TaxTMI 
TaxTMI 
2012 (7) TMI 1169
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....ncore International A.G., a company in Switzerland. As per the agreed terms, the petitioners with a covering letter, contemporaneously executed three documents in favour of respondent No. 2, wherein, it was specifically mentioned that the three documents were being executed by the petitioners as Security for Mobilisation Advance. The details of the three documents executed by the petitioners are as under: A Promissory Note dated 19.02.2010 for Rs. 2.50 Crores; B Cheque bearing No. 909722, dated 19.02.2010 for Rs. 2.50 Crores; and C Bank Guarantee dated 19.02.2010 for Rs. 1.25 Crores. 2. The respondent No. 3 on receipt of Security Documents i.e. Cheque, Promissory Note and Bank Guarantee from the petitioners and got released Rs. 2.50 Crores from its banker in favour of the petitioner on 22.03.2010. The respondent No. 2 presented the Cheque bearing 909722 dated 19.02.2010 for a sum of Rs. 2.50 Crores. 3. The respondent No. 2 received a Memo dated 08.08.2010 from its Bankers with the endorsement "Exceed Arrangements". The respondent No. 2, allegedly got issued Notice dated 26.08.2010 to the petitioners, which was dispatched on 27.08.2010. 4. Mr. Kai....
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....inal liability of the appellant under the provisions of Section 138 of the Act are attracted only on account of the dishonour of the cheques issued in discharge of liability or debt, but not on account of issuance of security cheques. The learned Single Judge has also not given cogent, satisfactory and convincing reasons for disbelieving and discarding the pre-charge evidence of the appellant corroborated by the evidence of the expert opinion in regard to the interpolation in and fabrication of the cheques by adding one more figure '0' to make Rs. 30,000/- to Rs. 3,00,000/- and similarly adding one more figure '0' to make Rs. 40,000/- to Rs. 4,00,000/-. 8. Learned counsel for the petitioner further refers to a judgment passed by Bombay High Court in Joseph Vilangadan V. Phenomenal Health Care Services Ltd. & Anr. in Criminal Writ Petition No. 2243 of 2009, wherein it was recorded as under :- 11 The issue as regards the coextensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the....
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....ured, he issued legal notice and the petitioners were duty bound to settle the amount, failing which, they are responsible for the offence punishable under Section 138 of Negotiable Instruments Act. 14. It is further submitted that the petitioners have to prove in the trial, that he did not owe any dues towards respondent No. 2, therefore, at this stage, the instant petition is pre-matured. 15. To strengthen his arguments, learned counsel for respondent has relied upon a case of M.S. Narayana Menon(supra), wherein, it has been held as under :- 28. In view the aforementioned backdrop of events, the questions of law which had been raised before us will have to be considered. Before, we advert to the said questions, we may notice the provisions of Sections 118(a) and 139 of the Act which read as under: 118. Presumptions as to negotiable instruments - Until the contrary is proved, the following presumptions shall be made: (a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transfer....
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....ose of discharging any debt or liability and as such complaint under Section 138 cannot be maintainable. 10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque" The above noted three words are of excrement significance, in particular, by reason of the user of the word "any"--the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment. 17. Learned counsel for respondent fur....
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....n the decision of the Gujarat High Court in Om Prakash v. Gurucharan Singh 1997 (3) Cri 433. The answer to my mind is simple. Section 139 of N.I. Act states that it shall be presumed unless contrary is proved that the holder of a cheque received the cheque of the nature referred to in the Section 138 of the discharge in whole or in part of any debt or other liability. The Section raises presumption that cheque was drawn for consideration. This issue was also settled by several authoritative pronouncements of the Supreme Court in Maruti Udyog Ltd. v. Narender and Ors. (1999)1SCC113, and M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P) Ltd., 2002 Cri LJ 266, wherein it was held: 15. A similar view has been taken by this Court in the case of K.N. Beena v. Muniyappan reported in 2001(7) Scale 331, wherein again it has been held that under Section 139 of the Negotiable Instruments Act the Court has to presume, in complaint under Section 138, that the cheque had been issued for a debt or liability. 16. There is Therefore no requirement that the Complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was....
