Point of Law:Dishonor of cheque - Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability

JUDGMENT :

This appeal is filed to set aside the judgment and order of acquittal dated 21.04.2009 passed in Crl.A. No.117/2008 by the XXXVI Additional City Civil & Sessions Judge, Bangalore, for the offence punishable under Section 138 of Negotiable Instruments Act and to restore the judgment of conviction and sentence dated 10.01.2008 passed in C.C. No.17243/2005 by the XV Additional Chief Metropolitan Magistrate, Bengaluru and to convict the respondents for the aforesaid offence in accordance with law.

2. The genesis of the litigation in the present appeal is that a complaint under Section 138 of the Negotiable Instruments Act was filed by the complainant before the XV Additional Chief Metropolitan Magistrate, Bengaluru. The learned Magistrate had found the respondents / accused guilty and sentenced them to pay a fine amount of Rs.6,30,000/-and further ordered that out of the recovered fine amount, a sum of Rs.6,25,000/-shall be paid to the complainant as compensation and balance amount of Rs.5,000/-shall go to the State. In the event of default of payment of fine amount by the accused Nos.2 and 3, they shall undergo simple imprisonment for a period of one year each.

3. The order of conviction passed by the learned Magistrate was challenged in the appeal before the XXXVI Additional City Civil & Sessions Judge (CCH-37), Bengaluru. Said appeal was allowed. The findings and order of conviction passed by the trial court was set aside. Being aggrieved by the order of acquittal passed by the first appellate court, the complaint has preferred the appeal.

4. The case of the complainant is that the accused Nos.2 and 3 being the Managing Director and Director of accused No.1 Company had availed hand loan of Rs.6,00,000/-from the complainant because of their financial difficulties and they had issued three postdated cheques all dated 13.01.2005 for a sum of Rs.2,00,000/-each drawn on Canara Bank, Avenue Road branch, Bengaluru, in favour of the complainant. The said cheques were presented for encashment, but they were returned with an endorsement “Account closed”. Therefore, the complainant got issued a legal notice dated 25.01.2005. On receiving the said notice, the accused have given untenable reply and have failed to pay the amount, thereby they have committed the offence punishable under Section 138 of the N.I. Act.

5. Before the trial court, the complainant got examined himself as PW1 and got marked documents as per Exhibits-P1 to P17. After recording of 313 statement, the accused No.2 got examined as DW1 and witnesses were examined as DW3 and DW4. Documents were got marked as per Exhibits-D1 to D16.

6. The trial court on analysis of the evidence adduced by the respective parties arrived at a factual finding that the accused had duly issued the cheques in question for Rs.2,00,000/-each in favour of the complainant in discharge of their debt or liability. The said cheques were presented to the Bank for payment within the period of its validity, but the cheques have been returned unpaid on the reason that the account was closed. Thereafter, the statutory notice of dishonor was duly issued, for which, reply was given by the respondents / accused and further held that there is no convincing rebuttal evidence by the accused that there was no debt or liability. The complainant has established that the accused had issued cheques, but they have failed to make the payment despite service of legal notice.

7. Being aggrieved by the order of conviction passed by the trial Court, the accused had preferred appeal. On re-appreciation of evidence, the first appellate court has come to the conclusion that the accused have probablized the defense by placing cogent evidence and have successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act. With this observation, the first appellate court allowed the appeal and the order of conviction passed by the trial court was set aside.

8. Heard learned counsels for the parties and peruse