Facts: Two people sold their agricultural land to one Mr.X(respondent). Part payment was already done by Mr. X. Two postdated cheques were issued to the sellers. However, on such date, the cheques were returned unpaid with the remark ‘insufficient funds’. Legal notices were issued and complaints were initiated under Section 138 of the Negotiable Instruments Act, 1881 before the judicial magistrate, first class. The Magistrate dismissed the applications seeking discharge of complaint cases and charges were framed under section 138. The respondent then filed a petition u/s 482 before the High Court.

The High Court held that the cheques had not been issued for creating any liability or debt but for the payment of balance consideration and hence the Respondent did not owe any money to the complainants. Accordingly, the complaint under section 138 was quashed.

Issue: The issue pertained to dishonor of cheques for part payment of sale consideration.

View: It was observed that the builder had obtained the occupancy certificate almost two years after the date stipulated in the agreement with the purchaser. As a consequence, there was a failure to hand over possession of the flat within a reasonable period. The purchaser has made out a clear case of deficiency of service on the part of the builder. The purchaser was justified in terminating the agreement by filing the consumer complaint and cannot be compelled to accept the possession whenever it is offered by the builder. The purchaser was legally entitled to seek refund of the money deposited by him along with appropriate compensation.

Held: The Supreme Court held that the cheques were issued under and in pursuance of the agreement to sell. Though it is well settled that an agreement to sell does not create any interest in immoveable property, it nonetheless constitutes a legally enforceable contract between the parties to it. A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purposes of Section 138. Hence the order quashing the complaint was set aside.   ( CrA No. 483 of 2019 (SLP (Crl.) No. 4608 of 2016) / Cr ANo. 484 of 2019 (SLP (Crl.) No. 4610 of 2016 dt  13.03.2019

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