Misreading of Evidence by Magistrate: Calcutta HC sets aside Order of Acquittal in S. 138 NI Act Case [Read Order]

Directing the respondent to surrender, a Single Bench of the Calcutta High Court has quashed and set aside the order of acquittal granted by the magistrate owing to misreading of evidence. The appellant had filed a complaint under Section 138 of the Negotiable Instruments Act alleging, inter alia, that the respondents No.2 and 3, the Directors of a company under the name and style of M/s Amba Complex Private Limited. The appellant is an income tax consultant and he worked for the said company previously in relation to their income tax etc. Since respondents No.2 and 3 were closely acquainted with the appellant they approached him to lend a sum of Rs.30,50,001/- to purchase real estate in the name of the said company on consideration that the appellant would be made a Director of the said company having 1/3 share. The complainant agreed to such a proposal and during the period between 7th November, 2009 to 12th January, 2010, he lent a total sum of Rs.30,50,001/- by cheque and cash to purchase real estate property in the name of the said company. Being unable to repay the debt, On 30th September, 2012 they proposed the complainant for amicable settlement and handed over three cheques amounting to Rs.20,50,001/- in order to discharge their legally enforceable debt/liability in part. They also compromised to pay a balance amount of Rs.10 lakhs on the date of withdrawal of the civil suit. The respondent No.2 issued two cheques bearing No.460648 and 460649, both drawn on Bank of Maharashtra, Asansol Branch for a sum of Rs.1300001 and Rs.500000/- respectively. However both the said two cheques were dishonored on the ground “account closed”, leading to the present complaint. The Magistrate on due consideration of the evidence on record to the respective cases of the parties and legal position with regard to vicarious liability of the Directors of a company and personal liability of the drawer of cheques came to the finding that the complainant failed to prove charge under Section 138 of the N.I Act and passed an order of acquittal in favour of the respondents, leading to the present appeal by the complainant. For the complainant, Sandipan Ganguly, assisted by Somopriyo Chowdhury submitted that the learned Magistrate has wrongly placed the burden of statutory presumption under Section 139 read with Section 118 of the N.I Act. The presumption contemplated in Section 139 read with Section 118 of the N.I Act is always in favour of the holder of a cheque in due course that the drawer of the cheque has issued the same in discharge of legally enforceable debt or liability. Of course such presumption is rebuttable by the accused but in the instant case respondent No.2 failed to rebut such presumption. Sourav Chatterjee, Advocate for the respondents, on the other hand, submitted that, When the drawer of the cheque is the person(s) who was in charge of, and was responsible to the company for the conduct of the business of the company, such person(s) as well as the company shall be deemed to be guilty of offense and shall be liable to be proceeding against the punished accordingly. In the instant case, the respondent No.2 did not issue the cheques in question in discharge of his personal debt or liability but in discharge of the debt or liability of M/s Amba Complex Private Limited. He added that, therefore, the company is the principal offender under Section 141 of the N.I Act and the respondent No.2 might be vicariously liable for the offense committed by the company under Section 138 read with Section 141 of the N.I Act. Referring to Anss Rajasekhar vs. Augustus Jeba Ananth (2020), it was further submitted by Chatterjee that Section 139 of the N.I Act mandates that it shall be presumed, unless the contrary is proved, that the holder of a cheque received it, in discharge, in whole or in part of a debt or liability. The bench noted that, “there is absolutely no evidence from which criminal law under Section 138 of the N.I Act could be attributed to respondent No.3. Therefore, recording of the order of acquittal in favour of respondent No.3 by the learned Magistrate cannot be called into question.“ However, the court went on to consider, the case from a standpoint where the finding of the acquittal is recorded on account of misreading of evidence, nonconsideration of evidence and perverse appreciation of evidence nothing prevents the High Court from setting aside the order of acquittal at the instance of the informant. Bearing the aforesaid principles in mind, the High Court bench analyzed as to whether the impugned judgment of acquittal is based on perverse appreciation of evidence, misreading or non-consideration of material evidence against the respondents. The court found, perusing the entire evidence on record, that the learned Magistrate recorded an order of acquittal on misreading of evidence and the evidence on record is sufficient to hold the respondent No.2 liable for committing offense under Section 138 of the N.I Act. The order of acquittal was thus set aside. The respondent No.1 was held guilty for committing offense under Section 138 of the N.I Act. The order of acquittal passed in favour of respondent No.3 was not interfered with and the order acquitting the respondent No.3 passed by the Magistrate was affirmed. The respondent No.2 was convicted accordingly and sentenced to undergo simple imprisonment for a period of six months. The respondent No.2 was also directed to pay compensation of Rs.36 lakhs being double the cheque amount with simple interest thereon at the rate of 9% per annum to the appellant/complainant in default of payment of said compensation, the respondent will have to undergo simple imprisonment for further period of six months, the Single Bench of Justice Bibek Chaudhuri held. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Misreading of Evidence by Magistrate: Calcutta HC sets aside Order of Acquittal in S. 138 NI Act Case [Read Order]

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