Case Note & Summary
The appellant, Ashok Kumar, filed a complaint under Section 200 Cr.P.C. before the XIII Additional Chief Metropolitan Magistrate, Bengaluru, against the respondent, Parameshwara B.T., for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The allegations were that the accused issued a cheque bearing No. 365473 for Rs. 3,00,000/- in favour of the complainant towards repayment of a loan. The cheque was presented for encashment but was dishonoured with the endorsement 'Funds Insufficient'. The complainant issued a legal notice to the accused, which was returned as 'unclaimed'. Since the accused failed to pay the amount, the complainant filed a private complaint. The trial court, after recording evidence, convicted the accused and sentenced him to pay a fine of Rs. 3,10,000/-. Aggrieved by the conviction, the accused filed an appeal before the Fast Track Court-II, Bengaluru (First Appellate Court), which allowed the appeal and acquitted the accused. The complainant then preferred the present criminal appeal under Section 378 Cr.P.C. before the High Court. The High Court framed the issue of whether the First Appellate Court was justified in reversing the conviction. The High Court noted that the complainant had examined himself as PW-1 and marked the cheque (Ex.P1), bank endorsement (Ex.P2), legal notice (Ex.P3), and postal acknowledgment (Ex.P4). The accused examined himself as DW-1 but did not produce any documentary evidence to rebut the presumption under Section 139 of the N.I. Act. The High Court observed that the First Appellate Court had erred in doubting the financial capacity of the complainant to lend Rs. 3,00,000/- without any evidence from the accused. The High Court held that once the issuance of the cheque and the signature of the accused are admitted, the presumption under Section 139 N.I. Act arises that the cheque was issued for a legally enforceable debt. The accused failed to rebut this presumption on a preponderance of probabilities. The High Court also noted that the accused did not examine any bank officials or produce any evidence to show that the cheque was not issued for a debt. The High Court concluded that the judgment of the First Appellate Court was perverse and liable to be set aside. Accordingly, the High Court allowed the appeal, set aside the acquittal, and restored the conviction and sentence imposed by the trial court.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The complainant proved the issuance of cheque and signature of accused, raising presumption of legally enforceable debt. The accused failed to rebut the presumption on preponderance of probabilities by producing any evidence of financial incapacity or absence of debt. Held that the First Appellate Court erred in acquitting the accused by doubting the financial capacity of the complainant without any rebuttal evidence (Paras 5-10). B) Criminal Procedure Code - Appeal against Acquittal - Section 378 - Appellate Court's Power - The High Court, in an appeal against acquittal, can re-appreciate evidence and reverse the finding if the lower appellate court's judgment is perverse and based on erroneous appreciation of law and facts. Held that the First Appellate Court's judgment was unsustainable as it ignored the statutory presumption and shifted the burden on the complainant (Paras 11-13).
Issue of Consideration
Whether the First Appellate Court was justified in reversing the conviction of the accused under Section 138 of the Negotiable Instruments Act, 1881, by improperly shifting the burden of proof and ignoring 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 07.07.2014 passed by the Fast Track Court-II, Bengaluru in Criminal Appeal No. 390/2013, and restored the judgment of conviction dated 08.07.2013 passed by the XIII Addl. C.M.M., Bengaluru in C.C. No. 18350/2011. The accused is convicted for the offence under Section 138 of the N.I. Act and sentenced to pay a fine of Rs. 3,10,000/-.
Law Points
- Presumption of legally enforceable debt under Section 139 N.I. Act
- Rebuttal of presumption by accused
- Standard of proof in cheque dishonour cases
- Appellate court's power to reverse acquittal under Section 378 Cr.P.C.
