Back
2011(2) Bankmann 95 (Del.)
DELHI HIGH COURT
Shiv Narayan Dhingra, J.
Magnum Aviation Pvt Ltd. —Petitioner
versus
State & Anr. —Respondent
Criminal M.C. No. 244 of 2009
Decided on 27.08.2010
IMPORTANT POINT
A liability can incurred without a debt being there.
Headnote:(i) Negotiable Instruments Act, 1881—Section 138—Legal debt— Liability and legal debt are two different terms—Legal debt is one which is recoverable at a point of time—A debt is a liability owing from one person to another person—However, a liability may be incurred without a debt being in existence—It is not necessary that while incurring a liability debt should already be there—A liability can incurred without a debt being there—It is not necessary that a cheque is always issued against debt—A cheque can be issued against liability also—Liability may be respect if a contract which is entered into by the person for purchase as an advance payment so that seller either procures the material or manufactures it. (Para 5)
(ii) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque—Liability—If at the time of entering into a contract it is one of conditions of contract that purchaser has to pay amount in advance then advance payment is a liability of purchaser—Issuance of cheque at the time of signing such contract has to be considered against a liability—Purpose of Negotiable Instruments Act is to make orderly statement of rules of law relating to negotiable instruments and to ensure that mercantile instruments should be quoted with goods passing from one hand to other—Sole purpose of the Act would stand defeated if after placing orders and giving advance payments, stop payments are issued and orders are cancelled on the ground of pricing of the goods. (Para 8)
Shiv Narayan Dhingra, J. —This petition has been preferred against an order dated 2nd September 2008 passed by learned Additional Sessions Judge on a revision petition filed by the respondent (petitioner herein) assailing summoning order under Section 138 of Negotiable Instruments Act.
2. Learned Additional Sessions Judge set aside the summoning order on the ground that the cheques issued by the respondent at the time of entering into contract for supply of equipment were not the cheques issued against any debt or liability which existed as on the date of issuance of cheques since supplies were to be made later on. Thus, the presumption envisaged under Section 139 of Negotiable Instruments Act (hereinafter referred to as the Act) stood rebutted and the ingredients of Section 138 of the Act were not attracted, so, the respondent could not be summoned.
3. Brief facts relevant for the purpose of deciding this petition are that on 19th February, 2007 and on 26th February, 2007respondent placed two separate purchase orders upon the petitioner after finalization of terms and conditions of the contract for supply of aircraft parts. One of the terms and conditions of the contract was that the entire payment would be given to the petitioner in advance as the petitioner had procure the parts from abroad. Under this contract two cheques dated 15th March 2007 and 20th March, 2007 were given to the petitioner. These cheques got dishonoured when they were presented to the bank on the ground that respondent has stopped payment. The petitioner received a letter dated 22nd March, 2007 from the respondent which reads as under:
“Date: 22nd March, 2007 To, Magnum Aviation Pvt. Ltd. S-241, Panchsheel Park New Delhi-110017 KIND ATTN. Vishal Varshnei Dear Vishal. This is with reference with the purchase order given to you against the purchase of break as of US$ 35,500,00 (Thirty Five Thousand Five Hundred only) & PDU of amount USD 77100.00 (Seventy Seven Thousand One Hundred Only). We have issued two cheques for the same to Magnum Aviation but unfortunately we have to stop the payment against both the cheques as we came to know from other vendors the price quoted by you was quite higher than them. We therefore cancel orn purchase order raised against the above mentioned items and it is requested return our both the cheques failure to which we will apply to Court of law. Thanking you With Regards”.
4. The contention of the petitioner is that the moment purchase order was signed since the orders were of urgent nature and second order was also placed within a week of the first order, the petitioner placed orders for procurement of these with suppliers overseas and made substantial advance payments to the overseas suppliers. The goods were procured by the petitioner. When the cheques of respondent No.2 got dishhonoured on 15th March, 2007, the petitioner informed respondent No.2 about dishonour of the cheque as well as that the shipment was ready and requested the respondent to make payment as per terms of purchase order so that the shipment could be sent to him. Even the second cheque dated 20th March, 2007, got dishonoured. It is only after two days, that is, on 22nd March, 2007 that the petitioner received aforesaid letter from the respondent. After receipt of this letter, the petitioner immediately respondent vide letter dated 23rd March, 2007 that the order could not be cancelled since the material has already been procured and the petitioner had already made payment to the foreign suppliers. It is thereafter that the petitioner sent a legal notice calling upon the respondent to make payments against the cheques.
5. The only issue which this petition raises is whether the cheques issued at the time of signing the contract, as a condition of the contract, can be said to be against a liability or they are the cheques issued for no liability. The liability as per dictionary meaning is the state of being liable, that is, for which one is respo
