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2010 (8) TMI 1121

. Mahajan & Mr. Gaurav Mahajan, Advocates. ORDER JUDGMENT 1. This petition has been preferred against an order dated 2nd September, 2008 passed by learned Additional Sessions Judge on a revision petition filed by the respondent (petitioner herein) assailing summoning order under Section 138 of Negotiable Instruments Act. 2. Learned Additional Sessions Judge set aside the summoning order on the ground that the cheques issued by the respondent at the time of entering into contract for supply of equipment were not the cheques issued against any debt or liability which existed as on the date of issuance of cheques since supplies were to be made later on. Thus, the presumption envisaged under Section 139 of Negotiable Instruments Act (herein .....

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as quite higher than them. We therefore cancel our purchase order raised against the above mentioned items and it is requested to return our both the cheques failure to which we will apply to Court of Law. Thanking You With Regards 4. The contention of the petitioner is that the moment purchase order was signed, since the orders were of urgent nature and second order was also placed within a week of the first order, the petitioner placed orders for procurement of these parts with its suppliers overseas and made substantial advance payments to the overseas suppliers. The goods were procured by the petitioner. When the cheque of respondent No.2 got dishonoured on 15th March, 2007, the petitioner informed respondent No.2 about dishonour of the .....

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y that a cheque is always issued against debt. A cheque can be issued against liability also. This liability may be in respect of a contract which is entered into by the person for purchase as an advance payment so that seller either procures the material or manufactures it. 6. Learned Additional Sessions Judge had relied upon Shanku Concretes Pvt. Ltd. & Others vs. State of Gujarat & Anr.; 2000 CLJ 1988 wherein the Gujarat High Court observed that the trial court will have to decide whether there was an existing liability on the part of the petitioner which required due discharge within the meaning of Section 138 of the Act and whether bounced cheques were issued to discharge such existing liabilities. The other case relied upon is .....

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bility of the purchaser. The seller of the items would not have entered into contract unless the advance payment was made to him. A condition of advance payment is normally put by the seller for the reason that the purchaser may not later on retract and refuse to take the goods either manufactured for him or procured for him. Payment of cost of the goods in advance being one of the conditions of the contract becomes liability of the purchaser. The purchaser who had issued the cheque could have been asked to make payment either by draft or in cash. Since giving cheque is a mode of payment like any other mode of payment, it is normally accepted as a payment. The issuance of a cheque at the time of signing such contract has to be considered ag .....

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defeated if after placing orders and giving advance payments, the stop payments are issued and orders are cancelled on the ground of pricing of the goods as was done in this case. 9. This court in Mojj Engineering Systems Limited & Ors. Vs. A.B. Sugars Ltd.; 154 (2008) Delhi Law Times 579 had observed as under :- 7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young Vs. Grote (1827) 4 Bing. 253 it was held that when a blank cheque is signed and handed over, it .....

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has ex facie resulted in miscarriage of justice or an abuse of the process of Court, and therefore interference under Section 482 Cr.P.C. to quash the proceedings is warranted in the interest of justice. The question whether the consideration for which the cheque was issued was ultimately satisfied or whether the cheque was wrongly sought to be encashed, are all issues that must also be decided at the trial. The Supreme Court in the case of M.M.T.C. Ltd. and Another Vs. MEDCHL Chemicals and Pharma (P) Ltd. and Another, (2002) 1 SCC 234 held as follows: 13…..the well-settled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court .....

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