proved that there was liability against respondent No.1 in the matter of purchase of goods from the appellant-company. The complainant had proved its case with precision that the cheque was dishonored, though, the same was issued by respondent No.1 towards price of the goods. The trial Court also found that the defence taken by respondent No.1 that the cheque was stolen by the appellant-company was afterthought - The very object of brining section 138 of NI Act and provision of Section 139 of NI Act for presumption was for early disposal of the claims of the parties. The said object was thus, defeated by the lower Appellate Court by giving reasons that the account book that was proved was not sufficient when the same is also evidence under Section 34 of the Evidence Act, 1872. The reason given by the lower Appellate Court that he did not bring the cash book or order book etc. could well be understood, if civil suit is tried. The judgment of the lower Appellate Court will have to be set aside and the judgment of the trial Court will have to be restored. Issues:Appeal against acquittal under Section 138 of the Negotiable Instruments Act, 1881.Analysis:The appellant challenged the lower Appellate Court's judgment acquitting the respondent of the charge under Section 138 of the NI Act. The appellant argued that the lower court erred in reversing the trial court's judgment based on flimsy reasons. The appellant contended that the complainant had proven its case beyond a reasonable doubt, supported by necessary records and the presumption in favor of the appellant. The lower court was criticized for ignoring the presumption arising from the dishonor of the cheque and for treating the case as a civil suit. The appellant highlighted the evidence presented by the complainant-witness and emphasized the liability of the respondent in purchasing goods from the appellant.The respondent's counsel opposed the appeal, supporting the lower court's judgment. It was argued that the appellant failed to prove any outstanding liability against the respondent through documentary evidence, despite being a company maintaining all records. The respondent's defense focused on the lack of proof of outstanding liability and the absence of evidence supporting the appellant's claim.Upon reviewing the evidence and arguments from both parties, the judge noted that the cheque issued by the respondent was dishonored, and the legal notice under Section 138 of the NI Act went unanswered. The complainant successfully proved the liability against the respondent, and the defense claiming the cheque was stolen was deemed false and an afterthought. The trial court's detailed analysis of the evidence supported the complainant's case, emphasizing the dishonor of the cheque and the completion of all legal formalities.The judge criticized the lower Appellate Court's reasoning for acquitting the respondent, noting that the court disregarded the presumption under Section 138 of the NI Act due to the respondent's failure to present any contrary evidence. The lower court's approach was deemed faulty as it ignored the purpose of the NI Act for swift resolution of claims. The judge highlighted the importance of the account book as evidence and criticized the lower court's reliance on irrelevant factors like differences in signatures and resolution dates. Consequently, the judge set aside the lower court's judgment and restored the trial court's decision, ordering implementation within a specified timeframe.