HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION No.6717 OF 2022
ORDER:
1. This Criminal Petition is filed seeking to quash the complaint in STC-NI No.919 of 2022 on the file of IX Metropolitan Magistrate, Manoranjan Complex, Hyderabad.
2. The petitioners are questioning the continuance of their criminal prosecution for the offence under Section 138 of the Negotiable Instruments Act filed by the 2nd respondent mainly on the ground that the cheques in question were given towards sale consideration of the property. In the event of failure to pay the sale consideration, it would not amount to legally enforceable debt and since the cheques which are given after entering into an agreement of sale and when registration of the property not taken place, the question of there being any liability or debt on the said cheques given towards sale consideration does not arise.
3. Sri Sricharan Telaprolu, learned counsel for the petitioners has relied on the clauses 12 and 13 of the two agreement of sales dated 24.07.2021, which reads as follows: 2
"12. If the Vendor fails to execute and register the said sale deed within the specified time referred to above even after the receipt of consideration the Vendor shall be liable for specific performance of this agreement and shall be liable to pay costs and damages to the PURCHASER/s. shall be liable to pay double cost of advance amount to the PURCHASER/s.
13. If the PURCHASER/s fails to obtain the sale deed within the time specified above, by paying the balance of the consideration he shall have no claim whatsoever under this agreement, his/her earnest amount will be forfeited and this agreement will be treated as null and void."
4. Learned counsel for the petitioners argued that according to the agreement in between the parties, if the purchaser fails to obtain the sale deed within time specified by paying balance consideration, no claim whatsoever can be made regarding the earnest amount and same would be forfeited. Since the amount which was earlier paid to an extent of Rs.9.00 lakhs was already forfeited, the 2nd respondent/complainant is benefitted by that amount. When there is no question of purchasing the property and consequent registration of the property, the question of paying the amount covered by the cheques does not arise, as such there is no legally enforceable debt.
5. On the other hand, Sri A.P.Suresh, learned counsel for the 2nd respondent would submit that the similar issue was 3 decided by the Hon'ble Supreme Court in the case of Ripudaman Singh v. Balkrishna (Criminal Appeal NO.483 of 2019, dated 13.03.2019 arising out of SLP (Crl.) No.4608 of 2016, wherein it is held as follows:
"13.we find ourselves unable to accept the finding of the learned Single Judge of the High Court that the cheques were not issued for creating any liability or debt, but 'only' for the payment of balance consideration and that in consequence, there was no legally enforceable debt or other liability. Admittedly, the cheques were issued under and in pursuance of the agreement to sell. Though it is well settled that an agreement to sell does not create any interest in immoveable property, it nonetheless constitutes a legally encforceable contract between the parties to it. A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liablity for the purposes of Section 138.
15. The question as to whether there was a dispute as contemplated in clause 4 of the Agreement to Sell which obviated the obligation of the purchaser to honor the cheque which was furnished in pursuance of the agreement to sell to the vendor, cannot be the subject matter of a proceeding under Section 482 and is a matter to be determined on the basis of the evidence which may be adduced at the trial."
6. The Hon'ble Supreme Court in the said judgment held that though an agreement of sale does not create any interest in immovable property, however, it constitutes a legally enforceable contract in between the parties and any cheques given towards such agreement of sale would constitute an enforceable debt. Further, the clauses mentioned in the agreement of sale could only be determined during the course of trial and not under Section 482 of Cr.P.C by the High Court. 4
7. In view of law laid down by the Hon'ble Supreme Court in the aforesaid case, the ground of there being no liability on the cheques issued towards sale consideration on the basis of the agreement reduced into writing under clauses 12 and 13 can only be determined by the trial Court. It is left open to the petitioners to address their defence before the trial Court. The trial Court shall consider the defence of there being no liability on the cheques issued towards sale consideration. The Hon'ble Supreme Court held that such defence cannot be considered in a quash proceedings but only during trial.
8. In the result, the Criminal Petition is accordingly diposed with the above observations. As a sequel thereto, miscellaneous petitions, if any, shall stand closed.
__________________ K.SURENDER, J Date:10.01.2023 kvs 5 HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITOIN No.6717 OF 2021 Date:10.01.2023.
kvs 6