IMPORTANT POINT
In criminal appeal against acquittal, High Court ought to decide the matter on merits.

JUDGMENT

C. NAGAPPAN, J.

1. Leave granted.

2. This appeal is preferred against judgment and order dated 10.10.2013 passed by the High Court of Karnataka at Bangalore in Criminal Appeal No.368 of 2009 wherein the High Court set aside the judgment of acquittal of the trial court and remanded the case to the trial court for retrial.

3. The respondent herein/complainant and the appellant/accused were working as lecturers in a Government College at Bangalore. The case of the complainant is that the accused borrowed a loan of Rs.14 lakhs in cash on 1.12.1997 from him to start granite business, promising to repay the same with 3% interest per month on demand and issued post-dated cheque dated 30.11.2000 for sum of Rs.29,12,000/-which included principal and interest and few days prior to presentation of the cheque on its due date to bank for encashment, the accused requested him not to present the cheque and took extension of time of another three years for repayment and finally issued a cheque dated 16.08.2005 for a sum of Rs.73,83,552/-which included principal and interest. The complainant presented the cheque on 19.8.2005 for encashment to his banker and it was dishonored with an endorsement ‘fund insufficient’ and the complainant issued legal notice on 12.9.2005 demanding repayment within 15 days from the date of its receipt thereof and accused sent reply but failed to comply with the demand and the complainant lodged complaint under Section 138 of the Negotiable Instrument Act, against the accused.

4. In the trial the complainant examined himself as PW1 and examined CWs1 and 2 on his side and marked documents Exh. P1 to P23. The accused examined himself as DW1 and marked documents Exhs. D1 to D5. The trial court held that the complainant had no source of income to lend a sum of Rs.14 lakhs to the accused and he failed to prove that there is legally recoverable debt payable by the accused to him and that in discharge of said liability he issued the cheque and accordingly acquitted the accused for the alleged offence under Section 138 of N.I. Act. Aggrieved by the same the complainant preferred appeal in the High Court in Criminal Appeal No.368 of 2009, and the High Court heard the appeal along with 9 other appeals by framing two legal issues which are as under:

“ i) Whether an action under Section 138 of the N.I. Act for dishonor of cheque is the complainant required to establish his financial capacity to lend money?

ii) Will not presumption under Section 139 of the N.I. Act accrues to the benefit of the complainant unless the accused rebuts that presumption?”

5. Relying on the ratio laid down by this Court in the decision in Rangappa vs. Sri Mohan [(2010) 11 SCC 441] the High Court answered the first issue in the negative and the second issue in the affirmative. It further held that the orders of acquittal recorded by the trial court in all the appeals suffer from legal infirmity as the prosecution has been undone only on the ground that complainant had not proved his capacity to lend money and hence those orders are liable to be set aside. Accordingly it allowed the appeals and set aside the respective judgments of acquittal and remanded the cases to courts concerned directing retrial. The present appeal is preferred challenging the said judgment.

6. The learned counsel appearing for the appellant/respondent contended that the High Court erroneously clubbed a batch of 10 criminal appeals and formulated two questions of law and insofar as the present appeal is concerned the trial court never proceeded on the assumption that the presumption under Section 139 of the N.I. Act would enure to the benefit of the complainant only if he proves his financial capacity and on the contrary the trial court had for reasons recorded found that the accused has rebutted the presumption by placing cogent evidence that there was no legally recoverable debt or liability and the complainant had no capacity to lend huge amount of Rs.14 lakhs and, accor