Rangappa vs S.

Mohan

IN THE HON’BLE SUPREME COURT OF INDIA

In the matter of
(Appellant)
Rangappa

vs

(Respondent)
S. Mohan

MEMORANDUM FOR THE RESPONDENT

COUNSEL FOR THE RESPONDENT

Aaditya Ranjan Das

Roll No. 1
Section A
Semester 1

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 Rangappa vs S. Mohan

CONTENTS

Content Page no.

Index of authorities 1

Table of abbreviations and 2

symbols

Statement of facts 3

Issues raised 4

Summary of pleadings 5

Pleadings 6-8

Prayer for relief 9

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 Rangappa vs S. Mohan

INDEX OF AUTHORITIES

Judicial Decisions
 Nagisetty Nagaiah vs State of A.P.
 M/s Indus Airways Pvt.Ltd. and others Vs. M/S Magnum Aviation Pvt.
Ltd.
 Kedar Patidar vs State Bank Of India

Statutes Referred
 NIA, 1881

Websites
 Lexis Nexis
 Manupatra
 Indian Kanoon

Dictionary
 The Concise Oxford English Dictionary, Oxford University Press (10th
Edn. 1999)

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 Rangappa vs S. Mohan

TABLE OF ABBREVIATIONS AND SYMBOLS

S. No. Abbreviation Word

1. vs Versus

2. Hon’ble Honourable

3. NIA Negotiable
Instruments Act
4. Sec. Section

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 Rangappa vs S. Mohan

STATEMENT OF FACTS

1. The respondent is a civil engineer who had engaged the services of the
appellant, who is a mechanic, to supervise the construction of his house
2. As per the appellant, the respondent had asked for a hand loan amounting
to Rs. 45,000 in October 1998
3. The appellant had loaned the amount in cash to the respondent
4. The respondent had initially promised to repay the amount by October
1999
5. Upon failure to fulfil his promise, the respondent promised to repay the
amount by December 2000
6. The respondent issued a post-dated cheque, numbered 886322 and dated
8th February 2001 (8/2/01) for Rs. 45,000.
7. The appellant had submitted the cheque in the bank for encashment,
however on 16th February 2001, the bank issued a return memo stating that
the “payment has been stopped by the drawer”
8. The appellant had then issued a notice to the respondent on 26th February
2001 (26/2/01), however the respondent failed to honour the cheque within
the statutorily prescribed period.

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 Rangappa vs S. Mohan

ISSUES RAISED

CONTENTION 1: WHETHER THE ISSUED CHEQUE WAS MEANT

TO REPAY A LEGALLY ENFORCEABLE DEBT

CONTENTION 2: WHETHER THE RESPONDENT IS LIABLE TO

REPAY THE AMOUNT

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SUMMARY OF PLEADINGS

CONTENTION 1: THE ISSUED CHEQUE WAS NOT MEANT TO

REPAY ANY LEGALLY ENFORCEABLE DEBT

As per the Sec. 138 and the presumption under Sec. 139 of the NIA, 1881, there
exists no legally enforceable debt.

CONTENTION 2: THE RESPONDENT IS NOT LIABLE TO REPAY THE

AMOUNT

Since there would not be any legally enforceable debt as stated above therefore
there exists no liability upon the respondent to repay any amount.

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 Rangappa vs S. Mohan

PLEADINGS

CONTENTION 1: THE ISSUED CHEQUE WAS NOT MEANT TO

REPAY ANY LEGALLY ENFORCEABLE DEBT

As per the appellant, the respondent owed him an amount of Rs. 45,000.
However, the issued cheque was not meant to repay any legally enforceable debt
for the sole reason that the cheque was issued as a security deposit. This means
that the appellant was in a position to cash out the cheque only if the respondent
failed to repay the loan in any other manner.

Since the appellant had hand-loaned the amount in cash and since there wasn’t
any written agreement with regards to the repayment of the loan, the respondent
found it in his best interests to repay the amount in cash itself. However, upon
failing to repay the loan the first time, i.e. October 1999, the respondent issued a
post-dated cheque amounting to Rs. 45,000 to the appellant.

This issued cheque was only meant to be a security deposit, and this further
clarifies the fact that the respondent was still willing to pay the amount in cash.
Once the respondent had paid the amount in cash to the appellant, he asked the
appellant to return the post-dated cheque to prevent its misuse. However, post the
appellant refused to hand over the existing cheque to the respondent, the
respondent made an imperative decision to stop payment of the cheque. This
action of stopping the payment can therefore not be evaluated as an act of cheque
bounce, as the party who had acted in bad faith was the appellant.

Further, the Sec. 138 of the NIA, 1881, is only applicable when the cheque is
meant to repay a legally enforceable debt, and as observed above, since the

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 Rangappa vs S. Mohan

cheque was only issued as a security deposit, it thus does not fall under the
provisions of the Sec. 138 of the NIA 1881. Also, since the Sec. 138 would not
be applicable, by default the Sec. 139 of the NIA 1881 would also not apply as it
is a presumption which is applicable only if the case fulfils the requirements
stated under Sec. 138.

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CONTENTION 2: THE RESPONDENT IS NOT LIABLE TO REPAY

THE AMOUNT

As stated above, the cheque was not meant to repay any existing and legally
enforceable debt, therefore it straight away rules out the question of the
respondent being liable to repay the amount. Taking precedence from the case of
Kedar Patidar vs State Bank of India, we can observe that by merely drawing a
cheque, no legally enforceable debt or liability arises.

Further taking reference from Sec. 20 of the NIA 1881, we can conclude that the
payee is only allowed to withdraw the amount of money as stated in the cheque,
thereby prohibiting him/her to withdraw in excess, subjected to the fact that the
payment had not been made earlier. Considering the facts of the case, we can
observe that since the payment had been made in cash by the respondent to the
appellant, it leaves the appellant with no room to withdraw any extra money as
stated under Sec. 20 of the NIA 1881. However the attempt to misuse the cheque
by the appellant as observed, is completely against the fundamentals of the NIA,
and therefore violates the Sec. 20 of it.

Also, since the Sec. 138 and 139 are no longer subjected to applicability over the
respondent, the burden of proof to prove that the respondent had not repaid the
loan currently lies on the appellant. Since the appellant has not been successful
in proving that the respondent had not repaid the amount, thereby there exists no
scope for the respondent to be held guilty and accountable for the same.

Keeping all facts and figures in mind and citing reference from Thimmiah vs
Ningamni we can conclude that the respondent is not liable to repay any amount.

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PRAYER FOR RELIEF

In the light of the facts stated, arguments advanced, issues raised and authorities
cited, it is humbly prayed by the counsel on behalf of the Respondent, the Hon’ble
Supreme Court may be pleased to adjudge and declare that:

1. The cheque issued was not meant to repay any legally enforceable debt or
liability and therefore the stop payment action does not amount to criminal
liability under cheque bounce as stated under Sec. 138 of the NIA, 1881;
2. The respondent is not liable to repay any amount and therefore the judicial
decision of the Hon’ble High Court of Karnataka be reconsidered and the
penalty placed upon the respondent be removed.

The Hon’ble Supreme Court may also be pleased to pass any order which it may
deem fit in the light of justice, equity and good conscience.
All of which is most humbly prayed.

Date: 23/10/2019 Counsel on behalf of Respondent

Place: Karnataka AADITYA DAS

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