2006 (5) TMI 471 - HC - Indian Laws

Dishonour of cheque - discharge of legal liability to the tune of the amount covered by the cheque - acquittal of accused - HELD THAT - True, Ext.D3 and Ext.P8 indicate that accused owes some amount to the complainant, which has to be settled between the parties, as offered by the accused in the said letters. But what was the amount so due on settlement was not proved by the complainant. Whether it is in excess of the amount covered by Ext.P1 or whether it is less than the amount covered by Ext.P1 is a material aspect as regards the alleged liability on that count. In order to deem that one had committed offence under Section 138, the amount covered by the cheque shall be either in discharge of the liability incurred by the drawer, either in full or in part. It cannot in any way in excess of the liability incurred. Unless the complainant proves that the liability to be settled is to the tune of the amount covered by Ext.P1, he could not have made use of that cheque for such liability. Therefore, Ext.P1 cheque cannot be stated to be one issued in discharge of the liability to the tune of the amount covered by it, which was really issued, as is revealed by Ext.D1, as the price amount for 28 numbers of mixies, which the complainant had not supplied. Therefore the acquittal of the accused cannot be stated to be unjustified to invite interference in the appeal. Appeal upheld.

Summary

Issues:
Acquittal under Section 138 of the N.I Act challenged; Dispute over liability for a post-dated cheque; Admissibility of evidence regarding liability admission; Interpretation of stop memo and order for mixies; Proof of liability amount in relation to the cheque.

Analysis:
1. The appeal challenges the acquittal of the respondent under Section 138 of the N.I Act. The complainant alleged that the respondent owed an amount due to credit purchases and issued a post-dated cheque, which bounced. The respondent claimed the cheque was for mixies not supplied by the complainant, as per an order and stop memo.

2. The lower court found that the cheque was not issued to discharge the accused's liability towards the complainant. The evidence was crucial in determining the nature of the transaction and the purpose of the cheque.

3. The appellant argued that evidence, including communications (Ext.D3 and Ext.P8), indicated the respondent's admission of liability towards the complainant. Despite the stop memo, the appellant contended that the cheque was intended to settle the existing liability, even if it was initially meant for the mixies order.

4. The order for mixies (Ext.D1) and the stop memo (Ext.D4) were pivotal in understanding the sequence of events. The stop memo was issued before the cheque date, indicating the respondent's intention not to honor the cheque due to non-supply of the ordered items. The appellant failed to prove the exact amount of liability in relation to the cheque.

5. The court concluded that the post-dated cheque was not issued to discharge the specific liability amount covered by it, which was for the mixies order. As the complainant did not prove the exact liability matching the cheque amount, the acquittal of the accused was deemed justified, and the appeal was dismissed.