Liability under Section 138 of the Negotiable Instruments Act applies to cheques issued as security, reinforcing the presumption of liability upon dishonor.

JUDGMENT

Being aggrieved by the acquittal of respondents/ accused for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 ('N.I. Act' for short) complainant has come up with this appeal under Section 378 (4) of the Cr.P.C.

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

3. It is the case of complainant that accused No.1 is the wife of accused No.2. Accused No.2 represented to the complainant that he is the agreement holder with the owner of Flat No.PH –1, 3rd Floor, Image Greens Apartments, having agreed to purchase it for a sum of Rs.26 lakhs. Claiming that they are short of Rs.18 lakhs, accused No.2 offered to sell the same to the complainant for a total sum of Rs.35 lakhs by assigning the rights accrued to him. Complainant had money by selling his property situated at Veerabhadranagar Bengaluru-560085 and was interested to buy the said apartment. Complainant paid a sum of Rs.18 lakhs to the accused who acknowledged the same on 18.12.2013. However, accused No.2 could not secure the said apartment. Therefore, he issued two cheques for Rs.9 lakhs each dated 04.11.2015 and 05.11.2015. When presented for realisation they were dishonored for want of ‘sufficient funds’. On the instructions of accused, the complainant re-presented the cheques on 16.12.2015. Once again they were dishonoured for want of sufficient funds.

4. However, accused No.2 paid a sum of Rs.2 lakhs in cash and assured the payment of balance of Rs.16 lakhs on or before 10.01.2016, but failed to keep up his promise. On the other hand, on 08.05.2016 he lodged a complaint against the complainant with Girinagar police. In the said complaint, he admitted the fact that he is due in a sum of Rs.16 lakhs to the complainant. In this regard, accused No.1 issued two cheques dated 23.08.2016 for a sum of Rs.8 lakhs each. Accused have executed a memorandum of understanding dated 23.08.2016 and requested complainant not to present the cheques on 23.08.2016. Complainant heed to their request. Since the validity period of the cheques was going to expire, complainant presented the cheques on 05.10.2016. To the dismay of complainant, both cheques were dishonoured for ‘funds insufficient’ as per the endorsement dated 06.10.2016. Accused No.2 has executed the memorandum of understanding dated 23.06.2016 and accused No.1 has issued the cheques securing the payment due from accused No.2. Therefore, both accused are jointly and severally liable.

5. After the dishonour of cheques, he got issued legal notice dated 19.10.2016 to both accused demanding payment of Rs.16 lakhs due under the cheques. Accused No.1 has received the notice, but failed to comply with the same. She has also not sent any reply. Accused No.2 has failed to receive the notice and sent it back as not claimed. Therefore, both accused are liable to be punished for the offence punishable under Section 138 of N.I Act.

6. On service of summons both accused have entered appearance through a common counsel and resisted the proceedings by pleading not guilty.

7. To prove the allegations against accused, complainant has examined himself as PW-1 and relied upon Exs.P1 to 12.

8. During the course of their statement under Section 313 Cr.P.C, the accused have denied the incriminating evidence led by the complainant.

9. Accused No.1 has examined herself as DW-1. No documents are m