Case Note & Summary
The appellant, Ramesh Ingole, filed a criminal appeal challenging the acquittal of the respondents, Eknath Thigale and Niteshkumar Thigale, who were the President and Secretary of Jijamata Krushi Sanstha, for an offence under Section 138 of the Negotiable Instruments Act, 1881. The dispute arose from an agreement between the parties whereby the appellant was to purchase seeds of a crop called Kolius from the accused at Rs.10,000 per acre, cultivate the crop, and sell the final yield to the accused at Rs.8,000 per quintal. The accused gave the appellant a cheque for Rs.50,000 as an advance payment on 26/6/2006. When the appellant deposited the cheque, it was dishonoured due to insufficient funds. After issuing a demand notice and receiving no payment, the appellant filed a complaint. The trial court acquitted the accused on 17/7/2008, holding that the cheque was not towards a legally enforceable debt. The High Court considered the only issue: whether the cheque was for a legally enforceable debt. The appellant's own cross-examination revealed that the cheque was given as an advance and that he had not yet delivered the final crop to the accused. The court noted that the appellant also gave a contradictory version that the cheque was a security deposit. The High Court held that since the cheque was given as an advance for a future contract and no liability had accrued at the time of its issuance, there was no legally enforceable debt. The appeal was dismissed, and the acquittal was upheld.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - Cheque given as advance payment under an agreement for future supply of crop - The complainant admitted that the cheque was given as an advance and that the final crop was not delivered to the accused - Held that there was no existing liability at the time of giving the cheque, and thus no offence under Section 138 is made out (Paras 2-4).
Issue of Consideration
Whether the cheque for Rs.50,000/- was towards repayment of any legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act, 1881.
Final Decision
The High Court dismissed the appeal and upheld the judgment of acquittal passed by the Judicial Magistrate, First Class, Malegaon on 17/7/2008.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- legally enforceable debt
- advance payment
- future liability
- acquittal upheld
Case Details
2012 LawText (BOM) (10) 172
Criminal Appeal No. 634 of 2008
Shri O. Y. Kashid for appellant, Shri N. B. Kalwaghe for respondents
Ramesh S/o Kisanrao Ingole
Eknath s/o Haribhau Thigale and Niteshkumar s/o Eknath Thigale
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Nature of Litigation
Criminal appeal against acquittal in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881.
Remedy Sought
The appellant sought conviction of the respondents for the offence under Section 138 of the Negotiable Instruments Act, 1881.
Filing Reason
The appellant filed a complaint after the cheque issued by the respondents was dishonoured and they failed to pay despite a demand notice.
Previous Decisions
The Judicial Magistrate, First Class, Malegaon acquitted the respondents on 17/7/2008.
Issues
Whether the cheque for Rs.50,000/- was towards repayment of any legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act, 1881.
Submissions/Arguments
Appellant argued that the cheque was given as an advance payment and was dishonoured, constituting an offence under Section 138.
Respondents contended that the cheque was given as an advance under an agreement and there was no existing liability at the time of its issuance.
Ratio Decidendi
For an offence under Section 138 of the Negotiable Instruments Act, 1881, the cheque must be issued towards a legally enforceable debt or liability. A cheque given as an advance payment for a future contract, where no liability has accrued at the time of issuance, does not constitute a legally enforceable debt.
Judgment Excerpts
The only question, which was relevant before the trial Court, was whether the concerned cheque for Rs.50,000/- was towards the repayment of any legally enforceable debt or towards any liability?
During the cross-examination, the complainant had specifically agreed regarding terms and conditions of the agreement between the parties as mentioned above. So also, he has agreed that by way of an advance the concerned cheque was given to him.
As such, it is apparent that as on giving of the said concerned cheque to the complainant, there was no legally enforceable liability and the right to receive the money @ Rs.8,000/- per quintal has not accrued in favour of the complainant.
Procedural History
The appellant filed a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 before the Judicial Magistrate, First Class, Malegaon. The Magistrate acquitted the respondents on 17/7/2008. The appellant then filed Criminal Appeal No. 634 of 2008 before the High Court of Bombay at Nagpur, which was dismissed on 4/10/2012.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
