SHYAM GOPAL GUPTA Vs. SANJEEV BHARGAVA

JUDGEMENT

(1.) The instant appeal has been preferred against the judgment dated 31st May, 2004 passed by the learned Metropolitan Magistrate whereby he acquitted the accused for offences under Sections 138 of Negotiable Instruments Act (in short - the NI Act?).

(2.) Brief facts relevant for the purpose of deciding this appeal are that two cheques issued by the respondent to the complainant, each for a sum of Rs. one Lac, got dishonoured for reasons of ?account closed?. A legal notice of demand was sent to the accused but no payment was made. The complainant/appellant thereafter filed a complaint under Section 138 of the NI Act. The respondent admitted receipt of loan and execution of documents of loan and issuance of cheques. He, however denied the receipt of notice of demand as also his liability to pay the cheque amount. The complainant was the tenant of the respondent. The respondent alleged that the complainant was to hand over the possession of tenanted premises as a precondition but was still in possession of the premises. The other ground was that he was to give prior intimation and a notice to him before presenting these two cheques which was not done.

(3.) The learned trial court gave a finding that a valid notice of demand was served upon the respondent/accused. There was no necessity of sending an intimation to the accused before presenting the cheques. Section 138 was attracted even where cheques are dishonoured due to account being closed and the cheques were valid cheques. However, the learned trial court held that the debt for which these cheques were issued was not a legally recoverable debt on the ground that there was an agreement entered into between accused and the complainant. This agreement was a loan agreement and was proved as Ex. CW1/A. There was a clause 5, which prescribed that the complainant was required to issue one month's notice to the accused who thereafter would return the loan amount and in case of his failure to return the loan amount, the complainant can take steps for recovery (by presenting the cheques to the bank). The trial court observed that in terms of the agreement, the complainant had not issued one month's prior notice to the accused before presenting the cheques, so the complainant violated the terms and conditions of the agreement and thus by presenting cheques, complainant had taken advantage of his own wrongs. The learned trial court also observed that in view of the explanation provided in Section 138 of NI Act, it was not sufficient that there was a debt or liability but it must be legally enforceable. Though there was a debt and liability existing even on the date of presentation of cheques, but it could not be legally enforceable due to Clause 5 of the agreement which required a particular procedure to be followed in order to enforce it. Trial court, therefore, dismissed the complaint.