2005 (11) TMI 532 - HC - Indian Laws

Appellate Court Overturns Acquittal; Orders Sentencing in Negotiable Instruments Act Case for Unrebutted Liability.

The appellate court quashed the trial court's acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1938, due to the accused's ... Statutory presumption under Section 139 of the Negotiable Instruments Act - Burden to rebut presumption on the drawer - Admissibility and effect of purshis/declaration as admission - Interference in appeals against acquittal - perversity standard - Remand for sentencing and compensationStatutory presumption under Section 139 of the Negotiable Instruments Act - Burden to rebut presumption on the drawer - Admissibility and effect of purshis/declaration as admission - Interference in appeals against acquittal - perversity standard - Whether the trial court misapplied the statutory presumption under Section 139 by treating the complainant as required to prove existence of liability and whether the accused had discharged the burden of rebutting the presumption. - HELD THAT: - The High Court held that Section 139 creates a mandatory statutory presumption that a cheque is received for discharge, in whole or in part, of any debt or liability, and that the onus lies on the drawer to rebut that presumption by leading cogent, convincing evidence. The Court found that the accused did not dispute his signatures on the cheques, the indemnity bond or the purshis (Exh. 9), and did not lead any affirmative evidence (including failing to examine the purported signatory of Exh. 23) to prove that the cheques were not issued against any liability. The purshis/ declaration (Exh. 9), containing multiple signatures and counter-signatures and identified by the advocate, constituted an admission which the accused subsequently attempted to resile from on improbable grounds (Exh. 11). The trial court had treated the matter as if the complainant alone bore the primary burden of proving the subsisting liability - a view contrary to Sections 138/139 and Supreme Court precedent - and therefore erred. Applying the settled principle that an appeal against acquittal can be interfered with where the trial court's conclusion is perverse and results in miscarriage of justice, the High Court concluded that no reasonable man would have reached the trial court's conclusion on the facts and that the acquittal was perverse and unsustainable. [Paras 29, 30, 31, 33, 36]The trial court's acquittal is quashed insofar as it resulted from misapplication of Section 139; the accused failed to rebut the statutory presumption and is held guilty on that issue.Remand for sentencing and compensation - What order should follow after quashing the acquittal, and whether the matter should be remanded for further proceedings. - HELD THAT: - The High Court declined the accused's request for remand limited to adjudication of the Exh. 9/11 dispute, observing that Exh. 11 advanced inherently improbable grounds for resiling from the admission in Exh. 9 and that no useful purpose would be served by remanding only for that narrow issue. However, having quashed the acquittal, the Court remanded the matter to the trial court for the limited purpose of determining sentence and compensation after affording both parties an opportunity to be heard. The trial court was directed to decide the matter within two months from receipt of the record. [Paras 35, 37, 38]Matter remanded to the trial court for determination of sentence and compensation after hearing both parties; trial court directed to decide within two months.Final Conclusion: The High Court allowed the appeal in part: the trial court's acquittal was quashed for misapplication of the mandatory presumption under Section 139 and for being perverse; the matter is remanded to the trial court solely for determining sentence and compensation after hearing both sides within two months. Issues Involved:1. Whether the accused committed an offense under Section 138 of the Negotiable Instrument Act, 1938.2. Whether the cheques were issued for the discharge of any existing liability or debt.3. Whether the trial court erred in acquitting the accused based on the evidence presented.Issue-Wise Detailed Analysis:1. Whether the accused committed an offense under Section 138 of the Negotiable Instrument Act, 1938:The appellant challenged the acquittal of the accused under Section 138 of the Negotiable Instrument Act, 1938, which pertains to the dishonor of cheques for insufficiency of funds. The trial court framed two issues: whether the accused committed an offense under Section 138 and what order should be passed. The trial court concluded that the accused did not commit the offense and acquitted him.2. Whether the cheques were issued for the discharge of any existing liability or debt:The complainant alleged that the accused issued two cheques totaling Rs. 13,61,000 as payment for a row house. The cheques were dishonored due to insufficient funds. The complainant issued a notice demanding payment, which the accused did not fulfill. The accused argued that the cheques were issued as a guarantee, not for an existing liability. The trial court found that the complainant failed to prove the cheques were issued for an existing liability.The appellant argued that under Section 139 of the Negotiable Instrument Act, there is a presumption that the cheques were issued for discharging a debt or liability, and the accused must disprove this presumption with cogent evidence. The appellant cited several Supreme Court judgments, including *K.N. Beena v. Muniyappan* and *Hiten P. Dalal v. Bratindranath Banerjee*, to support this contention.The court noted that the accused did not deny signing the cheques or receiving the statutory notice. The accused's application to withdraw an earlier declaration admitting liability was based on improbable grounds. The court found that the accused failed to disprove the presumption under Section 139, as he did not lead any evidence to show the cheques were not issued for an existing liability.3. Whether the trial court erred in acquitting the accused based on the evidence presented:The appellant argued that the trial court's judgment was perverse and unreasonable, as it failed to appreciate the material evidence and the statutory presumption under Section 139. The court agreed, stating that the trial court misconceived the scheme of the Act and the mandatory presumption in favor of the complainant. The trial court's approach resulted in a miscarriage of justice.The court emphasized that the statutory presumption under Section 139 requires the accused to lead cogent evidence to rebut it. The accused's failure to do so, coupled with his admission of liability in an earlier declaration, led the court to conclude that the trial court erred in acquitting the accused.Conclusion:The court quashed and set aside the trial court's judgment of acquittal, remanding the matter back to the trial court for determining the award of sentence and compensation after affording both sides an opportunity to be heard. The trial court was directed to decide the matter within two months from the date of receipt of the writ.