A dishonored cheque primarily for insufficient funds establishes liability under Section 138, while secondary reasons like signature discrepancies are irrelevant unless intent to defraud is proven.

JUDGMENT :

G. S. Ahluwalia, J.

This criminal appeal, under Section 378 of Cr.P.C, has been filed against the judgment of acquittal dated 28.01.2011 passed by JMFC, Gwalior in Case Number 5103/2009, by which respondent has been acquitted of the charge under Section 138 of the Negotiable Instruments Act.

2. Challenging the judgment of acquittal passed by trial Court, it is submitted by counsel for appellant that the respondent had issued a cheque No. 90299 of Rs.1,35,000 in discharge of his legal liability. The said cheque was presented and the same was returned by the Bank with an endorsement "Insufficient Funds and drawers signature differ". When an information was given to respondent, he again instructed to re-deposit the cheque which was once again returned back with an endorsement "Insufficient funds and alteration requires full signature". The applicant issued a statutory notice on 15.05.2009. However, respondent did not pay the cheque amount within the stipulated period, and accordingly, a complaint under Section 138 of the Negotiable Instruments Act was filed. The trial Court, by order dated 28.1.2011 held that respondent had given a cheque of Rs.1,35,000/- in discharge of his legal liability, and in spite of notice issued under Section 138 of the Negotiable Instruments Act, he has not repaid the cheque amount. However, the respondent was acquitted on the ground that, as per the endorsement by the bank, the cheque was dishonored on the ground of "Insufficient Funds and Alteration Requires Full Signatures."

3. It is submitted by counsel for appellant that the cheque was presented twice. On the first occasion, the cheque was returned with an endorsement "Insufficient Funds and Drawer Signature differ" and on re- presentation, the cheque was returned with an endorsement of "Insufficient Funds and Alteration Requires Full Signature". It is submitted that once the bank had returned the cheque on the ground of "Insufficient Funds," then "Alteration Requires Full Signatures" becomes secondary, and under these circumstances, the trial court committed material illegality by acquitting the respondent. To buttress his contention, counsel for appellant has relied on the judgment passed by the Supreme Court in the case of Bir Singh versus Mukesh Kumar reported in (2019) 4 SCC 197 .

4 . Per Contra, counsel for respondent has supported the findings recorded by the Court below.

5. Heard, learned counsel for the parties.

6. It is clear from the impugned judgment that the cheque was returned on the ground of "Insufficient Funds and Alteration Requires Full Signature". Thus, it is clear that for the second time the cheque was not returned on the ground of "insufficient funds & difference in signatures" but it was returned on the ground of "insufficiency of funds and alteration requires full signatures". If the account was not having sufficient funds then whether the alteration required full signature or not, becomes immaterial. The Delhi High Court in the case of Santosh Kumar Gupta Vs. State , decided on 16.09.2017 in CRMC Number 2271/10, has held as under:

9. In the decision reported as 2010 (2) Kerala Law Times Devan Vs. Krishna Menon, in para 37, it was observed as under:-

“37. We do in these circumstances reiterate the law thus. If the signature in the cheque is proved to be not genuine, the instrument cannot be reckoned as a cheque and the same cannot attract culpability under S.138 of the Negotiable Instruments Act. But the decision as to whether the signature is genuine ad whether the execution is proved will have to be taken by a court, the mere fact that the banker returns the ch