Karnataka High Court
S.T.P. Ltd., Reptd. By Its Branch ... vs Usha Paints And Decorators, A ... on 20 March, 2006
Equivalent citations: III(2007)BC193, 2006(5)KARLJ323, 2006 (5) AIR KAR R 28
Author: K. Sreedhar Rao
Bench: K. Sreedhar Rao
JUDGMENT K. Sreedhar Rao, J.
1. The appellant-complainant prosecuted the respondent-accused for committing the offence punishable Under Section 138 of the N.I. Act. The accused had entrusted contact work to the complainant and towards remuneration the cheque Ex.P.3 is issued for Rs. 20000/-. The cheque is dishonoured on presentation. Statutory notice is issued and private complaint is filed.
2. It is the defence contention that the cheque is issued only as a security and not for repayment of the debt. The trial court up held the contention and dismissed the complaint. Hence, the appeal.
3. The distinction sought to be made between issuance of cheque for repayment of debt and issuance of cheque as a security for repayment of debt is illusory in law. Any cheque whether issued towards repayment of debt or liability as a security if dishonoured, the drawer of a cheque incurs liability of prosecution Under Section 138 of the N.I. Act. Unlike the other securities, the cheque, even if it is issued as security for repayment it is very much a negotiable instrument and with implied instruction for deferred presentation on future date, if the debt is unpaid as per the agreed terms. The cheque upon the default of the terms if presented and dishonoured, it very much amounts to an offence Under Section 138 of the N.I. Act. In that view, the acquittal of the accused is bad in law. The appeal is allowed. The accused is convicted for the offence punishable Under Section 138 of the N.I. Act. The accused is sentenced to pay a fine of Rs. 40000/- in default to undergo S.I. for a period of one year. Out of the fine amount, the complainant shall be paid compensation of Rs. 35000/-.