2017 (3) TMI 822 - SC - Indian Laws

Charge against 2nd respondent under Section 138 of the N.I. Act - Held that - We find that the 2nd respondent in his deposition categorically stated that to satisfy the terms of agreement (Ext.D2), on 7.9.2000 he had arranged to the appellant ₹ 75,000/- in cash and a cheque for ₹ 2,25,000/-. It is on record that the appellant/complainant himself admitted in the cross examination that till 6.9.2000 the balance in his bank account was less than ₹ 1,000/- and on 7.9.2000 (the date of agreement, Ext. D2) he made a fixed deposit of ₹ 70,000/-. Significantly, a copy of the fixed deposit receipt is available with the 2nd respondent also giving scope to the presumption that the appellant made the fixed deposit of ₹ 70,000/- out of the cash arranged by 2nd respondent. There is also no justifiable reason shown by the appellant to deem that the fixed deposit was made out of any other source. An argument was, however, advanced on behalf of the appellant that even if the cheque in question was issued by the 2nd respondent for settling the disputes between the appellant and M.M. Basheer, the 2nd respondent would be still binding under Section 138 of the N.I. Act. On this aspect, we observe that the material on record explicitly shows that the disputes between the appellant and M.M. Basheer were not settled amicably in terms of agreement (Ext.D2). Moreover, the appellant nowhere claimed fulfillment of performance of his part of the agreement. Taken into consideration all aspects of the case, we are of the opinion that the entire evidence has been properly evaluated by the Trial Court to reach the just conclusion that the appellant/complainant has failed to prove his case beyond reasonable doubt. Thus, there is no perversity or illegality in the impugned order passed by the High Court calling for our interference, particularly in the absence of proof of legally enforceable debt existing between the parties.

Summary

Issues:
- Dismissal of complaint under Section 138 of the Negotiable Instruments Act by the trial Court and High Court.
- Interpretation of evidence presented by the appellant and respondent.
- Examination of the legality of the cheque issued by the respondent.
- Evaluation of the agreement between the parties and the role of the respondent as a mediator.
- Determination of the existence of a legally enforceable debt or liability on the respondent.

Analysis:
The judgment revolves around the dismissal of a complaint under Section 138 of the Negotiable Instruments Act by both the trial Court and the High Court. The appellant alleged that the respondent issued a cheque that was dishonored by the bank due to insufficient funds. The trial Court dismissed the complaint, stating that the appellant failed to prove that the respondent borrowed the amount in question. The High Court upheld this decision, leading to the appeal in the Supreme Court.

The appellant argued that the lower courts erred in their assessment of the evidence, particularly the cheque and the dishonor memo. The appellant claimed to have arranged a loan for the respondent from a neighbor and that the cheque was issued to discharge this liability. However, the respondent contended that the cheque was part of an agreement to settle disputes between the appellant and another party. The respondent, as a mediator, facilitated this agreement but stated that no legally enforceable debt existed.

Upon review, the Supreme Court found that the evidence, including the agreement and the appellant's bank transactions, supported the respondent's version of events. The Court noted that the appellant's bank balance and fixed deposit around the time of the agreement aligned with the respondent's claims. Additionally, the Court emphasized that the disputes were not settled as per the agreement, and the appellant did not demonstrate fulfillment of his obligations.

Ultimately, the Supreme Court concluded that the lower courts correctly evaluated the evidence and found no legally enforceable debt between the parties. As a result, the appeal lacked merit and was dismissed. The judgment highlights the importance of substantiating claims with concrete evidence and the need to establish a legally binding obligation for a successful case under Section 138 of the N.I. Act.