Dishonoured Cheque offence even if cheque issued for sale consideration not disclosed in sale deed

In Bhawish Chand Sharma v. Bawa Singh, the case of the complainant was that he had sold a property to the accused for an agreed sale consideration of Rs. 20 lakhs. The accused had paid Rs.15 lakhs in cash and for the balance consideration, the cheque was issued. On presentment, the cheque got dishonoured, and the complaint was filed when the accused failed to discharge the liability after the statutory notice.

The accused admitted that the sale consideration was Rs.20 lakhs, and stated that he had paid Rs.16 lakhs in cash. He put forth a defence that he had issued cheques for Rs.4 lakhs, but those cheques were returned by the complainant stating that he had no bank account. The accused further stated that he had paid the balance in cash and that a cheque for Rs.5 lakhs without writing the name of payee was handed over to the broker as security for discharging certain electricity dues on the property. According to the accused, that cheque was misutilized by the complainant to cause the dishonour.

The trial court noted that even though the complainant stated the sale consideration to be Rs.20 lakhs, the value reflected in the sale deed was just Rs.4 lakhs. On this count, and also by accepting the version of the accused, the trial court acquitted the accused.

On appeal the High Court held that the failure to disclose full sale consideration will not invalidate the transaction underlying the cheque, though it may attract other legal penalties and that offence of dishonour of cheque under Section 138 of the Negotiable Instruments Act is attracted even if the cheque was issued in respect of sale consideration which was not disclosed in the sale deed.