The Bombay High Court has granted leave to appeal against an acquittal order in a case under Section 138 of the Negotiable Instruments Act, 1981, highlighting the accused's failure to substantiate their defence of a tripartite agreement. The judgment underscores the evidentiary burden on the accused to prove exceptions or defences in cheque dishonour cases, particularly when relying on xerox copies of documents.
Background & Facts
The Dispute
The applicant, S.T.P. Ltd., a Mumbai-based company, filed a complaint under Section 138 of the Negotiable Instruments Act, 1981 against Chhaya Kamlesh Khemani, the proprietor of a concern, for dishonour of a cheque dated 14.09.2011 for Rs.7,51,078. The cheque was issued in discharge of a liability arising from supply of water-proofing material under 13 invoices (Exh.11). The accused was convicted by the Metropolitan Magistrate, 16th Court, Ballard Pier, Mumbai and sentenced to 6 months simple imprisonment with a fine of Rs.15,00,000. The accused appealed the conviction, and the Additional Sessions Judge, Greater Bombay acquitted her by order dated 06.06.2018.
Key Facts
- The accused issued the cheque in question on 14.09.2011 for Rs.7,51,078, which was dishonoured due to insufficient funds.
- The accused claimed the cheque was issued as security under a tripartite agreement involving Larson & Toubro (L&T), the applicant, and herself as a sub-contractor for work at Wankhede Stadium.
- The accused relied on a xerox copy of the alleged tripartite agreement (Exh.31) and asserted that L&T was to pay the applicant directly.
- The accused also raised a defence of non-supply of material.
Procedural History
- 14.09.2011: Cheque issued by accused for Rs.7,51,078.
- Date not specified: Cheque dishonoured due to insufficient funds.
- Case No.4019/SS/2011: Filed by applicant before Metropolitan Magistrate, 16th Court, Ballard Pier, Mumbai.
- Conviction order: Metropolitan Magistrate convicted the accused under Section 138 and sentenced her to 6 months SI with fine of Rs.15,00,000.
- Criminal Appeal No.274/2017: Filed by accused challenging conviction.
- 06.06.2018: Additional Sessions Judge, Greater Bombay acquitted the accused.
- 02.07.2026: Bombay High Court listed the matter for disposal by consent; no appearance for Respondent No.2.
- 16.07.2026: Application for leave to appeal allowed by High Court.
The Parties' Positions
The applicant argued that the accused failed to prove her defence of a tripartite agreement or non-supply of material. The accused relied on a xerox copy of the alleged tripartite agreement and bank witness testimonies to support her defence.
Relief Sought
The applicant sought leave to file an appeal against the acquittal order dated 06.06.2018, which was granted by the High Court.
The Legal Issue
The central question was whether the accused had sufficiently proved her defence of a tripartite agreement and non-supply of material to warrant acquittal under Section 138 of the Negotiable Instruments Act, 1981.
Arguments Presented
For the Applicant
The applicant contended that the accused failed to discharge the burden of proving her defence. The accused relied on a xerox copy of the tripartite agreement and bank witness testimonies, which were insufficient to establish the defence.
For the Respondent
The accused did not appear, and no arguments were presented on her behalf.
The Court's Analysis
The Court examined the defence raised by the accused, particularly the reliance on a xerox copy of the tripartite agreement and the assertion that L&T was to pay the applicant directly. The Court noted that the accused admitted in cross-examination that the tripartite agreement was a xerox copy and that she had no proof to show that the person who signed the agreement was duly authorized by the applicant. The Court also observed that no witness from L&T was examined to support the defence.
The Court held that the accused failed to substantiate her defence with credible evidence. The reliance on xerox copies and lack of corroborative evidence from L&T weakened the defence. The Court emphasized that the burden of proof lies on the accused to establish exceptions or defences in cheque dishonour cases.
"The defence of the Respondent/accused seems to be that the cheque was issued by way of security and there was a tripartite agreement between the parties and Larson & Tubro Company (L&T for short), under which L&T was supposed to pay the Applicant/complainant directly. Also defence of non-supply of material seems to be taken."
The Court concluded that the order of acquittal required further scrutiny due to the insufficient defence presented by the accused.
The Verdict
The Bombay High Court allowed the application for leave to appeal against the acquittal order dated 06.06.2018. The appeal was admitted and numbered. The Court directed the appeal to be listed for hearing, with no appearance required for Respondent No.2.
What This Means For Similar Cases
Burden of Proof Lies on the Accused
Practitioners must note that in cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1981, the accused bears the burden of proving exceptions or defences. Reliance on xerox copies or insufficient evidence will not suffice to discharge this burden.
Tripartite Agreements Require Robust Evidence
- The defence of a tripartite agreement must be supported by original documents or credible evidence from all parties involved.
- Witnesses from all parties, including the third party (e.g., L&T), must be examined to substantiate the defence.
- Xerox copies or unsigned documents are insufficient to prove the defence.
Acquittals Under Section 138 Require Scrutiny
Courts will closely examine the evidence and defence presented by the accused in acquittal orders under Section 138. Insufficient or unsubstantiated defences will not be accepted, and appeals may be granted to ensure justice.
