2020 (12) TMI 1005 - HC - Indian Laws

Appellate Court Convicts Accused under Section 138 of N.I. Act, Imposes Fine & Compensation

The appellate court allowed the appeal, setting aside the trial court's judgment and convicting the accused under Section 138 of the N.I. Act. The court ... Dishonor of Cheque - acquittal of the accused - maintainability of complaint filed by a power of attorney without making specific assertion about his knowledge about transaction with accused - HELD THAT:- From a perusal of examination-in-chief of PW1, it is seen that deponent has clearly averred that he is working as Assistant Manager of complainant- company and knows facts of the case. During cross- examination, there are no elicitations or admissions that deponent is not aware of transactions between complainant and accused. In this case, accused contended that cheque in question was a post dated cheque issued for security purposes only. Which means that accused admitted his signature on cheque and its issuance to complainant. Consequently presumption under Section 118 and 139 of N.I. Act would be available to complainant as per KISHAN RAO VERSUS SHANKARGOUDA [2018 (7) TMI 101 - SUPREME COURT] and RANGAPPA VERSUS SRI MOHAN [2010 (5) TMI 391 - SUPREME COURT]. As accused failed to substantiate his contention by cogent evidence, it has to be held that he failed to rebut presumption in favour of complainant. The accused is convicted of offence punishable under Section 138 of Negotiable Instruments Act, 1881 - Appeal allowed - decided in favor of appellant. Issues Involved:1. Validity of the complaint filed by a power of attorney holder without specific assertions of knowledge about the transaction.2. Determination of whether the cheque was issued towards an existing debt or as security.3. Evaluation of the trial court's judgment and reasons for acquittal.4. Consideration of appropriate sentencing and penalty.Issue-wise Detailed Analysis:1. Validity of the Complaint Filed by a Power of Attorney Holder:The primary issue was whether a complaint filed by a power of attorney holder without specific assertions of knowledge about the transaction is maintainable. The court referenced the authoritative pronouncement of the Supreme Court in A.C. Narayanan's case, which mandates that a power of attorney holder must explicitly assert knowledge of the transaction in the complaint. The complaint in this case contained an averment in para 1 stating that the complainant's authorized signatory and power of attorney holder was acquainted with the facts of the complaint. The court found this to be sufficient compliance, noting that the power of attorney holder had deposed and verified the complaint under oath, asserting his knowledge of the transaction.2. Determination of Whether the Cheque was Issued Towards an Existing Debt or as Security:The trial court had acquitted the accused on the grounds that the cheque was issued as security and not towards an existing debt. However, the appellate court found this reasoning unsubstantiated by evidence. The accused had admitted to issuing the cheque and signing it, which invoked the presumption under Sections 118 and 139 of the N.I. Act that the cheque was issued for the discharge of debt or liability. The accused failed to provide cogent evidence to rebut this presumption, leading the appellate court to conclude that the cheque was indeed issued towards an existing debt.3. Evaluation of the Trial Court's Judgment and Reasons for Acquittal:The appellate court critically evaluated the trial court's judgment, which had found the power of attorney invalid and the cheque issued as security. The appellate court found these reasons contrary to law and the evidence on record. It noted that the trial court's findings were perverse and unsupported by the evidence presented. The appellate court emphasized that the complainant had produced sufficient documentary evidence, including the cheque, bank endorsement, statutory notice, postal receipts, and the complaint, which corroborated the complainant's case and substantiated the ingredients of the offence under Section 138 of the N.I. Act.4. Consideration of Appropriate Sentencing and Penalty:Upon setting aside the trial court's judgment and convicting the accused, the appellate court considered the appropriate sentence. The complainant sought maximum penalty, citing prolonged litigation and the accused's awareness of insufficient funds. The accused, on the other hand, pleaded for leniency due to financial hardship and ill-health. The court, following the Supreme Court's directions in Damodar S. Prabhu's case, deemed it just to impose a fine instead of imprisonment, given the compensatory nature of the offence under Section 138. The accused was sentenced to pay a fine of Rs. 2,04,000, twice the cheque amount, with a provision for simple imprisonment for four months in default of payment. Additionally, Rs. 1,95,000 was ordered to be paid to the complainant as compensation, with the remaining amount defrayed to the State towards prosecution expenses.Conclusion:The appeal was allowed, the trial court's judgment was set aside, and the accused was convicted under Section 138 of the N.I. Act. The court imposed a fine with a compensatory focus, reflecting the civil nature of the offence.