HON’BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL No.2359 of 2004 JUDGMENT: The complainant filed this appeal against acquittal recorded by the lower Court of the accused of the offence under Section 138 of the Negotiable Instruments Act (in short, the Act). The complainant indulges in several businesses including entering into hire purchase agreements in respect of motor vehicles. In the similar way, the complainant entered into hire purchase agreement/lease agreement Ex.P.2 with one T.Sreenivasulu in respect of his truck bearing No.AP.21.3969. The accused was guarantor for T.Sreenivasulu (mistakenly referred by the lower Court as T.Venkateswarlu) by executing Ex.P.3 guarantee agreement. It is alleged that the accused issued Ex.P.4 cheque dated 12.08.1998 for Rs.2,79,304/- in his capacity as guarantor towards discharge of the said liability. When the cheque was dishonoured for want of sufficient funds, the complainant issued Ex.P.8 statutory notice and thereafter filed the complaint in the lower Court. 2. But, during trial in the lower Court, it was elicited from PW.1 who is the legal Assistant in the complainant- company that as T.Sreenivasulu failed to make payments of hire instalments as per Ex.P.2 agreement, the truck was seized by the complainant and it was sold in public auction for Rs.2,60,000/-. The accused also summoned Exs.D.1 to D.3 documents from Regional Transport Officer, Kurnool. The said documents revealed and PW.1 admitted that Ex.P.2 agreement was terminated with effect from 24.07.1998 as per Ex.D.1 endorsement canceling H.P.A. endorsement on ‘C’ book relating to the truck. The dishonoured cheque Ex.P.4 is dated 12.08.1998 subsequent to the date of cancellation of Ex.P.2 agreement. 3. It is contention of the appellant’s counsel that Ex.P.4 cheque was issued by the accused towards discharge of his liability under Ex.P.3 guarantee agreement and that as per evidence of PW.1, Ex.P.4 cheque was a post-dated cheque given by the accused on 12.07.1998 prior to cancellation of Ex.P.2 agreement and that it was issued when his liability under Ex.P.3 was subsisting. It is not the complainant’s case in the complaint that Ex.P.4 cheque was issued on 12.07.1998 with post-date mentioned on the cheque as 12.08.1998. Realizing the mistake, PW.1 changed his version in cross- examination, which version was not believed by the lower Court rightly as it is not the complainant’s case in the complaint. In the complaint, the complainant did not even disclose about seizing of the truck and auctioning the said truck in which the complainant realized Rs.2,60,000/-. It is evidence of PW.1 that after realizing Rs.2,60,000/- by sale of the truck, the accused gave Ex.P.4 cheque for Rs.2,79,304/- towards balance amount due and payable under Ex.P.2 agreement. It is contended that as the accused gave Ex.P.4 cheque, the complainant cancelled Ex.P.2 agreement on 24.07.1998. The cheque was issued on 12.08.1998 long after cancellation of Ex.P.2 agreement. Therefore, the argument that the complainant cancelled the Ex.P.2 agreement on the belief that Ex.P.4 cheque would be realized, falls to the ground. By the date of Ex.P.4 cheque, there was neither debt nor liability either on the part of the accused or on the part of T.Srinivasulu towards the complainant. 4. Section 128 of the Indian Contract Act prescribes liability of surety in the following terms: “Surety’s liability:- The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.” Liability of the surety is there only so long as liability of the principal debtor/T.Sreenivasulu continued. The moment T.Sreenivasulu’s liability is discharged by way of seizure of his truck and selling the same in public auction and realizing its value and cancellation of Ex.P.2 agreement thereafter, there cannot be any liability for the accused as guarantor under Ex.P.3 guarantee agreement. All the clauses in Ex.P.3 agreement impose liability on the accused as guarantor under Ex.P.2 agreement only. Over and above liability of T.Sreenivasulu under Ex.P.2 lease agreement, the accused has no other liability. Even though Ex.P.3 reads that it will be in force for 30 months, the said period became frustrated by seizure and sale of the truck and cancellation of Ex.P.2 lease agreement. After termination of Ex.P.2 lease agreement, there was neither liability on the part of T.Sreenivasulu nor on the part of the accused. Therefore, the lower Court is correct in holding that Ex.P.4 cheque was not drawn in discharge of any debt or liability. There are no grounds in this appeal to interfere with finding of acquittal recorded by the lower Court. 5. In the result, the appeal is dismissed. ____________________________ SAMUDRALA GOVINDARAJULU,J Dt. 13th December, 2011. PNV