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TMI Blog2016 (9) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... omplaint were towards the partial repayment of the dues under the loan agreement (para 5 of the complaint). The question has to be answered in favour of the respondent and against the appellant. Dishonour of cheque in the present case being for discharge of existing liability is covered by Section 138 of the Act, as rightly held by the High Court. - Criminal Appeal No. 867 of 2016 ( Arising Out of S.L.P. (CRL.) No. 5410 of 2014) - - - Dated:- 19-9-2016 - Dipak Misra And Adarsh Kumar Goel, JJ. For the Appellant : Mr. Lakshmi Raman Singh,Adv For the Respondent : Mr. Annam D. N. Rao,Adv JUDGMENT Adarsh Kumar Goel, J. 1. This appeal has been preferred against the judgment and order dated 8th May, 2014 passed by the High Court of Delhi at New Delhi in Writ Petition (Criminal) No.1170 of 2011. 2. Question for consideration is whether in the facts of the present case, the dishonour of a post-dated cheque given for repayment of loan installment which is also described as security in the loan agreement is covered by Section 138 of the Negotiable Instruments Act, 1881 ( the Act ). 3. The appellant is Director of the company whose cheques have been dishono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the 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 be extended to two years, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . LJ 4330 (Ker) was held to be correct view as against the view of Delhi High Court in Magnum Aviation (P) Ltd. versus State (2010) 172 DLT 91: (2010) 118 DRJ 505 and Mojj Engg. Systems Ltd. versus A.B. Sugars Ltd. (2008) 154 DLT 579 which was disapproved. 10. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (supra) with reference to the explanation to Section 138 of the Act and the expression for discharge of any debt or other liability occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for discharge of debt or liability depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 11. Reference to the facts of the present case clearly shows that though the word security is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging the subsisting liability or debt. There is, thus, no similarity in the facts of that case simply because in that case also loan was advanced. It was noticed specifically therein as was the admitted case of the parties that the cheque was issued as security for the advance and was not intended to be in discharge of the liability, as in the present case. 15. In HMT Watches Ltd. versus M.A. Abida (2015) 11 SCC 776, relied upon on behalf of the respondent, this Court dealt with the contention that the proceedings under Section 138 were liable to be quashed as the cheques were given as security as per defence of the accused. Negativing the contention, this Court held :- 10. Having heard the learned counsel for the parties, we are of the view that the accused (Respondent 1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, cannot also travel beyond its jurisdiction to interfere with the proceeding which is otherwise genuine. The courts cannot also lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable. 12. In Rallis India Ltd. v. Poduru Vidya Bhushan [(2011) 13 SCC 88], this Court expressed its views on this point as under: (SCC p. 93, para 12) 12. At the threshold, the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged the respondents of the said liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the earlier partnership was dissolved and since what date the respondents ceased to be the partners of the firm. 16. We are in respectful agreement with the above observations. In the present case, reference to the complaint (a copy of which is Annexures P-7) shows that as per the case of the complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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