Telangana High Court

Sri Mahaveer Chand Jain vs Sri Ghanshyam Dave And Another on 8 November, 2024

              HON'BLE SRI JUSTICE K.SURENDER

              CRIMINAL APPEAL No.1423 OF 2010

JUDGMENT:

The appellant/complainant filed the appeal aggrieved by the

acquittal of respondent/accused for the offence under Section 138

of the Negotiable Instruments Act.

2. The case of the complainant-PW1 is that the complainant lent

an amount of Rs.4 lakhs to the respondent/accused for his

business and personal needs with a promise to repay it with 24%

annual interest. A Promissory Note was also executed on

01.10.2007 for Rs.4 lakhs and the transaction was done in the

presence of two witnesses. According to the complainant, the

accused paid interest component for one month and thereafter did

not make any payment. The complainant-PW.1 then issued legal

notice to the accused on 22.01.2008 for payment of the amount

with interest. On receipt of the same, the accused issued two post-

dated cheques of Rs.2 lakhs each towards repayment of the

principal amount, promising to pay interest in cash. The

complainant presented cheque No.726907, dt.21.02.2008 for

collection, but it was returned unpaid on 25.02.2008 with the

endorsement 'no such account'. The complainant issued a final

legal notice on 07.03.2008, which was served on the accused on

12.03.2008, however, since the accused failed to pay the amount

covered by the cheque, though he received notice, criminal

complaint was filed.

3. The Learned Magistrate having examined PW.1 got marked

Exs.P1 to P16 on complainant's behalf. Having considered the

evidence of both parties, acquitted the accused on the following

grounds;

i) Ex.P6 bears the signatures of two witnesses i.e.Raj Kumar who signed in English and Kishore who signed in Hindi. During cross-examination, PW.1 stated that both witnesses were associated with the accused and denied any suggestion that they were either his relatives or employees. However, PW.1 later admitted that the second witness, Kishore had also signed as a witness in another Promisory Note executed by one Akhtar Sultnana in favour of the complainant. In that case, filed as CC.No.208 of 2008, the Promissory Note also showed Kishore as a witness for the complainant, not the accused.

ii) PW.1 further admitted that the Promissory Note filed in CC.No.208 of 2008, was also typed one. He also admitted that he filed two civil suits basing on typed promissory notes. Thus, this part of evidence of PW.1 falsifies his contention that accused got typed Ex.P6 promissory note as it is established through PW.1 that he used to get the promissory notes typed in all the other cases.

iii) The accused is an educated person and signed in English in the Promissory note as well as on the cheque. The complainant failed to explain as to what prevented him from getting the promissory note filled by the accused. The complainant failed to examine both the attesters of Ex.P1-promissory note to show that the debt transaction was done in their presence.

iv) If the alleged debt transaction had indeed occurred on 01.10.2007, it should have been reflected in PW.1's income-tax returns. Furthermore, PW.1 did not clarify as to how he was able to secure the substantial amount of Rs.4 lakhs as of 01.10.2007.

v) The evidence of PW.1 goes to show that he has been doing money lending business. But, he failed to file any money lending licence before the Court to show that he is a registered moneylender. Hence, the alleged debt transaction without any money lending licence cannot be enforceable under law and it does not attract the offence under Section 138 of the Negotiable Instruments Act.

vi) From the evidence of PW.1, Ex.P1 cheque cannot be said to have been issued towards discharge of legally enforceable debt. Hence, the presumption under Section 139 of the Negotiable Instruments Act was rebutted.

vii) The burden is on the complainant to prove that there is existence of subsisting legal liability. But, except the self-interested testimony, there was no other evidence to substantiate the claim of any existing legal liability.

viii) PW.1 did not examine the attesters of Ex.P6 and failed to file income-tax returns. Withholding the best evidence by PW.1

leads to the conclusion that an adverse inference should be drawn against him. PW.1 failed to prove that the accused issued Ex.P1- to discharge a legally enforceable debt, beyond reasonable doubt.

ix) E.P2-cheque return memo dated 25.02.2008 indicated the return reason as '51' (no such account). However, the prefix '1' was written in a different ink, indicating 'funds insufficient'. But the complainant did not examine Bank Manager to prove the actual reason for the cheque's return, particularly because '1' had been struck out and '51' rounded off. This raises the possibility that the cheque may have indeed been returned with the endorsement 'no such account'. Since the cheque was returned on the ground of ' no such account' and the complainant failed to prove that the cheque was drawn on an account maintained by the accused, which is a critical element for establishing liability under Section 138 of the N.I.Act, the accused cannot be held liable.

x) The complainant ought to have summoned the Bank Manager with the relevant records for account number 4391 to prove that the cheque belonged to the accused and was drawn on his account. Without this evidence, the accused cannot be held liable for an offence under Section 138 of N.I.Act, solely based on Ex.P2-cheque return memo.

