Summary
The Supreme Court restored cheque-dishonour complaints arising from cheques for the balance price under an agreement to sell. Such an agreement can support an enforceable payment liability even though it creates no interest in land. Whether a contractual dispute clause suspended payment required evidence at trial, rather than quashing under Section 482 CrPC.
Issues
- Whether balance-price cheques under an agreement to sell could discharge an enforceable liability.
- Whether the alleged contractual condition postponing payment justified quashing.
Provisions considered
- Section 138, Negotiable Instruments Act, 1881Payment pursuant to an enforceable agreement to sell can satisfy the debt-or-liability requirement; the absence of a proprietary interest created by the agreement does not negate contractual enforceability. (¶ 13)
- Section 482, Code of Criminal Procedure, 1973Whether a dispute within the agreement’s clause postponed the obligation to honour the cheques required trial evidence and could not be decided in quashing proceedings. (¶ 14–17)
Held
- An agreement to sell is an enforceable contract even though it does not create an interest in immovable property. The High Court wrongly treated balance consideration as necessarily outside enforceable debt or liability. (¶ 13)
- The purchaser had acted under the power of attorney to enter a subsequent sale transaction. Whether the dispute contemplated by clause 4 nevertheless relieved the purchaser of payment was a question for evidence at trial. (¶ 14–15)
- Setting aside quashing expressed no view on the merits of issues arising at trial. (¶ 16–17)
Result
Appeals allowed; High Court order quashing the complaints set aside. Trial merits reserved; pending applications disposed of.