JAI NARAIN VYAS UNIVERSITY

Session-2019-2020
B.B.A. LL.B. (5th Year)
8th Semester

COMPANY LAW & NEGOTIABLE

INSTRUMENT ACT
Submitted To: Submitted By:
RAGHAV DAGA
16BBL53032
 IN THE HON’BLE HIGH COURT OF
ANDHRA PRADESH

Criminal Appeal No. /2012

In the Matter of
Rajesh ……............ (APPELLANT)
V.
Ajay ....…......... (RESPONDENT)

MEMORIAL ON BEHALF OF THE APPELLANT

 TABLE OF CONTENTS:
Index of Authorities.........................(3)
Statement of Jurisdiction................(4)
Statement of Facts.......................(5-6)
Statement of Issues.........................(7)
Body of Pleadings.........................(8-10)
Prayer...........................................(11)
 INDEX OF AUTHORITIES:
Websites Referred:
www.casemine.com
www.indiankanoon.com
Statues:
Negotiable Instrument Act, 1881
Partnership Act, 1932
Contract Act, 1872
Book Referred:
The Negotiable Instrument Act- Justice Ranganath
Mishra (Retd.)
 Statement of Jurisdiction:
This criminal appeal is filed before this Hon’ble High
Court of Andhra Pradesh under Section 374 of the Code
of Criminal Procedure, 1973 by Mr. Rajesh arising out
of the order of the Sessions Court upholding his
conviction under Section 138 of the Negotiable
Instruments Act, 1881.
 Statement of Facts:
Ajay and Rajesh were running a taxi business together
in Hyderabad. Rajesh issued a personal cheque dated
8.10.2011 for Rs.50, 000/-to Ajay for his share of
profits.

Subsequently, Rajesh was in pressing need of a hand

loan which was given by Ajay for an amount of Rs.50,
000/- on 15/12/2011.

Rajesh failed to repay the loan amount within two

months as promised.

The cheque that Rajesh issued to Ajay for his business

profit was dishonored on two instances of
presentment.

Ajay issued a legal notice to Rajesh to which there was

no reply. After 15 days of issuance of notice, Ajay filed
a criminal complaint under Section 138 of the
Negotiable Instruments Act, 1881.
 Statement of Issues:
Whether the amount paid to Ajay is a legally
enforceable debt or not?

Whether the appellant is guilty of the wrongful

dishonour of the cheque?
 Body of Pleadings:
That the amount paid to Ajay by Rajesh is not a legally
enforceable debt.

It is humbly submitted that the amount transacted by

cheque is not a legally enforceable debt and hence, as
such, would not attract the penal provision under
section 138 of the Negotiable Instruments Act.

Section 138 of the Negotiable Instruments Act attracts

strict liability of penal nature only. Strict liability of 138
can be enforced only when it is a case of discharge of a
legally enforceable debt or liability1.

In common parlance, debt is something owed to

another. A liability is an obligation, a chosen action
which is capable of being assigned by creditor to some
other person.

The furnishing of evidence has already been done and

the burden of proof that lies on the appellant here in to
show that the amount is not a legally enforceable debt

1
Sam Daniel v John 2005 128 comp cas 17
has been discharged in the Court of the Metropolitan
Magistrate where evidence was taken on record.

That the appellant is not guilty for wrongful

dishonour of the cheque.

It is humbly submitted that the appellant herein is not

liable for any wrongful dishonour of the cheque. It can
be gathered from the fact file that respondent herein
has initiated the complaint proceedings against the
appellant only after the former failed to discharge the
liability of the hand loan of Rs.50,000/- that he had
taken from the latter.

It is submitted that the personal cheque issued by the

appellant to the respondent was not in lieu
of discharging the liability of the hand loan that Rajesh
had taken from Ajay. It is submitted that the
respondent attempted to encash the cheque and
initiated complaint proceedings only after their
payment of the hand loan of Rs.50, 000 was delayed by
the appellant whereas the cheque in issue was issued in
lieu of the profit share out of the business. It is
submitted that the respondent has attempted to act
upon the delay in repayment of the hand loan by filing
a complaint for the dishonour of the cheque issued for
another purpose. Both are different and distinguished
transactions. Section 138 is wrongfully invoked as a
knee jerk reaction to the delay in payment of the hand
loan. The Hon’ble Metropolitan Magistrate and the
Hon’ble Sessions Court failed to appreciate this
distinction.

There cannot be any presumption as under Section 139

of the Negotiable Instruments Act. The said cheque was
not issue for any consideration as it was not meant for
discharging the debt of the hand loan. Sufficient
evidence has been adduced in the trial proceedings in
this regard.

The requirement for an offence to be made out in this

section is that the cheque must be drawn “for the
discharge in whole or in part of any debt or
other liability”. An allegation in a complaint that “in
the course of the business an accused had issued a
 cheque” does not satisfy the requirements needed for
making out an offence under this section2.

Hence, by the above authority, even if it is considered

as a cheque issued in the due course of business, the
complaint shall not stand and will fail. It is humbly
submitted that this Hon’ble High Court may revisit
these facts and appreciate the same.

2
Kumar K vs Bapsons Footwear 1995 83 comp cas 172 Madras
 Prayer:
Wherefore in the light of the facts stated, issues
presented, arguments advanced and authorities cited,
the counsel for the Appellant humbly prays and
implores this Hon’ble High Court of Andhra Pradesh
that it may be pleased to adjudge and declare:
That the amount transacted is not a legally enforceable
debt

That the appellant is not guilty of wrongful dishonour

under section 138 of the Negotiable Instruments Act

And pass any order/orders this Hon’ble High Court may

deem fit in the interest of justice, equity and good
conscience.