2021 (6) TMI 996 - HC - Indian Laws

Appellate Court Reverses Acquittal, Convicts First Respondent under Section 138

The appellate court found the trial court erred in acquitting the first respondent in a case under Section 138 of the Negotiable Instruments Act. The ... Dishonor of Cheque - acquittal of the accused - insufficiency of funds - cross-examination of appellant - wrong interpretation adopted by the learned Magistrate - rebuttal of presumptions - Section 142 of the Negotiable Instruments Act - HELD THAT:- The answers given by the accused in reply to questions under Section 313 of the Cr.P.C., are not per se evidence; they are not on oath; the prosecution does not get opportunity to verify the correctness of such statements, unless the accused takes oath and enters the box under Section 315 of the Cr.P.C., they do not get opportunity to cross examine. Here the counsel for the first respondent did not cross examine the appellant, when he took oath and gave evidence as PW1. Secondly, no evidence is tendered by the first respondent in support of his version that the cheque was given only in consideration of ₹ 50,000/-. The learned Magistrate has gone estray in acquitting the first respondent. Having regard to the circumstances he should not have been acquitted. After having admitted that the Ext. P1 cheque was issued by him, in the absence of a plausible and satisfactory explanation, the trial court ought to have drawn the presumptions under Sections 118 and 139 of the Act. The court went wrong in taking the statement given by first respondent under Section 313 of the Cr.P.C. as gospel truth and acquitting him from liability. That finding requires interference in appeal. The first respondent is found guilty and convicted under Section 138 of the N.I. Act and sentenced to pay a fine of ₹ 2,50,000/- in default to undergo simple imprisonment for six months. When realised, the amount shall be paid as compensation to the appellant - Appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the trial court erred in acquitting the first respondent under Section 138 of the Negotiable Instruments Act.2. Whether the absence of details of the original transaction in the complaint is fatal to the prosecution's case.3. Whether the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act were properly applied.4. Whether the statement of the accused under Section 313 of the Cr.P.C. can be treated as substantive evidence.Detailed Analysis:1. Error in Acquitting the First Respondent:The appellant contended that the trial court erroneously acquitted the first respondent despite the latter not cross-examining the appellant (PW1). The trial court's decision was based on the accused's statement under Section 313 of the Cr.P.C., which the appellant argued was not sufficient to discredit the evidence provided by PW1. The appellate court found that the trial court was mis-guided by the first respondent and that such a finding could not stand judicial scrutiny. The trial court should have drawn the statutory presumptions under Sections 118 and 139 of the Act once the execution of the cheque was proved.2. Absence of Transaction Details:The trial court had dismissed the complaint partly on the basis that the complaint did not contain details about the original transaction, such as the time, place, and conditions under which the amount was lent. However, the appellate court clarified that in a prosecution under Section 142 of the Act, alleging an offence under Section 138, such details are not necessary. The most vital aspect is whether the cheque was executed and issued by the accused. If proved, this attracts the presumptions under Sections 118 and 139 of the Act, shifting the burden to the accused to rebut the presumption.3. Application of Statutory Presumptions:The appellate court emphasized the statutory presumptions under Sections 118 and 139 of the Act, which presume that the cheque was issued for consideration and in discharge of a legally enforceable debt. The trial court failed to apply these presumptions correctly. The appellate court cited several precedents, including Uttam Ram v. Devinder Singh Hudan and M/s. Kumar Exports v. M/s. Sharma Carpets, to reinforce that the burden shifts to the accused to rebut these presumptions once the execution of the cheque is established.4. Statement under Section 313 of the Cr.P.C.:The appellate court noted that the trial court was unduly influenced by the first respondent's statement under Section 313 of the Cr.P.C., which cannot be treated as substantive evidence. The statement given by the accused under this section is not on oath and does not provide the prosecution an opportunity to cross-examine. The appellate court reiterated that the testimony given on oath by the complainant (PW1) cannot be rejected merely because it was contradicted by the accused's statement under Section 313 of the Cr.P.C.The appellate court also pointed out that the first respondent admitted to issuing a signed blank cheque, which under the law, still attracts liability under Section 138 of the N.I. Act unless the accused can provide a plausible and satisfactory explanation to rebut the presumption.Conclusion:The appellate court found that the trial court erred in acquitting the first respondent. The appeal was allowed, and the first respondent was found guilty and convicted under Section 138 of the N.I. Act. The respondent was sentenced to pay a fine of Rs. 2,50,000, in default of which he would undergo simple imprisonment for six months. The amount, when realized, was to be paid as compensation to the appellant. If the amount was not tendered within two months, the trial court was directed to initiate coercive proceedings.