2015 (4) TMI 1313 - HC - Indian Laws

Appellate court upholds acquittal, ruling appellant failed to prove legally enforceable debt and transaction violated tax laws.

The appellate court upheld the trial court's acquittal, determining that the appellant failed to establish the Rs. 75,000/- as a legally enforceable debt ... Dishonor of Cheque - insufficiency of funds - acquittal of the accused - existence of advance or not - HELD THAT:- The scope and ambit of the jurisdiction of the Appellate Court while dealing with an appeal against acquittal is no longer res integra. The Hon'ble Supreme Court in the case of VIJAY PAL SINGH VERSUS STATE OF UTTARAKHAND [2014 (12) TMI 1375 - SUPREME COURT], has after taking survey of its earlier decisions including in the case of BASAPPA VERSUS STATE OF KARNATAKA [2014 (2) TMI 1386 - SUPREME COURT] and Chandrappa and others Vs. State of Karnataka, [2007 (2) TMI 704 - SUPREME COURT], has held that unless the judgment of acquittal is based on, no material or is perverse or the view taken by the Court is wholly unreasonable or is not a plausible view or there is non consideration of any evidence or there is palpable misreading of evidence, the Appellate Court will not be justified in interfering with the order of acquittal. The Income Tax Return is in respect of M/S Kamala Traders of which the Proprietor is shown as Smt. Radhika R. Pangam and the appellant. The Balance Sheet is signed by the Chartered Accountant and not by the appellant. It is true that in the matter of filing of Returns, the party takes the assistance of a Chartered Accountant/Expert. However, in the present case, the appellant could have examined the Chartered Accountant or atleast produced the accounts maintained, in order to establish that the amount of ₹ 75,000/- was advanced to the respondent No. 1. That evidence is not forthcoming. The appellant has not examined his wife, who is the Proprietor and in whose presence the amount is allegedly advanced. As noticed earlier from the evidence of the appellant, it does not appear that the appellant was having sufficient amount, so as to support the loan of ₹ 75,000/-, somewhere in June, 2008. The submission on behalf of the appellant that adverse inference needs to be drawn as the respondent No. 1 had failed to subject himself for cross examination, also cannot be accepted. It is now well settled that the accused can rebut the presumption on the basis of the cross examination of the complainant and other witnesses if any, and it is not necessary that he should enter the witness box as a rule. Appeal dismissed. Issues Involved:1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.2. Applicability of Section 269-SS of the Income Tax Act.3. Presumption under Sections 139 and 118 of the Negotiable Instruments Act.4. Adverse inference due to non-cross-examination.5. Scope of appellate court's jurisdiction in interfering with acquittal.Issue-wise Detailed Analysis:1. Legally Enforceable Debt or Liability under Section 138 of the Negotiable Instruments Act:The appellant filed a complaint under Section 138 of the N.I. Act, alleging that the respondent issued two cheques totaling Rs. 75,000/- which were dishonored for insufficient funds. The appellant issued a notice demanding payment, which the respondent failed to comply with, leading to the filing of the complaint. The trial court acquitted the respondent, finding that the appellant failed to prove the Rs. 75,000/- advance as a legally enforceable debt. The appellant's Income Tax Returns did not reflect this amount, and the trial court held that the transaction violated Section 269-SS of the Income Tax Act, making it unenforceable.2. Applicability of Section 269-SS of the Income Tax Act:The trial court relied on the Supreme Court's decisions in Krishna Janardhan Bhat and Sandeep Shirodkar to conclude that the cash advance of Rs. 75,000/- violated Section 269-SS of the Income Tax Act, which mandates that any loan above Rs. 20,000/- must be made through an account payee cheque. This violation rendered the debt unenforceable. The appellant argued that the trial court misapplied these decisions, especially in light of the subsequent Supreme Court ruling in Rangappa, which clarified the presumption under Section 139 of the N.I. Act.3. Presumption under Sections 139 and 118 of the Negotiable Instruments Act:The appellant contended that the respondent did not dispute signing the cheques, which should have triggered a presumption in favor of the appellant under Sections 139 and 118 of the N.I. Act. The appellant argued that the trial court failed to draw this presumption and did not consider the evidence properly. However, the respondent rebutted this presumption by questioning the appellant's financial capacity to advance Rs. 75,000/- and pointing out inconsistencies in the appellant's evidence, such as the absence of this amount in the Income Tax Returns and the lack of a receipt for the cash advance.4. Adverse Inference Due to Non-Cross-Examination:The appellant argued that the trial court should have drawn an adverse inference against the respondent for failing to present himself for cross-examination after initially opting to testify. However, the court noted that the accused could rebut the presumption through cross-examination of the complainant and other witnesses without necessarily testifying himself. The trial court found that the respondent effectively rebutted the presumption by highlighting the appellant's inability to prove the cash advance.5. Scope of Appellate Court's Jurisdiction in Interfering with Acquittal:The appellate court reiterated the principles governing its jurisdiction in appeals against acquittal, emphasizing that it should not interfere unless the trial court's judgment is perverse, unreasonable, or based on no material evidence. The court cited Supreme Court precedents, including Vijay Pal Singh and Chandrappa, to underscore that acquittal carries a double presumption of innocence. The appellate court found no compelling reason to disturb the trial court's findings, concluding that the trial court's judgment was neither perverse nor based on misappreciation of evidence.Conclusion:The appellate court upheld the trial court's acquittal, finding that the appellant failed to prove the Rs. 75,000/- advance as a legally enforceable debt. The trial court's reliance on Section 269-SS of the Income Tax Act was justified, and the presumption under Sections 139 and 118 of the N.I. Act was effectively rebutted by the respondent. The appellate court found no grounds to interfere with the trial court's judgment, and the appeal was dismissed with parties bearing their own costs.