2019 (1) TMI 1774 - HC - Indian Laws

Appellate court overturns judgment, convicts accused under N.I. Act with fine and conditional imprisonment

The appellate court allowed the appeal, setting aside the trial court's judgment. The accused was convicted under Section 138 of the N.I. Act and fined ... Dishonor of cheque - rebuttal of presumption - whether presumption is said to be rebutted by the accused and whether the trial Court was right in giving benefit to the accused? - HELD THAT:- The accused failed to rebut the presumption under Section 139 of the N.I. Act. The complainant succeeds in proving issuance of cheque by the complainant for discharge of debt of ₹ 35,000/- towards complainant. I conclude that there is a failure on the part of the complainant to pay ₹ 35,000/- within 15 days of receipt of notice on the background of dishonour of cheque. Hence, complainant succeeded in proving commission of offence under Section 138 of the N.I. Act by the accused. There are 3 kinds of punishments laid down under Section 138 of the N.I. Act. There can either be imprisonment or there can only be fine. There can also be combination of both - the accused is fined ₹ 40,000/-, out of which ₹ 35,000/- be paid to the complainant towards compensation - Imprisonment can be imposed if fine amount is not paid within reasonable period. Appeal allowed. Issues Involved:1. Rebuttal of presumption under Section 139 of the N.I. Act.2. Appreciation of evidence by the trial court.3. Proof of hand loan of Rs. 35,000.4. Connection with hand loan of Rs. 65,000.5. Effect of summary suit No.214/2006.6. Issuance of cheque.7. Completion of cheque.8. Dishonour of cheque and receipt of notice.9. Evidence through power of attorney.10. Sentence.Issue-wise Detailed Analysis:Rebuttal of Presumption under Section 139 of the N.I. Act:The court examined the shift in judicial interpretation regarding presumption under Section 139 of the N.I. Act. Initially, the presumption was limited to debt or liability, as observed in Krishna Janardhan Bhat v. Dattatraya G. Hegde, but was later extended to legally recoverable debt in Rangappa v. Sri Mohan. The principles established include that the presumption is rebuttable, the accused can rebut it by making out a probable case on the balance of probabilities, and mere denial is insufficient.Appreciation of Evidence by the Trial Court:The trial court was criticized for its approach in appreciating evidence, emphasizing unproven facts over proven ones and failing to draw necessary inferences from the accused's failures. The appellate court emphasized the need for a cautious approach, ensuring evidence is properly marshalled and legal principles correctly applied.Proof of Hand Loan of Rs. 35,000:Overwhelming evidence supported the hand loan of Rs. 35,000, including a receipt and bank documents. The accused did not deny taking the loan but claimed repayment, which was not substantiated with evidence.Connection with Hand Loan of Rs. 65,000:The court distinguished between the two loans, stating there was no need to prove the Rs. 65,000 loan in this case. The trial court erred in interlinking the two loans.Effect of Summary Suit No.214/2006:The trial court gave undue weight to the complainant's ignorance of repayment during cross-examination. The appellate court noted that the accused should have proven repayment independently. The civil suit judgment was relevant but not conclusive in the criminal trial.Issuance of Cheque:The cheque, dated 10/01/1906, raised suspicion due to the year discrepancy. The court found it likely issued in 1999, with the complainant authorized to complete the cheque under Section 20 of the N.I. Act.Completion of Cheque:The complainant preserved the cheque for seven years, and under Section 20 of the N.I. Act, was authorized to fill in the date, amount, and payee's name. No excess authority was used.Dishonour of Cheque and Receipt of Notice:The cheque was dishonoured for exceeding the arrangement, which was not contested by the accused. The notice of dishonour was properly issued and received, and the complaint was filed within the statutory period.Evidence through Power of Attorney:The power of attorney holder, the complainant's husband, was authorized to give evidence and was knowledgeable about the transaction. This was not challenged, and the court found no fault in the evidence presented.Sentence:The court decided against immediate imprisonment due to the case's age, instead imposing a fine of Rs. 40,000, with Rs. 35,000 to be paid to the complainant as compensation. Imprisonment was conditional on non-payment of the fine within two months.Final Conclusion:The appellate court concluded that the accused failed to rebut the presumption under Section 139 of the N.I. Act. The complainant proved the issuance of the cheque for the discharge of debt. The trial court's judgment was set aside, and the accused was convicted under Section 138 of the N.I. Act, with a fine imposed and conditional imprisonment.Order:1. Appeal allowed.2. Trial court's judgment set aside.3. Accused convicted under Section 138 of the N.I. Act.4. Fine of Rs. 40,000 imposed.5. Conditional imprisonment for one year if the fine is not paid within two months.6. Fine to be deposited with the trial court, with Rs. 35,000 to be paid to the complainant as compensation.7. Trial court to ensure compliance if the fine is not paid in time.