@JUDGMENTTAG-ORDER
Mr. Alexander Thomas, J.—The petitioner herein is the sole accused in C.C. No. 227/2014 on the file of the Judicial First Class Magistrate''s Court-XII, Thiruvananthapuram, for offence punishable under Section 138 of the Negotiable Instruments Act, instituted on the basis of a complaint preferred by the 1st respondent. The case projected in the petition broadly as follows. That as per Anx. A-2 agreement for sale dated 16.12.2013 entered into between the petitioner-accused and the respondent-complainant, an extent of 13.500 cents of property which originally stood in the name of one Sri. Jayanathlal was agreed to be sold in favour of the petitioner-accused or his nominees by the complainant, who was the power of attorney holder of the said Sri. Jayanathlal. The period fixed for the performance of Anx. A-2 agreement was 4 months from the date of agreement (16.12.2013). An amount of Rs.7.5 lakhs was paid by the petitioner-accused to the complainant, who has received the same towards sale consideration and as per the covenants stipulated in the agreement for sale, the balance consideration has to be paid within a period of 4 months from the date of execution of the agreement, failing which it is made clear that the agreement for sale would cease to operate and that the amount of Rs.7.5 lakhs which was paid by the petitioner towards advance sale consideration would be forfeited by the vendor. That before the due date fixed for performance of agreement for sale, R-1 complainant demanded the amount to the tune of Rs.17.35 lakhs from out of the total amounts due to be paid towards the balance sale consideration covered by Anx.A-2 agreement for sale. That a cheque for an amount of Rs.17,35,000/- towards the part sale consideration was handed over in favour of the complainant and the said cheque was dishonoured. Further that the complainant thereafter had unilaterally withdrawn from the terms and conditions from the said agreement of sale and sold the entire extent of property covered by the agreement for sale to a person other than the accused and forfeited the amounts received as advance and thereafter proceeded to initiate actions against the petitioner for the offence under Section 138 of the Negotiable Instruments Act, before the learned Magistrate, which resulted in the impugned criminal proceedings for the offence under Section 138 of the Negotiable Instruments Act. Anx. A-1 is the impugned complaint filed in this regard by the 1st respondent.
2. It is contended by the petitioner that the cheque is not issued in discharge of a legally enforceable debt and there is no debt or liability existed as on the date of issuance of the cheque (16.4.2014) and that the cheque is issued towards the amount due by way of balance sale consideration covered by the agreement for sale and that the same would not attract the offence under Section 138 of the Negotiable Instruments Act, even if the cheque is dishonoured. Therefore, the learned Magistrate has committed illegality in issuing summons to the petitioner. It is in the light of these aspects, that the petitioners has preferred the instant Crl. M.C by invoking the powers conferred on this Court under Section 482 of the Cr.P.C with the prayer that this Court may call for the records leading to the impugned Anx. A-1 complaint and quash the same, etc.
3. After issuing notice in this matter, the 1st respondent had entered appearance. According to the contentions urged by the 1st respondent-complainant, the petitioner-accused and R-1 complainant had entered into Anx. A-2 agreement for sale dated 16.12.2013 and as per the agreement, R-1 had agreed to sell 13.5 cents of property @ Rs.3.10 lakhs/cent to the petitioner or his nominees within a period of 4 months. Advance amount of Rs.7.5 lakhs was paid by the petitioner-accused to the 1st respondent-complainant at the time of executing Anx. A-1 agreement. The balance amount was agreed to be paid at the time of execution and registration of the sale deed. Thereafter, the petitioner-accused had instructed the complainant that the sale deeds are to be executed and registered in favour of 2 nominees nominated by the petitioner in terms of the agreement and that the petitioner had thus arranged 2 buyers to whom the properties are to be conveyed by the complainant. That accordingly, on 16.4.2014, the petitioner had given another amount of Rs.17 lakhs as cash and the balance amount of Rs.17.35 lakhs by way of the impugned cheque in question towards entirety of the balance sale consideration. Since the petitioner had paid the entire balance amount partly by cash and partly by the impugned cheque, the 1st respondent had executed and registered the sale deed No.1456/14 (in respect of 3.550 cents) in favour of K.S. Unnikrishnan Nair and Smt. P.B. Priyadarshini, (both of whom are the nominees nominated by the petitioner in terms of the agreement) and further that sale deed No.1457/14 was also executed and registered by the 1st respondent in respect of 8.425 cents in favour of one Sri.P.Dileep Kumar (another nominee nominated by the petitioner in terms of the agreement) and that thus sale deeds were executed in favour of the nominees of the petitioner in terms of Anx. A-2 agreement on 16.4.2014 and those sale deeds were registered on the next working day on 19.4.2014, etc. That it was only later when the said cheque for an amount of Rs.17.35 lakhs was presented before the bank concerned, that the 1st respondent was intimated regarding the dishonour of the cheque, etc. On this basis, it is contended that the facts of the case are not in respect of a transaction involving a mere agreement for sale but that a full fledged sale had fructified on the basis of the terms and conditions in Anx. A-2 agreement for sale. That apart, from the initial advance amount to the entire balance sale consideration was paid partly in cash and partly by cheque on 16.4.2014 which resulted in the execution of the sale deed in favour of the nominees of the petitioner on 16.4.2014 and its subsequent registration on 19.4.2014.
