Ripudaman Singh v.
Balkrishna, (2019) 4 SCC 767
Banking Laws and Negotiable Instruments Assignment
2101013
DR. B.R. AMBEDKAR NATIONAL LAW UNIVERSITY
Rai, Sonipat, Haryana – 131021
ASSIGNMENTS ON
BANKING LAW AND NEGOTIABLE INSTRUMENTS
SUBJECT CODE- 903A
TOPIC
Ripudaman Singh v. Balkrishna, (2019) 4 SCC 767: A Comprehensive Analysis
Submitted By:
Kritika Joshi
2101013
Batch- 2021-2026
Semester IX
Under the guidance of :
Dr Parul P Vashisht , Assistant Professor,
Mr Arjun , Assistant Professor,
Dr. B.R. Ambedkar National Law University
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Acknowledgements
I extend my heartfelt gratitude to Dr Parul and Mr Arjun for their guidance and expertise.
Their insights have significantly enriched this study. In addition to that I thank the librarian
for all the assistance with regard to the study material.
Sincerely
Kritika
2101013
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Table of Contents
Acknowledgements...........................................................................................................................2
Table of Contents..............................................................................................................................3
Preface...............................................................................................................................................4
Ripudaman Singh v. Balkrishna, (2019) 4 SCC 767: A Comprehensive Analysis................................5
Introduction.......................................................................................................................................5
Background and Facts of the Case.....................................................................................................5
Legal Issues.......................................................................................................................................6
Relevant Legal Framework................................................................................................................6
Section 138 of the Negotiable Instruments Act, 1881....................................................................6
Presumptions under Sections 118 and 139 of the NI Act...............................................................7
The Supreme Court's Reasoning........................................................................................................8
Analysis of the Judgment...................................................................................................................8
1. Clarification of the Scope of "Legally Enforceable Debt or Liability"......................................8
2. Distinction Between Property Rights and Contractual Obligations...........................................9
3. Implications for Real Estate Transactions..................................................................................9
4. Prevention of Technical Defenses..............................................................................................9
Subsequent Judicial Treatment........................................................................................................10
Limitations and Unresolved Questions............................................................................................10
Analysis...........................................................................................................................................11
Conclusion.......................................................................................................................................12
Sources............................................................................................................................................13
1. Judgements..............................................................................................................................13
2. Web Articles............................................................................................................................13
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Preface
The case of Ripudaman Singh v. Balkrishna (2019) 4 SCC 767 represents a landmark
decision by the Supreme Court of India, illuminating the intricate nexus between property
law and the law governing negotiable instruments in India. This judgment, delivered on
March 13, 2019, by Justice Dr. Dhananjaya Y. Chandrachud, with Justice Hemant Gupta
concurring, addresses a pivotal issue: whether cheques issued pursuant to an agreement to sell
immovable property constitute a "legally enforceable debt or liability" under Section 138 of
the Negotiable Instruments Act, 1881. The ruling not only clarifies the legal standing of such
cheques but also reinforces the sanctity of contractual obligations in real estate transactions, a
sector critical to India's economic landscape.
This comprehensive analysis delves into the factual matrix, legal issues, and judicial
reasoning of the case, while exploring its broader implications for property transactions and
the enforcement of negotiable instruments. By examining the Supreme Court's interpretation
of statutory presumptions under Sections 118 and 139 of the NI Act, alongside its distinction
between property rights and contractual obligations, this study highlights the judgment's role
in strengthening the reliability of cheques in commercial dealings. The analysis also
considers the decision's subsequent judicial impact, its limitations, and unresolved questions,
such as the treatment of rescinded agreements or security cheques.
This assignment aims to provide a thorough understanding of the Ripudaman Singh
judgment, offering insights into its significance for legal practitioners, scholars, and
stakeholders in India's real estate and financial sectors. Through a detailed examination of the
case's facts, legal framework, and judicial reasoning, this study underscores the delicate
balance between contractual flexibility and the punitive framework of the NI Act, ensuring
that economic promises are upheld even in the absence of proprietary finality.
