JUDGMENT : VENKATA JYOTHIRMAI PRATAPA, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment of acquittal dated 31.03.2017 in Criminal Appeal No. 68 of 2015, on the file of X Additional District & Sessions Judge, Visakhapatnam at Anakapalle [Hereinafter, Appellate Court] reversing the judgment of conviction passed by trial Court in C.C. No. 523 of 2011, on file of V Metropolitan Magistrate, Anakapalle, Visakhapatnam District [Hereinafter, Trial Court] against the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 [Hereinafter, N.I. Act, 1881] the complainant preferred the present Appeal. 2. Heard Sri P.R.K. Amarendra Kumar, learned counsel for the Appellant and Sri S.V.S.S. Sivaram, learned counsel for the Respondent No. 1 and the learned Assistant Public Prosecutor, for the Respondent No. 2. 3. This Court has gone through the entire material on record. This Court feels it is not necessary to re-produce the evidence. This Court will refer the evidence as and when necessary to the extent required. This is a case of dishonor of a cheque, said to have been issued by the accused in discharge of legally enforceable debt, in favour of complainant. Case of Complainant 4. The case of complainant in nut shell: 4.1. Accused borrowed an amount of Rs.2,00,000/- from complainant on 14.12.2008, for the purpose of his business and executed a promissory note. 4.2. Accused issued a cheque bearing No. 120647, dated 24.12.2009 and also paid Rs.30,000/- towards part payment. Thereafter, he issued another cheque bearing No. 119753, dated 20.12.2010 for Rs.1,00,000/-. 4.3. Complainant presented the said cheque, which was returned as “Account closed.” 4.4. Complainant approached the accused. On request of accused, he presented the cheque after three (03) months i.e. on 21.04.2011, which was dishonored. 4.5. Complainant got issued legal notice on 27.04.2011, but the accused did not choose to pay the amount. Version of Accused: 5. The plea of accused is of total denial. From the evidence of PW-1, the defence put forth by giving suggestions to the complainant, would show that it is a plea of discharge. Accused issued a cheque on 24.12.2009, for Rs.1,00,000/- and cash of Rs.30,000/- towards full and final settlement. But the complainant taking advantage of the blank promissory note and cheque, filed the false complaint. Procedural History: 6. During the course of trial, complainant himself was examined as PW-1. Exs.P1 to P7 were the documents marked. Accused issued a cheque on 24.12.2009, for Rs.1,00,000/- and cash of Rs.30,000/- towards full and final settlement. But the complainant taking advantage of the blank promissory note and cheque, filed the false complaint. Procedural History: 6. During the course of trial, complainant himself was examined as PW-1. Exs.P1 to P7 were the documents marked. In defence, no oral or documentary evidence adduced. 7. On appreciation of evidence on record, after hearing both the counsel, learned Magistrate found the accused guilty for the offence punishable under Sec.138 of the N.I. Act and sentenced him to suffer simple imprisonment for a period of one (01) year and to pay fine of Rs.5,000/- and in default of payment of fine, to undergo simple imprisonment for a period of 15 days. 8. Aggrieved by the said judgment of conviction, accused carried the matter in appeal before the appellate Court, where the judgment got reversed on the following grounds: (a) As per Ex.P2, the cheque was dishonored since balance is ‘0’ and account closed on 03.10.2009. Whereas, Ex.P3 shows that, funds in sufficient upto 21-04-2011 at 5.30 PM, Complainant failed to examine the bank officials to clear the discrepancy. (b) Ex.B4-Legal notice would show that, on 21.04.2011 also the cheque was returned with same endorsement as that of 21.12.2010. But the cheque was not returned for the same endorsement on 21.12.2010 and 21.04.2011. (c) Complainant deliberately suppressed the reason for dishonor in Ex.P7 relating to Ex.P1 vide endorsements under Ex.P2 and Ex.P3. 9. The Appellant preferred this instant appeal on the grounds that the Appellate Court failed to appreciate the evidence on record in right perspective and has erroneously observed that there is inconsistency in Ex.P7 and Ex.P5 relating to dishonor of cheque vide Ex.P1 and that once notice was sent by registered post, it is deemed to have been served on the accused, no proof of service is required. Arguments Advanced at the Bar 10. Learned counsel for complainant/Appellant would submit that, the cheque was dishonored due to closure of account at first instance. When the same cheque was presented for the second time, it was dishonored due to insufficient funds. Arguments Advanced at the Bar 10. Learned counsel for complainant/Appellant would submit that, the cheque was dishonored due to closure of account at first instance. When the same cheque was presented for the second time, it was dishonored due to insufficient funds. The dishonor of the