High Court quashed criminal proceedings for cheque bounce under Section 138 NI Act held that no legally enforceable debt existed against the accused who was merely a witness to the loan agreement rather than a party to it.
Criminal proceedings under Section 138 NI Act in CC No.2253/2022 were quashed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
NC: 2023:KHC-D:12856 CRL.P No. 102221 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 3RD DAY OF NOVEMBER 2023
BEFORE
THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL PETITION NO. 102221 OF 2023
BETWEEN:
SHRI. ISHWAR S/O ADIVEPPA BANNUR, AGE. 31 YEARS, OCC. PRIVATE, R/O. MRUTYUNJAYA NAGAR, SAVADATTI ROAD, M J NAGAR, DHARWAD-580006.
… PETITIONER
(BY SRI. ROSHAN SAHEB CHABBI, ADVOCATE)
AND:
SHRI. MANJUNATH S/O. GURAPPA NOLVI, AGE. 34 YEARS, OCC. BUSINESS, R/O. RAM MANOHAR LOHIYANAGAR, GOKUL ROAD, HUBBALLI, DIST. DHARWAD-580030.
… RESPONDENT
VIJAYALAKSHMI M KANKUPPI Digitally signed by VIJAYALAKSHMI MKANKUPPI Date: 2023.11.07 10:35:16 +0530
(BY SRI. GOURISHANKAR S.B. MOT, ADVOCATE)
THIS CRIMINAL PETITION IS FILED U/SEC. 482 OF CR.P.C. SEEKING TO QUASH THE ENTIRE PROCEEDINGS AGAINST THE PETITIONER IN CC NO.2253/2022, PENDING ON THE FILE OF THE I JMFC COURT, HUBBALLI, FOR THE COMMISSION OF THE ALLEGED OFFENCES PUNISHABLE U/S 138 OF NEGOTIABLE INSTRUMENTS ACT, 1881.
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:
NC: 2023:KHC-D:12856 CRL.P No. 102221 of 2023
ORDER
This petition is filed under Section 482 of Criminal procedure Code (hereinafter referred to as “Cr.P.C.” for brevity) praying to quash the entire proceedings against the petitioner in C.C.No.2253/2022, pending on the file of I JMFC Court, Hubballi.
contend that the hand loan has been borrowed by his father from the respondent as per the hand loan agreement (Ex.P.8 dated 11.02.2022). He contends that there is no legally enforceable debt or liability for which this petitioner has issued a cheque in favour of the respondent. Petitioner is not party to the said hand loan agreement dated 11.02.2022. The respondent Manjunath Noolvi and father of this petitioner namely Sri.Adiveppa S/o Thippanna Bannur are the parties to the said hand loan agreement. Petitioner is witness to the said hand loan agreement. Under the said hand loan agreement, the respondent cannot enforce the liability against this petitioner. Therefore, there is no legally recoverable debt against this petitioner. As per the averments of the complaint, the cheque-Ex.P.1 has been issued for making payment of debt. There is no legally enforceable debt or liability against this petitioner. Therefore, the said aspect does not attract the offence under Section 138 of N.I.Act.
NC: 2023:KHC-D:12856 CRL.P No. 102221 of 2023
With this, he prayed to allow the petition and quash the proceedings.
that in averments of the complaint it is stated that both the petitioner and father have borrowed the hand loan from the respondent. He contended that in the hand loan agreement dated 11.02.2022 (Ex.P.8) there is mention of number of cheque-Ex.P.1 and there is also mention that wife and children are also liable for the said hand loan taken by Sri.Adiveppa S/o Tippanna Bannur from the respondent. The petitioner has issued cheque for making repayment of loan taken borrowed by his father. The said aspect attracts offence under Section 138 of N.I.Act. He contends that there are no grounds for quashing the proceedings. With this, he prayed to dismiss the petition.
11.02.2022. The said hand loan agreement (Ex.P.8) is between respondent and one Sri.Adiveppa S/o Tippanna Bannur. As per the said hand loan agreement (Ex.P.8) Sri.Adiveppa S/o Tippanna Bannur has borrowed a sum of Rs.2,50,000/- from the respondent and for the security of the said hand loan agreement two cheques of the son of
Sri.Adiveppa S/o Tippanna Bannur are given to the respondent. The petitioner is witness to the said hand loan agreement (Ex.P.8). The petitioner is not party to the said agreement. The respondent cannot enforce the said hand loan agreement (Ex.P.8) against this petitioner for recovery of amount borrowed in sum of Rs.2,50,000/-. Therefore, it is not legally recoverable debt for which Ex.P.1-cheue has been issued. In order to attract the penal provision of bouncing of cheque, it is essential that the dishonored cheque should have been issued in discharge, wholly or in part, of any debt or other liability
of the drawer to the payee. The Explanation to Section 138 of N.I. Act defines the expression “debt or other liability” as a legally enforceable debt or other liability.
Strict liability under Section 138 N.I. Act can be enforced only when cheque is issued for discharge of any legally enforceable debt or other liability. Where a cheque is issued not for the purpose of discharge of any debt or other liability, return of such check unpaid will not meet the penal consequences and the maker of the cheque was not liable for prosecution. The legally enforceable debt or other liability should be that of drawer of the cheque.
namely:
ORDER
The petition is allowed.
NC: 2023:KHC-D:12856 CRL.P No. 102221 of 2023
The proceedings against this petitioner/accused in CC No.2253/2022 for offence under Section138 of NI Act are quashed.
The respondent is at liberty to enforce the liability in Ex.P-8–hand loan agreement against Sri.Adiveppa
Thippanna Bannur.
Sd/JUDGE
AC & Kmv from para 7 till end ct:bck
2 issues framed by the court
Whether criminal proceedings for cheque bounce can be quashed when the accused is not a party to the underlying loan agreement.
Whether there exists a legally enforceable debt against the petitioner to attract the penal provisions of Section 138 of the Negotiable Instruments Act.
2 provisions across 2 enactments
ISHWAR S/O ADIVEPPA BANNUR
MANJUNATH S/O GURAPPA NOLVI
SHIVASHANKAR AMARANNAVAR
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