4. Heard Sri. T.N. Manoj, learned counsel appearing for the petitioner-accused, Sri. G. Biju, learned counsel appearing for the 1st respondent-complainant and Sri. Saigi Jacob Palatty, learned Prosecutor appearing for R-2 State.
5. In the judgment in Shanku Concretes Pvt. Ltd. and ors. v. State of Gujarat and anr. reported in 2000 Cri. L.J. 1988 Guj, the Gujarath High Court held that while dealing with the provisions of Section 138 of the Negotiable Instruments Act, in order to attract Section 138 of the N.I. Act, there must be subsisting liability or debt on the date when the cheque was delivered and the very fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of the cheques would take the case out of the purview of Section 138 of the N.I. Act. Explanation to Section 138 of the Negotiable Instruments Act makes it clear beyond doubt that the purpose of the said section is that the "debt or other liability" means a legally enforceable debt or other liability.
6. This Court, in the judgment in Supply House v. Ullas reported in 2006 (3) KLT 921 = 2006 Cri.L.J. 4330 (Kerala) dealt with the issue of a post dated cheque issued by the accused along with the order for supply of goods. The supply of goods was not made by the complainant. The accused initially instructed the bank to stop payment against the cheque and then requested the complainant not to present the cheque as he had not supplied the goods. The cheque was dishonoured which resulted in the complaint. This Court held in the said judgment in page 925 para 5, as follows:
"5. ........................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."
Accordingly, it was held that the accused therein is entitled to be acquitted under Section 138 of the Negotiable Instruments Act.
7. In the case Indus Airways Pvt. Ltd. v. Magnum Aviation Pvt. Ltd. reported in (2014) 12 SCC 539, the Apex Court dealt with a case where the appellant-purchaser therein placed 2 purchase orders with the respondent-supplier by issuing 2 separate cheques towards advance payment. After some time, the deal between the parties got cancelled as the goods were not supplied. The respondent-supplier tried to supply the goods, but it was refused by the appellant-purchaser. The complaint under Section 138 of the NI Act was made by the supplier. The trial court issued summons and it was challenged by the appellant purchaser before the Sessions Court wherein the issuance of the impugned process was quashed. The Delhi High Court thereafter set aside the order passed by the Sessions Court which led to the appeal before the Apex Court in the above case. The reasonings of the Delhi High Court in the said case [Magnum Aviation Pvt. Ltd. v. State reported in (2010) 172 DLT 91 = 2010 118 DRJ 505] are as follows: (refer 2010 118 DRJ 505 p. 508 para 8).
"8. If at the time of entering into a contract it is one of the conditions of the contract that the purchaser has to pay the amount in advance then advance payment is a liability of the purchaser. The seller of the items would not have entered into contract unless the advance payment was made to him. A condition of advance payment is normally put by the seller for the reason that the purchaser may not later on retract and refuse to take the goods either manufactured for him or procured for him. Payment of cost of the goods in advance being one of 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 and procures the goods. If for any reason, the seller fails to manufacture the goods or procure the goods it is only under those circumstances that no liability is created. However, where the goods or raw material has been procured for the purchaser by seller or goods have been manufactured by the seller, it cannot be said that the cheques were not issued against the liability. I consider that if the liability is not construed in this manner, the sole purpose of making dishonour of the cheque as an offence stands defeated. The purpose of making or enacting Section 138 of the N.I. Act was to enhance the acceptability of cheque in settlement of commercial transactions, to infuse trust into commercial transactions and to make a cheque as a reliable negotiable instrument and to see that the cheques of business transactions are not dishonoured. The purpose of Negotiable Instrument Act is to make an orderly statement of rules of law relating to negotiable instruments and to ensure that mercantile instruments should be equated with goods passing from one hand to other. The sole purpose of the Act would stand defeated if after placing orders and giving advance payments, the stop payments are issued and orders are cancelled on the ground of pricing of the goods as was done in this case."
