The dishonor of a cheque issued as security does not negate liability under Section 138 if the conditions of notice service and the enforceable debt are established.

JUDGMENT :

SATHI KUMAR SUKUMARA KURUP, J.

This Criminal Appeal had been filed to set aside the Judgment dated03.03.2018 passed by the learned XVII Additional Sessions Judge, Chennai in C.A.No.190 of 2016 reversing the Judgment dated 09.06.2016 passed in C.C.No.135 of 2007 by the learned Metropolitan Magistrate, Fast Track Court – III, Saidapet.

2. The brief facts, which are necessary for the disposal of this Criminal Appeal, are as follows:-

2.1. The Appellant is the Complainant, who had filed the complaint in C.C.No. 135 of 2007 under Section 138 of The Negotiable Instruments Act, 1881. According to the Appellant, he retired from Government service and was planning to start a business. At this stage, the Respondent/Accused approached and requested him to invest in the business of trading packaged drinking mineral water carried on by him and assured of a reasonable return. Therefore, a sum of Rs.2,00,000/- was deposited by the Appellant in the business run by the Respondent and on such deposit, the Appellant was inducted as a partner. According to the Appellant, the Respondent assured him of Rs.10,000/- as monthly return which will be paid on or before 10^th of every month. An agreement dated 16.03.2004 was also entered into between the Appellant and the Respondent. According to the Appellant/Complainant, until March 2005, he received the sum of Rs.10,000/- every month from the Respondent, but thereafter, the Respondent did not pay the amount and committed default in such monthly payment. Further, the cheques given by the Respondent to the Appellant were dishonoured on presentation. At this juncture, the Appellant demanded the Respondent to return back the sum of Rs.2,00,000/- paid by him. After discussion of the dispute among the Appellant and the Respondent, a Memorandum of Understanding dated 17.08.2005 was entered into between them in which the Respondent admitted the default in payment committed by him and issued a cheque No. 312910 dated 06.08.2006 for Rs.2,00,000/- towards the amount deposited by the Appellant. When the cheque was presented for collection on 30.08.2006 with the bankers of the Appellant – Indian Overseas Bank, Choolaimedu Branch, Madras, it was returned as unpaid for the reason 'funds insufficient' and a return memo dated 31.08.2006 was issued to that effect. In such a circumstances, the Appellant sent a legal notice dated 27.09.2006 calling upon the Respondent to pay the cheque amount. However, the Respondent did not come forward to neither pay the cheque amount nor sent a reply notice. Therefore, the Appellant has filed C.C. No. 135 of 2007 before the trial court.

2.2. On presentation of the complaint under Section 138 of the Negotiable Instruments Act, 1881, the sworn statement of the Complainant was recorded by the learned Metropolitan Magistrate, Fast Track Court-III, Saidapet. On perusal of the documents filed by the Complainant the learned Metropolitan Magistrate concluded that a prima facie case was made out against the Accused under of the Negotiable Instruments Act, 1881. The learned Metropolitan Magistrate therefore took cognisance of the complaint and numbered it as C.C.No.135 of 2007. Thereafter, summons were issued to the Accused along with the copy of the complaint under Section 204 of Cr.P.C., The Accused appeared and on his appearance, the learned Metropolitan Magistrate questioned him regarding the charge under of Negotiable Instruments Act, 1881. The Accused denied the charge and claimed to be tried. Therefore, trial was ordered during which, the Complainant examined himself as P.W-1 and another witness by name Umapathy as P.W-2 and the Manager of the Bank was examined as P.W-3. On appreciation of the evidence, the learned Metropolitan Magistrate had convicted the Accused/Respondent herein for the offence under of the Negotiable Instruments Act, 1881 and sentenced him to undergo six months simple imprisonment and to pay the cheque amount as compensation under Section 255 (2) Cr.P.C.,

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