Sri K. Satyanarayan vs Sri G.V. Venkatadri

K.N. Keshava Narayana, J.—As parties to these appeals are one and the same and since common questions of fact and law arise for consideration from out of the same transaction, these appeals were heard together and are being disposed of by this common judgment.

These appeals filed u/s 378(4) Cr.P.C. are directed against the judgment and order dated 06.08.2007 passed by the 13th Additional CMM, Bangalore, in C.C. Nos. 31574/2000, 30603/01. 30711/02, 30860/01 and 30710/02 acquitting the respondent/accused of the charge levelled against him for the offence punishable u/s 138 of the Negotiable Instruments Act (for short, the "Act")

The facts leading to presentation of these appeals are as under:

Appellant-K. Satyanarayana obtained quarrying lease from the Department of Mines and Genealogy, Government of Karnataka, on 28.10.1987 in respect of a part of the land bearing Sy. No. 4 of Vabasandra Anupanahaili Village, Gudibande Taluk, Kolar District, Measuring 3 acres 20 guntas for a period of 5 years w.e.f. 03.11. 1997. Under the lease, the complainant was permitted to extract Pink Granite from the said land. Thereafter, the complainant being unable to proceed with the quarrying operation for various reasons, entered into an agreement with the accused-Venkatadri on 10.06.2000 granting lease of the very same quarry to the accused for a period of 5 years for Rs. 6,00,000/- and on the date of the agreement, received a sum of Rs. 1,00,000/- in cash and for the balance of Rs. 5,00,000/-, the accused issued four cheques for Rs. 1,25,000/- each and another cheque for Rs. 1,33,500/- towards the value of for the dressed Granite measuring 23 meters lying at the property, drawn in favour of the complainant. Subsequently, when the cheques were presented for encashment, they were returned un-paid with the Banker''s endorsement "Funds Insufficient". Thereafter, the complainant served notice to the accused informing him about the dishonour of the cheques and called upon him to pay the amount covered under the cheques. However, the accused failed to comply with the demands made therein. The accused sent reply to the said notice inter alia admitting the agreement entered into and issuance of the cheques, but further contended that after the execution of the agreement, when he went to the spot for extraction work, he came to know that the complainant soon after obtaining quarrying lease, has entered into Partnership with 9 other persons for extracting the Granite from the land and those 9 persons have invested substantial amount for the said work, as such, the complainant had no absolute right for granting quarrying lease and he was also prevented from proceeding with the extraction of Granite. Therefore, he expressed his inability to comply with the demand made in the notices. He contended that the agreement was void and therefore, he is not under an obligation to honour the cheque. Thereafter, the complainant filed 5 private complaints u/s 200 of Cr.P.C. r/w. Section 142 of the Act.

Upon service of summons, the common respondent/accused appeared before the learned Magistrate and pleaded not guilty for the accusation made against him and claimed to be tried. During the enquiry, the complainant examined himself as PW.1 in all the complaints and produced documentary evidence. In defence, the accused examined himself and also produced documentary evidence. By way of defence, he reiterated his stand, which he had taken in his reply notice.

On appreciation of oral and documentary evidence, the learned Magistrate by the independent judgments passed in each of these cases, acquitted the accused of the charge levelled against him holding that, the agreement entered into between the complainant and the accused was void u/s 23 of the Indian Evidence Act and that the complainant has failed to prove that the cheques in question were issued for discharge of legally enforceable liability, and therefore, the offence u/s 138 of the N.I. Act is not made-out against the accused. Being aggrieved by the acquittal of the accused, the complainant has presented these appeals.

Upon service of notices of these appeals, the respondent/accused has appeared through his Counsel. I have heard the learned Counsel on both sides and perused the records and judgment under appeal.

As noticed above, there is no dispute that the cheques in question were issued by the respondent/accused and they relate to an account held by him in the Bank. These cheques were issued as per the terms of the agreement dated 10.06.2000 entered into between the complainant and the accused. There is also no dispute that the complainant had obtained quarrying lease from the Government in respect of the land in question and the said right of extraction of the Granite conferred on him was sought to be transferred in favour of the accused for a period of 5 years under the agreement dated 10.06.2000. The defence urged by the accused was that after he entered into an agreement with the complainant, he came to know that the complainant had no absolute right to execute the said agreement since subsequent to obtaining quarrying lease from the Government, the complainant had entered into a Partnership with 9 other persons, whereunder, he had vested his right of quarrying in a Partnership Firm constituted under the Deed of Partnership dated 1.2.07.1997, a copy of which is marked as Ex. D3. The said firm was named Thirumala Granites. Exs. D1 to D3 were secured from the Registrar of Firms and those documents have been marked thereafter. The complainant did not dispute the correctness of these documents. As per Ex. D3, the complainant along with 9 other persons entered into a partnership and the right of extraction of the Granite from the land in question came to be vested in the Partnership Firm. As per Ex. D3, each of the other partners have invested Rs. 1,75,000/-. There is no dispute that the other partners were not parties to the agreement entered into with the accused. It is also not the case of the complainant that subsequently, the Partnership was either dissolved or reconstituted. From this, it is manifestly clear that as on 10.06.2000, when the complainant entered into agreement with the accused he had no absolute right to transfer the right of extraction of Granite from the land to the accused as the said right had been vested in the Partnership Firm as far back as on 12.08.1997 itself. The said fact was not disclosed to take accused. Therefore, the agreement entered into between the complainant and the accused was rightly held as void agreement u/s 23 of the Indian Contract Act. In view of this, the cheques issued under the said agreement cannot be termed as having been issued for discharge of any legally enforceable debt or liability. It is not the case of the complainant that pursuant to the agreement, the accused extracted Granite from the land in question. Of course, Sri. R.A. Devanand, learned Counsel for the appellant sought to contend that since under the agreement the accused was placed in physical possession of the land, it was for him to protect his possession and therefore, he could not turn round and say that the cheques were not issued for legally enforceable liability. This very argument was addressed before the learned Magistrate and the same has been rightly rejected. Though the agreement recites that the possession of the leased property has been delivered to the accused, except the recital in the agreement, there is absolutely no other evidence on record that the accused was placed in actual possession of the property and he was permitted to extract Granite. In fact, during cross-examination of the accused, a suggestion has been put to him that the quarry was in the same position, as it was on the date of the lease. From this, it is clear that no extraction work has been done by anyone. Having regard to the fact that the complainant had no absolute right as on 10.06.2000 to grant lease of quarry to the accused, the Court below has rightly held that the cheques in question were not issued for discharge of any legally enforceable liability. It is only the cheques which are issued for discharge of legally recoverable or enforceable debt or liability, which could be the subject matter of offence u/s 138 of the N.I. Act, in the event of dishonour of such cheques for any of the reasons stated therein. In the case on hand, the cheques were admittedly issued for purported right transferred to the accused to extract the Granite from the land. However, it turned out that the complainant who granted lease in favour of the accused was not the absolute rightful owner to confer such right on the accused. Therefore, the learned Magistrate has rightly held that the cheques were not issued for discharge of legally recoverable or enforceable liability.

Having regard to the facts and circumstances of the case, I find no error committed by the learned Magistrate in acquitting the accused in all these cases. The judgments do not suffer from any perversity, illegality or irregularity. There are no reasons to interfere with the judgment under appeal.

Accordingly, the appeals are dismissed.