High Court overturns Appellate Court's judgment, restores conviction under Section 138

The High Court allowed the appeal, setting aside the Appellate Court's judgment and restoring the Trial Court's decision to convict the accused under Section 138 of the Negotiable Instruments Act. The High Court found the Appellate Court's judgment to be unsupported by the evidence on record, deeming it perverse.

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Issues Involved:
1. Whether the Appellate Court erred in acquitting the accused for the offence punishable under Section 138 of the NI Act.
2. What order should be passed.

Detailed Analysis:

Issue 1: Whether the Appellate Court erred in acquitting the accused for the offence punishable under Section 138 of the NI Act.

The factual matrix of the case involves the complainant alleging that the accused had taken a hand loan of Rs. 1,50,000 and issued a cheque dated 27.10.2004 to discharge the liability. The cheque was dishonored due to "Funds Insufficient". Despite legal notice, the accused did not reply, leading to the filing of the complaint.

The Trial Court convicted the accused under Section 138 of the Negotiable Instruments Act, 1881. However, the Appellate Court reversed this decision, acquitting the accused. The complainant contended that the Appellate Court erred in appreciating the evidence and wrongly permitted the appellant to produce documents (Exs.D4 to D7).

The complainant testified as P.W.1, substantiating his claim with documents (Exs.P1 to P8). The accused, examined as D.W.1, along with witnesses D.W.2 and D.W.3, presented documents (Exs.D1 to D7 and Ex.P9). The Appellate Court’s decision was based on the evidence of D.W.3, who testified that the vehicles were not registered in the complainant’s name, thus questioning the complainant’s financial capacity.

The High Court noted that the accused admitted the signature on the cheque but contended the writings were in different ink. The accused's defense was that the cheque was given to the complainant's brother for a different loan of Rs. 25,000, which was repaid, but the cheques were not returned. However, no substantial evidence was provided to support this claim. The accused also failed to provide documentary proof of replies to the notices (Exs.D1 to D3).

The High Court emphasized that once the signature on the cheque is admitted, a presumption under Section 139 of the NI Act arises, which the accused must rebut. The accused's attempts to discredit the complainant's financial capacity and the authenticity of the cheque were not convincing. The evidence of D.W.2 did not inspire confidence, and the documents (Exs.D1 to D3) lacked credibility.

The High Court found that the Appellate Court erred in its judgment by not properly considering the admissions and the lack of credible evidence from the accused. The Appellate Court mainly relied on the evidence of D.W.3 without adequately addressing the other evidence and admissions.

Issue 2: What order should be passed.

The High Court concluded that the Appellate Court’s judgment was perverse and not supported by the material on record. The High Court restored the judgment of the Trial Court, convicting the accused under Section 138 of the NI Act.

Order:
1. The appeal is allowed.
2. The Appellate Court’s judgment dated 03.11.2010 in Criminal Appeal No.37/2009 is set aside.
3. The Trial Court’s judgment dated 02.01.2009 in C.C.No.476/2007 is restored.
4. The registry is directed to send the records to the concerned Trial Court forthwith.

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