cheque may be due to account closure or due to insufficient funds, either of which clearly falling under Sec.138 of the N.I. Act, but the learned appellate court has considered it as a great discrepancy and thereby, reversed the judgment of the trial Court from conviction to acquittal, which is not tenable under law. 11. Learned counsel further submits that complainant filed Ex.P5, which is the information received from the postal authorities to the effect that the registered notice which was issued to the accused on 27.04.2011, was properly delivered to him on 28.04.2011. In the light of Ex.P5, the finding of the learned appellate Judge as to the postal stamp on the acknowledgment dated 28.05.2011, pointing out the discrepancy and dismissing the complaint by acquitting the accused is not sustainable and contra to the record. Ultimately, learned counsel prays to allow this appeal. 12. Per contra, learned counsel for the defence would submit that learned appellate judge rightly pointed out the discrepancies in the case of the complainant, complainant failed to prove that the cheque has been issued to clear the legally enforceable debt, the notice alleged to have been issued to the accused was not served and there are no grounds to intervene in the well-considered judgment of the appellate Court, prays to dismiss this appeal. Points for Determination 13. Having heard the submissions of the learned counsel, the points that would emerge for determination in this appeal are: (1) Whether the accused issued the cheque and in turn, on presentation, it was dishonoured? (2) Whether the complainant followed the statutory requirements to attract the offence under Section 138 of the Negotiable Instruments Act, against the accused? (3) Whether the presumption u/s. 139 of the N.I Act, comes to the rescue of the complainant? (4) Whether the accused failed to rebut the presumption u/s. 139 of the N.I. Act? (5) Whether the complainant has proved the guilt of the accused for the offences punishable u/s. 138 of the N.I. Act? (3) Whether the presumption u/s. 139 of the N.I Act, comes to the rescue of the complainant? (4) Whether the accused failed to rebut the presumption u/s. 139 of the N.I. Act? (5) Whether the complainant has proved the guilt of the accused for the offences punishable u/s. 138 of the N.I. Act? (6) Whether impugned judgment of the appellate Court is sustainable on facts and law or warrants any interference of this Court in appeal? Determination by the Court 14. It is pertinent to state that the defence put forth to PW-1 in cross examination by way of suggestions is to the effect that accused discharged the entire debt payable to the complainant by issuing the cheque dated 24.12.2009 towards full and final settlement and that the complainant having the blank cheque and promissory note, filed false complaint against the accused. The above suggestions made to PW-1 would clearly indicate that accused admitted about issuance of cheque on 24.12.2009 and the payment of Rs.30,000/- in cash to the complainant. Complaint would also show the same facts. The only difference is, accused says it was given as full and final settlement and he discharged the entire debt. In contra, complainant says accused issued a cheque to discharge the debt under Ex.P1 for Rs.1,00,000/-. 15. The defence put forth to PW-1 referred supra, would also construe the prior acquaintance of the accused and complainant. Accused never disputed his signature either on the cheque on Ex.P1 or Ex.P6-promissory note. He is not disputing the capacity of the complainant in lending money. He never said that the cheque does not belong to him. In Ratna Constructions Company v. Hemendra Manubhai Chowksi, 2007 Law Suit AP 128 the then composite High Court of Andhra Pradesh observed that in context of the offence under Section 138, once issuance of cheque admitted, burden shifts on the accused to rebut the said presumption. 16. PW-1 categorically deposed with all minute details about the execution of the promissory note by the accused. In a plea of discharge, the burden is on the accused to prove that he has discharged the loan amount. 17. It is apposite to revisit certain settled principles of law governing Section 138 of the N.I. Act. The main provision contains the essential ingredients necessary to tap in the offence followed by a proviso that contains three clauses viz. (a), (b), and (c). 