The issuance of a cheque under a conditional agreement does not establish liability under Section 138 of the Negotiable Instruments Act if the condition is not fulfilled.

JUDGMENT :

SATHI KUMAR SUKUMARA KURUP, J.

1. This Criminal Appeal had been filed against the order of acquittal dated 27.06.2012 passed in S.T.C. No. 25 of 2011 on the file of the learned Judicial Magistrate, Fast Track Court at Hosur for the offence under 138 of the Negotiable Instruments Act.

2. The brief facts, which are relevant for consideration of this Criminal Appeal, are as follows:

2.1. The Complainant - Nagaraj is the father-in-law of Ramaiah. The dispute between the Complainant and the Accused is with regard to the sale of the property belonging to one Narasimhaiah, father of Ramaiah, a resident of Chimandahalli village, Jadigenahalli, Hosur. He owns a property to an extent of 2 acres 17 guntas which is his ancestral property. After the death of Narasimhaiah, the property devolved on his sons, Ramaiah, Narayanasamy and Srinivasan.

2.2. During the life time of Narasimhaiah, he entered into sale agreement with JR Housing Developers Private Limited Company, Accused-1. Accused-2 is Jagadeeswara Reddy, Managing Director of M/s. JR Housing Developers Private Limited. The Complainant/Nagaraj is the Power of Attorney Agent of Narasimhaiah. After his death, he was the Power of Attorney agent to the legal heirs of Narasimhaiah. Nagaraj claims that he, as Power of Attorney Agent, spent Rs.16,00,000/- for developing the agricultural lands into housing plots. He also claims to have entered into sale agreement with the Accused. In the course of the business transactions, the Accused had issued a cheque for Rs.8,00,000/- to the Complainant. While entering into sale agreement, it was agreed that 30% of the gain to be shared with the Complainant/Nagaraj and 70% with the legal heirs of Narasimhaiah. The Accused-2 in S.T.C. No. 25 of 2011 claimed that he is running a firm by name Shivapriya Developers and he had already entered into developing arrangements with Narasimhaiah during his lifetime. Subsequent to the death of Narasimhaiah in the year 2002, the second Accused in this case had entered into a settlement with Nagaraj by which a confirmation deed was executed. In the confirmation deed, the Complainant/Nagaraj agreed to help the Accused to sell the lands for which he will get the signatures of all the legal heirs of Narasimhaiah. On such promise, Rs.8,00,000/- was issued by way of cheque by the Accused. In the confirmation deed, the Complainant/Nagaraj had affixed his signature. When the Complainant presented the cheque for Rs.8,00,000/- issued by second Accused in his bank on 22.01.2011, the Accused had issued notice to his Bank to stop payment directing his Bank not to issue money on presentation of the cheque. Therefore, the cheque presented by the Complainant/Nagaraj was returned with an endorsement “payment stopped by the drawer”. The attempt of the Complainant to contact the Accused-2 regarding the instructions given by him to his bank to stop payment could not be fructified. Therefore, the Complainant issued statutory notice directing him to settle the amount failing which he will be forced to file a complaint under Section 138 of the Negotiable Instruments Act. On receipt of the notice, the Accused had denied the contention of the Complainant in the statutory notice stating that the cheque was issued only to bring the legal heirs of late Narasimhaiah to affix their signatures in the confirmation deed towards settlement of the dispute between the Complainant and the Accused-2 in developing the lands into house plots and sale of the same. Since the Accused disputed the claim of the Complainant, the Complainant was forced to file a case under