4. Learned Counsel appearing for the appellant submits that the

main ground on which the accused was acquitted was that there

was no valid licence of money lending. He filed a document to show

that at the time of transaction, the application for renewal of his

money lending licence was pending and the money lending licence

was later granted with retrospective effect. In the said

circumstances, when the case was dismissed mainly on the ground

of not holding a valid licence which is factually incorrect, the

appeal has to be allowed.

5. He relied on the Judgment of Honourable Supreme Court in

Shamamma and others v. Ramachander Rao and others 1and

C.C.Alavi Haji v. Palapetty Muhammed and others 2.

6. On the other hand, the counsel appearing for the accused

would submit that apart from the ground of there being no valid

licence, the learned Magistrate has also relied on the

circumstances of the case to show that there was no outstanding

and the cheque that was earlier given was misused by the

complainant.

7. In cases of acquittal, the appellate Court can only reverse

such finding of the acquittal unless findings are incorrect or not

based on record.

8. Learned Magistrate found that there was no valid licence.

However, it was also found that the witnesses to the Promissory

Note were not examined by the complainant. Further, the reason

for the return of the cheque was doubtful and the complainant

1973 SCC OnLine AP 153

(2007) 6 Supreme Court Cases 555

ought to have examined the Branch Manager since there was

corrections in the cheque return memo. The cheque return memo

reflects that the cheque was returned as 'no such account'. The

said endorsement ought to have been clarified by the concerned

Manager.

9. The appellant has not filed any petition under Section 391 of

Cr.P.C. before this Court to entertain any documents that were

filed. Without there being an application under Section 391 of

Cr.P.C., the question of looking into any document that are filed to

substantiate the argument of the counsel for the

complainant/appellant that the complainant was holding a valid

licence, cannot be looked into.

10. In Ravi Sharma v. State (Government of NCT of Delhi) and

another 3, the Hon'ble Supreme Court held that while dealing with

an appeal against acquittal, the appellate court has to consider

whether the trial Court's view can be termed as a possible one,

particularly when evidence on record has been analysed. The

reason is that an order of acquittal adds up to the presumption of

innocence in favour of the accused. Thus, the appellate court has

to be relatively slow in reversing the order of the trial court

rendering acquittal.

(2022) 8 Supreme Court Cases 536

11. In Ghurey Lal v. State of Uttar Pradesh 4 the Hon'ble

Supreme Court after referring to several Judgments regarding the

settled principles of law and the powers of appellate Court in

reversing the order of acquittal, held at para 70, as follows:

"70. In the light of the above, the High Court and other appellate Courts should follow the well-settled principles crystallized by number of Judgments if it is going to overrule or otherwise disturb the trial court's acquittal:

1. The appellate court may only overrule or otherwise disturb the trial court's acquittal if it has "very substantial and compelling reasons" for doing so.

A number of instances arise in which the appellate court would have "very substantial and compelling reasons" to discard the trial court's decision. "Very substantial and compelling reasons" exist when:

i) The trial court's conclusion with regard to the facts is palpably wrong:

ii) The trial court's decision was based on an erroneous view of law;

iii) The trial court's judgment is likely to result in "grave miscarriage of justice";

iv) The entire approach of the trial court in dealing with the evidence was patently illegal;

v) The trial court's judgment was manifestly unjust and unreasonable;

vi) The trial court has ignored the evidence or misread the material evidence or has ignored material documents like dying declarations/report of the ballistic expert, etc.

vii)This list is intended to be illustrative, not exhaustive.

2. The appellate court must always give proper weight and consideration o the findings of the trial court.

3. If two reasonable views can be reached__ one that leads to acquittal, the other to conviction __the High Courts/appellate courts must rule in favour of the accused."

12. The initial burden on the complainant to prove that there was

an outstanding was not discharged. Since the finding of the learned

Magistrate regarding the failure of the complainant to file income-

(2008) 10 Supreme Court Cases 450

tax returns which would be the best evidence and withholding such

evidence an adverse inference has to be drawn under Section 114-g

of the Evidence Act. The said finding of the learned Magistrate and

other findings as narrated in the preceding paragraphs cannot be

found fault with. Even accepting that there was a valid licence for

lending, the other factors that were discussed while acquitting the

accused are reasonable, based on record and probable.

13. There are no compelling reasons to reverse the well reasoned