Madhya Pradesh High Court
Jitendra Singh Flora vs Ravikant Talwar on 8 August, 2000
Equivalent citations: 2001(1)ALD(CRI)767, 2001(1)MPHT130
ORDER S.C. Pandey, J.
1. This revision is directed against the order dated 25-10-1999 passed by Judicial Magistrate First Class, Jabalpur in Criminal Case No. 814/99.
2. The non-applicant Ravikant Talwar filed a complaint against the applicant under Section 138 of the Negotiable Instruments Act, 1881 (henceforth 'the Act'). The non-applicant alleged in his complaint that he is the holder of power of attorney of one Shri Shashikant Talwar. The applicant and the complainant entered into two agreements dated 8-5-1990 and 10-5-1992, whereby the applicant was required to construct building No. 183, A.P.R. Colony, Katanga, Jabalpur. Pursuant to the aforesaid agreements, it is alleged that the non-applicant advanced Rs. 2,70,000/- to the applicant. It was agreed that the work of construction of above mentioned house shall be over by 30-8-1992. It is alleged in the complaint that the applicant was not able to deliver the completed building by 30-8-1992 and, therefore, the non-applicant agreed to extend the time till 30-4-1993. It is alleged in the complaint that pursuant to the aforesaid agreements, three post dated cheques dated 30-4-1993 were issued by the applicant in favour of the non-applicant bearing No. 0646945 of Rs. 30,000/-, No. 0646946 of Rs. 30,000/- and No. 0646947 of Rs.40,000/-. These cheques were in respect of the deposit of the applicant in the Bank of India, Napier Town Branch, Jabalpur. It is alleged that after 30-4-1993, when the construction was not completed, the non-applicant presented the cheques to the Bank of India on 5-5-1993. The Bank dishonoured the cheques issued by the applicant with the remarks that "Refer to Drawer Insufficient Funds". The dishonoured cheques alongwith the advice of the Bank were returned to the non-applicant on 7-5-1993.
3. Thereafter, the non-applicant served a notice dated 18-5-1993 to the applicant under Section 138 of the Act which was received by the applicant on 19-5-1993. In the notice, a demand of Rs. 1,00,000/- (Rupees One Lakh) was made by the non- applicant. On receiving no response from the applicant, the non- applicant filed a complaint under Section 138 of the Act on 18-6-1993 within the period of limitation prescribed therefor.
4. On the aforesaid allegations and after registering the complaint and noticing the applicant, the Court proceeded to examine the non-applicant, Ravikant Talwar before framing the charge. Thereafter, it framed the charge on 25-10-1999 against the applicant Jitendra Singh Flora.
5. Shri Ranjan Banerjee, learned counsel for the applicant in this revision has argued that no offence under Section 138 of the Act is made out on the ground that Section 138 of the Act is attracted where a person issues cheque in order to discharge, in whole or in part, any debt or other liability. It was the contention of learned counsel for the applicant that there was no debt or other liability which could be legally held to be debt or other liability in the eyes of law. It was contended by the learned counsel for the applicant that the cheques issued by the applicant were of normal nature and did not create any liability in favour of the non-applicant. The cheques were issued by way of security for giving timely discharge of the construction of building. In such cases, no offence is made out for the reason already stated above.
