SAMPELLY SATYANARAYANA RAO versus INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY LIMITED

Citation: [2016] 6 S.C.R. 531 · Decided: 19-09-2016 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Dismissed
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Judgment (excerpt)

[2016] 6 S:C.R. 531 
SAMPELLY SATYANARAYANA RAO 
v. 
· INDIANRENEWABLEENERGY. 
DEVELOPMENT AGENCY LIMITED 
(Criminal Appeal No. 867 of2016) 
SEPTEMBER 19, 2016 
[DIPAK MISRA AND ADARSH KUMAR GOEL, JJ.] 
Negotiable Jnsn•uments Act, 1881 : s. 138-Dishonour of post-dated 
cheques given for repayment of loan installment and described as "security" 
in loan agreement, if covered uls. 138 -
Held: ·Applicability of s.138 
depends on whether the cheque represents discharge of existing enforceable 
debt/liability or it represents advance payment without there being-subsisting 
debt or liability-Thus. i/bJJ the date of the cht;que. liability or debt exists , 
'or the ainount becomes legally recoverable, s.138 is attracted and not 
otherwise.:_ In the instant case, loan was disbursed prioi· io the date of the 
cheques - Though, the word ;.security" is used in the loan agreement, it, 
however refers to the c7ieques towards repayment of installments of loan -
Ther(ore, once the loan was advanced and the installment had fallen due 
on the date of the cheque as per the agreement. dishonour of such cheques 
would-fall u_uder s.138. 
·• 
Criminal law - Quashing of complaint'- Held: While dealing with 
a quashing petition, the Court has ordinarily to proceed on the basis of 
averments in complaint-'- Defence of accused cannot be considered at this 
stage - Court considering the prayer for quashing does not adjudicate 
upon a disputed question of fad. 
Dismissing the appeal, the Court 
HELD: 1.1 The question whether a post-dated cheque is for 
"discharge of. debt. or liability" depends on the nature of the 
transaction. If on the date of the cheque, liability or debt exists or 
the amount has become legally recoverable, the Section is attracted 
and not otherwise. [Para·lO] (536-F] 
1.2 Reference to the ·racts of the present case· clearly shows · 
that though the word "security" is used in clause 3.l(iii) of the 
agreement, the said expression refers to the cheques being towards 
repayment of installments. The repayment becomes due under the 
agreement, the moment the loan is advanced and the installment 
531 
A 
B 
c 
D 
E 
F 
G 
H 
532 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2016] 6 S.C.R. 
falls due. It is undisputed that the loan was duly disbursed prior to 
the date of the cheques. Once the loan was disbursed and installments 
have fallen due on the date of the cheque as per the agreement, 
dishonour of such cheques would fall under Section 138 of the Act. 
The cheques undoubtedly represent the outstanding liability. [Para 
11] (536-G; 537-A-B] _ 
1.3 Crucial question to determine applicability of s.138 of the 
Act is whether the cheque represents discharge of existing enforceable 
debt or liability or whether it represents advance payment without 
there being subsisting debt or liability. (Para 13] [537-G] 
2. In the present case, reference to the complaint shows that 
as per the case of complainant, the cheques which were subject ma_tter 
of the said complaint were towards the partial repayment of the dues 
under the loan agreement. It is well settled that while dealing with a 
quashing petition, the Court has ordinarily to proceed on the basis of 
averments in the complaint. The defence of the accused cannot be 
considered at this stage. The court considering the prayerfor quashing 
does not adjudicate upon a disputed question of fact. [Paras 16 and 
17] [540-B-C] 
. 
HMT Watches Ltd. v. M.A. Abida (2015) 11 SCC 776: 2015 
(3) SCR 719; Rangappa v. Sri Mohan (2010) 11 SCC 441 : 
2010 (6) SCR 507; Goaplast (P) Ltd. v. Chico Ursula 'D · 
Souza (2003) 3 SCC 232: 2003 (2) SCR 712 - relied on. 
Indus Airways Private Limited v. Mag,;um Aviation Private 
"° 
-
Limited (2014) 12 SCC 539; Balaji Seafoods Exports (India) 
Ltd. v. Mac Industries Ltd. (1999) 1 CTC 6 (Mad) -
distinguished. 
Swastik Coaters (P) Ltd. v. Deepak Bros. (1997) Cr!. LJ 
1942 (AP); Shan/at Concretes (P) Ltd. v. State of Gujarat 
(2000) Crl LJ 1~88 (Guj); Supply House v. Ullas (2006) 
Crl. LJ 4330 (Ker); Magnum Aviation (P) Ltd. v. State 
(2010) 172 DLT 91 : (2010) 118 DRJ 505; Mojj Engg. 
Systems Ltd. v. A.B. Sugars Ltd. (2008) 154 DLT 579 -
referred to. 
Case Law Reference 
(1997) Crl. LJ 1942 (AP) 
(2000) Cr! LJ 1988 (Guj) 
referred to 
referred to 
Para 9 
Para 9 
SAMPELLY SATYANARA YANA RAO v. INDIAN RENE»-'ABLE 
533 
ENERGY DEVELOPMENT AGENCY LIMITED 
(200?) Crl: LJ 4330 (Ker) 
referred to 
Para9 
(2010) 118 DRJ 505 
referred to 
Para9 
02008) 154 DLT
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