17. It is apposite to revisit certain settled principles of law governing Section 138 of the N.I. Act. The main provision contains the essential ingredients necessary to tap in the offence followed by a proviso that contains three clauses viz. (a), (b), and (c). It is a settled principle of law that the offence under Section 138 is said to have been committed only on the combined fulfillment of the main provision and eventualities in the proviso clauses. The Hon’ble Apex Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578 detailed the ingredients essential to attract the offence under Section 138 as follows: “11. Section 138 of the Act provides that a drawer of a cheque is deemed to have committed the offence if the following ingredients are fulfilled: (i) A cheque drawn for the payment of any amount of money to another person. (ii) The cheque is drawn for the discharge of the “whole or part” of any debt or other liability. “Debt or other liability” means legally enforceable debt or other liability. (iii) The cheque is returned by the bank unpaid because of insufficient funds. However, unless the stipulations in the proviso are fulfilled the offence is not deemed to be committed. The conditions in the proviso are as follows: (i) The cheque must be presented in the bank within six months from the date on which it was drawn or within the period of its validity. (ii) The holder of the cheque must make a demand for the payment of the “said amount of money” by giving a notice in writing to the drawer of the cheque within thirty days from the receipt of the notice from the bank that the cheque was returned dishonoured. (iii) The holder of the cheque fails to make the payment of the “said amount of money” within fifteen days from the receipt of the notice.” 18. Needless to say to prove the guilt of accused for the offence under Section 138 of the N.I. Act, the complainant has to establish certain fundamentals viz. (iii) The holder of the cheque fails to make the payment of the “said amount of money” within fifteen days from the receipt of the notice.” 18. Needless to say to prove the guilt of accused for the offence under Section 138 of the N.I. Act, the complainant has to establish certain fundamentals viz. drawing of the cheque of the accused, presentation of the said cheque to the bank by the complainant, endorsement of the bank to the effect that the cheque is dishonoured, then, issuing notice in writing to the accused demanding payment of the cheque amount within 30 days, thereafter, and the failure of the accused to make payment, within 15 days of the receipt of the notice. 19. In the instant case, Accused contended that legal notice alleged to have been issued was not received by the accused and as the complainant failed to issue notice as per statutory requirement, the complaint is not maintainable. In order to prove his version, PW-1 filed Ex.P4-office copy of legal notice dated 27.04.2011 i.e. in a period of one week from the date of dishonour, that he got issued legal notice to the accused and the Ex.P7/postal acknowledgment with the signature of the accused. Accused never disputed the signature on the acknowledgment card. Just beneath the signature of the accused on Ex.P7, the date is mentioned as 28.o4.2o11. In addition, the complainant filed Ex.P5 i.e. endorsement given to sub post Master on 16.05.2011 to the effect that the registered notice delivered to the accused on 28.04.2011. Despite the documents Ex.P4, P5, P7, learned appellate Judge opined that there is a discrepancy on Ex.P5, since the date mentioned beneath the signature of the accused showing 28.04.2011, but whereas, the postal stamp on the acknowledgment would show 28.05.2011, and because of this discrepancy the case of the complainant cannot be believed. This Court is surprised to see such a finding, since the complainant has placed on record the best evidence available to prove the fact of the service of notice on the accused. 20. This Court is surprised to see such a finding, since the complainant has placed on record the best evidence available to prove the fact of the service of notice on the accused. 20. At this juncture, it is apposite to refer to the decision rendered by the Hon’ble Supreme Court in Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods, Register of Shipping, Indian Office, Staff Provident Fund, (2007) 14 SCC 753 where the service of notice was made by the agent of the complainant by hand and its validity was brought to question. The Apex Court held as follows: “19. In K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510 1999 SCC (Cri) 1284 importance of service of notice has been pointed out stating: (SCC p. 519, Paras 19-21) “19. In Black's Law Dictionary ‘giving of notice’ is distinguished from ‘receiving of the notice’ (vide p. 621): “A person notifies’ or ‘gives’ a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person ‘receives’ a notice when it is duly delivered to him or at the place of his business. 