The Apex Court held in para 15 of Indus Airways Pvt. Ltd. v. Magnum Aviation Pvt. Ltd. reported in (2014) 12 SCC 539, p.545, para 15, that the above said reasoning of the Delhi High Court is clearly flawed inasmuch as it failed to keep in mind the fine distinction between the civil liability and criminal liability under Section 138 of the N.I. Act. If at the time of entering into a contract, it is one of the conditions of the contract that the purchaser has to pay the amount in advance and there is breach of such condition then purchaser may have to make good the loss that might have occasioned to the seller but that does not create a criminal liability under Section 138. For a criminal liability to be made out under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. Their Lordships of the Apex Court have held that they are unable to accept the view of the Delhi High Court that the issuance of cheque towards advance payment at the time of signing such contract has to be considered as subsisting liability and dishonour of such cheque amounts to an offence under Section 138 of the N.I. Act. It was also held by the Delhi High Court that the purpose of enacting Section 138 of the N.I. Act would stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. It was held by the Apex Court therein that if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed are not supplied by the supplier, the cheque cannot be said to have been drawn for an existing debt or liability. In this view of the matter, the Apex Court has allowed the appeal against the impugned judgment of the Delhi High Court setting aside the order of the Additional Sessions Judge and had restored the order of the Sessions Court quashing the issuance of a process of taking cognizance in Section 138 of the NI Act.
8. Therefore, it is now too well established that where the issuance of the cheque is towards advance payment in pursuance of signing of contract, such cheques so issued towards advance payment cannot be treated as subsisting liability and dishonour of such cheque amount cannot be said to have attracted offence under Section 138 of the NI Act.
9. However, the present case, as per the version of the 1st respondent-complainant stands on a entirely different footing. It is the case of the 1st respondent-complainant that the initial amount of Rs.7.5 lakhs was paid as advance sale consideration in pursuance of Anx. A-2 agreement dated 16.12.2013. It is the further case of the complainant that within the stipulated time limit as per the agreement, the petitioner had given the entire balance sale consideration partly in cash (Rs.7.5 lakhs) and partly in cheque (Rs.17.35 lakhs) on 16.4.2014 and had instructed the complainant to execute the sale deed in favour of the nominees nominated by the petitioner in pursuance of sale agreement and thereupon the 1st respondent complainant had executed the sale deed in question in favour of the nominees nominated by the petitioner on 16.4.2014 and as the next 2 days were holidays, the sale deed was registered on the next day, i.e., on 19.4.2014, etc. It is also contended by the complainant that believing the assurances of the accused that the cheque dated 16.4.2014 for an amount of Rs.17.35 lakhs will be honoured on its subsequent presentation that the 1st respondent was constrained to fulfil his obligations in executing and registering the sale deeds in favour of the nominees nominated by the petitioner in pursuance of Anx. A-2 agreement. Therefore, since this is the case projected by the complainant, this Court is of the considered view that the said decision of the Apex Court has no application to the facts of this case for the purpose of considering the rival pleas under Section 482 of the Cr.P.C. True that none of above-said details as now projected by the learned counsel for the complainant are mentioned in the complaint. But in para 1 of the impugned Anx. A-1 impugned complaint it has been specifically averred by the complainant that the accused had owed an amount of Rs.17.35 lakhs to the complainant on account of the sale of the property in pursuance of the agreement for sale dated 16.12.2013, etc. Therefore, the specific averment in the said complaint is that the sale has in fact been duly completed in pursuance of the agreement for sale dated 16.12.2013 and that on that account, the accused owed an amount of Rs.17.35 lakhs to the complainant,etc. The above-said details now stated as referred to herein above, are all on the basis of the sale deeds said to have been executed and then registered before the Sub Registrar''s office concerned. Therefore, these are all matters for evidence and the issue as to whether these details is correct or wrong, will be easily discernible from the documentary evidence in relation to the above-said 3 sale deeds, etc. So also, the factual issue as to whether the landed properties in question have been duly conveyed to the nominees of the accused in terms of the agreement as alleged by the complainant or whether it has been conveyed to third parties/strangers as alleged by the accused, are all matters which can be easily ascertained by adducing of evidence. Therefore, those are all matters eminently within the province of the trial court and it will be clearly erroneous in this Court entertaining the plea for quashment of the complaint merely on account of lack of these details in the complaint.
