Case Note & Summary
The appellant/complainant filed a criminal appeal under Section 378(4) Cr.P.C. challenging the judgment of acquittal dated 29.12.2010 passed by the XVIII Additional Chief Metropolitan Magistrate and XX ASCJ, Bangalore in C.C.No.3336/2006, whereby the respondent/accused was acquitted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). The complainant alleged that the accused, being a close relative, borrowed a hand loan of Rs.6,00,000 on 07.12.2003 and issued a cheque dated 31.08.2005 drawn on Syndicate Bank, Nandikoor branch towards repayment. The cheque was dishonoured with the endorsement 'funds insufficient'. After issuing a legal notice, the complainant filed a complaint. The trial court acquitted the accused on the ground that the complainant failed to prove his financial capacity to lend the loan amount. The High Court held that the trial court erred in its approach. The accused admitted his signature on the cheque, which raised the presumption under Section 139 of N.I. Act that the cheque was issued for discharge of a debt or liability. The accused failed to rebut this presumption by leading evidence or effectively cross-examining the complainant. The court observed that the financial capacity of the complainant is not a decisive factor when the execution of the cheque is admitted and the presumption under Section 139 is not rebutted. The court set aside the acquittal and convicted the accused under Section 138 of N.I. Act, sentencing him to pay a fine of Rs.6,00,000 with default sentence.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption under Section 139 - Rebuttal - The accused admitted his signature on the cheque, thereby raising the presumption under Section 139 of N.I. Act that the cheque was issued for discharge of a debt or liability. The accused failed to rebut this presumption by leading evidence or cross-examining the complainant effectively. The trial court erred in acquitting the accused solely on the ground that the complainant did not prove his financial capacity. Held that once the execution of the cheque is admitted, the presumption under Section 139 operates, and the burden shifts to the accused to rebut it. (Paras 10-15) B) Negotiable Instruments Act - Financial Capacity of Complainant - Relevance - In a prosecution under Section 138 of N.I. Act, the complainant's financial capacity to lend the loan amount is not a decisive factor when the accused admits his signature on the cheque and fails to rebut the presumption. The trial court's emphasis on the complainant's failure to prove financial capacity was misplaced. Held that the accused's admission of signature and failure to rebut the presumption leads to conviction. (Paras 16-20)
Issue of Consideration
Whether the trial court was justified in acquitting the accused under Section 138 of N.I. Act on the ground that the complainant failed to prove his financial capacity to lend the loan amount, despite the accused admitting his signature on the cheque and failing to rebut the presumption under Section 139 of N.I. Act.
Final Decision
Appeal allowed. The judgment of acquittal dated 29.12.2010 in C.C.No.3336/2006 is set aside. The accused is convicted under Section 138 of N.I. Act and sentenced to pay a fine of Rs.6,00,000, in default to undergo simple imprisonment for six months.
Law Points
- Presumption under Section 139 N.I. Act
- Rebuttal of presumption
- Burden of proof
- Financial capacity of complainant
- Execution of cheque
- Section 138 N.I. Act
- Section 118 N.I. Act
