A cheque issued as security for another's debt constitutes a valid liability under Section 138 of the Negotiable Instruments Act.

J U D G M E N T

This appeal is at the instance of the complainant in CC No.123 of 2005 on the file of the Judicial Magistrate of First Class, Kodungallur, challenging acquittal of the accused under Section 138 of the Negotiable Instruments Act (hereinafter referred as ‘the N.I Act’), vide judgment dated 20.10.2006.

2. The case of the complainant is that, towards the cost of gold ornaments purchased by the accused from the jewellery shop of the complainant, he issued Ext.P1 cheque dated 23.11.2004, assuring that it would be honoured on presentation before the Bank. But, that cheque was dishonoured for the reason ‘insufficient funds’, as per Ext.P2 dishonour memo. Thereafter the complainant sent registered lawyer notice to the accused, intimating dishonour of the cheque and demanding the cheque amount. In spite of receipt of notice, the amount was not paid.Hence the complaint.

3. On taking cognizance and on appearance of the accused before the trial court, particulars of offence was read over and explained, to which, he pleaded not guilty and claimed to be tried.

4. PW1 was examined and Exts.P1 to P6 were marked from the side of the complainant, to prove his case.

5. On closure of complainant’s evidence, the accused was questioned under Section 313 of Cr.P.C. He denied all the incriminating circumstances brought on record, but no defence evidence was adduced.

6. On analysing the facts and evidence and on hearing the rival contentions from either side, the trial court acquitted the accused on the ground that, the complainant failed to prove the transaction by producing documents. Aggrieved by the acquittal of the accused, the complainant preferred this appeal.

7. Heard learned counsel for the appellant/complainant and learned counsel for the 1 st respondent/accused.

8. Learned counsel for the appellant would contend that, the accused was admitting issuance of Ext.P1 cheque to the complainant, and the signature in Ext.P1 cheque also was not disputed. The presumption under Sections 118 and 139 of the N.I Act was also there, to show that Ext.P1 cheque was issued for valid consideration and towards discharge of a legally enforceable debt. Even then the trial court acquitted the accused and hence the impugned judgment is liable to be set aside.

9. Learned counsel for the 1 st respondent/accused would contend that, though the complainant admitted before court that, he was having documents to prove purchase of gold by the accused from his shop, no such documents were produced to prove the transaction. According to the accused, his friend one Mr.Baker purchased gold ornaments from the shop of the complainant, and as a security for repayment, accused had given his blank signed cheque leaf to the complainant. He never purchased gold ornaments from the shop of the complainant and he never issued Ext.P1 cheque for an amount of Rs.75,000/- in favour of the complainant. So, according to him, the acquittal of the accused by the trial court is only to be upheld.

10. On going through the testimony of DW1-accused, it could be seen that, he was admitting that the complainant was the Managing Partner of M/s.Swarnagopuram Jewellery at Perinjanam. During cross examination of PW1-the complainant, learned counsel for the accused was suggesting to him, that several persons had purchased gold ornaments from the shop of the complainant through the accused. Even the case of the accused was that one Mr.Baker purchased gold ornaments on credit, from the shop of the complainant for which he had given Ext.P1 cheque as security. But, according to him, the balance amount due was only Rs.20,000/-. If at all it is admitted for argument sake that Ext.P1 cheque was issued by the accused as a security for the gold ornaments purchased on credit by his friend Mr.Baker, then also it has to be found that, by issuing Ext.P1 cheque, he was undertaking the liability o