10. Sri. T.N. Manoj, learned counsel, had also placed strong reliance on the judgment of this Court in K.K. Divakaran v. State of Kerala reported in 2016 (4) KLT 233 = 2016 (4) KHC 901, more particularly paras 18 and 19 which read as follows:
"18. Before she filed the complaint the second respondent sent Ext. P4 statutory notice to the revision petitioner informing him about the dishonour of the cheque and demanding payment of the amount covered by it. Neither the nature, nor the date of the transaction between the parties nor the date of issuance of the cheque was disclosed in it. There was only a bald statement that the revision petitioner issued a cheque bearing the date 11/01/1999 for Rs.2,55,000/- in discharge of a debt. There is no explanation why these material facts were not disclosed in the statutory notice. Suppression of material facts relating to the alleged transaction in the notice issued before filing the suit or the complaint is an artifice used by certain litigants, the intention of which is very clear. They want to develop a story after knowing the defence that may be set up by the opposite party. The doors of the Court should be closed to such fortune seekers.
19. In the complaint also neither the nature, nor the date of the transaction between the parties is mentioned. The only addition made in the complaint is that the date of issuance of cheque is 14/09/1998. For the first time it was in her evidence the 2nd respondent (PW 1) disclosed that the transaction between the parties was a loan of Rs.1,95,000/-. In answer to a leading question put in the examination-in-chief she stated that the transaction was after the marriage between her daughter Sulatha and the revision petitioner''s son Pradeep, which was solemnised on 23/01/1998. She testified that the revision petitioner requested for a loan of Rs. 3 lakh one week after the marriage of Sulatha and Pradeep and she paid him Rs.1� lakh on 09/04/1998 and Rs. 45,000/- on 08/05/1998. The amount mentioned in the cheque is Rs.2,55,000/- though the loan amount was only Rs.1,95,000/- Rs.60,000/- is said to be interest. How the interest was calculated will be considered later. Her story is that in August, 1998 she made a demand for repayment of the amount and then the revision petitioner undertook to pay the amount in January, 1999; the 2nd respondent insisted on getting a cheque and a document from the revision petitioner; on 14/09/1998 at her residence at Pampadi the revision petitioner executed Ext. P1 cheque and Ext. P8 undertaking."
Para 1 of the impugned Anx. A-1 complaint reads as follows:
"1. On account of sale of property in pursuant to agreement dated 16/12/13 between the complainant and the accused, the accused owed an amount of Rs.17,35,000/- (Rupees Seventeen Lakh and Thirty Five Thousand only) to the complainant and towards the discharge of the said debt the accused issued a cheque in favour of the complainant bearing No.000025 Dated 16/04/14 drawn at HDFC Bank Branch at East Fort, Thiruvananthapuram, for the said amount."
A reading of para 1 of the complaint would disclose that the case projected by the complainant is that in compliance with the terms and conditions of Anx. A-2 agreement for sale dated 16.12.2013, the sale of the property was effected, etc., and that the cheque in question dated 16.4.2014 for an amount of Rs.17.35 lakhs was issued by the accused to discharge the said liability covered by the said transaction referred to therein, etc. A reading of the said complaint will not lead to the necessary conclusion that those averments are totally devoid of the ingredients of Section 138 of the NI Act. Moreover, the contentions raised by the petitioner-accused on the basis of the decision of K.K. Divakaran ''s case (supra) are not to be entertained in the facts of this case which involved the plea of quashment under Section 482 of the Cr.P.C and those are all matters which are to be raised by the petitioner at the trial court in appropriate manner.
11. It has been held by the Apex Court in the judgment in Laxmi Dyechem v. State of Gujarath and ors. reported in (2012) 13 SCC 375 = 2013 (1) KLT 167 (SC) para 15 that the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter which essentially the trial court will have to examine, having regard to the evidence adduced before it and keeping in view that the statutory presumption that unless rebutted the cheque is presumed to have been issued for valid consideration, etc. Therefore, in the light of the wholesome principles, this Court would desist from entering more into the evaluation of the evidenciary aspects as this case is one essentially involving the plea under Section 482 of the Cr.P.C for quashment of the complaint on the contention that the transaction of the complaint is bereft of the essential ingredients of Section 138 of the N.I. Act. Having regard to the contentions urged by the complainant, this Court is of the considered view that it cannot be said that the complaint is bereft of ingredients of Section 138 of the NI Act. This Court has expressed its opinion only on the limited issue as to whether the complaint is liable to the quashed under Section 482 of the Cr.P.C and nothing in this order shall be construed as an expression on the merits of the matter, which is a matter solely and exclusively in the realm of the trial court. It is for the parties to adduce their evidence and advance their contentions and nothing in this order shall in any manner trammel or influence the discretion of the trial court in evaluating independently the case based on the evidence that may be adduced by the rival parties.
12. In the light of these aspects, the plea for quashment of the impugned complaint cannot be acceded and accordingly, the Crl. M.C stands dismissed.