6. Nobody appeared to support the case of the non- applicant before this Court,
7. In order to examine if the applicant is guilty of offence committed under Section 138 of the Act, it is necessary to consider this fact of the nature of the agreements entered into by the parties. The first agreement is dated 8-5-1990. The other agreement is dated 10-5-1992 and the third agreement is dated 10-2-1993. These agreements are cumulatively marked as Annexure P-3. In the agreement dated 8-5-1990, the cost of construction is mentioned as Rs. 3,00,000/- (Rupees Three Lakhs) and the details of the building to be constructed upon plot No. 183, A.P.R. Colony, Katanga, Jabalpur are given. It appears that on the plot of 1500 sq. ft., the applicant was required to -construct a house for the non-applicant. We are not concerned much with this agreement. There is yet another agreement dated 10-5-1992. It is stated in the agreement dated 10-5-1992 that the party No. 1 i.e., the non-applicant was unable to supervise the construction of the dwelling unit over the plot in question on account of the fact that he remains away from Jabalpur. The applicant was given time till 30-8-1992 for the completion of building. It was, however, further agreed that the owner may grant a period of twenty days further for completion of building by way of extended period. It was also agreed between the parties that the amount which has already been received by the applicant shall be treated as a consideration and the balance of Rs. 30,000/-(Rupees Thirty Thousand) shall be paid to the applicant after completion of the building. In Paragraph 5 of the agreement dated 10-5-1992, the following terms were made:--
"Clause 5 : That in order to demonstrate desire to carry out the obligations enshrined in the agreement and by way of Security the Builder/Party No. 2 has delivered three Post dated cheques bearing Nos. 414175 dated 15-7-92 and 414176 dated 30-8-92 for Rs. 60,000/- and 414177 dated 30-8-92 for Rs. 40,000/- of Punjab & Sind Bank, Jabalpur.
Clause 6: That cheque No. 414175 shall be returned to Party No. 2 on completion of Ground Floor, cheque No. 414176 shall be returned on casting of first floor slab and Cheque No. 414177 shall be returned on handing over of the building complete in all respect subject to deductions if any."
8. It appears that the applicant was unable to finish the construction of the building by 30-8-1992 and, therefore, the period appears to have been appended in a fresh agreement entered into on 10-2-1993. Now the time was extended upto 30-4-1993 on the same conditions as were made in the previous agreement. Since the time for encashing the new cheques mentioned in the second agreement dated 10-5-1992 was expired, new cheques were issued, as already stated, by the applicant and they were made payable at Bank of India. It appears that after the agreement was styled and the last date of 30-4-1993 was given, there was one more clause was added to agreement i.e., the building was to be completed by way of grace period upto 30-4-1993 and it was agreed also that the non-applicant shall pay to the applicant a part of money during the course of the construction of the building.
9. It is clear from a fair reading of Clauses 5 and 6 of the second agreement dated 10-5-1992 that the amount of Rs. 1,00,000/- (Rupees One Lakh) issued by way of three cheques was not in any way due to the non-applicant. These cheques were issued normally by way of security of loan and the cheques issued were liable to be returned on completion of the construction of the building. Clause No. 6 states that the first cheque shall be returned after completion of ground floor. The second cheque shall be returned after casting of the first floor and the third cheque shall be returned after completion of the building.
10. It is thus clear that there was no intention of the parties to create any debt or other liability. The cheques were not issued for discharge of the aforesaid liability but only normally by way of security for construction of building.
11. The nature of substantive offence shall be clear from Section 138 of the Negotiable Instruments Act, 1881, which reads as under :--
"Section 138. Dishonour of cheque for insufficiency, etc., of funds in the account.-- 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 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 provisions 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 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."
12. It is clear from the aforesaid section read with the explanation that the debt or other liability means a legally enforceable debt or other liability. Now, it is clear that the cheques were not issued for creating any liability. They cannot be enforceable in the eyes of law. The applicant did not owe any money to the non-applicant. In fact, the non-applicant was not entitled to recover the amount mentioned in the cheques even if the building was not completed within the period prescribed by the agreement. All that he could do is to withhold the cheques till the building is complete. Moreover, the last date of completion of the building was extended by one month, i.e., by 30-4-1993. The non-applicant instead of waiting till 30-4-1993, sought to encash the cheques on 3-5-1993. Even if the applicant was held to be liable, his liability will accrue only when building was not completed on 30-4-1993. In this case, the applicant has further suppressed the fact from the eyes of the Court in the complaint that at least how far the applicant has made the construction because first two cheques were to be returned even before the completion of the building. However, this Court is taking the broader view of the matter and holds that there was no debt or other liability under Section 138 of the Act in view of the agreements. The result is that the applicant cannot be held liable under Section 138 of the Act.
13. Consequently, this revision succeeds and is allowed. The order dated 25-10-1999 framing a charge against the applicant is hereby set aside and he is discharged.
14. Criminal Revision allowed.