The legal enforceability of the debt and the presumption of service of notice are crucial in determining liability under the Negotiable Instruments Act.

1. This is an appeal preferred by the complainant against the acquittal of the respondent for an offence under Section 138 of the Negotiable Instruments Act passed by the learned I Additional Sessions Judge, Coimbatore in C.A. No. 150 of 1993.

2. The brief facts that have led to the acquittal are as follows : The complainant filed a complaint before the VII Judicial Magistrate, Coimbatore in C.C.No. 171 of 1991 against the respondent herein for an offence under Section 138 of the Negotiable instruments Act. The averments in the complaint are that the accused/respondent borrowed a sum of Rs. 25,000/- and executed a promissory note on 25.01.1998. The loan was borrowed at the interest rate at 22 per cent. He undertook to repay the said loan within two months. When he received the amount he paid two months interest and gave Ex.P.13 wherein the due date has been noted as 25.03.1988. But, however, when the two months time was about to be lapsed, the complainant demanded the money. The accused apparently was not prepared to give the money, but instead issued a cheque dated 12.03.1991. The same was presented in the Karur Vysya Bank, Coimbatore and it was returned as "insufficient funds". Hence, notice as contemplated under the Negotiable Instruments, Act was issued. However, the notice was returned unserved and consequently the complaint was filed before the expiry of the period of limitation.

3. To substantiate the averments, the prosecution has examined two witnesses. P.W. 1 is none other than the complainant who speaks with reference to the above said facts. P.W. 2 is the Bank Manager who speak with reference to the dishonouring of cheque.

4. The accused when questioned under Section 313 of Cr.P.C. denied committing any offence and at the same time examined one witness on his side who deposed to the effect that the cheque was given subsequently. However, the learned Magistrate who tried the case after recording the evidence, and hearing the arguments of both sides, found the respondent guilty of the said offence and convicted and sentenced him to undergo Rigorous imprisonment for six months in addition to pay a fine of Rs.2000/-.

5. Aggrieved by the same, the accused preferred an appeal. On appeal the conviction and sentence were set-aside on two grounds. The first ground is to the effect that on the date of cheque being presented in the Bank, no legally enforceable debt subsisted and hence there is no liability cast on the accused to honour the cheque. Secondly, the notice has not been served on the party namely, the accused herein and consequently he cannot be prosecuted. As far as the first contention is concerned, it is the case of the prosecution that when the loan of Rs. 25,000/- was given, a promote was executed. Along with that two months interest was calculated and was also paid for which a receipt had been given which has been marked as Ex. P.13. In the said receipt, it has been clearly established that the due date was on 25.03.1988 and consequently, according to the appellant, the debt was legally enforceable till 25.03.1991 and the cheque in question which had been presented in the bank was on 12.03.1991 and the same was presented on the same day which was returned on the ground that funds were insufficient. It is pertinent to note that there is no cross examination with reference to the document, Ex.P.13 which in effect would go to show that the accused admits having given the receipt in which the due date has been specifically mentioned as 25.03.1988. Hence, according to the counsel the debt was legally enforceable till 25.03.1991. In support of this contention Mr. Nicholas appearing for the appellant would rely on the Judgment of a Division Bench of this Court as early as 1920 in Poonuswamy v. Vellore Commercial Bank (AIR 1920 Madras 486) wherein the question that arose for consideration was to when the cause of action arose to file a suit. In the said case, the appellant applied to the bank for a loan. The