Indian Kanoon - Search engine for Indian Law

4. In pursuance of the agreement, the petitioner herein gave a post dated cheque for Rs. 35 lakhs. According to the petitioner's counsel, it was an undated cheque. The second agreement also refers to a similar clause under Clause 5. It is not the case that any fresh cheque was issued towards security as mentioned in clause 5. Therefore, the fact remains that only one cheque was issued on 27.12.1995 as security for the advance of Rs. 35 Lakhs received by the processor from the complainant. The 1st agreement does not contain the period during which the agreement will be in force. The 2nd agreement also does not contain any reference to the period of agreement. From the admitted case of the parties, it is clear that the cheque that was issued by the petitioner was as security for the advance received. According to the terms of the agreement, the said advance of Rs. 35 lakhs will be adjusted against the profits made by the accused in the transaction. Even according to the complaint, the supply should be completed on or before 31.3.1997. Therefore, it cannot be accepted that the petitioner handed over a cheque for Rs. 35 lakhs dated 17.7.1997. Since the cheque was issued at the time when the 1st agreement was entered into, the cheque must be post dated so as to coincide with the expiry of the period of the 1st agreement or coincide with the expiry of the 2nd agreement. The agreements and the complaint would show that the supply shall be completed by the accused on or before 31.3.1997. If that is the allegation, on its face value, one would expect the petitioner to give a post dated cheque dating it as 31.3.1997 or 1.4.1997, as the case may be. Therefore, to say that the accused handed over a cheque dated 17.7.97 even on the date when he entered into the 1st agreement on 27.12.1995, is rather odd. For the contention of the accused is that the complainant hurriedly filled up the date of his choice and what was handed over was an undated cheque.

8. Therefore, on the date when the cheque was handed over, there was no legally enforceable debt or other liability. An undated cheque for Rs.35 lakhs was handed over as a security for the purpose of the contract. It was not handed over with the intention of making it as an instrument of immediate negotiation to discharge a subsisting liability or debt. Thus, this is a case where one of the parties to the contract had obtained a signed undated cheque for Rs. 35 lakhs as a security. As dispute arose between the parties, the cheque is now utilised by the complainant to resort to Sections 138 of the Act by filing in a date convenient to him.

10. Therefore, I am of the considered view that as an undated cheque having been given only as security, the provision of Section 138 of the Negotiable Instruments Act are not at all attracted and hence, the complaint against the accused under section 138 of the Negotiable Instruments Act cannot be maintained at all.

11. In the result, this petition is allowed, quashing the proceedings against the petitioners herein C.C.No. 6029 of 1997, pending on the file of the IX Metropolitan Magistrate, Saidapet, Chennai. In view of the order passed in the main petition, Crl.M.P.No. 6854 of 1997 shall stand closed.