Case Note & Summary
The complainant, M/s Bagalkot Cement and Industries Limited (formerly Kanoria Industries Limited), a public limited company manufacturing cement, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against the respondents/accused. The accused No.1 was a partnership firm, and accused Nos.2 and 3 were its managing partners. The complainant alleged that it had been supplying cement to the accused, and towards part payment of the cost of cement supplied, the accused issued a cheque dated 30.03.2001 for Rs.1,00,000 drawn on State Bank of India, Nippani Branch. When the cheque was presented for encashment, it was dishonoured with the endorsement 'funds insufficient'. The complainant issued a legal notice on 09.04.2001 demanding payment, but the accused failed to pay within the statutory period. Consequently, the complainant filed a complaint in C.C.No.797/2001 before the Principal Civil Judge and JMFC, Bagalkote. The trial court, by judgment dated 16.11.2013, acquitted the accused of the offence under Section 138 of the NI Act. Aggrieved by the acquittal, the complainant filed the present appeal under Section 378(4) of the Code of Criminal Procedure, 1973. The High Court examined the evidence and found that the complainant had proved the issuance of the cheque and the signature of the accused, thereby raising the presumption under Section 139 of the NI Act that the cheque was issued for a legally enforceable debt. The accused failed to rebut this presumption by adducing any credible evidence. The trial court had erroneously shifted the burden on the complainant and acquitted the accused on flimsy grounds. The High Court held that the trial court's judgment was perverse and not based on proper appreciation of evidence. Accordingly, the appeal was allowed, the impugned judgment of acquittal was set aside, and the accused were convicted for the offence under Section 138 of the NI Act. The accused were sentenced to pay a fine of Rs.1,50,000 each, in default to undergo simple imprisonment for six months. Out of the fine amount, Rs.1,00,000 was ordered to be paid to the complainant as compensation.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The complainant proved issuance of cheque and signature of accused, raising presumption of legally enforceable debt. The accused failed to rebut the presumption by preponderance of probabilities. The trial court's acquittal was based on erroneous appreciation of evidence and hence set aside. (Paras 2-10) B) Criminal Procedure Code - Appeal against Acquittal - Section 378(4) - Scope - The appellate court can interfere if the trial court's view is perverse or unreasonable. In this case, the trial court ignored the presumption and shifted burden on complainant, warranting interference. (Paras 1-10)
Issue of Consideration
Whether the trial court erred in acquitting the accused for offence under Section 138 of Negotiable Instruments Act, 1881 despite the presumption under Section 139 and failure of accused to rebut the same.
Final Decision
Appeal allowed. Impugned judgment of acquittal dated 16.11.2013 passed by Principal Civil Judge and JMFC, Bagalkote in C.C.No.797/2001 is set aside. Accused are convicted for offence under Section 138 of Negotiable Instruments Act, 1881. Each accused is sentenced to pay fine of Rs.1,50,000, in default to undergo simple imprisonment for six months. Out of fine, Rs.1,00,000 to be paid to complainant as compensation.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Standard of proof in cheque dishonour cases
- Section 138 NI Act ingredients
