2015 (5) TMI 1246 - HC - Indian Laws

Appellate Court Upholds Conviction for Issuing Cheques to Discharge Debt, Emphasizes Legal Presumptions

Suresh Chandra Goyal Versus  Amit Singhal

Suresh Chandra Goyal Versus  Amit Singhal - TMI Issues Involved:1. Whether the cheques in question were issued in discharge of a debt or as security.2. Whether the findings of the learned Magistrate were legally sustainable.3. Applicability of Sections 91 and 92 of the Indian Evidence Act.4. The presumption under Sections 118 and 139 of the Negotiable Instruments Act.5. Scope of interference with a judgment of acquittal by an appellate court.Issue-wise Detailed Analysis:1. Whether the cheques in question were issued in discharge of a debt or as security:The appellant argued that the cheques were issued in discharge of a debt as evidenced by the Memorandum of Understanding (MOU) dated 26.06.2011, which acknowledged the debt of Rs. 3 Lakhs owed by the accused. The MOU stipulated repayment in six monthly installments of Rs. 50,000 each. The appellant had received Rs. 1.50 Lakhs and returned three cheques to the accused, while the remaining three cheques for Rs. 50,000 each were dishonored due to insufficient funds. The accused admitted liability for Rs. 60,000 but contested the amount of Rs. 1.50 Lakhs. The court held that the MOU (Ex. CW-1/4) clearly established the debt, and the cheques were issued in discharge of this debt, not merely as security.2. Whether the findings of the learned Magistrate were legally sustainable:The learned Magistrate's judgment was found to be misdirected in law. The Magistrate erred by doubting the existence of the debt and going behind the MOU (Ex. CW-1/4), which was not challenged by the accused. The Magistrate's approach was contrary to Sections 91 and 92 of the Indian Evidence Act, which restrict proof of the terms of a contract to the document itself. The Magistrate's conclusion that the cheques were security cheques and could not form the basis of a complaint under Section 138 of the NI Act was incorrect.3. Applicability of Sections 91 and 92 of the Indian Evidence Act:Sections 91 and 92 of the Indian Evidence Act were pivotal in this case. Section 91 mandates that when the terms of a contract are reduced to writing, no evidence other than the document itself is admissible to prove its terms. Section 92 prohibits any oral agreement or statement from contradicting, varying, adding to, or subtracting from the terms of the written contract. The court held that the MOU (Ex. CW-1/4) was conclusive evidence of the debt, and the accused could not contradict it by claiming the cheques were merely for security.4. The presumption under Sections 118 and 139 of the Negotiable Instruments Act:The court emphasized the presumptions under Sections 118 and 139 of the NI Act, which presume the existence of a legally enforceable debt or liability when a cheque is issued. The accused's mere assertion that the cheques were security cheques did not suffice to rebut this presumption. The accused needed to provide cogent evidence to disprove the presumption, which he failed to do. The court cited V.S. Yadav v. Reena, stating that the accused must provide evidence to support their defense and cannot rely solely on statements made under Sections 281 or 313 Cr.P.C.5. Scope of interference with a judgment of acquittal by an appellate court:The court referred to the Supreme Court's guidelines in Ghurey Lal v. State of Uttar Pradesh, which outline the conditions under which an appellate court may overturn a trial court's acquittal. The appellate court must have 'very substantial and compelling reasons' to do so, such as the trial court's conclusion being palpably wrong, based on an erroneous view of the law, or resulting in a grave miscarriage of justice. The court found that the learned Magistrate's judgment met these criteria, as it was based on a misinterpretation of the law and ignored material evidence.Conclusion:The appellate court set aside the impugned judgment, holding that the cheques were issued in discharge of a legally enforceable debt as per the MOU. The accused's defense that the cheques were security cheques did not hold, and the appellant was entitled to invoke Section 138 of the NI Act. The accused was convicted of the offense under Section 138 of the NI Act.