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Ripudaman Singh v. Balkrishna, (2019) 4 SCC 767: A Comprehensive Analysis
Introduction
The Supreme Court of India's judgment in Ripudaman Singh v. Balkrishna, delivered on
March 13, 2019, and reported as (2019) 4 SCC 767, stands as a significant pronouncement on
the intersection of property law and negotiable instruments law in India. The judgment,
authored by Justice Dr. Dhananjaya Y. Chandrachud (with Justice Hemant Gupta
concurring), addresses a crucial question: whether cheques issued pursuant to an agreement
to sell immovable property constitute a "legally enforceable debt or liability" within the
meaning of Section 138 of the Negotiable Instruments Act, 1881 ("NI Act"). This analysis
explores the facts, reasoning, and implications of this important decision, which has since
been cited in numerous subsequent judgments across various courts in India.[1.1]. Lastly it
presents an legal comment on the judgment.
Background and Facts of the Case
The appellants, Ripudaman Singh and his spouse Usha Singh, claimed ownership of certain
agricultural land and entered into an agreement to sell this land to the respondent, Balkrishna,
on May 28, 2013.[1.1] The sale consideration was fixed at Rs. 1.75 crores. According to the
agreement, Rs. 1.25 crores had already been paid in cash, with the remaining Rs. 50 lakhs to
be paid through two post-dated cheques, each for Rs. 25 lakhs.[1.1]
The details of the cheques were as follows:[1.1]
1. Cheque No. 297251 dated June 3, 2013, drawn on Indusind Bank, Indore for Rs.
25,00,000/-, in favor of Ripudaman Singh
2. Cheque No. 297252 dated July 2, 2013, drawn on Indusind Bank, Indore for Rs.
25,00,000/-, in favor of Smt. Usha Singh
When these cheques were presented for payment, they were returned unpaid with the remark
"insufficient funds."[2.1] Consequently, the appellants initiated criminal complaints under
Section 138 of the NI Act against the respondent. The respondent filed applications seeking
discharge in these complaints, which were dismissed by the trial court.[2.1]
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Aggrieved by this, the respondent filed a petition under Section 482 of the Code of Criminal
Procedure, 1973 ("CrPC") before the High Court of Madhya Pradesh at its Bench in Indore.
The High Court allowed the petition and quashed the complaints.[1.1] The High Court's
reasoning was that the cheques were not issued to create any liability or debt but "only" for
the payment of balance consideration for the sale of land, and therefore, the respondent did
not owe any money to the appellants that would constitute a "legally enforceable debt" under
Section 138 of the NI Act.[2.1]
The appellants then approached the Supreme Court of India, challenging the High Court's
decision.[1.1]
Legal Issues
The primary legal issue before the Supreme Court was whether cheques issued pursuant to an
agreement to sell immovable property constitute a "legally enforceable debt or liability"
within the meaning of Section 138 of the NI Act.[2.1] This question necessitated an
examination of:
1. The nature and legal implications of an agreement to sell immovable property
2. The scope and interpretation of "legally enforceable debt or liability" under Section
138 of the NI Act
3. Whether payments under an agreement to sell, which does not itself create an interest
in immovable property, can still create a legally enforceable debt
Relevant Legal Framework
Section 138 of the Negotiable Instruments Act, 1881
Section 138 of the NI Act criminalizes the dishonor of cheques issued for the discharge of a
debt or liability. For an offense under Section 138 to be established, the following ingredients
must be satisfied:[1.2]
1. A person must have drawn a cheque on an account maintained by him in a bank for
payment of a certain amount of money to another person from that account for the
discharge of any debt or other liability
2. The cheque must have been presented to the bank within a period of six months from
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the date on which it is drawn or within the period of its validity, whichever is earlier
3. The cheque is returned by the bank unpaid, either because of insufficient funds or
because it exceeds the amount arranged to be paid from that account by an agreement
with the bank
4. The payee or holder in due course of the cheque makes a demand for payment by
giving written notice to the drawer within 15 days of receiving information regarding
the dishonor
5. The drawer fails to make the payment within 15 days of receiving the notice
Crucially, the Explanation to Section 138 defines "debt or other liability" as a "legally
enforceable debt or other liability."[1.3]
Presumptions under Sections 118 and 139 of the NI Act
