When a matter relating to bouncing of cheques issued by a society reached the High Court, wherein following arguments were presented:
"During 2015, the respondent herein approached the petitioner society representing that it is intending to construct residential apartments near Hosakote Town, Old Madras Road, Bangalore District Bangalore and offered to sell the apartments to the members of the petitioner society. The respondent requested the petitioner society to facilitate the transaction on behalf of the members so that the respondent herein could deal at one point contact instead of dealing with the individual employees separately. Under this circumstance, the petitioner society signed the MOU and in terms of Clause 1.3 of the MOU, the sale of the individual apartments would be made to "members" of the Petitioner and each such transaction would entail a separate "Agreement to Sell" between the respondent and the "member" to be intimated to the respondent by the petitioner. In effect, the apartments were actually to be purchased, from the respondent, individually and separately by members of the Employees Welfare Fund of the petitioner society and the MOU was entered into, by the petitioner society with the respondent, only for facilitating the transaction. The petitioner society has not incurred any debt or other liability under the said agreement".
High Court observed and held as under:
"The fact remains that the amount was paid by the society on behalf of its individual member to facilitate the transaction in getting their houses constructed by the respondent. Since the individual members of the petitioner society immediately doubted whether the respondent would be able to complete the flats, they did not deposit the amount with the society and thus, the cheques issued by the society got dishonoured. It is not disputed that the society was constituted for the welfare of its members who were interested in getting their houses constructed by the respondent. Therefore, the society played a role only to facilitate its members in getting their houses constructed and the society had no liability as per Section 138 NI Act on the date of signing of the MOU".
High Court then ordered "The petition is accordingly allowed and the complaint case No. 10764/16 filed under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act and all consequent proceedings emanating therefrom are hereby quashed".
Read the Order here:
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