Delhi High Court
Nijjer Agro Foods Limited And Ors. vs Shri Nasib Chand And Anr. on 14 October, 2003
Equivalent citations: 2003 VIIAD Delhi 327, 2004 CriLJ 529, 2003 (3) JCC 304
Author: J Kapoor
Bench: J Kapoor
JUDGMENT
J.D. Kapoor, J.
1. The petitioner entered into an agreement with respondent No. 1 for production of tomoto crop in 1000 acres, 500 acres at Central State Farms Suratgarh and 500 acres at Central State Farm, Ladhowal on the terms and conditions mentioned in the agreement. The relevant terms and conditions of payment are as under:-
Terms of Payment
9. One week before lifting the tomoto produce from the field. Second party shall provide Bank guarantee/advance post dated cheques of 1st June to the extent of Rs. 20 lakhs, 30th June to the extent of Rs. 20 lakhs and balance of 15th July. The collection charges of the cheques shall be borne by the second party. In case the demand draft for the equivalent value are handed over before these dates, the advance cheques shall be returned by the first party. In case the payment are not made by the stipulated date, i.e. 1st June, 30th June and 15th July, the Corporation will be free to invoke the Bank guarantee in case the guarantee is given or the advance cheque shall be encashed on the due date.
2. Admittedly in terms of para 9 of the terms and conditions, the petitioner gave two post dated cheques dated 1.6.1996 and 30.6.96 in favor of respondent No. 1 for Rs. 20 lac each. In terms of the agreement, these cheques were to be replaced by the petitioner company by way of demand draft of the total value of Rs. 20 lac each. Admittedly demand drafts amounting to Rs. 40 lac were given to respondent No. 1. Instead of replacing the cheques with these demand drafts respondent No. 1 presented those cheques which obviously were dishonoured.
3. The question before the learned trial court was whether there was any liability of the petitioner towards these cheques in question or not. Merely because some amount or remaining balance payment was due from the petitioner does not mean that respondent No. 1 was entitled to recover those payments by virtue of the aforesaid two cheques given by the petitioner as security which were replaceable by way of demand drafts.
4. Once the payment against those cheques was made by way of demand drafts the liability qua these cheques ceased to exist and therefore the respondent No. 1 was not entitled to present those cheques even if some amount or balance amount was due from the petitioner. Section 138 of the Negotiable Instruments Act pertains to those cheques which are towards liability. Once the said liability stands discharged the offence under Section 138 of the Negotiable Instruments Act ceases to exist. Proceedings under Section 138 of the Negotiable Instruments Act cannot be converted into civil suit for recovery. These are specific proceedings and confine only to cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part or other liability.
5. In the instant case, the liability of Rs. 40 lac created by way of postdated cheques was duly discharged by way of aforesaid demand drafts and therefore there was no occasion for the learned trial court to reject the application for dropping the proceedings. The impugned order suffers from inherent infirmity. In the result, petition is allowed. Impugned order is set aside. Proceedings are droppd.
