A cheque issued as security does not constitute a legally enforceable debt under Section 138 of the Negotiable Instruments Act.

1. This appeal has been filed by the appellant, Sri Manab Lahkar, challenging the Judgment and Order dated 06.12.2012, passed by the learned SDJM(S) - II, Kamrup, in connection with C R Case No. 7319C / 2005, acquitting Sri Mukunda Ram Das (referred to as respondent No. 1) of offence under S.138 of the Negotiable Instruments Act, 1881 (the NI Act, for short). The State of Assam is arrayed as respondent No.

2. The appellant was the Marketing Manager of the Company, Gupta Hardware Private Limited (also referred to as "Gupta Hardware"). The appellant was authorized by Sri Rajendra Kashyap Gupta, the Director of Gupta Hardware, to institute this case on his behalf. The respondent No. 1 had purchased 260 bags of cement @ Rs.188/- per bag, amounting to Rs.48,880/- and transportation charge @ Rs.1120/-

2. It is contended that the respondent No. 1 (also referred to as the accused) handed over a cheque bearing No. 383327, dated 14.10.2005 for Rs.50,000/- drawn on the State Bank of India in favour of Gupta Hardware, but when the cheque was deposited on 14.10.2005, the same was returned with remark as - "funds insufficient".

3. It is further submitted that a legal notice was issued by 'Gupta Hardware' on 07.11.2005, demanding the payment of the cheque amount, but the respondent No. 1 neglected to pay the cheque amount and thus, this complaint was initiated against the respondent No. 1.

4. To substantiate its stance, the appellant presented the evidence of three witnesses, including himself and two bank officials. The respondent No. 1 contested the proceedings and examined himself as a witness and his friend Sri Paban Medhi as DW - 2. The plea of the respondent No. 1 was that the cheque was issued as security, because he used to purchase goods on credit from Gupta Hardware.

5. The respondent No. 1 has prayed to dismiss the appeal as the cheque was not issued for discharge of any debt or other liability. The learned trial Court has delineated the following points to decide this case: -

"1) Whether the complaint is maintainable in view of the fact that it is lodged by Shri Manab Lahkar?

2) Whether the accused issued the cheque for the discharge of any legally enforceable debt or liability?

3) Whether the cheque was dishonoured for insufficient funds in the account of the accused?

4) Whether the accused received the demand notice issued by the complainant regarding the dishonor of the cheque?

5) Whether the accused has committed the offence under S.138 of the Negotiable Instruments Act, 1881 ?"

6. It is contended by the appellant that the learned trial Court has dismissed the complaint on frivolous grounds as lack of authorization cannot be a good ground for dismissing. Power of Attorney in favour of the appellant was annexed in the complaint petition. The company's seal was also affixed on the Power of Attorney (POA, for short).

7. It is not disputed by the respondent No. 1 that the complainant was not authorized.

8. The learned counsel for the petitioner has relied on the decision of Hon'ble the Supreme Court in Bhupesh Rathod v. Dayashankar Prasad Chaurasia ; reported in 2022 (2) SCC 355 : (AIR 2021 SC 5726), wherein it has been observed that -

"19. In the conspectus of the aforesaid principles we have to deal with the plea of the respondent that the complaint was not filed by the competent complainant as it is the case that the loan was advanced by the Company. As to what would be the governing principles in respect of a corporate entity which seeks to file the complaint, an elucidation can be found in the judgment of this Court in Associated Cement C