The main legal point established in the judgment is the requirement for a legally enforceable debt or liability for strict liability under Section 138 of the Negotiable Instruments Act, and the need for the complainant to be the payee or holder in due course.

The Appellant/Complainant has filed the present Criminal Appeal before this Court (as an aggrieved person) as against the Judgment dated 06.03.2013 in C.A.No.69 of 2012 passed by the Learned Principal District and Sessions Judge, Krishnagiri.

2. The First Appellate Court (as an Appellate Authority) while passing the impugned Judgment in Crl.A.No.69 of 2012 on 06.03.2013 at Paragraph No.8 had among other things observed that “...the Accused (the Respondent) after obtaining a loan from Byrappa and executing a sale deed had paid back a sum of Rs.2,50,000/- and after writing a cancellation of Sale Deed, a higher rate of interest was demanded and further that in the Sale Cancellation Agreement, the signature was erased after taking the photo, the Complainant (Appellant) was approached and the interest was additionally demanded to be paid, an harassment was made and because of the inability to pay the interest, the cheque, which was given for security was filled up by the complainant etc.,” and ultimately it was concluded that the case filed against the Respondent/Accused under Section 138 read with 142 of Negotiable Instruments Act was not established beyond reasonable doubt and resultantly allowed the Appeal by setting aside the Judgment dated 05.10.2012 in STC No.143 of 2009 passed by the Learned Judicial Magistrate (Fast Tract Court), Hosur and acquitted the Accused/Respondent under Section 386 (b)(i) of Cr.P.C.,

3. Earlier, the Learned Judicial Magistrate, Fast Track Court, Hosur while delivering the Judgment in STC No. 143 of 2011 on 05.11.2012 (filed by the appellant/Complainant) at Paragraph No.5 had observed as under:

“5. The accused in order to disprove the case, he himself examined as DW1 in the proof affidavit he pleaded that he issued the cheque for the security of towards the interest of loan obtained from one Bairappa to prove the fact that he examined the DW2 Abdul Rehman and DW3 Raju, they in their evidence stated that the accused paid the loan to Bairappa and sale agreement was canceled but Bairappa demanded more interest and refused to get it registered by removing his photo in the cancellation deed and struck off the signature. The next day the complainant came to the accused shop and quarreled with accused. The accused called the DW2 and DW3 for the support there the accused given blank cheque to the accused for security of interest till the payment of interest. But the DW3 in the cross stated that on 03.05.2008 the accused called on him over phone at that time the Bairappa, the accused and Dw2 were present in accused shop Bairappa paid the amount to the accused but it is quiet contra to the defence case the accused in the evidence not stated that at time of receiving loan the DW2 and DW3 were present. It created the doubt on the evidence of DW3 and DW2. The evidence of DW2 is concerned why the cheque was given to complainant towards the amount to be paid to Bairappa is not explained the cheque could be filled with the name of Bairappa why it was not done it was not explained, more over the Bairappa was not examined to prove this fact, why he was not examined there is no explanation. Even the accused in the cross stated that when the complainant came to the shop he has not asked about Bairappa why he was given the Blank cheque to the complainant there is no valid reason. Therefore the accused failed to prove the defence case. The case of the defence is highly unbelievable and the case of the complainant compare to the defence is believable. Therefore the accused failed to disprove the case of the complainant and complainant proved his case u/s 139 of N.I. Act.”

and resultantly found the Respondent/Accused guilty in respect of an offence under Section 138 r/w 142 of Negotiable Instruments Act, 1881 and imposed a punishment of Six Months Simple Imprisonment and directed him to pay a compensation of Rs.3,10,000/- to the Complainant (Appellant) in default of payment of compensation to undergo Simple Imprisonme