Supreme Court Upholds Acquittal in Cheque Bounce Case, Citing Lack of Prima Facie Evidence - 2024-06-13

Law Updates Made Simple.

Background

This appeal was filed against the acquittal of the accused in a complaint alleging an offense under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complainant, who is the appellant, claimed that the accused had issued a cheque for ₹6,00,000 dated September 22, 1997, to discharge a liability towards the complainant. However, when the complainant presented the cheque for collection, it was dishonored due to insufficient funds in the accused's account.

Arguments

The appellant's counsel argued that the signature on the cheque (Exhibit P3) was not disputed and, in the absence of any evidence from the accused to rebut the statutory presumptions, the trial court should have found the accused guilty of the offense under Section 138 of the NI Act. On the other hand, the accused's counsel argued that the power of attorney holder of the complainant (PW1) had categorically admitted in cross-examination that he had no direct knowledge of the alleged transaction between the accused and the complainant. The counsel further argued that the complainant had not adduced any prima facie evidence regarding the execution and issuance of the cheque.

Court's Analysis and Reasoning

The court noted that the complaint only showed that the accused had issued the cheque to discharge a liability towards the complainant, but there were no averments regarding the date of execution and issuance of the cheque or the nature and place of the transaction between the parties. The court further observed that in his cross-examination, PW1 had admitted that he had only hearsay knowledge from the complainant regarding the alleged transaction and had no direct knowledge about it. The court relied on the Supreme Court's decision in Janki Vashdeo v. Indusind Bank, which held that a power of attorney holder cannot depose for the acts done by the principal and cannot testify about matters of which only the principal can have personal knowledge. The court also noted that when the accused was questioned under Section 313 of the Criminal Procedure Code, he had stated that there was no chitty transaction and that he had borrowed ₹1,000 Qatar Riyal from the complainant, for which the complainant had obtained a signed blank cheque and a signed stamp paper as security. The accused claimed that he had repaid the amount, but the complainant had not returned the blank signed cheque and stamp paper, and subsequently filed the complaint by misusing the signed blank cheque. Considering the principles of law governing presumptions under Sections 118(a) and 139 of the NI Act, as summarized by the Supreme Court in Basalingappa v. Mudibasappa, the court found that the complainant had not adduced any prima facie evidence regarding the execution and issuance of the cheque. Therefore, in the absence of satisfactory evidence to show that the Exhibit P3 cheque was supported by valid consideration at the time it was presented for collection, the court saw no reason to interfere with the findings in the impugned judgment.

Decision

The court dismissed the appeal, upholding the acquittal of the accused. The court found that the complainant had not adduced prima facie evidence to attract the statutory presumptions under the NI Act, and the accused had raised a probable defense regarding the nature of the transaction and the misuse of the signed blank cheque.