IMPORTANT POINT
Section 138 can be invoked only against liability of payment. Financial position of claimant becomes a relevant factor.

JUDGMENT

N.V. RAMANA, J.

1. Leave granted.

2. This appeal by special leave arises out of Judgment dated 22nd August, 2012 passed by the High Court of Karnataka, Circuit Bench at Dharwad, in Criminal Appeal No. 832 of 2007 whereby the High Court set aside the Judgment and Order of the J.M.F.C. (II-Court), Karwar acquitting the appellant herein of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'the Act').

3. The facts leading to this appeal, in a nutshell, are that a Cheque for Rs.5,00,000/- issued by the appellant in favour of the respondent was dishonoured by the Bank when it was presented for realization by the respondent, as the appellant had instructed the Bank to stop the payment. After receiving such information from the Bank, the respondent served a legal notice calling upon the appellant to pay the Cheque amount. Upon failure of the respondent to obey the legal notice warranting him to pay the Cheque amount of Rs.5,00,000/-, the respondent filed Complaint Case against the appellant for the offence punishable under Section 138 of the Act. The Judicial Magistrate (First Class), Karwar took cognizance of the offence, recorded statement of the complainant under oath, registered the case and summoned the accused-appellant. The appellant pleaded not guilty and claimed trial.

4. Before the Trial Court, the complainant-respondent solely led his own evidence as P.W. 1., whereas the appellant-accused in his defence led evidence of six witnesses. The case of the complainant was that he had given a hand loan of Rs.1,50,000/- to the accused-appellant and three and half years thereafter he had again given Rs.25,000/- as hand loan, thus in all, the accused-appellant owed him Rs. 1,75,000/- and to discharge this liability the cheque for Rs.5,00,000/- was drawn, but the same stood dishonoured at the instructions of the accused-appellant. Whereas, the case of the appellant before the Trial Court was that he had entered into an agreement with the complainant to purchase 3 acres of land belonging to the complainant for a total consideration of Rs.10,00,000/- and for that purpose, an advance of Rs.30,000/- in cash was paid and the Cheque in question for Rs.5,00,000/- was handed over to the complainant in presence of B.S. Pai (DW 2). When the complainant failed to execute the sale agreement and not even willing to return the advance amount of Rs.30,000/- and the Cheque of Rs.5,00,000/-, he had to instruct the Bank to stop payment against the said Cheque.

5. The Trial Court, taking note of financial condition of the complainant who was working under the accused, observed that the complainant has failed to lead any evidence to corroborate his version that the Cheque issued by the appellant was to discharge the liability towards the complainant. Keeping in mind the corroborative and unshaken defence version, the Trial Court found fault with the complainant-respondent and observed that instead of executing an agreement to sell and instead of repaying the advance money and returning the Cheque, a false complaint was filed by the complainant respondent against the accused-appellant. The Trial Court, therefore, dismissed the complaint and acquitted the accused-appellant of the offence.

6. Against the judgment of the Trial Court dismissing the Complaint and acquitting the accused, the complainant preferred Criminal Appeal before the High Court. The High Court while allowing the appeal, set aside the judgment of the Trial Court and sentenced the appellant-accused to pay a fine of Rs.8,50,000/- within a period of eight weeks, failing which, to suffer simple imprisonment for a period of six months. Aggrieved by the reversal of his acquittal, the appellant-accused filed the present appeal.

7. Learned counsel for the appellant-accused contended that the Cheque in question was in fact issued as part payment of the agreed sale/purchase of 3 acres of land belonging to the complainant for a total consideration of Rs.10,00