1. This is an appeal preferred by the appellant-complainant challenging the judgment of the First Additional Judicial First Class Magistrate, Amalapuram dated 21st December 1991 passed in C.C No. 89 of 1991, on his file, acquitting the accused of the offence under Section 138 of the Negotiable Instruments Act, as amended by Act 66 of 1988.

2. The complainant, Adapa Bhogi Raju is the lessee of Srinivasa Theatre for the period 1989-1990 and he transacted business with the accused, who is the Film Distributor running the business under the name and style of “Venkateswara Films”, Rajahmundry.

3. In the business transactions between the complainant and the accused, the accused became due to the complainant to certain amounts and in discharge of the same he issued four cheques to the complainant for a total value of Rs. 45,000/- at Amalapuram. Thereafter, the complainant presented those cheques in his Bank for collection but the cheques were returned unpaid as the accused was not having sufficient funds in his account. Later, on 21-1-1991 the complainant issued a notice to the accused apprising the accused of the above said fact of return of the cheques as unpaid and calling upon him to make the payment of the amount covered by the cheques. The accused issued a reply notice with untrue allegations and did not pay the amount. Thereafter, the complainant gave 15 days time to the accused for payment of the amount and as ??? did not pay the amount, the complainant filed the complaint against the accused for the offence under Section 138 of the Negotiable Instruments Act.

4. Exs. P. 1 to P. 4 are the four cheques in question. Ex. P. 5 is the letter of the Manager of Andhra Bank, Rajahmundry. Ex. P. 6 is the acknowledgment issued by Andhra Bank, Danvaipeta, Rajahmundry issued in token of receipt of the four cheques Ex. P. 7 is the memo returning the cheques issued by the Andhra Bank Rajahmundry, to Andhra Bank, Amalapuram. Ex. P. 8 is the office copy of the notice issued by the complainant to the accused informing the accused about the dishonour of cheques by the bank and calling upon him to pay the amount, and Ex. P. 9 is the postal acknowledgment for receipt of the notice Ex. P. 8.

5. The relevant finding of the lower court runs as follows;

“…………..If the complainant waited for some time, the accused might be paid the cash which is stated by the complainant in the cross-examination. So, the material on record clearly shows that the complainant is not the lessee of Srinivasa Theatre and he has nothing to do with the film distribution business. On the other hand, there is no document to show that the complainant transacted business with the accused under general power of attorney. As per the Section 138 of the Negotiable Instruments Act, there must be relationship between the accused and complainant and the alleged cheques should be concerned to discharge the debt or other liability. In the instant case, there is no piece of paper that the complainant transacted film distribution business with the accused and the accused indebted to complainant for the alleged amount. When there is no documentary evidence to show that the complainant transacted business with the accused, the oral evidence that the complainant transacted business with the accused cannot be taken into consideration and cannot be acted upon it………………..”

6. On a careful scrutiny of the entire evidence on record, it is clear and it is an admitted fact that the accused issued the four cheques Exs. P. 1 to P. 4 in favour of the complainant. But it is the case of the accused that those cheques were issued in some other connection but not in connection with the film distribution business, as alleged by the complainant. It may be noted that having admitted the issuance of cheques in favour of the complainant, the burden is very heavy on the accused to prove that the cheques were not issued in connection with the transactions as alleged by the complainant. An independent assessment of the evidence adduced by the complainant, both oral and documentary, leads me to an irresistible conclusion that the cheques were issued by the accused in connection with the film distribution business as alleged by the complainant but not in connection with some other transactions as contended by the accused. Even otherwise, he should not have issued cheques without sufficient funds in the bank to his credit. It is only the capacity of the complainant that is questioned by the accused. It is in the evidence of the complainant, supported by suggestions made by the accused that the complainant is looking after the affairs of the theatre. It is the case of the complainant that pursuant to the settlement arrived at between him and the accused the cheques were issued in favour of the complainant. When there is a settlement and when cheques were issued in pursuance of the settlement, it cannot be said that there is no debt due and that there is no contract. It is clear, as is evident from Ex. P.7 endorsement of the Bank that the cheques were issued without sufficient funds to the credit of the accused. Even after issuance of the notice by the complainant, as required under Section 138 of the Negotiable Instruments Act, the accused did not arrange payment of the amounts covered by the cheques. In these circumstances, the lower court went wrong in holding that the material on record is not sufficient to establish that the accused issued four cheques in connection with the film distribution business and that there is no wilful intention on the part of the accused to deceive the complainant. In this connection it is necessary to extract hereunder Section 138 of the Negotiable Instruments Act, which is in the following terms:—

138. Dishonour of cheque for insufficiency etc., of funds in the account:—

7. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that accused for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year or with fine which may extend to twice the amount of the cheque or with both.

Provided that nothing contained in this section shall apply unless:—

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due J. course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information, by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation:— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.”

8. Thus, on a plain reading of Section 138 of the Act, it is clear that where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence under this Section. So, the essential ingredients of Section 138 are that there must be a debt or other liability legally enforceable, that a cheque must be given by the debtor in favour of the creditor in discharge of the said debt or liability, in whole or in part and that cheque should be returned by the bank for insufficiency of funds to the credit of the debtor to honour the cheque, in this case the above ingredients are brought out by the evidence of the complainant, supported by the documents Exs. P. 1 to P. 8. It is proved beyond doubt that the cheques were issued by the accused under the capacity of the proprietor of the firm. It is also brought out that in the business transactions the accused became due to the complainant and after settlement of the accounts, the four cheques were issued by the accused in favour of the complainant. The finding of the lower court to the contrary is not based on any cogent reasoning. The material on record clearly brings home the essential elements of Section 138 of the Negotiable Instruments Act and consequently he is liable to be convicted for the said offence.

9. It is next contended by the learned counsel for the accused that the trial court, viz., Judicial First Class Magistrate's Court at Amalapuram in which court the present complaint has been filed, has no jurisdiction to entertain the complaint as the settlement in connection with the business was made at Rajahmundry. Though a part of the transaction took place at Rajahmundry, the main settlement was made at Amalapuram and the accused issued the cheques at Amalapuram only. So the Judicial First Class Magistrate's Court at Amalapuram has jurisdiction and has rightly entertained the complaint.

10. However, In view of my above finding with regard to the main offence under Section 138 of the Negotiable Instruments Act, viz., that the accused is guilty of the offence under the said section, the judgment of the trial court acquitting the accused of the said offence is liable to be set aside. Where there is misappreciation of the evidence and misapplication of the provisions of law, this court is competent to interfere with the acquittal and convict and sentence the accused.

11. In the result, the criminal appeal is allowed and the judgment of the trial court acuitting the accused of the offence under Section 138 of the Negotiable Instruments Act is set aside and the accused is convicted for the said offence. As regards the sentence, I feel that in the facts and circumstances of this case, imposition of a fine of Rs. 5,000/- would meet the ends of justice. Accordingly I sentence the accused to pay a fine of Rs. 5,000/- in default to suffer R.I for two months. Out of the fine amount, an amount of Rs. 4,000/- shall be paid to the complainant.