SATHAVAHANA ISPAT LTD Vs. UMESH SHARMA

JUDGEMENT

(1.) THE respondent-accused entered into an agreement with the complainant at Ex. D-1. The complainant agreed to make credit supplies giving a month's time for payment of the value of the supplies made to the accused. The agreement Ex. D-1 stipulates that the accused shall deposit blank signed cheques as security and to be used in the future course if there is any default in payment of the moneys by the accused for the credit supplies made. In other words, the agreement makes it specifically clear that the cheques are not issued in respect of any current or past liabilities, they are issued to the complainant to be used if there is any default in payment of future credit supplies.

(2.) THE relevant provision of Section 138 of Negotiable Instruments Act, 1881 is extracted hereunder : 138. Dishonour of 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 an 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 provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :" (Emphasis supplied) The material words in Sec. 138 is, "a cheque drawn by a person to another person for the discharge of whole or in part of any debt or other liability" should be interpreted to mean only the past or the current liabilities at the time when the cheque is issued. A cheque issued in respect of uncertain future liabilities would not attract prosecution u/s. 138. However, the vendor's right to recover the amounts in a civil forum will not get affected.

(3.) IN the instant three cases the cheques are issued in respect of uncertain future liabilities which may arise in the course of running transaction between the complainant and the accused. Therefore the prosecution u/s. 138 of N. I. Act is bad in law. The appeals are dismissed. Appeals dismissed.