SUNIL TODI & ORS. versus STATE OF GUJARAT & ANR.

Citation: [2021] 9 S.C.R. 1086 · Decided: 03-12-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

Cited by 1 judgment(s) · cites 11 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 9 S.C.R.
   [2021] 9 S.C.R. 1086
1086
SUNIL TODI & ORS.
 v.
STATE OF GUJARAT & ANR.
(Criminal Appeal No. 1446 of 2021)
DECEMBER 03, 2021
[DR. DHANANJAYA Y CHANDRACHUD
AND A. S. BOPANNA, JJ.]
Negotiable Instruments Act, 1881 – ss.138, 141 – Code of
Criminal Procedure, 1973 – ss. 202, 203 and 482 – Dishonour of
cheque issued by way of security – A Power Supply Agreement (PSA)
was entered into between the second respondent and the company
– The PSA between the parties envisaged that the second respondent
would supply power to the company of which the appellants are
directors etc. – The agreement postulated that payment for the power
supplied would be made by means of Letter of Credit (LCs) – A
cheque post-dated 28.08.2017 in the amount of Rs.2,67,84,000/-
was issued by the company in favour of the respondent, with the
following endorsement on its reverse, “to be deposited after
confirmation only for security purpose” – The power supply had
commenced on 01.07.2016 – Though, the LCs’ were provided, they
were allegedly not in a form acceptable to the bankers of the second
respondent – Bills were raised by the second respondent – The
company terminated its agreement with the second respondent –
Cheque issued by the company was deposited – Cheque was
dishonoured with a reason ‘payment stopped by drawer’ – Appellants
alleged offence u/s. 138 of the N.I. Act – A criminal complaint was
filed by the second respondent – Magistrate issued summons to the
appellants – Appellants filed petitions u/s.482 of Cr.P.C. – The High
Court dismissed the petitions for quashing the complaint – Before
the Supreme Court, the appellant contended that cheque was issued
for the purpose of security and not for encashment – Held: The
explanation to s.138 of the NI Act provides that ‘debt or any other
liability’ means a legally enforceable debt or other liability – The
term debt also includes a sum of money promised to be paid on a
future day by reason of a present obligation – A post-dated cheque
issued after the debt has been incurred would be covered by the
definition of ‘debt’ – However, if the sum payable depends on a
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contingent event, then it takes the color of a debt only after the
contingency has occurred – Therefore, in the present case, a debt
was incurred after the second respondent began supply of power
for which payment was not made because of the non-acceptance of
the LCs’ – The appellants do not dispute that prior to the termination
of the agreement, power was supplied for a period of three months
to the company – Once payments for electricity supply became due
in terms of the PSA, and the company failed to discharge its dues,
the second respondent was entitled in law to present the cheque for
payment – Merely labelling the cheque as a security would not
obviate its character as an instrument designed to meet a legally
enforceable debt or liability, once the supply of power had been
provided for which there were monies due and payable – There is
no inflexible rule which precludes the drawee of a cheque issued
as security from presenting it for payment in terms of the contract.
Negotiable Instruments Act, 1881 – ss.138, 141 – Code of
Criminal Procedure, 1973 – ss. 202, 203 and 482 – Dishonour
of cheque issued by way of security – A Power Supply Agreement
(PSA) was entered into between the second respondent and the
company – A cheque post-dated 28.08.2017 in the amount of
Rs.2,67,84,000/- was issued by the company in favour of the
respondent, with the following endorsement on its reverse, “to be
deposited after confirmation only for security purpose” – The power
supply had commenced – Bills were raised by the second respondent
– The company terminated its agreement with the second respondent
– Cheque issued by the company was deposited – Cheque was
dishonoured with a reason ‘payment stopped by drawer’ – Appellants
alleged offence u/s. 138 of the N.I. Act – A criminal complaint was
filed by the second respondent – Magistrate issued summons to the
appellants – The accused persons in the present case resided at
Aurangabad while the complaint u/s. 138 was filed before the
Magistrate in Mundra – The argument of the appellants is that in
these circumstances, the Magistrate was duty bound to postpone
the issuance of process and to either enquire into the case himself
or to direct an investigation either by a police officer or by some
other person – It was further contended tha

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