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....ereafter, on 17.1.2001, a collaboration agreement was entered into between the respondent No. 2, Rakesh Bedi, the confirming party and Ansal Buildwell Co. As per the agreement, the Ansal Buildwell Co. had to construct the multi-storeyed residential building on the said property. 7. Clause V of the aforesaid agreement around which controversy in the present petition revolves stipulated that as a security for due performance of agreement, a sum of Rs. 138 lacs was to be deposited by the Ansal Buildwell Co. with the respondent No. 2 and other owner of the said property. 8. Clause V reads as under: V. Security Deposit (a) The Builder shall deposit with the owners a total sum of Rs. 138 lakhs towards security for due compliance of the terms of this Agreement by the Builder. A sum of Rs. 11.5 lakhs has already been received by the owners from the Confirming Party, receipt whereof the owners hereby acknowledges. The Builder shall return the said sum of Rs. 11.5 lakhs on behalf of the owners, and the balance sum of Rs. 126.5 lakhs shall be paid by the Builder to the owners in 30 equal monthly Installments as per Annexure-II hereto. (b) Payment o....
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....e agreement. That from the fact that the amount covered by cheques in question was to be returned by the complainant/respondent No. 2 to the accused company on the due performance of the agreement, it is clear that cheques in question were neither issued towards discharge of a debt nor because accused company owed any money to the complainant. Counsel further relied upon judgment of the Supreme Court in the decision reported as Narayana Menon v. State of Kerala 2006 Cri LJ 4607 in support of his contention that where a cheque is given only as a security, the provisions of Section 138 of the N.I. Act are not at all attracted. 17. At the outset, I note that the expression "other liability" cannot be construed as akin to the preceding word "debt". The expression "other liability" can take its meaning and colour from the preceding word "debt" only if the rule of ejusdem generis is held to be applicable. 18. The rule of ejusdem generis is applicable when words pertaining to a class, category or genus are followed by general words. In such a case, the general words take their meaning from the preceding particular words because the legislature by using the particular wor....
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.... of application of the provisions of Section 138 of the Act: 'Any cheque' and 'other liability' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute. Any contra interpretation would defeat the intent of the legislature. The High Court, it seems, got carried away by the issue of grantee and guarantor's liability and thus has overlooked the true intent and purport of Section 138 of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus does not lend any assistance to the contentions raised by the respondents. 23. Thus, if given its full meaning, the expression "other liability" within its broad sweep would include any "liability to pay". 25. The doctrine of fundamental terms of a contract as enunciated in the decision reported as Suisse Atlantique Societe D'Armement Maritime S.A. v. N.V. Rotterdamche Kolen Centrale (1967) 1 AC 361 is as under: A fundamental term of a contract is a stipulation which the parties have agreed either expressly or by necess....
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....t be given, and that this can either be a benefit to the promisor or some detriment to the promisee. In the decisions reported as Chidambara Iyer v. Renga Iyer [1966] 1 SCR 168 and Sonia Bhatia v. State of U.P. AIR 1981 SC 1271, the Supreme Court compared the jural concept of the consideration and Section 2(d) of the Contract Act and held the two as being practically the same. It was held that the word 'valuable' in civil law could be negative or positive. 36. Thus, "consideration" is a very wide term and is not restricted to monetary benefit. Consideration does not necessarily means money in return of money or money in lieu of goods or service. Any benefit or detriment of some value can be a consideration. 37. In the instant case, the complainant and the other owner of the said property blocked their asset (property) till the period of completion of construction as provided in the agreement. The promise/act of the complainant and other owner of the said property of blocking their asset for a considerable period can very well be held to be a consideration within the meaning of Section 2(d) of the Indian Contract Act. Thus all reciprocal obligations of the ....