20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure. 21. In Maxwell's Interpretation of Statutes, the learned author has emphasised that ‘provisions relating to giving of notice often receive liberal interpretation’ (vide p. 99 of the 12th Edn.). The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in clause (b) of the proviso to Section 138 of the Act show that the payee has the statutory obligation to ‘make a demand’ by giving notice. The thrust in the clause is on the need to ‘make a demand’. It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is dispatched his part is over and the next depends on what the sendee does.” 21. Such being the case, the finding of learned appellate Judge has no merits. Ex.P5 was given to post master on 16.05.2011. Postal stamp on Ex.P7 would show 28.05.2011, i.e. the indication that the acknowledgment card was posted on that date. It is not uncommon to notice that sometimes the acknowledgment card never comes back to the person who posted the article and sometimes it may come back with a delay. That alone cannot be considered as a lacuna in case of the complainant, as in the present case. 22. Learned defence counsel submits that there is no legally enforceable debt under Ex.P1,therefore the question of presumption under Section 139 of the N.I. Act does not arise. The Hon’ble Supreme Court in Basalingappa v. Mudibasappa, (2019) 5 SCC 418 has encapsulated presumption and burden of proof vide Section 139 in the following terms: “25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner: 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.” 23. Further, a three Judge Bench of the Hon’ble Apex Court in Uttam Ram v. Devinder Singh Hudan, (2019) 10 SCC 287 explained the mandate of presumption provided in relation to Section 138 of N.I. Act which enables a statutory presumption and distinguished it from a situation where a person is to prove a debt before civil court on the basis of evidence in his favour. At Para 19, it was observed as follows: “19. A negotiable instrument including a cheque carries presumption of consideration in terms of Section 118(a) and under Section 139 of the Act. Sections 118(a) and 139 read as under: “118. Presumptions as to negotiable instruments - Until the contrary is proved, the following presumptions shall be made: (a) of consideration : that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. *** *** *** 139. Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.” 24. A bare glance at Section 139 of the N.I. Act would reveal that the Court has to presume unless the contrary was proved that the holder of the cheque received the cheque for discharging in whole or in part of a debt or liability. A bare glance at Section 139 of the N.I. Act would reveal that the Court has to presume unless the contrary was proved that the holder of the cheque received the cheque for discharging in whole or in part of a debt or liability. Hence, in complaints under Section 138 of the N.I. Act, when the complainant is able to prove the fundamental facts i.e. issuance of cheque by the accused and compliance of statutory requirements of giving notice to the accused waiting for repayment of the amount, then the Court has to presume that cheque had been issued for a debtor liability. Further, Section 139 opening words provide that “It shall be presumed, unless the contrary is proved”, meaning thereby the presumption is rebuttable and the burden is on the accused to rebut the said presumption. Due to the statutory presumption that operates following compliance to ingredients as per Section 138, the onus is on the accused to rebut the presumption that the cheque was issued not for discharge of any debt or liability. In the backdrop of the legal position referred supra, the burden is on the accused to prove that the cheque was issued vide Ex.P1 is not supported by legally enforceable debt. 25. The contention of the accused is that, he discharged the entire amount due under Ex.P1. Nothing has been elicited in the cross examination of PW-1 to rebut the presumption u/S.139 of the N.I. Act. Accused did not choose to give his evidence despite the existence of the legally enforceable debt. On the other hand, accused kept mum about any efforts made by him to take back the empty promissory note and the cheque having discharged the entire debt as alleged by him to support his contention. In that view of matter, the contention of the accused falls to ground. 26. Next, learned appellate court opined that the returned memo Ex.P2 reveals that the cheque was dishonoured as ‘0’ balance “account closed” whereas when the cheque was presented for the second time, it was returned as “funds insufficient” therefore both reasons are inconsistent to each other. In that view of matter, the contention of the accused falls to ground. 