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S.138 NI Act Offence Attracted Even If Cheque Issued For Sale Consideration Not Disclosed in Sale Deed:Delhi HC [Read Judgment]

The Delhi High Court has held that offence of dishonour of cheque under Section 138 of the Negotiable Instruments Act is attracted even if the cheque was issued in respect of sale consideration which was not disclosed in the sale deed. The judgment was delivered by Justice Vipin Sanghi in the case Bhawish Chand Sharma v. Bawa Singh while considering an appeal against the acquittal order passed by the trial court.

The case of the complainant was that he had sold a property to the accused for an agreed sale consideration of Rs. 20 lakhs. The accused had paid Rs.15 lakhs in cash and for the balance consideration, the cheque was issued. On presentment, the cheque got dishonoured, and the complaint was filed when the accused failed to discharge the liability after the statutory notice.

The accused admitted that the sale consideration was Rs.20 lakhs, and stated that he had paid Rs.16 lakhs in cash. He put forth a defence that he had issued cheques for Rs.4 lakhs, but those cheques were returned by the complainant stating that he had no bank account.  The accused further stated that he had paid the balance in cash and that a cheque for Rs.5 lakhs without writing the name of payee was handed over to the broker as security for discharging certain electricity dues on the property.  According to the accused, that cheque was misutilized by the complainant to cause the dishonour.

The trial court noted that even though the complainant stated the sale consideration to be Rs.20 lakhs, the value reflected in the sale deed was just Rs.4 lakhs.  On this count, and also by accepting the version of the accused, the trial court acquitted the accused.

The High Court held that the failure to disclose full sale consideration will not invalidate the transaction underlying the cheque, though it may attract other legal penalties. The Court observed as below:-

The agreement, namely, the sale of the property is not prohibited by law. The mutual agreement between the parties to disclose only a part of the consideration under the sale deed may attract other consequences for the parties. However, that by itself does not render the underlying transaction unlawful. Pertinently, it is not claimed that at the relevant time, there was a bar to payment of consideration in cash and the said bar had the effect of invalidating the transaction.

Observing thus, the Court rejected the argument that the cheque was issued for an unlawful agreement.

Statement of accused under Section 313 Cr.P.C cannot be read as part of the evidence

Further, the Court held that the trial judge erred by accepting the version of the accused, which was apparently improbable. The High Court wondered why should the accused hand over a cheque of Rs.5 lakhs as security for discharging electricity dues when the liability to discharge such dues was on the complainant. The High Court stated that the accused had not offered himself as a witness and had offered his explanation in statements given under Section 313 of the Code of Criminal Procedure. Those statements cannot be treated as evidence.  The judgment of the High Court in V.S. Yadav v. Reena, 2010 (4) JCC (NI) 323 was quoted as follows :

It must be borne in mind that the statement of accused under Section 281 Cr. P.C. or under Section 313 Cr. P.C. is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under Section 281 Cr. P.C. or 313 Cr. P.C. cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. There is no presumption of law that explanation given by the accused was truthful.

The appeal was allowed, setting aside the order of acquittal.

Read the Judgment Here

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  • Pkjakhu says:

    Very good updates.

  • N.RAMA KRISHNA says:

    Sirs,
    In the result the term ” legally enforceable debt” in the statute has lost its importance. Several earlier judicial pronouncements upholds the payment in cash as debt or hand loan beyond certain specified limits as per the directives of RBI as unenforceable as they are illegal. On the same analogy every illegal transaction should be construed as unenforceable in my opinion. But, in the given circumstances of the case the judicial wisdom might have opined in a different manner .

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