Case Note & Summary
The complainant, Smt H B Bhagyalakshmi, filed a criminal appeal under Section 378(4) of the Code of Criminal Procedure, 1973, against the judgment and order of acquittal dated 26.10.2018 passed by the XII Additional and XXXVII A.C.M.M. (S.C.C.H-8), Bengaluru, in C.C.No.25323/2017, whereby the Trial Court acquitted the accused/respondent, Smt Cheluvamma, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complainant alleged that the accused, known to her for several years, approached her in July 2016 and requested a loan of Rs.2,50,000 for her granddaughter's education and family necessities. The complainant lent the amount, and the accused issued a cheque dated 15.09.2016 drawn on State Bank of India, Peenya Industrial Estate Branch, Bengaluru, for the said amount. When the complainant presented the cheque, it was dishonoured with the endorsement 'Funds Insufficient'. The complainant issued a legal notice dated 30.09.2016, which was served on the accused, but the accused failed to pay the amount within the statutory period, leading to the filing of the complaint. The Trial Court acquitted the accused on the ground that the complainant failed to prove the existence of a legally enforceable debt. The High Court, after hearing the appellant's counsel and the amicus curiae for the respondent, framed the issue of whether the Trial Court's acquittal was sustainable. The Court noted that the complainant had examined herself as PW-1 and marked Exhibits P1 to P7, including the cheque, bank endorsement, legal notice, and postal acknowledgments. The accused did not lead any defence evidence. The Court held that the presumption under Section 139 of the NI Act operates in favour of the complainant, and the accused failed to rebut it. The defence that the cheque was given as security was not proved. The Court found that the Trial Court's findings were perverse and based on no evidence, and thus set aside the acquittal. The accused was convicted under Section 138 of the NI Act and sentenced to pay a fine of Rs.3,50,000, with Rs.3,40,000 to be paid as compensation to the complainant, and in default, simple imprisonment for six months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The complainant proved the loan of Rs.2,50,000 and issuance of cheque; the accused failed to rebut the presumption that the cheque was issued for discharge of a legally enforceable debt. The Trial Court's acquittal was set aside. (Paras 1-10) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - The loan was for the accused's granddaughter's education and family necessities, which constitutes a legally enforceable debt. The accused's defence that the cheque was given as security was not proved. (Paras 3-8) C) Criminal Procedure Code, 1973 - Appeal against Acquittal - Section 378(4) - The High Court, in an appeal against acquittal, can interfere if the Trial Court's findings are perverse or based on no evidence. Here, the Trial Court ignored the presumption under Section 139 of the NI Act and the evidence on record. (Paras 1-10)
Issue of Consideration
Whether the Trial Court erred in acquitting the accused for the offence under Section 138 of the Negotiable Instruments Act, 1881, despite the complainant establishing the existence of a legally enforceable debt and the accused failing to rebut the presumption under Section 139 of the NI Act.
Final Decision
Appeal allowed. The judgment of acquittal dated 26.10.2018 in C.C.No.25323/2017 is set aside. The accused is convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881. The accused is sentenced to pay a fine of Rs.3,50,000. In default of payment of fine, the accused shall undergo simple imprisonment for a period of six months. Out of the fine amount, Rs.3,40,000 shall be paid to the complainant as compensation.
Law Points
- Presumption under Section 139 of NI Act
- Rebuttal of presumption
- Standard of proof in cheque dishonour cases
- Section 138 NI Act ingredients
