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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.  82-83  OF 2016 (Arising out of S.L.P. (Crl.) Nos.4517-4518 of 2014)

Don Ayengia …Appellant

Versus

The State of Assam & Anr. …Respondents

JUDGMENT

T.S. THAKUR, J.

1. Leave granted.

2. These appeals arise out of a judgment and order dated 2nd  

April,  2014  passed  by  the  High  Court  of  Assam,  Nagaland,  

Mizoram and Arunachal Pradesh at Guwahati in Criminal Appeal  

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No.10  and  Criminal  Revision  No.41  both  of  the  year  2012  

whereby  the  High  Court  has  allowed  the  Criminal  Revision  

No.41  of  2012  and  set  aside  the  conviction  of  respondent  

Haren Mudoi under Section 138 of the Negotiable Instruments  

Act, 1881 and dismissed Criminal Appeal No.10 of 2012 filed  

by the Complainant/Appellant.   

3. The Complainant/Appellant in these appeals is a partner  

in M/s. Ayaan Consortium.  He entered into an agreement with  

one Nazimul Islam for construction of a multi-storeyed building  

over  a  certain  parcel  of  land.  It  is  not  in  dispute  that  the  

Complainant/Appellant  paid  to  Nazimul  Islam  in  connection  

with the said agreement a sum of Rs.10,00,000/- (Rupees Ten  

Lakhs only). It is also not in dispute that the agreement did not  

materialise in the execution of the work in question with the  

result that the same was cancelled in terms of a Promissory  

Note dated 13th August, 2007 executed by Nazimul Islam in  

favour  of  the  Complainant/Appellant.  The  Promissory  Note,  

apart from cancelling the agreement, promised to pay to the  

Complainant/Appellant the amount of Rs.10,00,000/- received  

by the executant Nazimul Islam within a period of one month  

from the  date  the  Promissory  Note  was  executed.  What  is  2

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important is that the Promissory Note further stipulated that  

the  amount  of  Rs.10,00,000/-  was  being  refunded  by  the  

executant  in  terms  of  five  post-dated  cheques  dated  5th  

September, 2007, 7th September, 2007, 9th September, 2007,  

11th September, 2007 and 13th September, 2007, the receipt  

whereof was acknowledged by the Complainant/Appellant.  The  

Promissory  Note,  at  the  same time,  somewhat  contradicted  

itself when it mentioned that the cheques were being issued as  

a security and shall  be returned to Nazimul Islam when the  

amount of Rs.10,00,000/- is paid by him within a period of one  

month. Interest at the bank rates was also promised to be paid  

on the said amount of Rs.10,00,000/-.   

4. The  cheques  so  received  by  the  Complainant/Appellant  

appear to have been presented for payment after the expiry of  

the  period  of  one  month  stipulated  for  the  return  of  the  

amount  when  no  such  return  was  made  to  the  

Complainant/Appellant.  All  the  cheques  were,  however,  

dishonoured  by  the  bank  on  the  ground  of  insufficiency  of  

funds. A second presentation also proved abortive for the same  

reason. It was at this stage that Respondent No.2-Haren Mudoi  

appeared  on  the  scene  and  indemnified  the  3

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Complainant/Appellant by acknowledging that the cheques in  

question  were  actually  issued  by  him  and  handed  over  to  

Nazimul Islam. This acknowledgment was reflected in the form  

of an endorsement on the Promissory Note in which he agreed  

to  the  cheques  being  presented  for  payment  after  25th  

September, 2007. The Complainant/Appellant accordingly once  

again  presented the cheques for  payment  on 5th November,  

2007 but the same were dishonoured by the bank for the third  

time.  This  led  to  the  issue  of  a  statutory  notice  by  the  

Complainant/Appellant to which the Respondent sent a reply  

through  the  lawyer  denying  that  he  had  any  knowledge  of  

handing over of all the cheques to the Complainant/Appellant  

by Nazimul Islam and also about the dishonour of the cheques  

due to insufficiency of funds. What is significant is that, in the  

reply, the Respondent undertook to pay the whole amount of  

Rs.10,00,000/-  by  the  second  week  of  January,  2008  by  

issuing fresh cheques.  

5. A  complaint  under  Section  138  of  the  Negotiable  

Instruments Act, 1881 was in the above backdrop filed by the  

appellant against both Nazimul Islam and Haren Mudoi. Since  

Nazimul  Islam  had,  in  the  meantime,  passed  away,  4

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proceedings against him abated but the trial court found the  

Respondent  guilty  and  accordingly  convicted  him  for  the  

offence  punishable  under  Section  138  of  the  Negotiable  

Instruments Act, 1881 and sentenced him to undergo simple  

imprisonment for a period of one year. In addition, the trial  

court awarded compensation to the Complainant/Appellant in a  

sum of  Rs.12,00,000/-  to  be  paid  within  a  period  of  three  

months.  

