The main legal point established is that in a case of cheque bounce under Section 138 of the Negotiable Instruments Act, the genuineness of the loan transaction and supporting evidence, such as income tax records, are crucial in determining liability.

1. Complainant is the appellant in this appeal. The appellant has come forward with this appeal challenging the judgment dated 03.06.2003 made in C.C.No.257 of 2002 by the learned Judicial Magistrate, Tiruchengode

2. The following are the allegations contained in the private complaint filed by the appellant under Section 138 of Negotiable Instruments Act.

2[a] The accused approached the complainant on 20.09.1999 for financial assistance and he borrowed a sum of Rs.1 lakh from the complainant agreeing to repay the same within one month and issued a cheque on 20.09.1999 for Rs.1 lakh bearing No. RGE 686090 of Punjab National Bank, Sankari West (Salem) to the complainant. The complainant presented the cheque on 03.11.1999 and the cheque was returned on 20.11.1999 unpaid with a memo "refer to drawer". Hence, on 01.12.1999, the complainant issued a notice to the accused calling upon him to pay the amount within 15 days from the date of receipt of the notice. But the notice was returned with an endorsement that intimation given to the accused on 03.12.1999 and it was returned on 17.12.11999. Hence, the complaint is filed.

2[b] The respondent denied the charge and he was tried. While he was questioned under Section 313 Cr.P.C., he denied the complicity to the offence. He did not examine any witness and marked Exs.D1 to D3.

3. After scrutiny of the evidence on record, the learned Judicial Magistrate, Tiruchengode acquitted the respondent of the charges by finding that there was no recoverable debt payable by the respondent to the appellant. Hence, the appellant is before this Court with this appeal.

4. The point for consideration is, "whether the respondent has issued the cheque to the appellant on 20.09.1999 on borrowing Rs.1 lakh and whether there was a legally recoverable debt ?

Point:-

4[a] Ex.P1 is the cheque drawn on Punjab National Bank dated 20.09.1999 purported to have been issued by the respondent/appellant on receipt of Rs.1 lakh. Ex.P2 is the intimation from the said Bank stating that the cheque is referred to drawer. The appellant had deposited the cheque with Corporation Bank which is his Bank and in turn the said Bank sent the same to Punjab National Bank for collection. Ex.P4 is the copy of the Advocate's notice sent by the appellant to the respondent dated 03.12.1999. It was returned on 17.12.1999 to the appellant and the same is Ex.P5.

4[b] The respondent has assailed the case of the appellant by contending that the above said cheque was missing from him and he intimated the fact to his Bank namely Punjab National Bank as early as 02.03.1999 by means of letter Ex.D2 which was addressed to the said Bank and the Bank has given acknowledgment in Ex.D1 stating that it is in receipt of the letter dated 02.03.1999. Ex.D3 is the copy of the ledger folio containing entries pertaining to the respondent in which it is mentioned at the top it is written that "cheque No.686090 reported lost " (initial – 02.03.1999). The Manager of Punjab National Bank, PW2 would admit Exs.D1 to D3. However, in the re-examination, he would say that he has produced the ledger extract pertaining to the respondent but there is no reference to the effect that the cheque No.686090 was missing, that he did not right the reference as noted in Ex.D3, but his initials are present therein and that the official who write the reference is still working in the Bank.

4[c] From the above said evidence on record, it transpires that the Bank Manager received the letter from the respondent dated 02.03.1999 under acknowledgment Ex.D1. Even though PW2 says that in the ledger account extract, the reference that the cheque was missing is not available, still it has to be observed that under Ex.D1 the Bank already acknowledged receipt of the letter and the reference in Ex.D1 (copy of the ledger extract) should have been genuine. In this regard, it is held that the respondent had already intimated the fact of missing of cheque to his Banker.

4[d] Much was said