2026 (2) TMI 117 - HC - Indian Laws

Dishonour of cheque: acquittal confirmed where accused probablized defence and complainant suppressed material facts, cheque issued as security under sale agreement

Dishonour of cheque proceedings under the Negotiable Instruments Act engaged the presumption of liability, while the complainant bore the onus to negate ... Dishonour Of cheque - Presumption of liability in cheque dishonour cases - Onus to prove absence of consideration - Suppression of material facts / clean hands doctrine - Requirement of statutory notice in proceedings under the Negotiable Instruments Act - Doctrine of coming to court with clean hands - Probabilization of defence by the accused - Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- It is seen that appellant prior to filing complaint under Section 138 of Negotiable Instruments Act, 1881, issued statutory notice (Ex.P3) to respondent. The statutory notice is with regard to issuance of cheque (Ex.P1) by respondent and dishonour of cheque (Ex.P1) and filing of complaint there is no details further given. Even in the complaint and in sworn statement, there is no reference to any of earlier transaction between appellant and respondent. When the appellant was cross examined by the respondent, the appellant was specifically questioned with regard to earlier sale agreement (Ex.D1), power of attorney (Ex.D2), cancellation of power of attorney (Ex.D3), filing of civil suit by appellant's father-in-law and other aspects. The appellant denied the same and feigns ignorance. The sale agreement is a registered document in No.5002 of 2011 dated 17.08.2011, power of attorney is document No.331 of 2011 dated 10.11.2011, cancellation of power of attorney is document No.1317 of 2013 dated 26.03.2013. These documents clearly referred to in the civil suit notice and its reply (Exs.D7 & D8). In this case, the proof affidavit filed on 20.11.2018, but there is no reference about these registered documents and the transactions between appellant and respondent, all details disclosed by the respondent when he examined himself as defence witness (DW1) and marked documents as defence exhibits (Exs.D1 to D8). It is apparent that the appellant had not come with clean hands and he suppressed material facts. In the civil suit, the specific stand is that at the time of sale agreement, a promissory note and signed blank security cheques collected from the respondent. One of the cheque filled up and the complaint filed. Hence cheque issued pursuant to the sale agreement as security and cheque not in discharge of any loan liability. On proper appreciation of evidence and materials the trial Court rightly held that the respondent probablized his defence by way of defence witness and documents and the appellant failed to prove the case beyond all reasonable doubt. This Court finds no reason to interfere with the judgment of acquittal dated 29.01.2020 in STC.No.90 of 2015 passed by the learned Judicial Magistrate No.I, Perambalur and the same is hereby confirmed. In the result, this Criminal Appeal stands dismissed. Issues: Whether the appellate court should interfere with the trial court's judgment of acquittal in a prosecution under Section 138 of the Negotiable Instruments Act, 1881, having regard to the documentary evidence, statutory notice and the defence evidence led by the accused.Analysis: The appeal concerns a cheque dishonour prosecution under Section 138 of the Negotiable Instruments Act, 1881 and whether the ingredients of the offence were proved beyond reasonable doubt. Applicable legal framework includes the presumption created by Section 139 of the Negotiable Instruments Act and the accused's burden to rebut that presumption, the role of statutory notice under Section 138, and evidentiary principles under the Indian Evidence Act relevant to production and suppression of material documents. The appellate review examined the presentation and return of the cheque, issuance and service of statutory notice, the complainant's evidence and exhibits, and the defence evidence including a registered sale agreement, power of attorney and related civil suit documents produced by the defence. The appellate view considered whether the defence had probablized its case through witness and documentary evidence and whether the complainant had suppressed material facts or failed to disclose earlier relevant transactions in the complaint and proof affidavit. On appreciation of the totality of evidence, including defence exhibits and the complainant's omissions, the defence was held to have sufficiently raised doubt and the prosecution was not established beyond reasonable doubt.Conclusion: The appellate court found no merit in interfering with the trial court's acquittal and confirmed the judgment of acquittal; the criminal appeal is dismissed, favouring the respondent.