The court upheld the validity of the loan repayment dispute under Section 138 of the Negotiable Instruments Act and verified the legal heirship for compensation.

1. The revision petitioner herein / accused had borrowed a sum of Rs.16,00,000/-as loan from the respondent herein / complainant agreeing to repay the same on monthly installment basis. The accused had also issued a pronote for the said amount. In order to discharge the said loan amount, the accused had issued a cheque for a sum of Rs.7,00,000/-, dated 16.03.2001, and the said cheque was presented by the complainant with his bankers viz., State Bank of India, West Mambalam, the same was returned unpaid. Hence, the complainant had filed the above case against the accused under Section 138 of Negotiable Instruments Act.

2. On the side of the complainant, three witnesses have been examined viz., P.W.1-complainant, P.W.2-the Manager of the complainant's bank and P.W.3- the Manager of accused bank. Complainant had marked 12 exhibits, which are as follows:- Ex.P1-memorandum of agreement, Ex.P2-pronote, Ex.P3-cheque, Ex.P4-return memo, Ex.P5-debit advice, Ex.P6-advocate notice, Ex.P7-acknowledgment card and Ex.P8-statement of accused, Ex.P9-authorization letter, Ex.P10-complainant's bank account particulars, Ex.P11-authorization letter to P.W.3 and Ex.P12-bank account statement of accused.

3. P.W.1 had adduced evidence that he had worked in the accused company as accountant. At that time, the accused requested him to provide a loan and that he had lent loan amount. When the complainant had demanded the said loan amount, the accused had issued a cheque in his favour and the same was presented for encashment, but the said cheque was returned unpaid. Therefore, the complainant had filed a case under Section 138 of Negotiable Instruments Act against the accused.

P.W.1 further stated that while the case was pending, the accused made a compromise and a memorandum of agreement was effected. As per memorandum of agreement, the accused had issued two cheques and had executed two pronotes. One of the Cheques was dated 09.03.2000 for a sum of Rs.7,00,000/-. The same was presented with the complainant's bankers viz., State Bank of India for collection. The same was returned. P.W.1, in support of his evidence had marked the above mentioned exhibits.

4. P.W.2, Srinivasan, State Bank Manager had adduced evidence stating that P.W.1 is an account holder in his bank, and that he had presented the said cheque in his account and the same was returned. He had produced the complainant's bank statement and authorization letter for giving evidence.

5. P.W.3, Chandrasekar, the Manager of the Global Trust Bank, Annanagar, had adduced evidence stating that the accused is an account holder of the bank. The complainant's cheque came for encashment. On that day, the balance in the account of the accused was only a sum of Rs.300/-. He had marked the bank statement of the accused and authorization letter.

6. The accused had denied his liability. The accused's counsel had filed written arguments. As per written argument, it has been submitted that the cheque had not been issued for a legally enforceable debt. The complainant had obtained blank cheques and blank pronotes from him and presented one of the cheques. The cheques were issued for security purpose. The complainant had issued the legal notice with unclear statements. The complainant was an employee under the accused and was employed as an accountant. As such, there is no possibility to receive any loan from the employee.

7. The learned counsel further stated in his written argument that the complainant, while working as an accountant, had taken the cheques of the accused and misused the same.

8. On considering the evidence of the complainant and on perusing the written arguments on both sides, the learned Magistrate has held that the accused was guilty of offence under Section 138 of Negotiable Instruments Act and sentenced him to undergo simple imprisonment for a period of three months and imposed a fine of Rs.5,000/-, in default of payment of fine, the accused had to undergo simple imprisonment