The court clarified that the issuance of a cheque as security does not preclude liability under Section 138 if it is intended to discharge an existing obligation.

J U D G M E N T

This appeal is preferred against the order of acquittal passed by the Judicial First Class Magistrate, Adoor in C.C.1163/97. It is the case of the complainant that the accused had borrowed a sum of Rs.50,000/- and towards the discharge of the liability had issued Ext.P1 cheque which when presented for encashment returned with the endorsement of insufficiency of funds. Thereafter a statutory notice was issued, it was not even replied and prosecution was launched. The case of the defence appears to be that he had borrowed a sum of Rs.25,000/- and at that time he had issued a cheque as security which had been utilized by the complainant to file a case of this nature. The learned Magistrate held that the evidence of PW1 would reveal that it is given as a security and therefore non suited the complainant. I am afraid that the learned Magistrate has not properly understood the evidence tendered by PW1 in this regard. PW1 had categorically stated in the chief examination that he had advanced an amount of Rs.50,000/- in liquid cash to the accused and towards the discharge of the liability a cheque has been issued. What he had stated in the cross examination is that if the amount had been paid within the stipulated time as understood by the parties and even after demand certainly there would not have been any opportunity to present the cheque for encashment and that is why he presented the cheque for encashment after all those attempts failed. It is in that back ground he had stated as ....................................................................

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It is a well settled proposition that isolated reading of the evidence shall not be done and the evidence has to be read in whole to understand the purport for which it has been adduced. If the learned Magistrate has done it, she would not have committed the error. It is the case of the accused that he had only received Rs.25,000/- and his case of security is different from what is spoken to by PW1. Further a notice was preceded before the prosecution for which even a reply was not sent. Therefore taking into consideration the materials available I have absolutely no hesitation to hold that PW1 has succeeded in proving that there was a liability and Ext.P1 cheque is issued towards the discharge of the liability which when presented for encashment returned with the endorsement of insufficiency of funds. Therefore I find the accused guilty u/s 138 of the Negotiable Instruments Act . So far as the sentence is concerned I do not want to sent this person to jail if he is prepared to pay the amount.

Therefore the Crl.Appeal is disposed of as follows.

(1) The order of acquittal passed u/s 138 of the Negotiable Instruments Act is set aside.

(2) The accused is found guilty u/s 138 of the Negotiable Instruments Act and is convicted thereunder and sentenced to undergo imprisonment till the raising of the Court and to pay a compensation of Rs.50,000/- u/s 357(3) Cr.P.C.

and in default he shall undergo two months simple imprisonment.

(4) The accused shall appear before the Court below on

1.12.2009 to receive the sentence and pay the compensation, failing which the Court below shall execute the sentence.

(5) The accused is at liberty to pay the compensation in advance and produce the receipt after due intimation to the counsel appearing for the complainant before the Court below.

M.N. KRISHNAN, JUDGE.

ul/-

M.N. KRISHNAN, J.

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J U D G M E N T

25th August, 2009