1. Dishonour of cheques issued under a Memorandum of Understanding for land transfer — Complaint filed under Section 138, Negotiable Instruments Act. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 )
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2024 Supreme(SC) 1378
SUPREME COURT OF INDIA
SUDHANSHU DHULIA, AHSANUDDIN AMANULLAH, JJ.
Sureshbhai Bhadabhai Pansuriya - Petitioner
Versus
The State Of Gujarat & Anr. - Respondents
R1: State Of Gujarat
R2: Jaydev Chhaganbhai Ardeshana (Patel)[Partner in M/s. J.N. Corporation]
Special Leave Petition (Criminal) No.9225 of 2017
With
Sureshbhai Bhadabhai Pansuriya - Petitioner
Versus
The State of Gujarat & Ors. - Respondents
R1: State of Gujarat
R2: Jaydev Chhaganbhai Ardeshana (Patel)[Ibid]
R3: M/S Brahmani Buildcon
Special Leave Petition (Criminal) No.9226 of 2017
Decided On : 21-11-2024
Advocates Appeared:
For the Petitioners: Dr. Abhishek Manu Singhvi, Sr. Adv., Mr. Arunabh Chowdhury, Sr. Adv. Mr. Ankur Chawla, Adv., Mr. Rahul Pratap, AOR Mr. Karan Gogna, Adv.
For the Respondents: Mr. Nikhil Goel, Sr. Adv., Mr. Ashutosh Ghade, AOR, Ms. Siddhi Gupta, Adv., Mr. Adithya Koshy Roy, Adv., Ms. Naveen Goel, Adv., Ms. Mahima Gupta, AOR, Ms. Deepanwita Priyanka, Adv., Ms. Swati Ghildiyal, AOR, Ms. Devyani Bhatt, Adv.
For the Petitioners: Dr. Abhishek Manu Singhvi, Sr. Adv., Mr. Arunabh Chowdhury, Sr. Adv. Mr. Ankur Chawla, Adv., Mr. Rahul Pratap, AOR Mr. Karan Gogna, Adv.
For the Respondents: Mr. Nikhil Goel, Sr. Adv., Mr. Ashutosh Ghade, AOR, Ms. Siddhi Gupta, Adv., Mr. Adithya Koshy Roy, Adv., Ms. Naveen Goel, Adv., Ms. Mahima Gupta, AOR, Ms. Deepanwita Priyanka, Adv., Ms. Swati Ghildiyal, AOR, Ms. Devyani Bhatt, Adv.
Cheques issued remain enforceable despite concurrent civil suits; unilateral cessation of payment does not negate liabilities under the Negotiable Instruments Act.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Criminal proceedings for dishonor of cheques - High Court dismissed petitions to quash FIRs for absence of legally enforceable debt - Satisfaction with evidence of debt persisting despite civil proceedings relating to property sales - Unilateral stopping of cheque payments does not eliminate liability. (Paras 16, 17, 18, and 20)
(B) Complaints under the Act can coexist with civil suits involving related issues, reaffirming the ability to pursue multiple remedies simultaneously. (Paras 17, 19)
Facts of the case:
Petitioner, involved in various transactions with landowners and a complainant, faced two cases of dishonored cheques amounting to significant sums as part of a land deal. Following a legal notice for payment, the complainant initiated action under the Act, which petitioner contested unsuccessfully in the High Court.
Findings of Court:
High Court accurately noted the legality of the cheques against existing liabilities; petitioner's actions did not justify stopping payment on grounds cited.
Issues: Main issues included whether there existed a legally enforceable debt and the implications of a concurrent civil suit on criminal proceedings under the Act.
Ratio Decidendi: The court concluded payment obligations remain valid, reaffirming previous judgments outlining enforceability conditions under the Act.
Result: Petitions dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether cheques issued for future events or cancelled deals constitute a legally enforceable debt or if the dispute is purely civil. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 )
3. Unilateral cancellation of a deal without notifying the payee does not extinguish the liability of dishonoured cheques issued for a legal debt. (Para 16 , 17 , 18 , 19 )
4. Simultaneous civil and criminal proceedings are permissible absent a specific bar; unilateral withdrawal from a contract does not rebut the presumption of a legally enforceable debt. (Para 16 , 17 )
5. Petitions dismissed; High Court judgments upheld; interim order vacated. (Para 20 )
6. Can a complainant pursue both a civil suit and criminal proceedings under Section 138 of the NI Act simultaneously?
Yes. Proceedings under various statutes can proceed simultaneously unless there is a specific legal bar. A civil suit for ancillary relief does not disentitle a complainant from prosecuting a petitioner under the Negotiable Instruments Act. (Para 17 )
7. Does a unilateral decision to cancel a deal justify stopping payment on cheques issued under a Memorandum of Understanding?
