A cheque issued as security can still be subject to Section 138 of the N.I. Act if it relates to a legally enforceable debt.

In this appeal filed under Section 378 (4) of Cr.P.C , appellant who is complainant has challenged the impugned judgment and order passed by the trial Court, acquitting the accused for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short 'N.I.Act').

2. For the sake of convenience, parties are referred to by their rank before the trial Court.

3. It is the case of complainant that he and accused are well acquainted with each other. Accused borrowed a sum of Rs.1,14,000/- from the complainant for establishing a TV showroom at Channapatna agreeing to repay the same within three months. On the date of loan he issued a post dated 20.12.2007 cheque for Rs.1,14,000/- by way of security. He instructed the complainant to re-present the cheque on 20.12.2007. However, when complainant presented it for encashment on 24.12.2007, it was returned with endorsement "Funds insufficient". When complainant personally approached the accused and informed him about the dishonour of cheque, he did not care to pay the amount due from him.

Therefore, complainant got issued legal notice. It is returned with endorsement "Absent during delivery time".

Accused has deliberately avoided service of notice, and hence, the complaint.

4. Before the trial Court, accused appeared through counsel and contested the case by pleading not guilty.

5. In order to bring home guilt to the accused, complainant examined himself as PW-1 and got marked Ex.P1 to 13.

6. During the course of his statement under Section 313 Cr.P.C , the accused has denied incriminating evidence led by the complainant.

7. In fact, he has also led the defence evidence by examining himself as DW-1 and relied upon Ex.D1 to 3.

8. Vide the impugned judgment and order the trial Court acquitted the accused.

9. Being aggrieved by the same, complainant has filed this appeal, contending that the trial Court has totally misread the entire case and passed the impugned erroneous judgment. It has not appreciated the case of complainant in proper perspective so far as legally enforceable debt is concerned. Having regard to the fact that accused has not disputed the issue of cheque, presumption is operating in favour of the complainant placing the initial burden on the accused. This fact is not appreciated by the trial court. Merely because the subject cheque was termed as issued by way of security would not take away its character as an negotiable instrument issued towards legally recoverable debt or liability. Viewed from any angle the impugned judgment and order is not tenable and pray to allow the appeal, convict the accused and sentence him in accordance with law.

10. In support of his arguments, the learned counsel for complainant has relied upon the following decisions:

(i) K.Narayana Nayak Vs. M.Shivarama Shetty (K.Narayana Nayak)1 (ii) Lale Patel Vs. Sharanbasappa (Lale Patel)2 (i) Dashrathbhai Trikambhai Patel V.

Hitesh Mahendrabhai Patel and Anr.

(Dashrathbhai Trikambhai Patel)3

11. On the other hand, learned counsel for accused has submitted that complainant is an LIC agent, and when he pressed the accused to take a policy, he got a policy in the name of his sister. When she failed to pay the premium, on the insistence of complainant, accused issued a blank cheque as the amount due towards premium was uncertain. Utilizing the same, the complainant has filed a false complaint. He would further submit that accused never borrowed any loan from the complainant and in fact, complainant has no financial capacity to pay the alleged 1 2008 Crl.L.J 3411 2 2012 Supreme (Kar) 1192: 2015 1 KCCR 235 3 AIR 2022 SC 4961 hand loan and at the trial, he has failed to prove his financial capacity.

He would further submit that intentionally the complainant has sent the legal notice to a wrong address in order to see that it should not reach the accused and that he should not send any reply. In the cheque, except the signature, the rest of the writing is not in the hand of accused. Consideri