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IN THE HIGH COURT OF JUDICATURE AT MADRAS
D. BHARATHA CHAKRAVARTHY, J.
C. Balu @ Chinnasamy & Others - Appellant
Versus
N. Saravanan & Another - Respondent
Crl.A. Nos. 5, 6, 7 of 2021
Decided On : 16-09-2022
Negotiable Instruments Act - Acquittal under Section 138 - 138 - Summary: The court considered three appeals arising from acquittal under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused failed to repay loans and issued cheques that were dishonored. The Trial Court convicted the accused, but the Appellate Court acquitted them, citing lack of proof of loan transactions and the financial capacity of the complainant. The Appellate Court also held that the closed account did not make the cheque non-negotiable. The Supreme Court's interpretation of Section 138 was cited to support the complainant's case. However, the accused's defense, including the cancellation of power of attorney and lack of evidence for the huge cash transactions, was considered. The court found the Appellate Court's findings reasonable and dismissed the appeals.
Fact of the Case:
The appeals arose from acquittal under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused failed to repay loans and issued dishonored cheques. The Trial Court convicted the accused, but the Appellate Court acquitted them, citing lack of proof of loan transactions and the financial capacity of the complainant.
Finding of the Court:
The Appellate Court's findings on lack of proof of loan transactions and the financial capacity of the complainant were considered reasonable. The court also held that the closed account did not make the cheque non-negotiable, citing the Supreme Court's interpretation of Section 138. The accused's defense, including the cancellation of power of attorney and lack of evidence for the huge cash transactions, was considered.
Issues: The issues revolved around the proof of loan transactions, the financial capacity of the complainant, and the negotiability of the cheques due to the closed account.
Ratio Decidendi: The court found the Appellate Court's findings reasonable and dismissed the appeals, considering the lack of proof of loan transactions, the financial capacity of the complainant, and the negotiability of the cheques.
Final Decision: The appeals were dismissed, upholding the Appellate Court's findings and acquittal of the accused.
JUDGMENT
(Common Prayer: Criminal Appeals are filed under Section 378 of the Code of Criminal Procedure, against the Judgment of the learned Additional District and Sessions Judge, Dharmapuri in C.A.No.18 of 2017, C.A.No.19 pf 2017, and C.A.No.17 of 2017, dated 12.02.2020 respectively, in reversing the well-considered Judgment of the learned Magistrate FTC, Dharmapuri in STC No.31 of 2014, STC.No.14 of 2014, and STC.No.22 of 2015, dated 26.04.2017, respectively, in any event is illegal, incompetent, without jurisdiction and liable to set aside in-limina.)
Common Judgment
1. These three appeals arise out of acquittal for the alleged offence under Section 138 of the Negotiable Instruments Act, between the same parties, Judgments being delivered simultaneously, on the same date, and for the same reasons, are taken up together and disposed of by this common Judgment.
2. The case of the complainant is that the complainant is a person doing real estate and also lending monies for interest and is also a contractor. The accused is also a person who is a PWD contractor and also doing real estate business purchasing land and promoting them as residential plots and selling them. Therefore, the accused having acquaintance and transactions for about six years with the complainant. The complainant has lent several lakhs rupees on several occasions as a hand loan and the accused has repaid the same. On the said trust on the accused, on 14.01.2013, the complainant advanced a sum of Rs.50 Lakhs, and the accused agreed to repay the same in two monthly installments along with 1% interest per month and two cheques were issued for a sum of Rs.25 Lakhs each, post dated 25.03.2013 and 1.04.2013. Apart from the above transactions and on two other occasions also, the complainant has an advanced loan for a sum of Rs.40 Lakhs during February and another sum of Rs.30 Lakhs during March. For each of the transactions, cheques were issued. But, however, when the cheques were presented, they were returned with an endorsement “Account Closed”. When three separate legal notices were sent, the accused issued a reply notice with false particulars and accordingly, a rejoinder notice was also sent, and thereafter, the complaints were filed. The complaints were taken on file in STC.No.31 of 2014, STC.No.14 of 2014, and STC.No.22 of 2015.
3. In STC.No.31 of 2014, filed towards dishonour of two cheques of Rs.25 Lakhs each, the complainant was examined as P.W.1 and one Guruprasad was examined as P.W.2. On behalf of the complainant, and Exs.P-1 to P-14 were marked. Upon being questioned about the material evidence and incriminating circumstances on record, the accused denied the same as false. Thereafter, the accused examined himself as D.W.1 and one Bet Kumar was examined as D.W.2. On behalf of the defence, Exs.D- 1 and D-2 were marked.
4. Thereafter, the Trial Court proceeded to consider the evidence on both sides and found that the signature on the cheque leaves are admitted. The case of the accused is that the cheque leaves were given to the complainant during the year 2008 during earlier loan transactions, but the accused did not give any complaint or did not file any Civil Proceedings in respect of the said grievance that the complainant did not hand over those blank cheques to the accused. In that view of the matter, once the complainant is protected by the presumptions under Section 113 and 139 of the Negotiable Instruments Act, and when the defence of the accused is unacceptable, the Trial Court found the accused guilty and convicted the accused for the offence under Section 138 of the Negotiable Instruments Act, and imposed a punishment of one year Simple Imprisonment and ordered for payment of compensation of Rs.50 Lakhs to the complainant and in default to undergo three months Simple Imprisonment.
5. Aggrieved by the same, the accused filed C.A.No.18 of 2017 on the file of the Additional District and Sessions Judge, Dharmapuri, and by Judgment dated 12.02.2020, af
The main legal point established in the judgment is the interpretation of Section 138 of the Negotiable Instruments Act, particularly regarding the negotiability of cheques in the case of a closed ac....
A drawer of a cheque is presumed liable unless they provide evidence to rebut the presumption of issuance for debt repayment, established under Sections 138 and 139 of the Negotiable Instruments Act.
The burden of proof in a prosecution under Section 138 of the Negotiable Instrument Act lies on both the complainant and the accused. The court must analyze the evidence to establish liability and in....
A cheque issued as security does not constitute a legally enforceable debt under Section 138 of the Negotiable Instruments Act, and the presumption of liability can be rebutted by presenting credible....
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
The appellate court must respect trial court findings of acquittal unless substantial errors are demonstrated, maintaining the presumption of innocence.
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