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The Supreme Court of India is the highest judiciary authority in India. The apex court is responsible to apply the law and resolve any dispute. It resolves disputes amongst the citizens, citizens, and government, between two governments or even between central and state governments. It acts as the protector against the possible excesses in the legislative and executive body.

The SC in a recent judgment in the instance of Ripudaman Singh VS Balakrishna, dated 13.03.2019 holds that the Objection under Section 138 of NI Act, 1881 is sustainable once the cheques are corrupted in an enactment of a Contract to Sell.

The appeal was raised out of the final judgment passed dated 31st March 2016 by the learned Single Judge Bench in the High Court of Madhya Pradesh at Indore.

The appellants claimed that they arrived at a contract of sale of their property with the defendant on 23/03/2013. The sale deliberation was Rs 1.75 crore. It states in the agreement that remuneration through cash is a justification for an amount of Rs 1.25 crore. Releasing 2 post date cheques of Rs. 25 lacs each for finalizing remaining payment. Returning both the cheques on deposition were by the bank with remarks mentioning ‘insufficient funds’ is quite valid.

The appellants issued 2 legal notifications against the respondent and later filed a complaint under NI Act Section 138. The issuance by 1st Class Judicial Magistrate was responsible for the processing. In response to the complaints, the defendant filed 2 discrete submissions. This is for seeking acquittal in the respective complaint case. The case facing rejection from the 1st Class Judicial Magistrate was justifiable.

After framing of charges under Section 138, the filing for an appeal at the Hon. HC of Madhya Pradesh under Cr PC Section 482 by the defendant was justifiable. The High Court in its final verdict passed the order allowing the petition detained. Thus no dispensing of the cheques were justifiable for generating any accountability or obligation. But only for the reimbursement of balance deal consideration and quashed the charges formed under NI Act Section 138.

The suitors further pleaded in the SC challenging the judgment of the High Court. Thus, the SC holds the petition that dishonored cheques in pursuance to agreements to sell are maintainable under Section 138 of Negotiable Instruments Act, 1881. The respondent does not owe any legally enforceable money or liabilities to the appellants. In accordance with the agreement of sale, any immovable properties of the respondent cannot be taken away in order to make payments for the remaining amount settled for the sale consideration. In such cases, only the sale contract can face hampering. But submission of the remaining amount of money will not face legal enforcement. It is unlike the bank loans where a borrower has to mortgage an immovable property as security of his debts, failure of which can result in the insolvency of the stressed assets.

Post Author: Legalesolutio

14,354 Replies to “SUPREME COURT OF INDIA HOLDS THAT DISHONOURED CHEQUES IN PURSUANCE TO AGREEMENTS TO SELL ARE MAINTAINABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT, 1881”