M/S Moksh Agarbatti Co vs M/S Sri Basaveshwara Traders

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This is a complainant's appeal filed under Section 378(4) of Cr.P.C. before the Karnataka High Court challenging the acquittal of the accused by the XXI Additional Chief Metropolitan Magistrate, Bengaluru, in a case under Section 138 of the Negotiable Instruments Act. The complainant, a partnership firm engaged in manufacture of Agarbatti, alleged that the accused purchased goods on credit from 2002 to 2010 and issued four cheques of Rs. 3 lakhs each as security, which were dishonoured upon presentation with the endorsement 'Funds Insufficient', resulting in a total outstanding liability of Rs. 12,59,522/-.

The trial Court acquitted the accused holding, inter alia, that PW-1 had no personal knowledge of transactions prior to 2006 and that the complainant had failed to produce account books. The complainant contended that the trial Court had not correctly appreciated the facts, that the accused himself had produced a statement of accounts reflecting the outstanding liability of Rs. 12,59,522/-, and that the cheques were issued against an ascertained and determined debt arising from a running account across multiple invoices.

The High Court was called upon to consider whether the trial Court's acquittal was perverse, whether the Power of Attorney holder's evidence was sufficient to establish the debt, and the legal effect of cheques issued as security against a running account liability under Section 138 of the Negotiable Instruments Act.

Catchwords: Negotiable Instruments Act Section 138 dishonour of cheque funds insufficient complainant's appeal acquittal running account security cheques Power of Attorney holder personal knowledge account books partnership firm Karnataka High Court