Case: BALBHADURASINH INDRASINHJI ZALA Vs. SHANKU CONCRETE (PVT.) LTD. AND OTHERS

1. The Appellant-herein filed a complaint before the Judicial Magistrate, First Class, Lakhtar alleging the commission of an offence u/s 138 of the Negotiable Instruments Act, 1881. Originally there was only two accused-respondents in the complaint. Thereafter, two more Respondents were impleaded in the complaint proceedings. Learned Magistrate took cognizance of the offence and issued summons to the Respondents in the complaint. They filed a Criminal Miscellaneous Application before the High Court of Gujarat at Ahmedabad challenging that the order passed by the learned Magistrate was illegal and the complaint filed by the second Respondent-herein was not maintainable. 2. In the Criminal Miscellaneous Application the accused-petitioners had contended that the first Petitioner-Shanku Concretes Pvt. Ltd. and the other two Petitioners-Managing Directors of the Company have entered into an agreement with the complainant to promote sale of hollow blocks, solid blocks, interlocking etc. to be manufactured by the first Petitioner-Shanku Concrete (P) Ltd. and in that regard complainant paid Rs. 15 lakh to the second Respondent in the complaint, viz. Managing Director of Shanku Concrete (P) Ltd. and the second Respondent in the complaint executed a Cheque for Rs. 15 lakh. The complainant later on presented over the Cheque for payment and it was dishonoured by the Bank for not having sufficient funds in the accounts maintained by the Respondents in the complaint. 3. Before the High Court, the Respondents in the complaint alleged that there was no existing liability when the Cheque was issued and the Cheque was executed as part of the agreement executed between the parties and, therefore, the Cheque was unsupported by consideration. This plea was accepted by the High Court and the complaint was quashed. Aggrieved by the same, the present appeal is filed. 4. Respondent Nos. 1,2,3 and 5 were served with notice issued by this Court but they have not entered appearance. 5. We heard the Learned Counsel for the Appellant and also the Learned Counsel appearing for the State. The facts in this case show that the second Respondent herein, on behalf of the Company, issued the Cheque and that he had received Rs. 15 lakh from the complainant. Therefore, it appears that the Cheque was supported by consideration and, if any, other agreement entered into between the parties to defer the payment, that will not make the Cheque unsupported by consideration. The learned Single Judge was not right in holding that the Cheque was issued as collateral security and, therefore, it lacked consideration. The view expressed by the learned Single Judge is not correct.

Decision reasoning: 1[ds]5. We heard the Learned Counsel for the Appellant and also the Learned Counsel appearing for the State. The facts in this case show that the second Respondent herein, on behalf of the Company, issued the Cheque and that he had received Rs. 15 lakh from the complainant. Therefore, it appears that the Cheque was supported by consideration and, if any, other agreement entered into between the parties to defer the payment, that will not make the Cheque unsupported by consideration. The learned Single Judge was not right in holding that the Cheque was issued as collateral security and, therefore, it lacked consideration. The view expressed by the learned Single Judge is not correct.