Aruputham Enterprises v. J. Jayakumar

NEGOTIABLE INSTRUMENTS ACT, 1881,

--Dishonour of cheque --Insufficiency of funds Dispute in existing liability --No cogent evidence--Where the borrower was convicted and sentenced for an offence punishable under section 138 but the lender had failed to prove the existing liability of the borrower through the cogent evidence, then, Appellate Court had rightly acquitted the borrower.--Lender filed a complaint through her Power of Attorney (POA) alleging that the borrower had taken a loan from her and executed a promissory note. Borrower had issued a cheque for settlement of loan, but the same was dishonoured due to insufficient funds. Trial Court convicted and sentenced the borrower under section 138. Borrower filed an appeal on the ground that the promissory note was not executed in favour of the lender. Further, POA did not have enough knowledge with regard to the loan transaction, thus, Appellate Court acquitted the borrower. Therefore, appeal was filed against the order. Held: POA admitted that he did not have due knowledge with regard to the loan transaction happened between his wife and the borrower. Further, the recitals of the promissory note showed that the loan amount of Rs. 75,000 was received by the borrower, but evidences on record suggested that only Rs. 25,000 was paid as a loan. Therefore, the existing liability of the borrower had not been proved by the lender through the cogent and convincing evidence. Hence, Appellate Court had rightly acquitted the borrower.