The main legal point established in the judgment is that the dishonour of a cheque due to a closed account does not constitute an offence under S.138 of the Negotiable Instruments Act.

N. Krishnan Nair, J.

1. This appeal is directed against the judgment dated 27.6.1994 of the Sessions Judge, Kottayam in Crl. Appeal No.190/92. The case arose on a complaint filed by the petitioner herein before the Judicial First Class Magistrate, Palai, against the respondent herein, alleging the commission of the offence punishable under S.138 of the Negotiable Instruments Act. After the trial, the learned Magistrate found the respondent (accused) guilty of the offence and convicted him. He was sentenced to undergo simple imprisonment for three months and to pay a fine of Rs.5,000/- in default to undergo simple imprisonment for one month. Aggrieved by the order of conviction and sentence passed by the Magistrate, the respondent herein preferred an appeal before the Sessions Judge, Kottayam. The Sessions Judge, Kottayam allowed the appeal and set aside the conviction and sentence imposed upon the respondent and acquitted him. Aggrieved by the order of acquittal, the complainant has come up with this appeal.

2. The substance of the allegations in the complaint filed before the Magistrate is as follows :

The accused in discharge of an amount of Rs.25,000/- which he borrowed from the complainant, issued Ext.P1 cheque in favour of the complainant drawn on the Kozhuvanal Branch of the South Indian Bank Limited. When the complainant presented the cheque for encashment through the Palai Branch of the State Bank of Travancore, it was returned unpaid with the endorsement "account stands closed". Thereupon, the complainant issued a notice to the accused, calling upon him to pay the amount covered by the dishonoured cheque. Since the accused was not prepared to comply with the notice, proceedings were initiated against him for the offence punishable under S.138 of the Negotiable Instruments Act.

3. When the accused appeared before the court, the particulars of the offence were read over and explained to him. He pleaded not guilty. thereupon, the complainant gave evidence as PWl. and examined the Manager of the Kozhuvanal Branch of South Indian Bank as PW2. Exts. P1 to P8 were also marked. No defence evidence was adduced. On an elaborate consideration of the evidence, the learned Magistrate found the accused guilty of the offence, convicted him and sentenced him as stated earlier. The appeal filed before the Sessions Judge was allowed and the accused was acquitted.

4. The order of acquittal passed by the learned Sessions Judge is seriously challenged in this appeal.

5. The learned counsel for the appellant strongly contended that the learned Sessions Judge should have found that the dishonour of cheque by a bank on the ground that account is closed would be covered by the phrase the amount of money standing to the credit of that accused is insufficient to honour the cheque". According to the learned counsel, the decision reported in Japahari v. Priya (1993 (2) KLT 141) is not correctly decided and the lower court should have relied on the decision reported in Thomas Varghese v. Jerome (1992 (1) KLT 812). On the other hand, the learned counsel for the respondent supported the impugned judgment and urged that there is no ground for interference.

6. The important question that arises for consideration in this appeal is whether a drawer of cheque is liable under S.138 of the Negotiable Instruments Act, if the cheque is issued after closing the account. In this case, admittedly, the account which the accused has with the bank was closed on 5.8.1987 and the cheque in question was issued in 1990. If we examine S.138 of the Negotiable Instruments Act, it could be seen that in order to invite the penalty as provided for in S.138 of the Negotiable Instruments Act, for the drawer of the cheque, there must have been a subsisting account with the bank, either on the date on which the cheque was issued or on the date which the cheque was bearing or at the time when the cheque was presented for encashment. No doubt, if the drawer of the cheque issues