IMPORTANT POINT
Cheque dishonored with an endorsement “funds insufficient’’, constitutes offence under Section 138 of Negotiable Instruments Act, 1881.

Mohammad Nawaz, J.—The petitioner herein is challenging the concurrent findings of the Courts below wherein the Court of Civil Judge and JMFC, Hukkeri by judgment and order dated 14.10.2010, convicted him for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as ‘NI Act’, for brevity) and sentenced him to pay fine of Rs.1,00,000/- and in default to pay fine amount, to undergo simple imprisonment for a period of one year. The said judgment and order was confirmed by the Court of Fast Track and Addl. Sessions Court at Hukkeri, in Crl.A.No.156/2010 dated 3.1.2011.

2. The case of the complainant is that both the accused and the complainant were well acquainted with each other. The accused approached the complainant requesting him to give a hand loan of Rs.1,00,000/- and looking to the financial difficulty of the accused, the complainant agreed to give a hand loan of Rs.1,00,000/-. Since the accused did not repay the amount and when the complainant demanded him to repay the hand loan, at that time, the accused issued cheque bearing No.219943 dated 28.11.2008 for Rs.1,00,000/- drawn on State Bank of Mysore, Hukkeri Branch. However, when the complainant presented the said cheque to the Bank on 6.12.2008, the same was returned unpaid with a memo that “funds insufficient” in the account of the accused. Though legal notice was issued on 19.12.2008, the accused denied the transaction and failed to make payment.

3. Before the trial Court, the complainant got examined herself as PW1 and the Bank Manager as PW2. Exs.P1 to P14 were marked. The accused got himself examined as DW1 and Exs.D1 to D4 were marked. Considering the oral and documentary evidence on record, the Trial Court convicted the accused as noted above and the appeal preferred by the accused in Crl.A.No.156/2010 before the Sessions Court came to be dismissed.

4. It is the contention of the learned counsel for the petitioner that there is no such transaction as alleged by the complainant and false case has been filed against the petitioner. He further contended that the accused while traveling, in the month of July, lost the cheque in question and in this regard, he gave an application to the Bank bringing to the notice about the loss of cheque. The said cheque has been misused by the complainant. Therefore, he submitted that the accused has rebutted the presumption available under Section 139 of NI Act. He submitted that both the Courts below have erroneously held the accused guilty of the offence under Section 138 of NI Act and seeks to set-aside the impugned judgments and orders passed by the Courts below.

5. The learned counsel for the respondent-complainant on the other hand contended that the accused has not disputed the signature found on the cheque, which is marked as per Ex.P1. It is further contended that the theory of the loss of cheque by the accused is an afterthought. Ex.D4 does not contain signature of any of the Bank officials. The learned counsel further submitted that the accused failed to rebut the presumption which is in favour of the holder in due course. Therefore, he submits that the Courts below were proper in passing the impugned judgment and seeks to dismiss the petition.

6. That, it is the case of the complainant that the hand loan of Rs.1,00,000/- was given to the accused at his request and subsequently, the cheque in question was issued by the accused for the said amount, when the same was presented to the Bank, it was returned with an endorsement “funds insufficient” in the account of the accused. Both the Courts below have observed that the signature found on the cheque is not disputed by the accused. It is also not in dispute that the cheque was dishonored with an endorsement “funds insufficient”. The defence of the accused was that he had lost the cheque and in this regard, he gave an application as per Ex.D4 to the Bank for not honouring the cheque in question if it is presented to the Ban