Kerala High Court: Under NI Act, Trial Court’s Reasonable Verdict On Insufficient Funds Can’t Be Interdicted By Appellate Court

Kerala High Court: Under NI Act, Trial Court’s Reasonable Verdict On Insufficient Funds Can’t Be Interdicted By Appellate Court

The complainant had appealed against the decision without submitting any proof

The Kerala High Court has upheld the acquittal order issued by the trial court under Section 138 of the Negotiable Instruments (NI) Act, as there was no evidence to prove that the cheque was dishonored due to insufficient funds.

The bench of Justice P.G. Ajithkumar observed that the appellate court will not interfere with the order of the trial court if it’s reasonably formed.

The bench was ruling on the Chandrappa and Ors. vs. State of Karnataka (2007), Shyam Babu vs. State of UP (2012), and CBI vs Shyam Bihari & Ors. (2023) case.

It stated, “In an appeal against acquittal, powers of the appellate court are as wide as that of the trial court. It can review, re-appreciate, and reconsider the entire evidence brought on record by the parties and can conclude on facts as well as law. But it is well-established that if two views are possible based on evidence on record and one favorable to the accused has been taken by the trial court, it ought not to be disturbed by the appellate court. So long as the view of the trial court is reasonably formed, regardless of whether the appellate court agrees with it or not, the verdict of the trial court cannot be interdicted, and the appellate court cannot supplant the view of the trial court.”

The matter pertains to the 23 December 2023 cheque issued to the complainant for the discharge of a debt of Rs.50 thousand. However, it was dishonored when presented for encashment.

The complainant appealed before the high court against the acquittal of the person under the NI Act.

The Judicial Magistrate of the First Class had announced the acquittal on not finding any evidence to prove that the cheque was dishonored due to lack of funds. This is an essential ingredient for conviction under Section 138.

The complainant’s counsel contended that the acquittal must be reversed since the reason for the cheque bounce was due to insufficient funds.

However, the judge dismissed the appeal while observing that the complainant did not produce evidence proving that the cheque was dishonored for want of sufficient funds. It noted that no bank official was examined as a witness nor were any documents produced to support the case.