2003 Supreme(AP) 137

Andhra Pradesh High Court
Judges : T.CH.SURYA RAO
Mandadi Ram Reddy - Appellant
Versus
State OF A.P. - Respondent
Decided On : 01-24-03

Headnote:(i) Negotiable Instruments Act. 1881 - Sections 138 & 139 - Dishonour of cheque - Petition to quash proceedings on plea that cheque was not issued in discharge of "debt or other liability - Cheques were issued towards part payment of land agreed to be sold by complainant &: payment was got stopped on plea that complainant was found to have no title in land Though balance sale consideration to be paid under agreement could not be squarely construed as debt. it could come under expression" other liability" - Petitioner could not take validly the plea of non-existence of debt or liability.

       Held: Even assuming for a moment that the balance sale consideration to be paid under the agreement cannot squarely be construed as a 'debt', it cannot escape the consideration under the expression 'other liability', The parliament in its wisdom used the expression 'debt or other liability' in the explanation appended to' Section 138 of the Negotiable Instruments Act so as to bring within its ambit not only the debt, nay the other liabilities the contention of the petitioners that the 2nd respondent and another had no title over the land to be sold to them and therefore, the petitioners need not pay the amount part, pursuant to the terms of the contract in between the parties inter se obviously the petitioners are obliged to pay the balance sale consideration as stipulated therein inter alia. Once they are obliged to pay the amount on a particular date, it automatically becomes the other liability. Having regard to the provisions of Section 138 of the Negotiable Instruments Act, which engrafts a presumption that the holder of the cheque received the cheque for discharge of a debt or liability until the contrary is proved, it becomes obligatory on the part of the petitioners to prove the contrary so as to rebut the presumption. The presumption can be rebutted only by adducing necessary evidence at the time of trial. Therefore, I am afraid that the petitioners can not validly take the plea of non-existence of the debt or liability and non-enforceability thereof legally at this stage, except at the stage of trial where both the parties are expected to adduce evidence, particularly the petitioners so as to rebut the presumption under Section 139 of the Negotiable Instruments Act. (Para 9)

       The legal position is no more res integra and is squarely covered by the judgments of the Apex Court in M.M.T.C. Ltd. v. Medchal Chemicals, & Pharma (P) Ltd., 2002(1) ALT (Crl.) 230 (SC): (2002) 1 SCC234 and A. V. Murthy v. B.S. Nagabasavanna, 2002(1) ALT (Crl.) 234 (SC): (2002) 2 SCC 642. In the former judgment, the Apex Court held that there was no requirement that the complainant must specifically alleged in the complaint that there was a

       subsisting liability and the burden of proof that there was no existing debt or liability was on the accused and had to discharge the same in the trial. The Court further held that even if the cheque was dishonoured by reason of stop payment instructions by virtue of Section 139 of the Negotiable Instruments Act, the court had to presume that the cheque was received by the holder for the discharge in whole or any part of any debt or liabiJity till the accused was able to show that in his account there was sufficient funds to pay the amount of cheque at the time of presentation of the cheque for encashment at the drawer Bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of the cheque for encashment and then only the offence under Section 138 of the Negotiable Instruments Act would not be made out. The main plea of the petitioners that having come to know about the want of stopped on plea that complainant was found to have no title in land Though balance sale consideration to be paid under agreement could not be squarely construed as debt it could come under expression "other liabliity" - Petitioner could not take validly the plea of non-existence of debt or liability.

       Held: Even, assuming for a moment that the balance sale consideration to be paid under the agreement cannot squarely be construed as a 'debt', it cannot escape the consideration under the expression 'other liability'. The Parliament in its wisdom used the expression 'debt or other liability' in the explanation appended to Section 138 of the Negotiable Instruments Act so as to bring within its ambit not only the debt, nay the other liabilities. the contention of the petitioners that the 2nd respondent and another had no title over the land to be sold to them and therefore the petitioners need not pay the amount part pursuant to the terms of the contract-in between the parties inter se obviously the petitioners are obliged to pay the balance sale consideration as stipulated therein inter alia. Once they are obliged to pay the amount on a particular date. it automatically becomes the other liability. Having regard to the provisions of Section 138 of the Negotiable Instruments Act, which engrafts a presumption that the holder of the cheque received the cheque for discharge of a debt or liability until the contrary is proved, it becomes obligatory on the part of the petitioners to prove the contrary so as to rebut the presumption. The presumption can be rebutted only by adducing necessary evidence at the time of trial. Therefore. I am afraid that the petitioners can not validly take the plea of non-existence of the debt or liability and non-enforceability thereof legally at this stage, except at the stage of trial where both the parties are expected to adduce evidence, particularly the petitioners so as to rebut the presumption under Section 139 of the Negotiable Instruments Act. (Para 9)

       The legal position is no more resintegra and is squarely covered by the Judgments of the Apex Court in M.M.T.C. Ltd. v. Medchal Chemicals, & Pharma (P) Ltd.. 2002(1) ALT (Crl.) 230 (SC): (2002) 1 SCC234 and A. V. Murthy v. B.S. Nagabasavanna. 2002(1) ALT (Crl.) 234 (SC): (2002) 2 SCC 642. In the former Judgment. the Apex Court held that there was no requirement that the complainant must specifically alleged in the complaint that there was a subsisting liability and the burden of proof that there was no existing debt or liability was on the accused and had to discharge the same in the trial. The Court further held that even if the cheque was dishonoured by reason of stop payment instructions by virtue of Section 139 of the Negotiable Instruments Act. the court had to presume that the cheque was received by the holder for the discharge in whole or any part of any debt or liabiJity till the accused was able to show that in his account there was sufficient funds to pay the amount of cheque at the time of presentation of the cheque for encashment at the drawer Bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of the cheque for encashment and then only the offence under Section 138 of the Negotiable Instruments Act would not be made out. The main plea of the petitioners that having come to know about the want of title and possession of the 2nd respondent and another over the land sought to be sold under ail agreement of sale, they issued instructions to their Banker to stop payment and therefore, it was not a case of return of cheque for want of sufficient funds or funds exceeding the arrangement shall have to be determined only at the culmination of the trial when both the parties adduce their respective evidence. (Para 10)

       (ii) Negotiable Instruments Act, 1881 - Sections 138 - Dishonour of cheque - Plea that complaint was barred by limitation or that complainant manipulated bank memo to cover demand notice within limitation of 15 days would be matter of trial.

       Result: Petition dismissed.