Section 139 of the NI Act creates a statutory presumption that unless the contrary is proved, a
cheque has been issued for the discharge of a debt or liability. This shifts the evidential
burden to the accused to rebut the presumption.[2.2] However, the Supreme Court has
clarified in various judgments that the accused can rebut this presumption by showing, on a
preponderance of probabilities, that no debt or liability existed.[2.2]
Sections 118 and 139 of the Negotiable Instruments Act, 1881 (NI Act) establish critical
statutory presumptions that bolster the efficacy of cheques in commercial transactions,
particularly in disputes like Ripudaman Singh v. Balkrishna (2019) 4 SCC 767. Section 118
presumes, inter alia, that a negotiable instrument was drawn, accepted, or endorsed for
consideration, shifting the initial burden to the defendant to prove otherwise. This
presumption strengthens the payee’s position by assuming the instrument’s validity unless
rebutted. Section 139 specifically presumes that a cheque was issued for the discharge of a
legally enforceable debt or liability. This places the onus on the drawer to demonstrate, on a
preponderance of probabilities, that no such debt existed, as clarified in Rangappa v. Sri
Mohan (2010) 11 SCC 441.
In Ripudaman Singh, the Supreme Court leveraged these presumptions to reject the High
Court’s view that cheques issued under an agreement to sell lacked enforceable liability. The
Court emphasized that Section 139’s presumption applies unless the drawer disproves the
debt’s existence, reinforcing the NI Act’s intent to ensure cheque reliability. These provisions
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prevent frivolous defenses, compelling the accused to present credible evidence, as seen in
subsequent cases like Shaikh Suleman v. Lata Anil Gangwal (2023). However, the
presumptions are rebuttable, allowing defenses like agreement rescission or fraud, though the
threshold remains probabilistic, not absolute. By upholding these presumptions, the NI Act
fosters trust in negotiable instruments, balancing payee protection with the drawer’s right to
contest liability, thus underpinning India’s commercial framework.
The Supreme Court's Reasoning
The Supreme Court disagreed with the High Court's view that the cheques were not issued to
create any liability or debt but "only" for the payment of balance consideration, and that
therefore there was no legally enforceable debt or liability.[2.1]
Justice Chandrachud, writing for the Court, emphasized a crucial legal distinction: "Though it
is well settled that an agreement to sell does not create any interest in immoveable property, it
nonetheless constitutes a legally enforceable contract between the parties to it."[2.1][1.2] This
distinction is the cornerstone of the Court's reasoning.
The Court held that a payment made in pursuance of an agreement to sell is a payment made
in pursuance of a duly enforceable debt or liability for the purposes of Section 138 of the NI
Act.[2.1][2.1] In reaching this conclusion, the Court emphasized that while an agreement to
sell does not itself create an interest in immovable property (which would require a registered
sale deed under the Transfer of Property Act), it does create contractual obligations between
the parties, which are legally enforceable.[1.4]
The Supreme Court set aside the High Court's judgment and remanded the matter for
consideration on merits. However, it clarified that it was not expressing any views on issues
that might arise at the trial stage.[2.1]
Analysis of the Judgment
1. Clarification of the Scope of "Legally Enforceable Debt or Liability"
The judgment significantly clarifies the scope of what constitutes a "legally enforceable debt
or liability" under Section 138 of the NI Act. By holding that payments under an agreement
to sell qualify as legally enforceable debt, the Court has broadened the understanding of this
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concept beyond traditional debt relationships.[2.3]
This interpretation aligns with the legislative intent behind Section 138, which is to enhance
the acceptability of cheques in commercial and other transactions by providing a speedy
remedy in case of dishonor, thereby promoting the efficacy of banking operations.[2.4]
2. Distinction Between Property Rights and Contractual Obligations
The judgment draws a clear line between:
Property rights, which would require a registered sale deed under the Transfer of
Property Act
Contractual obligations, which arise from an agreement to sell and are legally
enforceable in their own right[2.1]
This distinction is crucial for understanding the legal implications of various types of
property transactions in India, especially in the context of part-payments and advance
payments made through cheques.
