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2022 (3) TMI 1555 - HC - Indian LawsDishonour of Cheque - legally recoverable debt or not - pre-matured cheques presented for realization were dishonoured - rebuttal of presumption - HELD THAT - The Apex Court in SRIPATI SINGH 2021 (11) TMI 66 - SUPREME COURT holds that the contention with regard to cheque being dishonoured and its justification or otherwise, would arise in a circumstance where the debt has not become recoverable and the cheque issued as security has not matured to be presented for recovery of the amount. If the due date as per the terms of agreement for payment has not yet arrived, it does not become a matured event to initiate proceedings under the Act; same is the case at hand. The law with regard to such interference in the proceedings under the Act is that, if documents of unimpeachable character are shown to the Court, the Court has to take that into consideration, as further proceedings should lead to a ground of harassment to the accused. A document if so unimpeachable is produced, the Court has to look into the same to avoid future harassment to the accused. Therefore, in the considered view of this Court, the cheques that were presented had not yet ripened to be presented as they were on a particular contingency to be presented or they were subject to conditions before presentation. Those conditions admittedly have not come about as on the date the cheques were presented. Therefore, the contingency has not even arrived at. Presenting the cheques and initiating proceedings for dishonor of cheques under the Act only results in harassment to the accused and esoteric satisfaction to the complainant. Petition allowed.
Issues Involved:
1. Validity of proceedings under Section 138 of the Negotiable Instruments Act, 1981. 2. Conditions for the maturity of cheques as per Joint Development Agreement (JDA) and Supplementary Agreement (SA). 3. Legal enforceability of debt or liability concerning the dishonored cheques. 4. Jurisdiction of the High Court under Section 482 of the Cr.P.C. to quash proceedings. Detailed Analysis: 1. Validity of Proceedings under Section 138 of the Negotiable Instruments Act, 1981: The petitioners challenged the proceedings in C.C.Nos.24107 of 2019, 24106 of 2019, and 24103 of 2019, pending before the XIX Additional Chief Metropolitan Magistrate, Bengaluru City, for taking cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1981, and issuing summons against them. The main contention was that the cheques were issued for a specific purpose and were not yet matured for presentation, as the event triggering their maturity had not occurred. 2. Conditions for the Maturity of Cheques as per Joint Development Agreement (JDA) and Supplementary Agreement (SA): The petitioners and the respondent had entered into a JDA on 28-01-2015 and an SA on 06-02-2015. The agreements stipulated several conditions, including the issuance of cheques contingent on specific events. Clause 6 of the SA mandated that the cheques were to be presented only after the conversion of properties for residential purposes, plan sanction by the concerned authorities, and signing of an agreement for apportionment and identification of shares. The properties had not yet been converted for residential purposes, making the presentation of cheques premature. 3. Legal Enforceability of Debt or Liability Concerning the Dishonored Cheques: The court examined the legal enforceability of the debt or liability associated with the dishonored cheques. It was emphasized that for a criminal liability under Section 138 to be established, there must be a legally enforceable debt or liability at the time of the cheque's presentation. The court cited several judgments, including SUNIL TODI v. STATE OF GUJARAT, SRIPATI SINGH v. STATE OF JHARKHAND, INDUS AIRWAYS PRIVATE LIMITED v. MAGNUM AVIATION PRIVATE LIMITED, and HMT WATCHES LIMITED v. M.A.ABIDA, to support the view that a cheque issued for a contingent event becomes a debt only after the contingency occurs. Since the conditions for the cheques' maturity had not been met, the cheques did not represent a legally enforceable debt. 4. Jurisdiction of the High Court under Section 482 of the Cr.P.C. to Quash Proceedings: The court considered the parameters for exercising jurisdiction under Section 482 of the Cr.P.C. It was noted that while the High Court should not ordinarily interfere with factual disputes, it can consider documents of unimpeachable character to prevent harassment of the accused. The court held that the proceedings under Section 138 were inappropriate as the cheques had not matured into a legally recoverable debt, and continuing the proceedings would result in harassment to the petitioners. Conclusion: The court allowed the criminal petitions, quashing the proceedings in C.C.Nos.24107 of 2019, 24106 of 2019, and 24103 of 2019. It clarified that this quashment would not affect any other pending proceedings between the parties and that the observations made would not impact any other ongoing disputes.
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