1995 (12) TMI 414 - HC - Indian Laws

High Court overturns acquittal in bounced cheque case, emphasizes 'refer to drawer' endorsement as proof

The High Court allowed the appeal, setting aside the Sessions Court's acquittal of the accused. The Court emphasized that the endorsement 'refer to the ... - Issues:Appeal against acquittal; Validity of the reasons given by the Sessions Court for acquittal; Competency of the Magistrate to impose fine exceeding Rs. 5000.Analysis:The appellant, the President of a workers' union, filed a complaint under Section 138 of the Negotiable Instruments Act against the accused, a factory proprietor, for dishonoring a cheque issued as part of a settlement agreement. The Magistrate convicted the accused, imposing a fine and compensation. However, the Sessions Court acquitted the accused based on two grounds: lack of proof of insufficiency of funds for the bounced cheque and the Magistrate's alleged lack of authority to impose a fine exceeding Rs. 5000.The Sessions Court's reasoning was challenged on appeal. The High Court noted that the endorsement 'refer to the drawer' on the bounced cheque is sufficient proof of dishonor due to insufficient funds. Citing precedent, the Court emphasized that such endorsements establish the bouncing of the cheque, necessitating proceedings under Section 138 of the Act. The Court highlighted the importance of summoning the Bank Manager to verify the insufficiency of funds, especially since the cheque amount was crucial retrenchment compensation.Regarding the Magistrate's authority to impose fines exceeding Rs. 5000, the High Court clarified that Section 142 of the Negotiable Instruments Act empowers a First Class Magistrate to impose fines beyond Rs. 5000, contrary to the Sessions Court's interpretation. Referring to a Madras High Court decision, the Court upheld the Magistrate's competency to levy fines exceeding the specified limit in cases under Section 138 of the Act.Consequently, the High Court allowed the appeal, setting aside the acquittal and remanding the case to the Magistrate for fresh consideration. The Magistrate was directed to provide the complainant with an opportunity to summon the Bank Manager to establish the insufficiency of funds for the bounced cheque. The judgment emphasized that only the Bank Manager's evidence and related documents could be presented as additional evidence, with no other evidence permitted. The parties were instructed to appear before the Magistrate for further proceedings.