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Indus Airways v. Magnum Aviation

Criminal Appeal · Neutral citation not assigned (Criminal Appeal No. 830 of 2014)Decided 7 Apr 2014
Criminal Appeal No. 830 of 2014
Justice R.M. Lodha · Justice Shiva Kirti Singh

Background

An aircraft operator issued post-dated cheques as advance payment for aircraft parts. It stopped payment and cancelled the purchase orders, and the goods were not supplied. The supplier prosecuted for cheque dishonour, and the High Court restored summons that the Sessions Judge had quashed.

Decision Breakdown

The Supreme Court allowed the purchasers' appeal, set aside the High Court's judgment and restored the Sessions Judge's order quashing the process. On these facts, the cheques represented advance payment for purchases that never went through, rather than discharge of an existing legally enforceable debt or liability. Breach of an advance-payment promise might support civil compensation for proven loss, but did not itself establish the cheque-dishonour offence. The Court rejected treating every contractual advance cheque as sufficient criminal liability merely because its payment date had arrived.

Lesson Learnt

A dishonoured advance cheque in a cancelled, unfulfilled purchase must be assessed against the underlying liability. The case does not mean that every cheque described as an advance or security cheque is immune from prosecution.

Official source (sci.gov.in)View Judgment (PDF)

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