No. A unilateral decision to stop payment because the drawer is no longer interested in a transaction does not make the cheques unactionable, nor does it provide a legally tenable defence to rebut the presumption of a legally enforceable debt. (Para 16 , 17 )
8. What is the effect of a cancellation deed executed between a buyer and seller that excludes the payee of the cheques?
A cancellation deed executed between the petitioner and original landowners to cancel a Memorandum of Understanding does not extinguish the petitioner's liability toward a third-party payee who was not a party to that cancellation deed. (Para 16 , 18 )
9. How is the presumption of a legally enforceable debt handled when the signature on the cheque is admitted?
Once the issuance of the cheque and the signature thereon are admitted, a presumption of a legally enforceable debt in favour of the cheque-holder arises, and the burden shifts to the accused to rebut this presumption. (Para 14 , 19 )
ORDER :
(Ahsanuddin Amanullah, J.)
In these petitions, the common petitioner assails separate but identical Final Judgments dated 12.10.2017 passed in Criminal Miscellaneous Applications (For Quashing & Set Aside FIR/Order)3[(sic).] Nos.10909 of 2017 and 11594 of 2017 (hereinafter referred to as the ‘Impugned Judgments’) by a learned Single Bench of the High Court of Gujarat (hereinafter referred to as the ‘High Court’). By the Impugned Judgments, the High Court dismissed the afore-noted Criminal Miscellaneous Applications, rejecting the prayers made to quash the criminal proceedings against the petitioner, being Criminal Case (CC) No.13900 of 2016 (with respect to4[Hereinafter abbreviated to w.r.t.] Cheque No.019748) and Criminal Case (CC) No.1221 of 2017 (w.r.t. Cheque No.019749) pending on the file of the Chief Judicial Magistrate at Vadodara. The petitioner is accused no.1 in CCs No.13900 of 2016 and 1221 of 2017, filed by the complainant- respondent no.2 under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘Act’).
BRIEF FACTS:
2. The respondent no.2-complainant is a Partner in the Partnership Firm named M/s J.N. Corporation. The respondent no.3-accused no.2-M/s Brahmani Buildcon is a Partnership Firm and accused no.1 and accused nos.3 to 9 are Partners of the said Partnership Firm-respondent no.3. The accused persons are engaged in the business of construction of residential houses, flats and shops. Petitioner-accused no.1 before this Court is one of the Partners in respondent no.3-accused no.2.
3. M/s. J.N. Corporation entered into an Agreement to Sell dated 19.06.2012 (hereinafter referred to as the ‘ATS’) with the original landowners of land situated at Revenue Survey No.576 having Final Plot No.26 at Sayajipura, District Vadodara admeasuring 27,855 sq. mtrs. for Rs.37,15,00,000/- (Rupees Thirty-Seven Crores and Fifteen Lakhs) having fixed the rate at Rs.1,200/- (Rupees One Thousand Two Hundred) per sq. mtr. The ATS was notarized and registered with Registration Number 1289. As per the ATS, the amounts were to be paid on different dates by respondent no.2 to the original owners, with the last tranche to be paid on 01.11.2014.Certain modifications to the ATS were made between the respondent no.2-complainant (on behalf of M/s. J.N. Corporation) and the landowners on 26.06.2013.
4. On 28.06.2013, in part-performance of the ATS, as modified, the original landowners executed a registered Sale Deed in favour of respondent no.2 qua 5475.81 sq. mtrs. out of 27855 sq. mtrs. of the land towards a consideration of Rs.7,07,29,932/- (Rupees Seven Crores Seven Lakhs Twenty-Nine Thousand Nine Hundred Thirty-Two). On 12.09.2014, the original landowners, on account of non-performance of obligations under the ATS as modified, sent a Legal Notice to M/s. J.N. Corporation purporting to have cancelled the ATS, as modified, and forfeited Rs.1,15,00,000/- (Rupees One Crore Fifteen Lakhs) already paid to them.
5. M/s. Brahmani Buildcon [accused no.2-respondent no.3 in SLP (Crl.) No.9226/2017] showed interest in purchasing the aforesaid land. Therefore, accused no.2 Partnership Firm, through one of its Partners i.e., the petitioner, entered into a Memorandum of Understanding (hereinafter referred to as the ‘MoU’) on 14.05.2015. M/s. Brahmani Buildcon (through petitioner) M/s. J.N. Corporation (through respondent no.2), in whose favour the ATS was executed as well as the original landowners through their Power-of-Attorney-holder, one Mr. Ratilal M. Patel, were parties to the said MoU. M/s. Brahmani Buildcon agreed, inter alia, to purchase part of the land admeasuring 23,279.19 sq. mtrs. from the original owners. On 14.05.2015 itself, vide a separate Cancellation Deed between the original landowners and respondent no.2, the ATS and its modification were cancelled.
6. Since respondent no.2-complainant had an ATS in his favour and had paid certain amounts to the original landowners, M/s. Brahmani Buildcon agreed to pay
