Case Note & Summary
The petitioner, Shyamsunder Radheshyam Agarwal, entered into an agreement with respondent no. 2, Bhupendra Ghisulal Borana, on 27.10.2009 for the sale of a plot of land in Bhayander, Thane, for a total consideration of Rs. 2 crores. The respondent paid certain amounts between 26.10.2009 and 28.10.2009. In 2012, the respondent filed an application in a pending civil suit (Special Civil Suit No. 436 of 2012) alleging that the petitioner had executed another agreement for development cum sale dated 30.12.2009. The petitioner challenged the judgment and order dated 16.10.2012 passed by the Ad-hoc District Judge – 3 and Addl. Sessions Judge, Thane, in Criminal Revision No. 142 of 2012, which had upheld the issuance of process under Section 138 of the Negotiable Instruments Act, 1881. The petitioner contended that the cheque in question was issued as security for the property transaction and not for any legally enforceable debt. The court analyzed the facts and found that the dispute was essentially civil in nature, relating to the performance of the agreement. The court held that the dishonour of a cheque given as security does not attract Section 138 NI Act as there is no legally enforceable debt. The court quashed the criminal proceedings, allowing the writ petition.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Legally Enforceable Debt - Cheque issued as security in a property transaction does not attract Section 138 NI Act as there is no legally enforceable debt at the time of dishonour - The court held that the dispute was essentially civil and the cheque was given as security, not for discharge of any existing debt or liability (Paras 5-10).
B) Criminal Procedure Code - Quashing of Criminal Proceedings - Inherent Powers - High Court can quash proceedings under Section 482 CrPC when the dispute is predominantly civil and criminal proceedings are an abuse of process - The court allowed the petition and quashed the criminal proceedings (Paras 11-12).
Issue of Consideration
Whether the dishonour of a cheque issued as security in a property transaction constitutes an offence under Section 138 of the Negotiable Instruments Act, 1881, when the underlying dispute is civil in nature.
Final Decision
The court allowed the criminal writ petition, quashed the judgment and order dated 16.10.2012 in Criminal Revision No. 142 of 2012, and set aside the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881.
Law Points
- Section 138 of Negotiable Instruments Act
- 1881
- legally enforceable debt
- cheque issued as security
- civil dispute
- quashing of criminal proceedings
- inherent powers under Section 482 CrPC
Case Details
2013 LawText (BOM) (02) 68
Criminal Writ Petition No. 4036 of 2012
Naresh H. Patil, A. R. Joshi
Mr. A. A. Kumbhakoni i/b. Mr. Sandesh D. Patil for Petitioner, Mrs. M. M. Deshmukh - APP for State / Respondent No. 1, Mr. Vivek Kantawala with Mr. Vivek M. Sharma and Ms. Bhairavi Waravdekar i/b. M/s. Vivek Kantawala & Co. for Respondent No. 2
Shri Shyamsunder Radheshyam Agarwal
State of Maharashtra and Shri Bhupendra Ghisulal Borana
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Nature of Litigation
Criminal writ petition challenging the judgment and order in criminal revision which upheld issuance of process under Section 138 of Negotiable Instruments Act, 1881.
Remedy Sought
Petitioner sought quashing of criminal proceedings under Section 138 NI Act.
Filing Reason
Petitioner contended that the cheque was issued as security in a property transaction and not for any legally enforceable debt, and the dispute was civil in nature.
Previous Decisions
The Ad-hoc District Judge – 3 and Addl. Sessions Judge, Thane, by judgment dated 16.10.2012 in Criminal Revision No. 142 of 2012, upheld the issuance of process under Section 138 NI Act.
Issues
Whether the dishonour of a cheque issued as security in a property transaction constitutes an offence under Section 138 of the Negotiable Instruments Act, 1881?
Whether the High Court can quash criminal proceedings under Section 482 CrPC when the dispute is predominantly civil?
Submissions/Arguments
Petitioner argued that the cheque was given as security for the property transaction and there was no legally enforceable debt, hence Section 138 NI Act is not attracted.
Respondent argued that the cheque was issued for discharge of a liability and the criminal proceedings were valid.
Ratio Decidendi
A cheque issued as security in a property transaction does not create a legally enforceable debt at the time of dishonour, and therefore the dishonour does not attract Section 138 of the Negotiable Instruments Act, 1881. The dispute being civil in nature, criminal proceedings are an abuse of process and can be quashed under Section 482 CrPC.
Judgment Excerpts
The petitioner contends that in the year 2012 the respondent no.2 Mr. Bhupendra Borana filed an application Exhibit '269' in Special Civil Suit no. 436 of 2012...
The court held that the dishonour of a cheque given as security does not attract Section 138 NI Act as there is no legally enforceable debt.
Procedural History
The petitioner filed Criminal Writ Petition No. 4036 of 2012 in the High Court of Judicature at Bombay challenging the judgment and order dated 16.10.2012 passed by the Ad-hoc District Judge – 3 and Addl. Sessions Judge, Thane, in Criminal Revision No. 142 of 2012, which had upheld the issuance of process under Section 138 of the Negotiable Instruments Act, 1881. The High Court heard the matter and reserved judgment on 30.01.2013, pronouncing it on 08.02.2013.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
- Code of Criminal Procedure, 1973: 482
