2021 (1) TMI 803 - HC - Indian Laws

High Court reverses acquittal, convicts under Section 138 NI Act, imposes Rs. 4,05,000 fine, directs registry for further action.

CB Dhanaram Versus NA Ballur

CB Dhanaram Versus NA Ballur - TMI Issues Involved:1. Whether the appellant has proved the guilt of the accused warranting a conviction under Section 138 of the NI Act.2. Whether the judgment of acquittal deserves to be set aside.Issue-wise Detailed Analysis:1. Whether the appellant has proved the guilt of the accused warranting a conviction under Section 138 of the NI Act:The appellant contended that the trial court's judgment of acquittal was erroneous and arbitrary, failing to appreciate the necessary ingredients required under Section 138 of the NI Act. The appellant provided a loan of Rs. 3,00,000 to the respondent, who issued a post-dated cheque as repayment. The cheque was dishonored due to insufficient funds, leading to the issuance of a legal notice and subsequent filing of a complaint under Section 200 of the Cr.P.C. The appellant examined himself and another witness, marking several exhibits, while the respondent cross-examined the appellant but did not lead any evidence. The trial court concluded that the appellant failed to prove a legally subsisting debt or liability, acquitting the respondent.Upon appeal, the High Court examined the evidence, noting that the appellant consistently narrated the events and provided substantial evidence, including the dishonored cheque and legal notice. The court emphasized the presumption under Section 139 of the NI Act, which places the burden on the respondent to disprove the appellant's case. The respondent's defense, including the claim that the cheque was issued as security for a previous transaction, lacked credible evidence. The court found the appellant's evidence credible and consistent, while the respondent's defense was unsubstantiated. The High Court concluded that the appellant proved the necessary ingredients of Section 138, establishing the respondent's guilt.2. Whether the judgment of acquittal deserves to be set aside:The trial court's judgment of acquittal was based on the appellant's failure to prove the existence of a legally subsisting debt or liability. The High Court, however, found this conclusion erroneous. The trial court heavily relied on Ex.D.1, a document allegedly proving the respondent's repayment of Rs. 50,000, but the High Court noted that this document did not inspire confidence and lacked essential details such as the name of the recipient and the date. The trial court's reliance on the appellant's non-disclosure of the loan in income tax returns was also deemed misplaced, as it did not negate the existence of the debt.The High Court emphasized the presumption under Section 139 of the NI Act, which the respondent failed to rebut with credible evidence. The trial court's shifting of the burden of proof to the appellant was incorrect. The High Court found that the appellant's evidence, including the dishonored cheque and the respondent's admission of the signature, sufficiently proved the existence of a legally enforceable debt. The trial court's judgment was thus found to be arbitrary and not supported by the evidence on record.Conclusion:The High Court set aside the trial court's judgment of acquittal, holding the respondent guilty under Section 138 of the NI Act. The respondent was sentenced to pay a fine of Rs. 4,05,000, with Rs. 4,00,000 to be paid as compensation to the appellant and Rs. 5,000 to be deposited to the state. In default of payment, the respondent would undergo simple imprisonment for one year. The court directed the registry to transmit the order to the trial court for further proceedings.