26. Next, learned appellate court opined that the returned memo Ex.P2 reveals that the cheque was dishonoured as ‘0’ balance “account closed” whereas when the cheque was presented for the second time, it was returned as “funds insufficient” therefore both reasons are inconsistent to each other. Furthermore, the legal notice under Ex.P7 would disclose that the cheque was dishonoured vide Ex.P2 and Ex.P3 with the self-same reason, which is not correct There is no dispute about the fact that at first instance, when the cheque was presented it was returned as ‘0’ balance account closed and when presented for the second time, it was dishonoured due to insufficient funds. Learned appellate court labeling this as a discrepancy, dismissed the complaint and acquitted the accused. This Court is of the view that the finding of the learned appellate Judge on this point is meritless. The reason being when the cheque is dishonoured either due to account closed or due to insufficient funds, it clearly attracts Section 138 of N.I Act. The view of this Court is fortified by the Hon’ble Apex Court in Laxmi Dyechem Vs. State of Gujarat and Others, 2012 (13) SCC 375 : “The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in Magma Case (1999) 4 SCC 253 : 1999 SCC (Cri) 524 that the expression “amount of money … is insufficient” appearing in Section 138 of the Act is a genus and dishonour for reasons such “as account closed” “payment stopped” and “referred to the drawer” are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the “signatures do not match” or that the “image is not found” which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act.” 27. The bone of contention of the learned counsel for the accused that legal notice was not served on the accused is far from the truth in the light of Ex.P5. The argument advanced on behalf of the defense that the complainant did not mention the reason for the dishonour correctly in the notice is of no avail, as dishonour of the cheque due to account closed or due to insufficient funds does not make any difference to attract the offence under Section 138 of N.I. Act. The record shows though PW-2 the Bank Officer was examined in-chief, accused did not choose to cross-examine the witness on the said date, when the matter is posted for cross examination on payment of costs of Rs.200/-. It appears later the witness did not turn up for cross-examination. Hence, the evidence of PW-2 is eschewed. However, the Court can presume that the fact of dishonour of the cheque vide memos issued by the bank under Ex.P2 and P3 having official stamp showing that cheque has been dishonoured. 28. Before parting with the issue, it is appurtenant to cite the object of the offence under Section 138 as interpreted by the Hon’ble Apex Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578 : “19. This Court in NEPC Micon Ltd. v. Magma Leasing Ltd. (1999) 4 SCC 253 : 1999 SCC (Cri) 524 : AIR 1999 SC 1952 held that the courts must interpret Section 138 with reference to the legislative intent to supress the mischief and advance the remedy. The objective of the Act in general and Section 138 specifically is to enhance the acceptability of cheques and to inculcate faith in the efficacy of negotiable instruments for the transaction of business. [Sunil Todi v. State of Gujarat, (2022) 16 SCC 762 : 2021 SCC Online SC 1174] Section 138 criminalises the dishonour of cheques. This is in addition to the civil remedy that is available. Through the criminalisation of the dishonour of cheques, the legislature intended to prevent dishonesty on the part of the drawer of a negotiable instrument. [Electronics Trade & Technology Development Corporation Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. (1996) 2 SCC 739 : 1996 SCC (Cri) 454] The interpretation of Section 138 must not permit dishonesty of the drawee of the cheque as well. [Electronics Trade & Technology Development Corporation Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. (1996) 2 SCC 739 : 1996 SCC (Cri) 454] The interpretation of Section 138 must not permit dishonesty of the drawee of the cheque as well. A cheque is issued as security to provide the drawee of the cheque with a leverage of using the cheque in case the drawer fails to pay the debt in the future. Therefore, cheques are issued and received as security with the contemplation that a part or the full sum that is addressed in the cheque may be paid before the cheque is encashed.” 29. In the light of the aforementioned premises and in circumstances of the case, this Court is of the view that the learned appellate Judge erroneously reversed the well-reasoned judgment of trial Court and without proper reasons, interfered in the judgment of the trial Court. The finding arrived by the learned appellate Judge does not stand for the scrutiny under law. To sum up, (1) Accused having received notice kept mum without giving any reply (2) Accused did not choose to examine himself as witness, when his case is of discharge Ex.P5 would indicate the notice has been served on the accused (3) Accused failed to rebut the presumption under Section 139 of the N.I. Act. Therefore, interference of this Court is warranted in the impugned judgment. 30. In the result, this appeal is allowed and the impugned judgment dated 31.03.2017, in Criminal Appeal No. 68 of 2015 passed by X Additional District & Sessions Judge, Visakhapatnam at Anakapalle is hereby set aside. The trial Court can take steps to see that the remaining sentence is to be executed against the accused. No costs. 31. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed.