The core of the case involves dishonored checks issued by Nagabhushan as a security deposit refund, which Nagaraja claimed as a legally enforceable debt under the Negotiable Instruments Act, 1881. The document outlines the procedural history, including the trial court’s initial conviction of Nagabhushan, the appellate court’s enhancement of compensation, and the High Court’s affirmation of the conviction. Ultimately, the Supreme Court partially allowed the appeals, quashing the higher courts’ judgments and restoring the trial court’s decision, finding that the full amount was not a legally enforceable debt due to Nagaraja’s prolonged unauthorized occupation of the property.
Negotiable Instruments Act, 1881, Section 138 – Dishonour of cheque – Conviction set aside – Legally enforceable debt – Cheques in question were given by the appellant-accused to the respondent-complainant towards refund of the security deposit to the tune of Rs. 9,00,000/- made by the latter, when he had taken the flat owned by the appellant- accused on rent – The refund of the amount of security deposit was contingent upon the respondent-complainant handing over the vacant possession of the flat and returning the keys thereof to the appellant-accused – Upon completion of the tenure of the lease, the appellant-accused issued a legal notice calling upon the respondent-complainant to vacate and hand over the vacant possession of the subject flat, but the respondent-complainant did not vacate the same – Appellant-accused filed a suit seeking ejectment of the respondent-complainant from the subject flat and for damages which was partly decreed in favour of the appellant-accused – Respondent- complainant continued to occupy the subject flat, for a period of nearly 5 years beyond the last date of the rent agreement without paying any rent or maintenance amount – Held that in this background, the appellant-accused was definitely not liable to refund the entire security deposit amount of Rs.9,00,000/- covered by the post-dated cheques, to the respondent-complainant because he was entitled to deduct the amount of due rent and maintenance from the said amount – Respondent-complainant failed to lead evidence to conclusively establish that the entire amount under the post-dated cheques was a legally enforceable debt against the appellant- accused – Judgment passed by the appellate Court and the judgment passed by the High Court, whereby compensation awarded by the trial Court was enhanced and the appellant-accused has been held liable to pay a sum of Rs.9,00,000/- as compensation to the respondent-complainant and in default to undergo simple imprisonment, do not stand to scrutiny hence liable to be quashed and set aside – The judgment rendered by the trial Court restored.
(Para 17 to 26)
M.S.Nagabhushan V. D.S.Nagaraja
Supreme Court: 2025 INSC 316: (DoJ 04-03-2025)
