LexDON AYENGIA versus THE STATE OF ASSAM & ANR
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[2016] I S.C.R. 405 DON AYENGIA v. Tl-IE STATE OF ASSAM & ANR. (Criminal Appeal Nos. 82-83of2016) JANUARY 28, 2016 (T.S. THAKUR, CJl AND KURIAN JOSEPH, J.] Negotiable J11str11me11ts Act. 1881: s.138 - Dishonour of' cheque - C'o1111Jlai11ant entere(f into an agree111e11t }Or construction of' building ll'ith 011e 'N' a11d paid him Rs. JO /akhs -Agree111ent did no/ materialise and was ca11celled i11 terms <Jf' promissory note executed by 'N 'in.fi11·our <?fcomplainant - Pro111issorv note stipulated promise lO plly Rs. I 0 lakh.1· within one mont /1 and f11rther the c/a11se that the amount was being re.fimded by the executant in terms <~f fire post dated cheques - Promissory note fio·ther stipulated that the cheques ll'ere being issued as a security and shall be returned to 'N' when the l/mou11t of'Rs.111 /akhs is paid by him 1l'ithi11 a period ()f one month - Interest was also promised to be paid 011 Rs. I 0 lakhs - Pay111ent not nuffle 1l'ithi11 the prescribed tilne - Pre.-.;entation o.l cheques after expiry of period of 011e 111onth - Dishonour of cheques - Respondent no.2 appeared at this stage and indemnified the co1111Jlai11a11t by ack1101l'/edging that the cheques in question i1•ere actually issued by him and handed over to 'N' - Cheq11es were again presented and got dishonoured - Co111pllli11t agaiust responde111 no.2 and 'N' - 'N' e.,pired n1ewlll'hile - Ti'ill/ court found respo11de11t no.2 guilty - High Court set aside the conriction - Held: The promissory note executed by 'N · co111ai11ed <Ill unequi\'Oclll acknowledgmenl <Jf 1101 only the debt/liability but promised to liquidate the same ll'ilhin one molllh ll'ith interest al the hank rate - Five cheques handed over ll'ere to be returned but onlr upon parmenl of the amow11 in question - Such being the fact situation. it cannot be said that the cheques had nothing to do ll'ilh any debt or other liability - Thus, there 11·as direct relationship be/ll'een the liability am! the cheques issued in connection there1l'ith - The endorsement made by the respondellt 011 the promiss01:v note that the cheques can be presented for encaslunent after a m0111h clearz)' sholl's thlll the cheques issued by hi111 ll'ere not ornamental but ll'ere meall/ to 405 A B c D E F G 1-1 406 SUPREME COURT REPORTS [2016] l S.C.R. A be presented if the amount in question was not paid within the. extended period - High Court fell in error in upsetting the conviction recorded by the Courts below. B c D E F Disposing of the appeals, the Court HELD: 1. The execution of the Promissory Note and the endorsement made by the Respondent was satisfactorily proved at the trial. Concnrrent findings recorded by the trial court and the first appellate court to that effect conclude the factual part of the controversy. The only question that survives in the above background is whether the cheques issued by the Respondent were meant to discharge, in whole or part, "any debt or other liability" within the meaning of Section 138 of the Negotiable Instruments Act, 1881. The facts showed that 'N' had received Rs. 10 lakhs from the complainant in connection with the agreement executed between the two. That upon termination of the agreement, the amount paid to 'N' was refundable to the complainant and that 'N' had agreed to refund the same within one month. The promissory note executed by 'N' contained an unequivocal acknowledgment of not only the debt/liability aforementioned but promised to liquidate the same within one month with interest at the bauk rate. Five cheques handed over were to be returned but only upon payment of the amount in question. Such being the fact situation, it cannot be said that the cheques had nothing to do with any debt or other liability. The cheques were post dated, only to give to the drawer the specified one month's time to pay the amount. There is thus a direct relationship between the liability and the cheques issued in connection therewith. 'rhus far there is no difficulty. The difficulty arises only because the promissory note uses the words "security" qua the cheques. This would ordinarily and in the context in which the cheques were given imply that once the amount of Rs. 10 lakhs was paid, the cheques shall have to be returned. There G would be no reason for their retention by the complainant or for their presentation. In case, however, the amount was not paid within the period stipulated,
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