Back
Andhra Pradesh High Court
ATV PROJECTS INDIA LIMITED, MUMBAI - Appellant
Versus
NAGARJUNA FINANCE LIMITED, HYDERABAD - RESPONDENT
Decided On: 12-10-01
The determination of a legally enforceable debt under Section 138 of the Negotiable Instruments Act is a question of fact to be decided by the magistrate.
Headnote:
Negotiable Instruments Act - Disputed debt - Sections 138, 417, 420, 465, 471 of the Indian Penal Code - Act 66 of 1988 - Post-dated cheque - Interpretation of legal provisions
Fact of the Case:
The respondent filed a complaint against the petitioners for dishonoring cheques issued under a hire purchase agreement. The petitioners claimed the debt was disputed due to defective machinery and pending civil suits. They argued that Section 138 of the Act was not applicable as the debt was disputed.
Finding of the Court:
The court declined to quash the proceedings, stating that the existence of a legally enforceable debt was a question of fact to be determined by the magistrate. The court directed the magistrate to proceed with the enquiry and trial without being influenced by its observations.
Issues: Disputed debt under Section 138 of the Act, applicability of post-dated cheques, necessity of quashing the proceedings
Ratio Decidendi: The court held that the determination of a legally enforceable debt was a question of fact to be decided by the magistrate. It also clarified the applicability of post-dated cheques under Section 138 of the Act.
Final Decision: The batch of criminal petitions was dismissed, and the magistrate was directed to proceed with the enquiry and trial without being influenced by the court's observations.
( 1 ) THIS batch of criminal petitions may be disposed of by a common order since common question arises for consideration in all these cases. It would be enough if the facts in criminal petition no. 3860 of 2000 are noticed.
( 2 ) CRIMINAL Petition No. 3860 of 2000 is filed by the petitioners to quash the proceedings In C. C. No. 126 of 1998 on the file of the learned IV Metropolitan magistrate, Nampally in which the petitioners are arrayed as the accused.
( 3 ) THE 1st respondent herein filed complaint against the petitioners herein for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short the Act ). It is the case of the respondent-complainant that the 1 st petitioner represented by the 2nd petitioner as its chairman entered into hire purchase agreement dated 4. 2. 1995 and availed finance from the complainant. It is alleged that the 1st petitioner-company represented by the 2nd petitioner also agreed to repay the finance amount of Rs. 2,50,000-00 with interest in 36 monthly instalments each for rs. 9,39,236-10 and in accordance with the schedule forming part of the hire purchase agreement dated 4. 2. 1995 entered into by the 1st petitioner represented by the 2nd petitioner accepting the repayment in the manner appended in the said schedule. The petitioners accordingly issued two cheques dated 15-9-1997 and 15-10-1997 for rs. 9,39,236-10 each drawn on the Bank of india, Madura Branch, Madura, Uttar pradesh and signed by the accused No. 3 as one of the authorized signatories of the 1 st petitioner towards partial discharge of the debt payable to the complainant by way of instalments.
( 4 ) THE cheques were presented for realization. They were returned dishonoured with memo dated 21-10-1997 endorsing payment stopped . Thereafter the respondent-complainant got Issued notice on 21-11-1997 calling upon the petitioners to pay the said amount of the two cheques within 15 days from the date of receipt of the notice issued under the provisions of section 138 of the Act. The petitioners received the notice but failed to pay. This is the sum and substance of the complaint.
( 5 ) THE case of the petitioners is that the 1st petitioner had entered into hire purchase agreement dated 4-2-1995 and placed an order with 2nd respondent- complainant for purchase of machinery worth rs. 2,50,000-00 to be repaid in 36 monthly instalments @ Rs. 9,39,236-10 inclusive of interest at 24% p. a. The machinery supplied by the 2nd respondent is defective and not performing properly and they were not the machines which were actually demanded by the petitioner. In the circumstances the petitioners were constrained to file suit bearing O. S. No. 496 of 1997 on the file of the II Civil Judge, Senior Division, Madura seeking appropriate directions as against the respondent-complainant to replace the machinery with new machinery in sound and working condition. The suit is stated to be pending.
( 6 ) IT is also stated that the petitioners filed a criminal complaint against the 2nd respondent-complainant for the offences punishable ,under Sections 417, 420, 465 and 471 of the Indian Penal Code before the judicial Magistrate, Sadar, Madura by the complaint No. 1180/9/97 and the same is pending.
( 7 ) IN nut shell it is the case of the petitioners that the respondent-complainant had taken from the petitioner company 36 cheques each for Rs. 9,39,236-10 and rs. 1-87,847-22 and subsequent to the civil dispute initiated by the petitioners and despite the fact that the petitioner-company had issued instructions to stop payment by letter dated 7. 9. 1997 the 2nd respondent presented the cheques and based on the return of the cheques filed the complaint.
( 8 ) SRI Milind G. Gokhale, the learned Counsel appearing for the petitioners, submits that the debt in respect of which cheques were issued by the petitioners is a disputed debt which is disputed by the petitioners by filing civil suits. Therefore, Section 1
