The cheque must represent a legally enforceable debt at the time of encashment for liability under Section 138 NI Act.

Rakesh Kainthla, Judge

The present appeal is directed against the judgment dated 15.6.2024, passed by learned Sessions Judge, Bilaspur, H.P. (learned Appellate Court), vide which the judgment of conviction dated 12.1.2023 and order of sentence dated 13.2.2023, passed by learned Chief Judicial Magistrate, Bilaspur, H.P. (learned Trial Court) were ordered to be set aside and the respondent (accused before learned Trial Court) was acquitte.d of the commission of an offence punishable under Section 138 of Negotiable Instruments Act , 1881 (NI Act). H(Parties shall hereinafter be referred to in the same manner a s they were arrayed before the learned Trial Court for convenieonce.)

2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant is a body corporate engaged in banking activities. The accused obtained a loan of ₹3,50,000/- from the complainant. He failed to repay the loan as per the iagreement. He was liable to pay ₹6,35,000/-. He issued a cheque drawn on Himachal Pradesh Gramin Bank, Branch ofÏce Dehra, District Mandi, H.P. for ₹6,35,000/- to discharge his liability. The complainant presented the cheque before the Bank, but it was dishonoured with an endorsement ‘insufÏcient funds’. The complainant issued a notice, which was duly received by the accused; however, the accused failed to pay the amount despite receipt of a valid notice of demand. Hence, the complaint w.as filed against the accused for taking action as per the law.

3. The learned Trial Court found sufÏcient reasons to summon the accused for the commission of an offence punishable under Section 138 of the NI Act. When the accused appeared, notice of accusation was put to him, to which he pleaded not guilty and claimed to be tried.

4. The complainant examined Rattan Lal (CW1) to prove its case. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had taken a loan of ₹3,50,000/-. He admhitted that he had defaulted in the payment of insgtalments. He denied that he had issued a cheque to discharge his liability. He stated that he paid ₹2,42,000/- to the complainant. He stated that he wanted to lead defence evidence, but no evidence was led, and he made a statement to this effect on 15.9.2022.

5. Learned Trial Court held that the statement of Rattan Lal (CW1) proved that the accused had taken a loan from the complainant. The accused had not repaid the amount. The cheque carried with it a presumption, and this presumption was not rebutted. The cheque was dishonoured due to ‘insufÏci.ent funds’. The complainant served a notice upon the accused asking him to pay the amount within 15 days of theH receipt of the notice; however, the accused failed to pay t he amount. All the ingredients of the commission of an ooffence punishable under Section 138 of the NI Act were duly satisfied. Hence, the learned Trial Court convicted the acrcused of the commission of an offence punishable under Section 138 of the NI Act and sentenced him to undergo simple imprisonment for six months and to pay compensation of ₹9,00,000/- to the complainant.

6. Being aggrieved from the judgment and order passed by the learned Trial Court, the accused preferred an appeal. The ilearned Appellate Court held that the complainant failed to produce any document to pro