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The HC allowed the petition and quashed the impugned cognizance and complaint under Section 138 of the NI Act. The court held the undated cheques were issued as security/advance conditional on performance of the sale agreement, and the condition precedent (transfer/possession of land) was not fulfilled by the respondent. Consequently no legally enforceable debt or subsisting liability existed at the time of presentation and dishonour, and the proceedings under Section 138 constituted misuse of process. Relief was granted to the petitioner, with the criminal proceedings under the NI Act set aside for want of a legally actionable liability.
The HC allowed the petition and quashed the impugned cognizance and complaint under Section 138 of the NI Act. The court held the undated cheques were issued as security/advance conditional on performance of the sale agreement, and the condition precedent (transfer/possession of land) was not fulfilled by the respondent. Consequently no legally enforceable debt or subsisting liability existed at the time of presentation and dishonour, and the proceedings under Section 138 constituted misuse of process. Relief was granted to the petitioner, with the criminal proceedings under the NI Act set aside for want of a legally actionable liability.
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