Cheque Bounce Case Resolved: Supreme Court Sets Aside Conviction Under Negotiable Instruments Act

The Supreme Court of India, in N.P. Murugesan vs. C. Krishnamurthy, ruled in favor of the appellant by setting aside his conviction under Section 138 of the Negotiable Instruments Act, 1881. The case involved a cheque bounce dispute, where the appellant was convicted and sentenced for issuing a dishonored cheque. However, since the cheque amount was fully paid and acknowledged by the respondent, the Court decided to quash the conviction in the interest of justice.

Background of the Case

The case stemmed from a dispute over a dishonored cheque. The appellant, N.P. Murugesan, was convicted under Section 138 of the Negotiable Instruments Act, 1881, which penalizes the issuance of cheques that are returned due to insufficient funds. The respondent, C. Krishnamurthy, had filed a complaint leading to the conviction.

After exhausting legal remedies in lower courts, the appellant approached the Supreme Court, challenging the conviction and sentence imposed on him.

Petitioner’s Arguments

The appellant argued:

• The cheque amount had been fully paid, and the respondent had acknowledged receipt.
• The purpose of the Negotiable Instruments Act is to ensure financial transactions are honored, and since the due amount was paid, the case should be closed.
• The conviction and sentence should be set aside to prevent unnecessary hardship.

Respondent’s Arguments

The respondent, C. Krishnamurthy, did not dispute the payment and acknowledged receiving the cheque amount.

Supreme Court’s Key Observations

The Supreme Court, in its ruling, stated:

“In the peculiar facts and circumstances of this case, we are of the view that for doing complete justice, the whole litigation should be given a quietus, subject to appropriate terms.”

The Court acknowledged that since the dispute had been resolved between the parties, continuing the conviction would serve no meaningful purpose.

Final Judgment and Conclusion

The Supreme Court:

• Set aside the conviction and sentence imposed on the appellant.
• Directed the appellant to pay Rs. 10,000 as costs to the Mediation Centre at the High Court of Madras within four weeks.
• Disposed of all pending applications related to the case.

This judgment highlights the Court’s approach in cheque bounce cases where payments are made during litigation. By resolving the matter amicably, the ruling reinforces the importance of settlements in financial disputes while ensuring that judicial resources are utilized efficiently.

Petitioner Name: N.P. Murugesan.
Respondent Name: C. Krishnamurthy.
Judgment By: Justice Kurian Joseph, Justice Sanjay Kishan Kaul.
Place Of Incident: Chennai, India.
Judgment Date: 04-07-2018.

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