3. Implications for Real Estate Transactions
The judgment has significant implications for real estate transactions in India, particularly
those involving staggered payments through post-dated cheques. It provides a layer of
protection to sellers who receive post-dated cheques as part of the consideration under an
agreement to sell.[2.1]
By recognizing that such cheques represent a legally enforceable debt, the judgment
strengthens the position of sellers in property transactions and potentially deters buyers from
issuing cheques that they do not intend to honor.[2.1]
4. Prevention of Technical Defenses
The judgment closes a potential loophole that allowed parties to evade liability under Section
138 by arguing that payments under an agreement to sell did not constitute a "legally
enforceable debt." As noted in the analysis by Khaitan & Co., "This decision may set a
precedent for vitiating the scope for a party that tries to abandon its contractual obligations of
payment by taking the technical defence that there is no subsisting liability or debt accruing
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to a party that has entered into a mere agreement to sell, and not into a sale deed in
furtherance of the agreement to sell."[2.1]
Subsequent Judicial Treatment
The ruling in Ripudaman Singh v. Balkrishna has been cited and applied in numerous
subsequent judgments across various High Courts and trial courts in India. Some notable
instances include:
1. Shaikh Suleman Shaikh Rustam v. Lata Anil Gangwal, where the court cited this case
to affirm that cheques issued pursuant to an agreement to sell qualify as being towards
legally enforceable debt or liability under Section 138.[1.5]
2. Sri Nazeer Ahmed v. B M Muniraju, where the court relied on this judgment to hold
that when cheques are issued in pursuance of an agreement to sell, they qualify as
being towards legally enforceable debt or liability and are amenable for prosecution
under Section 138 of the NI Act in case of dishonor.[1.6]
3. M/s D Meadows Ladakh v. Mohammad Ali, where the court quoted directly from
Ripudaman Singh to emphasize that a payment made in pursuance of an agreement to
sell is a payment made in pursuance of a duly enforceable debt or liability for the
purposes of Section 138.[1.4]
4. Harjeet Singh Bhatia v. Smt. Dhanvinder Kaur Bhatia, where the court cited this case
to reject the defense that cheques given as security cheques in an agreement to sell do
not attract Section 138 of the NI Act.[1.7]
Limitations and Unresolved Questions
While the judgment in Ripudaman Singh provides clarity on the status of cheques issued
pursuant to an agreement to sell, it leaves some questions unanswered:
1. Cancellation or Rescission of the Agreement: The judgment does not directly
address situations where the underlying agreement to sell is subsequently cancelled or
rescinded before the cheques are presented for payment. In Sukhwinder Kaur v.
Salman Khan, a trial court noted that while Ripudaman Singh established that cheques
issued pursuant to an agreement to sell qualify as legally enforceable debt, additional
questions arise when the agreement does not fructify.[1.2]
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2. Partial Performance: The judgment does not elaborate on situations involving
partial performance of the agreement to sell and its impact on the enforceability of
cheques issued under it.
3. Distinction from Security Cheques: There remains some ambiguity regarding the
distinction between cheques issued as part of consideration under an agreement to sell
and cheques issued purely as security.
