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2023 Supreme(Online)(GUJ) 194
GUJARAT HIGH COURT
NISHA M. THAKORE, J
KANTIBHAI MULJIBHAI VANKAR – Appellant
Versus
STATE OF GUJARAT – Respondent
R/CRIMINAL MISC.APPLICATION (FOR LEAVE TO APPEAL) NO. 5985 of 2023 | R/CRIMINAL APPEAL NO. 853 of 2023
For the Appellants/Petitioners: MR VICKY B MEHTA
For the Respondents: MS. VRUNDA C. SHAH, APP
A cheque issued as security does not constitute a legally enforceable debt if the underlying obligation has not been fulfilled at the time of dishonor.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Acquittal of the accused under Section 138 of the N.I. Act - Original complainant failed to prove a legally enforceable debt despite the accused issuing a cheque - Requirement of existing debt not met as the construction work was incomplete - Judgement of acquittal upheld. (Paras 2, 10, 12)
(B) Criminal Procedure Code, 1973 - Section 378(4) - Standard for leave to appeal against acquittal - Appellant must establish legal grounds for challenge. (Paras 6, 8)
Facts of the case:
The applicant engaged in construction sought payment through cheque, which was returned due to insufficient funds. Acquittal of the accused was claimed as erroneous by the complainant, who argued existence of a legally enforceable debt.
Findings of Court:
The court confirmed no enforceable debt existed as construction was not completed per agreement.
Issues: Whether the cheque represented an existing and enforceable debt or merely a security with no standing debt.
Ratio Decidendi: The court established that in the absence of completed work, no legal liability for the cheque arose at the time of dishonor, validating the Magistrate's acquittal.
Result: Application seeking leave to appeal is refused.
| Table of Content |
|---|
| 1. application for leave to appeal under cr.p.c. (Para 1 , 2) |
| 2. background of the cheque issuance and dishonor. (Para 3) |
| 3. arguments presented by the applicant regarding enforceable debt. (Para 5) |
| 4. consideration of maintainability of complaint under n.i. act. (Para 6 , 7 , 8) |
| 5. legal interpretations regarding non-enforceable cheque due to incomplete work. (Para 11 , 12 , 13) |
ORDER
This application seeking special leave to appeal is filed under Section 378(4) of the Cr.P.C. at the instance of the original complainant, with a prayer to challenge the judgment and order dated 05.01.2023 passed by the learned 5th Additional Chief Judicial Magistrate, Gandhinagar in Criminal Case No.151 of 2022.
2. By the said judgment and order, the learned Magistrate has proceeded to record acquittal of the present respondent No.2-original accused for the offence alleged under Section 138 of the N.I. Act.
3. In brief, the case as narrated by the original complainant in the present application reads as under:
3.1 The applicant is engaged in the business of construction and since the husband of respondent No.2 is the friend of the applicant, he contacted the applicant for the purpose of construction of the first floor of the house of respondent No.2 and the said construction work was completed in the year-2020. For the said construction work, the applicant was demanding an amount of Rs.4,00,000/-, which includes the materials and other things required for the construction work.
Therefore, on a frequent demand being made, respondent No.2 had handed over a cheque bearing No.000005 dated 22.10.2021 to the applicant and when the said cheque was deposited by the applicant for clearing purpose on 05.11.2021, the same got returned with an endorsement “Funds Insufficient” and therefore, a statutory notice under Section 138 of the N.I. Act was issued to respondent No.2 on 02.12.2021 through R.P.A.D. Though the statutory notice was received by respondent No.2 on 03.12.2021, neither any reply was given by respondent No.2 to the applicant nor any payment has been made.
3.2 The applicant, therefore, filed a complaint under Section 138 of the N.I. Act before the court of learned 5th Additional Chief Judicial Magistrate, Gandhinagar. Upon verification of the oath being recorded of the applicant, the learned court below was pleased to issue a summons to respondent No.2.
3.3 The respondent No.2, on being tried, the learned 5th Additional Chief Judicial Magistrate, Gandhinagar, was pleased to acquit him on the premise that the applicant has failed to prove that there was any legally enforceable debt. The applicant has therefore, approached this Court assailing the judgment and order dated 05.01.2023 passed by learned 5th Additional Chief Judicial Magistrate, Gandhingar acquitting the present respondent No.2.
4. Heard learned advocate on record for the applicant-original complainant.
5. Learned advocate on record for the applicant has invited my attention to the reasons assigned by the learned Magistrate while recording acquittal.
5.1 It is submitted that the amount of Rs.4 Lakhs was required to be paid by respondent No.2 to the applicant towards the construction work, carried out at the house of the respondent No.2. Respondent No.2, thus, issued cheque towards payment of the aforesaid amount. There is no dispute to the fact that cheque was issued by respondent No.2, the same was signed by the respondent No.2. The evidentiary documents have been brought on record, which includes the original disputed cheque (Exh.11-P-1). The cheque was dishonored on the ground of insufficient funds, which is evident from the cheque return memo (Exh.12-P-2) brought on record by the original complainant. It is also an admitted position that the applicant had issued a statutory notice as contemplated under the Act and the same was duly served upon the respondent No.2. However, no reply to such legal notice (Exh.13-P-3) was given by the respondent No.2. The