6. Aggrieved by the judgment and order passed by the trial  

court, the Respondent preferred Criminal Appeal No.9 of 2010  

before Additional Sessions Judge, Kamrup at Guwahati, who,  

while upholding the conviction of the Respondent modified the  

sentence awarded to him to payment of a fine of Rs.2,000/-  

(Rupees  Two  Thousand  only)  and,  a  default  sentence  of  

imprisonment  for  a period  of  one month,  in  addition  to the  

amount  of  compensation  awarded  by  the  trial  court.  The  

sentence of imprisonment was, in that view, set aside by the  

appellate court.

7. Criminal  Appeal  No.10  of  2012  and  Criminal  Revision  

No.41  of  2012  were  then  filed  before  the  High  Court  at  

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Guwahati by the parties.  While Criminal Appeal No.10 of 2012  

was  filed  by  the  Complainant/Appellant,  Criminal  Revision  

No.41 of 2012 challenged the conviction of the Respondent by  

the  trial  court  and  affirmed  by  the  Appellate  Court  for  an  

offence under Section 138 of the Negotiable Instruments Act,  

1881.   The  High  Court  has,  as  seen  earlier,  set  aside  the  

conviction  of  the  Respondent  and  allowed  Criminal  Revision  

No.41 of 2012 while dismissing Criminal Appeal No.10 of 2012  

in terms of the judgment and order impugned in the present  

appeals.

8. We have heard learned counsel for the parties at some  

length who have taken us through the orders passed by the  

courts  below.  We  may  at  the  outset  gainfully  extract  

Promissory Note dated 13th August, 2007 executed by Nazimul  

Islam  in  favour  of  the  complainant  in  which  the  deceased  

Nazimul  Islam  had  acknowledged  his  liability  to  refund  the  

amount  of  Rs.10,00,000/-  received  by  him  from  the  

Complainant/Appellant in this appeal. The Promissory Note was  

in the following words:

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“PROMISSORY NOTE  Dated 13.8.2007

I Shri Nazimul Islam s/o Late Sirajul Islam resident   of Bishnu Rabha Path Beltola do hereby declare that   after mutual discussion between us (the parties) as   per  agreement  dated  06/07/07  have  decided  to  cancel the said agreement and as such the advance  amount of Rs.10,00,000/- (Rupees Ten Lakhs only)   shall be refunded within a period of one month from  today.  The amount is being refunded vide cheques   Nos.  191254  dated  05.09.2007,  191255  dated   07.09.2007,  191256  dated  09.09.2007,  191257  dated  11.09.2007  and  cheque  No.191258  dated   13.09.2007  which  has  been  acknowledged  by  Mr.   Dhan  Ayengia,  resident  of  Nabagrah  Road,   Guwahati.   It  may  here  be  mentioned  that  these   cheques have been issued as a security and shall be   returned  to  me  as  and  when  the  payments  are   received  from  me,  within  the  mentioned  period.   Further  it  may  be  also  be  mentioned  that  one   month’s bank interest shall be paid by me, after the   payment is cleared, within the stipulated period.

         (Nazimul Islam) 13.8.2007”

9. We  may  also  extract,  at  this  stage,  the  endorsement  

which  the  Respondent  made  on  the  Promissory  Note  

acknowledging  that  the  cheques  handed  over  to  the  

Complainant/Appellant herein were actually issued by him and  

agreeing that the same may be presented for payment after  

25th September, 2007. The endorsement was in the following  

manner:

“The  above  cheques  are  issued  by  me  to   Nazimul  Islam  to  deliver  to  Mr.  Don  Ayengia  the  cheques are already been bounce.  Now, we have   requested  Mr.  Dona  Ayengia  to  represent  the   

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cheques  after  25.09.2007  to  contact  me.   15.09.2007

              (H.Mudoi)”

10. It is not in dispute that the execution of the Promissory  

Note and the endorsement made by the Respondent has been  

satisfactorily proved at the trial. Concurrent findings recorded  

by the trial  court and the first appellate court to that effect  

conclude the factual part of the controversy. The only question  

that survives in the above background is whether the cheques  

issued by the Respondent were meant to discharge, in whole or  

part, “any debt or other liability” within the meaning of Section  

138 of the Negotiable Instruments Act, 1881.   