Analysis
The Supreme Court’s decision in Ripudaman Singh v. Balkrishna, (2019) 4 SCC 767, is a
pivotal ruling that bridges the domains of property law and negotiable instruments, offering
clarity on the contentious issue of whether cheques issued under an agreement to sell
immovable property constitute a “legally enforceable debt or liability” under Section 138 of
the Negotiable Instruments Act, 1881. By overturning the Madhya Pradesh High Court’s
narrow interpretation, the Supreme Court, through Justice Chandrachud’s incisive reasoning,
affirmed that such cheques, despite not transferring proprietary interest, embody enforceable
contractual obligations. This distinction is critical, as it recognizes the sanctity of agreements
to sell as binding contracts under the Indian Contract Act, 1872, even if they lack the
formalities of a registered sale deed under the Transfer of Property Act, 1882. The ruling
reinforces the NI Act’s legislative intent to uphold cheque credibility in commercial
transactions, particularly in India’s real estate sector, where post-dated cheques are a common
mechanism for staggered payments. By holding that these cheques represent a legally
enforceable debt, the Court protects sellers from buyers who might exploit technical defenses
to evade liability, such as arguing the absence of a completed sale. The decision’s reliance on
the presumptions under Sections 118 and 139 of the NI Act places a fair burden on the
drawer to disprove liability, aligning with precedents like Rangappa v. Sri Mohan, which
emphasize probabilistic rebuttal over absolute proof. This approach prevents premature
quashing of proceedings under Section 482 CrPC, ensuring that triable issues proceed to trial,
as seen in the remand order. The judgment’s impact is evident in its extensive citation across
High Courts, from Shaikh Suleman to Harjeet Singh Bhatia, which apply its logic to uphold
prosecutions for dishonored cheques in similar contexts, including those issued as security.
However, the ruling leaves gaps, notably in cases of agreement rescission or partial
performance, where liability might hinge on the transaction’s status at presentation. The
ambiguity around security cheques versus consideration cheques also invites further judicial
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scrutiny, as courts may need to parse issuance intent. In a broader sense, the decision
strengthens transactional trust in real estate, a sector rife with informal agreements, by
deterring cheque dishonor through criminal sanctions. Yet, it subtly underscores the risks of
unregistered agreements, nudging parties toward formalization for added security. As India’s
real estate and fintech landscapes evolve, with digital payments gaining traction, the
principles in Ripudaman Singh remain a cornerstone, ensuring cheques retain their
commercial weight. Its legacy lies in balancing contractual flexibility with the NI Act’s
punitive framework, fostering a legal environment where economic promises are upheld,
even in the absence of proprietary finality.
Conclusion
The Supreme Court's judgment in Ripudaman Singh v. Balkrishna represents a significant
contribution to the jurisprudence on Section 138 of the Negotiable Instruments Act and its
application in property transactions. By clarifying that cheques issued pursuant to an
agreement to sell constitute a legally enforceable debt or liability, the Court has reinforced
the sanctity of contractual obligations in property transactions and strengthened the legal
framework supporting the use of cheques in such transactions.
The judgment strikes a balance between property law principles (which require registered
sale deeds for transfer of immovable property) and contract law principles (which recognize
the enforceability of agreements to sell). This balance serves the commercial reality of
property transactions in India, where staggered payments through post-dated cheques are
common.
As real estate transactions in India continue to evolve, the principles established in
Ripudaman Singh will likely remain a cornerstone of the legal framework governing the use
of negotiable instruments in property transactions, providing clarity and certainty to parties
involved in such transactions.
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Sources
1. Judgements
[1.1] indiankanoon: Ripudaman Singh vs Balkrishna on 13 March, 2019
[1.2] indiankanoon: CT CASES/839/2020 on 5 January, 2023
[1.3] indiankanoon: R. Krishnappa vs N. Rame Gowda on 13 January, 2016
[1.4] indiankanoon: M/S D Meadows Ladakh vs Mohammad Ali on 22 November, 2021
[1.5] indiankanoon: Shaikh Suleman Shaikh Rustam vs Lata Anil Gangwal Through Her ...
[1.6] indiankanoon: Sri Nazeer Ahmed vs B M Muniraju on 4 December, 2020
[1.7] indiankanoon: Harjeet Singh Bhatia vs Smt. Dhanvinder Kaur Bhatia on 21 October ...
2. Web Articles
[2.1] khaitanco: UPDATE
[2.2] scconline: Explained | Supreme Court verdict on principles relating to ...
[2.3] scconline: 2019 SCC Vol. 4 May 14, 2019 Part 4 | SCC Times
[2.4] nliu: Bribes and Cheques: An Examination of Legally Enforceable ...
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