2018 (2) TMI 2022 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - acquittal of accused - legally recoverable debt or not - Section 138 of the Negotiable Instruments Act 1881 - HELD THAT - There is no illegality committed by the Trial Court which calls for interference. It is to be seen that the cheque was not issued by the accused respondent towards a legally recoverable debt. It was issued as a security for the loan which he had borrowed from the complainant. There are no no infirmity in the judgment of acquittal rendered by the Trial Court. Hence there is no necessity to revisit the impugned judgment - appeal dismissed.

Summary

Issues involved:
Acquittal under Section 138 of the Negotiable Instruments Act, 1881 based on insufficiency of funds in the account at the time of issuing the cheque.

Detailed Analysis:

1. Background and Procedural History:
The appeal challenges the judgment of the Trial Court acquitting the accused under Section 138 of the NI Act. The complainant, a bank, alleged that the accused issued a cheque that was dishonored due to insufficient funds. The Trial Court acquitted the accused after examining witnesses and evidence.

2. Contentions of the Appellant:
The appellant argues that the Trial Court erred in finding no existing liability at the time of issuing the cheque. The appellant asserts that the cheque was security for a loan, and the absence of cash transaction at the time of issuance does not negate liability. The appellant relies on a Supreme Court judgment to support the argument that the cheque was issued for a present transaction, not a future liability.

3. Contentions of the Respondent:
The respondent contends that the cheque was issued as security without an existing legally recoverable debt. The respondent highlights that the cheque was filled later by a bank clerk and no documents were produced regarding the loan account. Therefore, the Trial Court's acquittal was justified.

4. Judgment and Analysis:
The High Court found no illegality in the Trial Court's decision. It confirmed that the cheque was not issued for a legally recoverable debt but as security for a loan. Citing the Supreme Court judgment, the High Court emphasized that no legal liability existed for the accused to pay at the time of issuing the blank cheque. The absence of account extracts further supported the lack of a legally recoverable debt.

5. Conclusion:
The High Court dismissed the appeal, upholding the Trial Court's judgment of acquittal. The acquittal was deemed valid as there was no legal obligation for the accused to pay the amount at the time of issuing the cheque. The judgment of the Trial Court was confirmed, and the appeal was found to lack merit.

This detailed analysis encapsulates the issues, arguments, and the court's reasoning in the judgment regarding the acquittal under Section 138 of the Negotiable Instruments Act, 1881.