JUDGEMENT
DR.DHANANJAYA Y.CHANDRACHUD,J. -
(1.)This appeal arises from a judgment dtd. 12/1/2022 of the High Court of Gujarat. The High Court dismissed an appeal against the judgment of the Additional Chief Judicial Magistrate dtd. 30/8/2016 by which the first respondent was acquitted of the offence under Sec. 138 of the Negotiable Instruments Act 1881[1]. At the core, the issue is whether the offence under Sec. 138 of the Act would deem to be committed if the cheque that is dishonoured does not represent the enforceable debt at the time of encashment.
[1] The Act
The Facts
(2.)On 10/4/2014, the appellant issued a statutory notice under Sec. 138 of the Act to the first respondent-accused. It was alleged that the first respondent borrowed a sum of rupees twenty lakhs from the appellant on 16/1/2012 and to discharge the liability, issued a cheque dtd. 17/3/2014 bearing cheque No. 877828 for the said sum. It was further alleged that the cheque when presented on 2/4/2014 was dishonoured due to insufficient funds. The appellant issued the notice calling the first respondent to pay the legally enforceable debt of Rs.20,00,000.00:
"Therefore, my client hereby calls upon you to make payment of Rs.20,00,000.00/- towards the legally enforceable debt due and payable by you within a period of 15 days from the date of receipt of this particular notice, [...]"
(3.)On 25/4/2014, the first respondent addressed a response to the statutory notice where he alleged the following:
(i) The first respondent and the appellant are related to each other. The appellant's son married the first respondent's sister;
(ii) The appellant lent the first respondent a loan of rupees forty lakhs. There was an oral agreement between the parties that the first respondent would pay rupees one lakh every three months by cheque and rupees eighty thousand in cash to the appellant. Two cheques were given to the appellant for security. It was agreed that the appellant would return both the cheques when the sum lent was paid in full;
(iii) The appellant's son-initiated divorce proceedings against the respondent's sister. However, the dowry that was given at the time of marriage is still in the possession of the appellant; and
(iv) The cheques that were issued for security have been misused by the appellant.
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