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2020 (1) TMI 574 - HC - Indian Laws


Issues Involved:
1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act, 1881.
2. Interpretation and compliance with the Memorandum of Understanding (MOU).
3. Presumption and rebuttal under Sections 118(a) and 139 of the Negotiable Instruments Act.
4. Appellate Court's power to interfere with the order of acquittal.

Issue-wise Detailed Analysis:

1. Legally Enforceable Debt or Liability under Section 138 of the Negotiable Instruments Act, 1881:
The appeals challenge the acquittal of the respondent under Section 138 of the Negotiable Instruments Act, 1881, which deals with the dishonour of cheques for insufficiency of funds. The complainant deposited five cheques, which were dishonoured due to insufficient funds. The complainant issued statutory notices, and the accused replied, denying liability, stating that the amounts under the cheques had not become due as certain preconditions were not met by the complainant. The Trial Court concluded that there was no legally enforceable debt or liability, as required by Section 138.

2. Interpretation and Compliance with the Memorandum of Understanding (MOU):
The MOU dated 3rd September 1996 outlined the terms of the sale of 2000 shares for ?18 lakhs. According to Clause 2 of the MOU, the complainant was required to sign a resignation letter from his directorship and transfer forms for the shares, which were to be kept in escrow until full payment was made. The complainant admitted to executing the MOU but chose not to produce it in the proceedings, claiming it was already filed in a civil suit. The Trial Court found that the complainant failed to fulfill his obligations under the MOU, such as depositing the resignation letter and share transfer forms with the escrow agent. Consequently, the time for payment had not arisen, and the cheques were not for a legally enforceable debt.

3. Presumption and Rebuttal under Sections 118(a) and 139 of the Negotiable Instruments Act:
Section 139 mandates a presumption that a cheque is for the discharge of a debt or liability, but this presumption is rebuttable. The accused can rebut the presumption by raising a probable defense based on the preponderance of probabilities. The Trial Court noted that the complainant did not address the accused's defense in the statutory notice replies. The Apex Court's principles in Basalingappa v. Mudibasappa were cited, emphasizing that the standard of proof for rebutting the presumption is preponderance of probabilities, and it is not necessary for the accused to testify.

4. Appellate Court's Power to Interfere with the Order of Acquittal:
The High Court reiterated the settled law that if two reasonable conclusions are possible based on the evidence, the Appellate Court should not disturb the Trial Court's finding of acquittal. The High Court referred to the principles laid down in Chandrappa v. State of Karnataka, which emphasize that an appellate court must bear in mind the double presumption of innocence in favour of the accused. The High Court found that the Trial Court's conclusion was reasonable and not perverse, as the complainant failed to prove compliance with the MOU and did not call the escrow agent as a witness.

Conclusion:
The High Court upheld the Trial Court's judgment, finding no reason to interfere with the acquittal. The prosecution failed to prove its case, and the orders of acquittal were not illegal or improper. Both appeals were dismissed.

 

 

 

 

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