11. We have no hesitation in answering that question in the  

affirmative.  The facts as narrated above and as held proved by  

the trial  Court  and the appellate  court,  leave no manner of  

doubt, that Nazimul Islam had received an amount of rupees  

ten  lakhs  from  the  complainant  in  connection  with  the  

agreement executed between the two.  It is also not in dispute  

that upon termination of the agreement, the amount paid to  

Nazimul  Islam  was  refundable  to  the  complainant  and  that  

Nazimul  Islam  had  agreed  to  refund  the  same  within  one  

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month.  The  promissory  note  executed  by  Nazimul  Islam  

contained  an  unequivocal  acknowledgment  of  not  only  the  

debt/liability  aforementioned  but  promised  to  liquidate  the  

same within one month with interest at the bank rate.  Five  

cheques  handed  over  were  to  be  returned  but  only  upon  

payment  of  the  amount  in  question.  Such  being  the  fact  

situation, it cannot be said that the cheques had nothing to do  

with  any  debt  or  other  liability.  As  a  matter  of  fact,  the  

existence of the debt or liability was never in dispute. On the  

contrary, it was acknowledged by Nazimul Islam who simply  

sought one month’s time to pay up the amount.  The cheques  

were post dated, only to give to the drawer the specified one  

month’s  time  to  pay  the  amount.   There  is  thus  a  direct  

relationship  between  the  liability  and  the  cheques  issued  in  

connection  therewith.   Thus  far  there  is  no  difficulty.   The  

difficulty  arises  only  because  the  promissory  note  uses  the  

words “security” qua the cheques.  This would ordinarily and in  

the context in which the cheques were given imply that once  

the amount of rupees ten lakhs was paid, the cheques shall  

have  to  be  returned.   There  would  be  no  reason  for  their  

retention by the complainant or for their presentation.  In case,  

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however, the amount was not paid within the period stipulated,  

the cheques were liable to be presented for otherwise there  

was no logic or reason for their having been issued and handed  

over  in  the  first  instance.  If  non-payment  of  the  agreed  

debt/liability within the time specified also did not entitle the  

holder  to  present  the  cheques  for  payment,  the  issue  and  

delivery of any such cheques would be meaningless and futile if  

not  absurd.   It  is  important  to  note that  it  was not a case  

where no debt or liability was determined or acknowledged to  

be payable.  If cheques were issued in relation to a continuing  

contract or business where no claim is made on the date of the  

issue nor any determinate amount payable to the holder, one  

could perhaps argue that the cheques cannot be presented or  

prosecution  launched  on  a  unilateral  claim  of  any  debt  or  

liability.  The present is, however, a case where the existence  

of  the  debt/liability  was  never  in  dispute.   It  was  on  the  

contrary acknowledged and a promise was made to liquidate  

the same within one month.  Failure on the part of the debtor  

to do so could lead to only one result, viz. presentation of the  

cheques for payment and in the event of dishonour, launch of  

prosecution as has indeed happened in the case at hand.

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12. The  argument  that  the  respondent  had  no  liability  to  

liquidate the debt owed by Nazimul Islam, has not impressed  

us.  What is important is whether the cheques were supported  

by consideration.  Besides the fact that there is a presumption  

that  a  negotiable  instrument  is  supported  by  consideration  

there was no dispute that such a consideration existed in as  

much  as  the  cheques  were  issued  in  connection  with  the  

discharge of the outstanding liability against Nazimul Islam.  At  

any  rate  the  endorsement  made  by  the  respondent  on  the  

promissory  note  that  the  cheques  can  be  presented  for  

encashment after 25-09-2007 clearly shows that the cheques  

issued  by  him were  not  ornamental  but  were  meant  to  be  

presented if the amount in question was not paid within the  

extended period.  The High Court in our view fell in error in  

upsetting the conviction recorded by the Courts below who had  

correctly  analysed  the  factual  situation  and  applied  the  law  

applicable to the same.

13. In the result, we allow these appeals and set aside the  

order  passed  by  the  High  Court  to  the  extent  it  allowed  

Criminal  Revision  No.41  of  2012  filed  by  the  respondent.  

Consequently  the  order  passed  by  the  appellate  court  shall  11

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stand  restored.   We,  however,  do  not  see  any  reason  to  

interfere with the order passed by the High Court to the extent  

it dismissed Criminal Appeal No.10 of 2012.  No costs.

…………………….……..……CJI.               (T.S. THAKUR)

………………………….…..……J.                             (KURIAN JOSEPH)

New Delhi January 28, 2016

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