2022 (5) TMI 69 - HC - Indian Laws

Appeal allowed, trial court conviction confirmed under Section 138 NI Act.

Shivakumar S.K. Versus Magesh Shankar C.P.

Shivakumar S.K. Versus Magesh Shankar C.P. - TMI Issues:1. Appeal filed under Section 378(4) of Cr.P.C. to set aside the judgment of acquittal and confirm the conviction.2. Interpretation of whether the cheque issued was for discharge of legally recoverable debt.3. Assessment of the judgment of the first appellate court for interference.Issue 1: Appeal under Section 378(4) of Cr.P.C.The appellant filed an appeal seeking to overturn the judgment of acquittal by the Additional City Civil and Sessions Judge and uphold the conviction by the Trial Court. The complainant alleged that the accused, involved in a traveling business, borrowed Rs. 7,00,000 and issued a post-dated cheque that bounced due to insufficient funds. The Trial Court convicted the accused, but the first appellate court acquitted him, leading to this appeal.Issue 2: Interpretation of the Cheque PurposeThe key question was whether the cheque issued by the accused was for discharging a legally recoverable debt, thereby constituting an offense under Section 138 of the NI Act. The complainant argued that the cheque was issued as security for a loan, as per the loan agreement. The first appellate court considered this admission as best evidence, leading to the acquittal. However, the Supreme Court's recent judgment clarified that a security cheque can still be presented for recovery if the loan is not repaid, making the accused liable under Section 138.Issue 3: Assessment of First Appellate Court's JudgmentThe first appellate court's judgment was challenged on the grounds that it failed to consider the legal implications of the security cheque issued by the accused. The complainant's financial capacity was also questioned, but evidence of owning multiple cars and a travel agency indicated sufficient capacity to lend the amount. The Supreme Court precedent highlighted the importance of evidence in determining financial capacity, leading to the decision to set aside the first appellate court's judgment and restore the trial court's conviction.In conclusion, the High Court allowed the appeal, setting aside the first appellate court's judgment and confirming the trial court's conviction. The accused's defense regarding the purpose of the cheque and the complainant's financial capacity were both dismissed, establishing the accused's liability under Section 138 of the NI Act.