The burden of proof under Sections 118 and 139 of the Negotiable Instruments Act shifts to the accused upon issuance of a cheque, and failure to rebut this presumption can lead to an enforceable debt.

JUDGMENT :

E.V. Venugopal, J.

1. Questioning the legality and validity of the judgment dated 04.12.2017, passed in C.C.No.24 of 2015 on the file of the Court of the V Special Magistrate, Hyderabad, wherein the trial Court acquitted the first respondent / accused for the offence punishable under Section 138 of Negotiable Instruments Act, the complainant filed the present appeal.

2. For the sake of convenience, the parties to this appeal will hereinafter be referred to as they were arrayed before the trial Court.

3. Shorn of unnecessary details, relevant aspects of the matter are as follows: The complainant and the accused are friends. They wanted to start production of film in the year 2010. The complainant spent an amount of Rs.42.00 lakhs till 2003 in that regard. Therefore, the complainant and the accused entered into an agreement of settlement on 20.8.2013 wherein the accused agreed to pay a sum of Rs.9.00 lakhs. The accused issued five cheques vide Exs.P.1, P.4, P.6, P.8 and P.10 in favour of the complainant towards the payment of amount in terms of the above said agreement. When the complainant presented the said cheques into bank for realisation, those were returned unpaid for the reason ‘insufficient funds’ vide cheque Memos Exs.P.2, P.3, P.5, P.7 and P.9. Hence he got issued a legal notice under Ex.P.11 through registered post with ACK due to the accused demanding him to pay the amount of dishonoured cheques but it was returned since the accused unclaimed. Hence, the complainant presented the complaint before the trial Court.

4. During the course of inquiry, besides examining himself as P.W.1, the complainant got examined two more witnesses as P.Ws.2 and 3 and got exhibited Exs.P.1 to P.17. However, on behalf of the accused no oral or documentary evidence was adduced.

5. On appreciation of the entire evidence available on record, the trial Court acquitted the accused of the offence under Section 138 of N.I. Act observing that as per the provisions of Section 269 of Income Tax Act, any transaction exceeding Rs.20,000/- shall be made by way of account payee cheque only but the complainant has not adduced nor stated the details of investment alleged to have been made for the production of film in terms of Ex.P.14 original deed of partnership commencing from the year 2010 and ending with 2013. That the complainant has not placed statement of bank account for the above period to show that he has drawn any amount from his bank so as to invest the said amount in the partnership business and hence it is unaccountable money, which cannot be recoverable in a court of law; therefore, it cannot be said that the cheques in question were issued towards legally enforceable debt.

6. The trial Court further observed that in the demand notice the complainant demanded Rs.5,000/- towards the charges of the legal notice besides the cheque amount of Rs.9.00 lakhs, therefore, the said notice is invalid notice and hence the complainant violated the cardinal ingredient of Section 138 (b) of the NI Act. Therefore, the prosecution against the accused is not maintainable.

7. As stated supra, aggrieved by the judgment of the learned trial Court acquitting the accused of the said offence the complainant preferred the present criminal appeal.

8. Sri Shyam S. Agrawal, the learned counsel for the complainant, attacking the judgment of the trial Court, contended vehemently that once the accused has not denied issuance of cheques in disp