IMPORTANT POINT
Dishonour of cheque—Complainant has to satisfy pre-conditions of filing complaint.

Anand Byrareddy, J.—Heard the learned Counsel for the petitioner and the learned Counsel for the respondent.

2. The appellant was the complainant before the Court below alleging of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I. Act’, for brevity). The complainant is a Co-operative Society registered under the Karnataka Co-operative Societies Act, 1959. The accused-respondent is said to have issued a cheque to the complainant-Society dated

31-10-2006 for a sum of Rs. 59,970 drawn on State Bank of Mysore, in discharge of a legal liability. When the cheque was presented for encashment, it was returned with an endorsement that, funds were insufficient. Therefore, the Society had issued a legal notice as required under Section 138 of the N.I. Act and followed up with the complaint. On process being issued, the accused had entered appearance and contested the case. The complainant had tendered evidence through PW 1 and marked documents at Exs. P1 to P8. On completion of the evidence, the statement of the accused was recorded under Section 313 of the Code of Criminal Procedure, 1973 (hereinafter referred to Cr.P.C., for brevity). The accused had examined himself as D.W. 1 and also produced documents at Exs. D1 to D5. After hearing the arguments on both sides, the Court below had framed the following points for consideration:

(i) Whether complainant proves that accused is in discharge of legally recoverable debt owed in favour of complainant society had issued cheque dated 31-10-2006 for a sum of Rs. 59,970 drawn on State Bank of Mysore, Main Branch, Hospet, in favour of complainant society, when the said cheque presented for encashment within its validity time, it was returned with the endorsement “insufficient Funds” after bouncing the cheque, complainant got issued legal notice calling upon the accused to pay the cheque amount, even inspite of service of said notice, accused failed to make the said payment thereunder within the stipulated period, thereby committed an offence punishable under Section 138 of Negotiable Instruments Act?

(ii) What order?

1. The Court below held the same in the negative and acquitted the accused. It is that, which is under challenge in the present appeal.

4. The learned Counsel for the appellant would take this Court through the records to contend that the Court below has incorrectly concluded that there was no legally recoverable debt in respect of which, the cheque in question had been issued. The cheque itself is not in dispute. It has been issued on the account of the respondent and the same having been dishonoured is also evidenced by the memo issued by the bank in this regard. The respondent also does not dispute the compliance with the requirements under Section 138 of the N.I. Act and filing of the complaint. The respondent is also not disputing the signature on the cheque. The presumption was clearly in favour of the holder of the cheque. The contention that there was no liability was to be established by the respondent and that burden not having been discharged by the respondent, the Court below could not have found the case on behalf of the respondent in the face of material documents to establish the charge. The respondent herein was a guarantor in respect of a loan transaction and the liability to repay the loan, therefore, was jointly and severally by the principal debtor as well as the present respondent. Hence, the conclusion of the Court below that there was no pleading in the complaint as to the appellant having extended any loan to the respondent-accused and there was no legal liability is the conclusion in the face of the observation of the Court below that, no doubt, it would be a liability cast as guarantor to discharge the loan equally with that of principal debtor. The finding of the Court below is also contrary to the admission in the reply notice by the respondent, that he stood guarantor to the lo