2018 (7) TMI 629 - HC - Indian Laws

Appellate Court overturns conviction due to lack of evidence and burden of proof shift.

The Appellate Court set aside the conviction and sentence of the accused under Section 138 of the Negotiable Instruments Act. The Court found ... Subject matter of cheque issue in dispute - Dishonor of Cheque - insufficiency of funds - it was claimed that the cheque was given as a security to the complainant as a security for the chit transaction - cheque issued for discharge of debt or not? - Section 138 of the Negotiable Instruments Act. Held that:- There was no way the accused and her husband while bringing the promissory note would have known that one Jagadish will be the witness in the promissory note and therefore the version of the complainant that the promissory note was brought typed by the accused and her husband is not believable. This only substantiates the case of the defense that the promissory note was a blank promissory note that was available with the complainant towards the earlier chit transaction and this promissory note has been typed and used for the purpose of this case. If really the version of the complainant is true, the best evidence that was available for the complainant was to examine Jagadish who is none other than a person who is working in his own office - It must also be noted that it is during this period of time, the chit transaction was going on between the complainant and the husband of the accused. Out of these two cheques, one cheque bearing No.88032 is the subject matter of the present case. The version of the defense that the subject matter cheque was given as a security to the complainant as a security for the chit transaction has been established by preponderance of probabilities. After the burden of proof was rebutted by the accused, the complainant must have at least examined Jagadish who according to him was the person who was present at the time when the loan was given by the complainant to the accused and her husband. However for reasons best to known to the complainant this was not done. The Appellate Court after discussing the entire evidence that was available on record has rightly come to the conclusion that the complainant failed to prove the fact that the subject matter cheque was issued towards a discharge of debt said to have been taken by the accused and her husband. Appeal dismissed. Issues:1. Appeal against order of conviction and sentence under Section 138 Negotiable Instruments Act.2. Examination of evidence by Trial Court.3. Appellate Court's consideration of chit transaction and documentary evidence.4. Defense's argument regarding chit transaction and loan transaction.5. Burden of proof under Section 139 of the Negotiable Instruments Act.6. Appellate Court's findings and reasoning for setting aside conviction and sentence.Analysis:1. The Criminal Appeal was filed against the order of conviction and sentence under Section 138 of the Negotiable Instruments Act. The Trial Court had convicted the accused for issuing a dishonored cheque, while the Appellate Court set aside this order, leading to the present appeal.2. The Trial Court had examined the evidence and convicted the accused based on the complainant's testimony and documents presented. The accused's husband had borrowed a sum, executed a promissory note, and the accused issued a cheque which bounced, leading to the complaint.3. The Appellate Court considered the chit transaction, comparing passbook entries and bank records. It found discrepancies in the cheque deposits, suggesting the subject cheque was given as security for the chit transaction.4. The defense argued that the chit transaction concluded in 2003, and the subsequent loan transaction in 2004 was independent. They contended that the accused issued the cheque to discharge the loan, not related to the chit transaction.5. The defense invoked Section 139 of the Negotiable Instruments Act, shifting the burden of proof to the accused to rebut the presumption of a legally enforceable debt. The defense successfully argued that the complainant failed to prove the existence of the debt or liability.6. The Appellate Court, after thorough examination of evidence, found in favor of the accused. It highlighted discrepancies in the complainant's case, including failure to call a crucial witness and absence of record of the loan transaction in the complainant's accounts. The Appellate Court's well-reasoned decision led to the dismissal of the Criminal Appeal, upholding the setting aside of the conviction and sentence by the Trial Court.