The Supreme Court of India, reversed the High Court's and the Appellate Court's decisions that had acquitted the respondent in a cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881. The Court held that the issuance of a cheque by the respondent was towards a legally enforceable debt and the discrepancies in the interest rate did not undermine the validity of the debt. The judgment reinstates the trial court's decision, which had sentenced the respondent to one year of simple imprisonment and imposed a fine.

1. Introduction

The case involves a criminal appeal by Sri Sujies Benefit Funds Limited against the acquittal of M. Jaganathuan by the High Court of Judicature at Madras. The appeal challenges the judgment passed by the High Court, which upheld the Appellate Court's decision to acquit the respondent under Section 138 of the Negotiable Instruments Act.

2. Brief Facts

The respondent, a subscriber to the appellant's chit fund, had borrowed multiple loans amounting to Rs. 21,09,000. In partial discharge of the debt, he issued a cheque of Rs. 19,00,000, which was dishonored due to account closure. The appellant then filed a complaint under Section 138 of the N.I. Act.

3. Trial Court's Decision

The Trial Court convicted the respondent, sentencing him to one year of simple imprisonment and ordering him to pay a fine of Rs. 38,00,000 as compensation. The respondent appealed this decision in the Appellate Court.

4. Appellate Court and High Court's Decisions

The Appellate Court, after allowing additional evidence, acquitted the respondent, citing discrepancies in the interest rates and lack of legally enforceable debt. The High Court upheld this acquittal.

5. Supreme Court's Analysis and Judgment

The Supreme Court found that the lower courts had erred in their reasoning, especially concerning the presumption of legal enforceability under the N.I. Act. The Court emphasized that the respondent did not effectively rebut the presumption of debt, and discrepancies in interest rates were not sufficient to dismiss the appellant's claim.

6. Conclusion

The Supreme Court reversed the acquittal and reinstated the trial court's judgment, emphasizing the importance of the legal presumption of debt in cheque bounce cases and the necessity of strict compliance with the N.I. Act's provisions.