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IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Prashant Kumar Agarwal, J.
Satya Narayan Koolwal S/o Late Shri Jagannath Prasad - Appellant
Versus
Dev Vart Jangir son of Shri Om Prakash Jangir - Respondent
S.B. Criminal Leave to Appeal No. 468 of 2016
Decided On : 06-04-2017
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 138 - DISHONOURED CHEQUES - LEGALLY ENFORCEABLE LIABILITY - SALE OF IMMOVABLE PROPERTY - PAYMENT OF SALE CONSIDERATION - TRANSFER OF PROPERTY ACT, 1882 - SECTION 54 - ADMISSION OF PARTY - BINDING NATURE - STAY ORDER BY COURT - RESTRAINT ON SALE OF LAND.
Fact of the Case:
The complainant-appellant challenged the acquittal of the accused-respondent in a case under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The dispute arose from dishonoured cheques issued by the respondent towards the balance sale consideration for a piece of land agreed to be sold to him by the appellant and his brothers. The trial court dismissed the complaint, finding that the cheques were to be encashed upon execution of the sale deed and that no liability or debt was due unless the sale deed was executed. The appellant contended that the cheques were issued for an existing legally enforceable liability and that the respondent was not constrained to stop payment due to a stay order by a court.
Finding of the Court:
The High Court allowed the appeal, holding that the cheques were issued for the discharge of an existing legally enforceable liability and that the respondent was not justified in stopping payment. The court noted that the respondent had agreed to pay part of the balance sale consideration even before the sale deed was executed, and that the cheques were issued as part of that agreement. The court also found that there was no evidence to support the respondent's claim that he was constrained to stop payment due to a stay order by a court.
Issues: 1. Whether the cheques in dispute were issued for the discharge of any existing legally enforceable liability. 2. Whether the respondent was constrained to stop payment of the cheques due to a stay order by a court.
Ratio Decidendi: 1. The court held that the cheques were issued for the discharge of an existing legally enforceable liability because the respondent had agreed to pay part of the balance sale consideration even before the sale deed was executed. The court noted that Section 54 of the Transfer of Property Act, 1882, provides that a sale of immovable property is complete only upon execution of a registered sale deed, but that payment of the sale consideration at the time of execution of the sale deed is not necessary for the completion of the sale. The court also noted that the respondent had already paid a substantial portion of the sale consideration in cash, and that the cheques were issued as part of the remaining balance. 2. The court held that the respondent was not constrained to stop payment of the cheques due to a stay order by a court because there was no evidence to support this claim. The court noted that the respondent had not appeared as a witness in defence, and that the only evidence of the stay order was an admission made by the appellant in cross-examination. The court held that this admission was not sufficient to prove that the respondent was constrained to stop payment, as it was made without considering the real nature of the stay order.
Final Decision: The High Court set aside the trial court's judgment and order, and allowed the appeal. The respondent was sentenced to one year's imprisonment and ordered to pay compensation of Rs. 30 lakhs to the appellant.
Prashant Kumar Agarwal, J.
By way of this appeal under Section 378(4) Cr.P.C., the complainant-appellant has challenged the judgment and order dated 16.8.2016 passed by the Chief Metropolitan Magistrate (Economic Offence), Jaipur Metropolitan, Jaipur in Criminal Case No.607/2016 whereby the learned trial Court by dismissing the complaint filed by the appellant acquitted the accused-respondent for offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter to be referred as "the Act"). The complaint was dismissed with a finding that the disputed cheques were to be encashed on the execution of the sale-deed and the sale-deed having not been executed. It was also found by the trial Court that no liability or debt was due unless sale-deed is being executed and the respondent has rebutted the presumption under Section 139 of the Act that the cheque was not issued in the discharge of any existing legal liability or debt.
2. In this appeal following two moot questions are involved to be decided by this Court:-
(1) Whether in the facts of the case the cheques in dispute cannot be said to have been issued for the discharge of any existing legally enforceable liability and, therefore, offence under Section 138 of the Act is not made out even if the same were dishonoured.
(2) Whether in the facts of the case the respondent was constrained to stop the payment of the disputed cheques by the reason that appellant and his brothers expressed their inability to execute a registered sale-deed in respect of the land which they agreed to sell to respondent in compliance of the agreement to sell dated 1.8.2005 as at the relevant time stay order by a Court was in existence.
3. Apart from these two questions, some ancillary questions are also involved in the appeal.
4. From the pleadings of the parties, evidence made available on record and admissions made by the parties, now dispute does not exist between them about following facts:-
(1) Appellant-complainant and his two brothers-Shri Mohanlal Gupta and Shri Rajendra Koolwal agreed to sell ¼ of their share measuring 8 bighas comprising in agriculture land bearing Khasra Nos. 13, 287, 292 and 298 situated at Village Lalchandpura Tehsil and District Jaiput to respondent at the rate of Rs.18,21,000/- per bigha and in this regard an agreement to sell was also executed on 1.8.2005 and Rs.21,00,000/- were paid by respondent in cash to complainant and his brothers at the time of execution of the agreement.
(2) One of the conditions of the agreement was that on execution of the registered sale-deed, the original title-deeds and possession of the land would be handed over to the respondent and the remaining amount of sale consideration would be paid by him to the sellers i.e. appellant and his brothers.
(3) The disputed cheques covering a total amount of Rs.22,50,000/- dated 26.3.2006 were issued by the respondent in favour of appellant as part of sale consideration.
(4) An amount of Rs.53,30,000/- was also paid by respondent in cash to the appellant towards balance amount of the sale consideration on 14.5.2006.
(5) When the disputed cheques were presented by the appellant in the concerned bank for encashment on 4.9.2006, they were returned dishonoured on 5.9.2006 with the endorsement of "insufficient fund" in the account for which they were issued by the respondent.
(6) Demand notice was sent on 11.9.2006 by the appellant through his counsel to respondent which was duly served upon him but neither the amount covered by these cheques was paid nor any reply was given.
(7) In Revenue Application No.66/2004 filed by Shri Rajendra Koolwal, brother of complainant, against three persons before Sub Divisional Officer, Jaipur against order dated 20.11.2004 passed by the Gram Panchayat Sarna-Doongar in mutation proceedings No.247, stay order was passed by the S.D.O. on 28.12.2004 against the persons who were party to the aforesaid application to the effect that status quo may be maintained by them w
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