Case Note & Summary
The appellant, M/s. Ajmera Housing Corporation, a partnership firm, filed a complaint under Section 200 of the Code of Criminal Procedure, 1973 against the respondent, Mr. Ramachandra, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). The complainant alleged that the accused issued a cheque bearing No.154377 dated 03.11.2016 for a sum of ₹2,50,00,000 drawn on Karnataka Bank Limited, Basavanagudi Branch, Bengaluru, towards discharge of his liability. When the cheque was presented, it was dishonoured with the endorsement 'Funds Insufficient'. The complainant issued a legal notice to the accused, but the accused failed to make payment within the statutory period. Consequently, the complainant filed a complaint before the trial court. The trial court, by judgment dated 22.02.2018 in C.C.No.5779/2017, acquitted the accused solely on the ground that the complainant failed to examine its power of attorney holder, Mr. Deepak Mehta, who had filed the complaint. Aggrieved by the acquittal, the complainant preferred the present appeal under Section 378(4) of the Cr.P.C. The High Court of Karnataka at Bengaluru, presided over by Dr. Justice H.B. Prabhakara Sastry, heard the appeal. The court observed that the trial court had recorded that the accused admitted his signature on the cheque and that the cheque was issued from his account. The court noted that the presumption under Section 139 of the N.I. Act operates in favour of the complainant, and the accused must rebut this presumption by raising a probable defence. The trial court, however, acquitted the accused solely on the ground that the complainant did not examine its power of attorney holder. The High Court held that the trial court's reasoning was erroneous and that the non-examination of the power of attorney holder did not automatically lead to acquittal, especially when the accused failed to rebut the presumption. The court further held that the trial court's findings were perverse and not based on proper appreciation of evidence. Accordingly, the High Court allowed the appeal, set aside the judgment of acquittal, and convicted the accused for the offence under Section 138 of the N.I. Act. The court sentenced the accused to pay a fine of ₹2,50,00,000, with a default sentence of simple imprisonment for six months. The court directed that the fine amount be paid as compensation to the complainant.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption under Section 139 - Rebuttal - The trial court acquitted the accused solely because the complainant did not examine its power of attorney holder. The High Court held that the presumption under Section 139 of the N.I. Act operates in favour of the complainant and the accused must rebut it. Non-examination of the power of attorney holder does not automatically lead to acquittal if the accused fails to rebut the presumption. (Paras 5-8) B) Criminal Procedure Code - Appeal against Acquittal - Section 378(4) - Scope - The High Court, in an appeal against acquittal under Section 378(4) Cr.P.C., can reappreciate evidence and interfere if the trial court's findings are perverse or based on erroneous reasoning. (Para 9) C) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Ingredients - The complainant must prove that the cheque was issued for a legally enforceable debt or liability. Once the cheque and signature are admitted, the presumption under Section 139 arises. The accused must rebut this presumption by raising a probable defence. (Paras 5-6)
Issue of Consideration
Whether the trial court was justified in acquitting the accused solely on the ground that the complainant failed to examine its power of attorney holder, despite the accused not rebutting the presumption under Section 139 of the N.I. Act?
Final Decision
The High Court allowed the appeal, set aside the judgment of acquittal dated 22.02.2018 passed by the trial court in C.C.No.5779/2017, and convicted the respondent/accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The accused was sentenced to pay a fine of ₹2,50,00,000 (Rupees Two Crore Fifty Lakhs only), in default to undergo simple imprisonment for a period of six months. The fine amount, if recovered, was directed to be paid as compensation to the complainant.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act
- 1881
- Rebuttal of presumption
- Examination of complainant's witness
- Section 138 of Negotiable Instruments Act
- Section 378(4) of Code of Criminal Procedure
- 1973
