In the year 1992 and 1995, the appellant’s wife subscribed to two 5-year chit funds with the respondent and upon the respondent’s persuasion that in order to be a successful bidder, the appellant submitted two blank cheques as security on behalf of his wife. In 1997, the bank account on which the said cheques were drawn was closed due to non-operation.
Both the chits got matured in the year 1997 and 1999 respectively, but the appellant was not the successful bidder in either of them. Therefore, repeated requests were made by the appellant to the respondent for releasing the subscription amount to the tune of ₹6 lakhs for both the chits, though to no avail.
When the appellant and his wife threatened the respondent with legal action, the respondent immediately presented the cheques for encashment without any information or intimation to the appellant. Both the cheques were returned back to respective respondents with an endorsement stating “account closed”.
Thereafter, two complaint cases were initiated by the respective respondents against the appellant under Section 138 of the NI Act. The same came to be dismissed by the trial court. Aggrieved, the respondents moved an appeal before the Madras High Court, which allowed the appeal and the appellant was convicted.
However, during the pendency of the appeal and pursuant to the dismissal of the complaint cases, both the respondents instituted civil suits for recovery of money on the basis of promissory notes alleging that the appellant took on October 20, 2008 and October 25, 2008, ₹3 Lakh each from both of them with a promise to return the same to them with 24 per cent interest. It was stated by the respondents that they had given the said amount from their agricultural income.
They also stated that the appellant had issued both of them cheques of ₹3.5 lakh each towards the discharge of liability, however both of them got dishonored since appellant had closed the account.
Both the civil suits were dismissed by the trial court. Aggrieved, the respondents moved the High Court in appeal, which was decreed in favor of the respondents.
The appellants then moved the present appeal before the apex court.
Source: Barandbench
