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2022 (5) TMI 304 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - discharge of legally enforceable debt or a security cheque - contradictory covenants in the agreement or not - Section 29 of the Contract Act - HELD THAT:- The petitioner has filed the instant petition under Section 561-A of Cr.P.C. read with Section 435 of J & K Cr.P.C. invoking inherent and revisional jurisdiction of this Court. So, while approaching this case, it has to be borne in mind that it is only if there is any illegality or impropriety writ large in the impugned orders passed by the courts below or there has been any failure of justice resulting from the aforesaid orders that this Court would step in and invoke its inherent or revisional jurisdiction. The concurrent findings of fact recorded by the learned courts below cannot be gone into by re-appreciating the evidence on record unless the findings of the learned courts below are patently illegal and perverse. The legal position as regards the question as to whether proceedings under Section 138 of the NI Act can be initiated in case a cheque issued by way of security is dishonoured for insufficiency of funds, has been a topic of discussion in a number of cases. In Sampelly Satyanarayna Rao v. Indian Renewable Energy Development Agency Ltd. [2016 (9) TMI 867 - SUPREME COURT], the Supreme Court has, while answering the issue as to what constitutes a legally enforceable debt and other liability as contained in section 138 of N.I. Act held that Dishonour of cheque in the present case being for discharge of existing liability is covered by Section 138 of the Act, as rightly held by the High Court. In the instant case, as per the agreement dated 5th March, 2013, it was clearly indicated therein that the petitioner owed a sum of Rs. 9.50 lacs to respondent. It was further agreed by the parties that the petitioner would liquidate the aforesaid amount and that he had issued the cheque in question as security to the respondent. The agreement also provides that the petitioner would be bound to deposit the sum in the savings bank account of the respondent maintained with J & K Bank Aircargo Branch to liquidate the aforesaid liability. The agreement also provides that the petitioner would pay the amount of Rs. 9.50 lacs to respondent positively. From the foregoing covenants of the agreement, there is no manner of doubt about the fact that the petitioner owed a sum of Rs. 9.50 lacs to respondent at the time when he issued the cheque in question in favour of the respondent. Learned counsel for the petitioner has harped on the expression 'security' used in the agreement and he has laid much emphasis on the covenant which provides that the cheque in question would not be presented for encashment - The cheque in question has been, admittedly, issued by the petitioner in favour of the respondent as security to discharge his liability. Once the petitioner failed to discharge his liability, the respondent had no option but to present the cheque for encashment. The covenant that the cheque in question is not to be presented for encashment is to be ignored and its enforcement has to be avoided in order to give effect to the intention and purport of the covenants of the agreement. It cannot be stated that the respondent has failed to prove that the cheque in question was not dishonoured for insufficiency of funds. In any case, if petitioner had sufficient funds in his account at the relevant time, it was always open to him to produce statement of account while leading his evidence in defence. Having failed to do so, it has to be presumed that whatever is stated in the memo of dishonour of cheque in question is correct. The argument of learned counsel for the petitioner is, therefore, rejected - Petition dismissed.
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