JUDGMENT :

1. The Court of Metropolitan Magistrate, 30th Court, Kulra, Mumbai convicted the Respondent-Accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 [“NI Act”]. The Respondent is sentenced to simple imprisonment and fine. In addition to that, compensation was awarded separately. Whereas, the Appellate Court i.e. City Civil Court, Mumbai set aside the conviction and acquitted the Respondent-Accused.

2. It is a settled law that compensation can be awarded from the amount of fine or it may be awarded independently without imposition of fine. So, if the fine is imposed, the compensation has to be awarded from the amount of fine only. It mean to say that the amount of compensation cannot be more than the amount of fine. If fine is not imposed, then compensation can be awarded without any restriction. These are the provisions incorporated in Sections 357(1) and 357(3) of the Code of Criminal Procedure, 1973 [“Cr.P.C.”]. This has not been followed by the trial Court. In addition to that, an imprisonment in default of fine was six months. This was in excess of 1/4th of substantive sentence of imprisonment (one year) and it violates the provisions of Section 30 of the Cr.P.C. These are some of the grounds for setting aside the judgment of conviction. So also, the judgment was set aside for the reason that the Respondent-Accused rebutted the presumption and findings of the trial Court were wrong.

3. Both the learned Advocates have not disputed about legality of findings about awarding compensation and default sentence. High Court of Kerala in the judgment in case of Sanjeev V/s. Triveni Credit Corporation, 2006 SCC OnLine Ker 356, relied upon by the Appellant has also clarified this issue. The provisions of Section 357(3) of the Code of Criminal Procedure, 1973 [“Cr.P.C.”] were considered. If sentence of fine is imposed, there can be no resort to the provisions of Section 357(3) of Cr.P.C. So, the only issues arisen in this Appeal are :-

a. whether the evidence given by the Respondent-Accused in rebuttal of the presumption is adequate or not and

b. whether the findings of the First Appellate Court are correct or not.

4. I have heard learned Advocate Shri.Saurish Shetye for the Appellant, learned Advocate Shri.B.B.Tiwari for Respondent No.1-Accused and Shri.H.J.Dedhia – APP for the Respondent No.2–State.

Scope of Appeal

5. There was conviction order passed by the trial Court. Trial Court found all ingredients for an offence punishable under Section 138 of NI Act were proved. Whereas, this judgment was set aside by the Appellate Court mainly for two reasons. Here we are concerned only with the reversal of observations of the trial Court by the Appellate Court. When there is a judgment of acquittal, normally, the Appellate Court do not interfere unless exceptional case is made out. But, in this Appeal, this rule is not applicable, particularly for two reasons. One is judgment of acquittal is reversed. Second is both the parties undertook the burden to prove on their shoulders. With this view in mind, the Appeal needs to be decided.

Case in short

6. There was transaction of purchase and sale of plywood. Initially, Respondent purchased from partnership firm M/s. Western Plywood in which, Appellant was a partner. Later on, Respondent purchased from the Appellant as proprietor. The Appellant relied on the following 3 bills :-

7. Respondent-Accused denied purchase and delivery also in the year 2005. However, he admits issuance of 5 cheques. There are 4 cheques drawn on HDFC Bank. They are :-