M/S Rajco Steel Enterprises vs. Kavita Saraff
Background
A partnership firm dealing in iron and steel had lodged four criminal complaints alleging that four cheques worth over Rs. 7.75 crore, issued by the respondent between November 2008, were dishonoured for insufficient funds. The firm claimed the cheques were issued in discharge of financial assistance it had given the respondent, while she claimed the money was for stock-market speculation on her account and that the cheques (kept blank in good faith) were later illegally procured from CBI custody, where she was separately under investigation, and misused. The trial court convicted her, but the First Appellate Court acquitted her, and the High Court of Calcutta upheld the acquittal.
Decision Breakdown
The Supreme Court held that once two appellate courts (the First Appellate Court and the High Court) have concurrently examined the evidence and acquitted the accused, the Supreme Court's power under Article 136 to interfere is limited to cases where the findings are based on no evidence or are perverse. The Court found neither appellate court's findings on the absence of a legally enforceable debt were perverse: the firm failed to show the debt reflected in its balance sheet, no other partner testified to corroborate the loan, and the accused's defence about stock-market dealings was found plausible. The Court declined to individually re-examine the multiple precedents cited by both sides on the presumption of debt under Sections 118 and 139 of the Negotiable Instruments Act, since the case turned on facts, not law. All four petitions were dismissed.
Lesson Learnt
In cheque-dishonour cases, merely proving the accused's signature and receipt of money is not automatically enough to sustain a conviction if the accused presents a credible alternative explanation and the courts below concurrently find no proof of an actual underlying debt; the Supreme Court will not disturb such concurrent factual findings unless they are perverse or based on no evidence.