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TMI Blog2010 (8) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondent at the time of entering into contract for supply of equipment were not the cheques issued against any debt or liability which existed as on the date of issuance of cheques since supplies were to be made later on. Thus, the presumption envisaged under Section 139 of Negotiable Instruments Act (hereinafter referred to as the Act‟) stood rebutted and the ingredients of Section 138 of the Act were not attracted. So, the respondent could not be summoned. 3. Brief facts relevant for the purpose of deciding this petition are that on 19th February, 2007 and on 26th February, 2007, respondent placed two separate purchase orders upon the petitioner after finalization of terms and conditions of the contract for supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a week of the first order, the petitioner placed orders for procurement of these parts with its suppliers overseas and made substantial advance payments to the overseas suppliers. The goods were procured by the petitioner. When the cheque of respondent No.2 got dishonoured on 15th March, 2007, the petitioner informed respondent No.2 about dishonour of the cheque as well as that the shipment was ready and requested the respondent to make payment as per terms of purchase order so that the shipment could be sent to him. Even the second cheque dated 20th March, 2007, got dishonoured. It is only after two days, that is, on 22nd March, 2007 that the petitioner received aforesaid letter from the respondent. After receipt of this letter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jarat Anr.; 2000 CLJ 1988 wherein the Gujarat High Court observed that the trial court will have to decide whether there was an existing liability on the part of the petitioner which required due discharge within the meaning of Section 138 of the Act and whether bounced cheques were issued to discharge such existing liabilities. The other case relied upon is Supply House, Represented by Managing Partner vs. Ullas; 2006 CLJ 4330 (Kerala) wherein cheques were issued by the accused at the time of placing order for 28 number of mixies. The order was placed on 9th February, 1998 and cheque was of 24th March, 1998. The cheque was got stop payment‟ and the accused informed the complainant not to present the cheques to the bank as the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions of the contract becomes liability of the purchaser. The purchaser who had issued the cheque could have been asked to make payment either by draft or in cash. Since giving cheque is a mode of payment like any other mode of payment, it is normally accepted as a payment. The issuance of a cheque at the time of signing such contract has to be considered against a liability as the amount written in the cheque is payable by the person on the date mentioned in the cheque. Where the seller or manufacturer, on the basis of cheques issued, manufactures the goods or procures the goods from outside, and has acted upon the contract, the liability of the purchaser gets fastened, the moment the seller or manufacturer acts upon the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young Vs. Grote (1827) 4 Bing. 253 it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield Vs. Lord Londesborough (1895-1899) All ER Rep 282 it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at must also be decided at the trial. The Supreme Court in the case of M.M.T.C. Ltd. and Another Vs. MEDCHL Chemicals and Pharma (P) Ltd. and Another, (2002) 1 SCC 234 held as follows: 13 ..the well-settled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a conclusion that there was no existing debt or liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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