Separate later liability cannot defeat cheque dishonour proceedings when the earlier debt and statutory notice are undisputed.

A later liability arising from a separate transaction could not be set off against a cheque issued towards an earlier legally enforceable debt under the Negotiable Instruments Act. The cheque dishonour and statutory notice were undisputed, and the accused's counter-claim based on a later invoice did not defeat the Section 138 proceedings. The alleged payment to a third party was also not proved, as the payee was not examined and supporting evidence was lacking. On that basis, the conviction and sentence were sustained and no interference was warranted.

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Issues: Whether the concurrent conviction under Section 138 of the Negotiable Instruments Act, 1881 suffered from illegality or perversity on the ground that the accused claimed a counter-amount arising from a separate transaction and alleged payment to a third party at the behest of the complainant.

Analysis: The cheque was issued towards an invoice liability existing on the date of the cheque, and the dishonour of the cheque and issuance of statutory notice were not in dispute. The accused relied upon a later invoice showing that the complainant allegedly owed a different amount, but that liability arose from a separate transaction and at a later date. Such a counter-claim could not be adjusted as set-off in proceedings for dishonour of cheque when the cheque itself was issued against an earlier legally enforceable debt. The alleged payment of Rs. 1,00,000 to a third party was also unproved, as the payee was not examined and no cogent supporting evidence was produced.

Conclusion: The defence failed, the conviction under Section 138 was rightly sustained, and no interference was warranted.

Final Conclusion: The revision challenge to the conviction and sentence did not succeed because the concurrent findings were neither illegal nor perverse.

Ratio Decidendi: A liability arising from a separate transaction, especially one arising later in point of time, cannot be set off to defeat proceedings under Section 138 of the Negotiable Instruments Act, 1881, and a pleaded payment in discharge of the defence must be proved by cogent evidence.

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