The refund of security deposit was contingent on the respondent handing over vacant possession of the flat. The appellant was entitled to deduct unpaid rent and maintenance charges from the deposit. The entire amount under post-dated cheques did not constitute a legally enforceable debt.

Details of the security deposit and cheques. (Paras 16-18) Cross-examination admission by the respondent. (Para 19) Appellant’s right to deduct unpaid rent from security deposit. (Para 21) Final direction and restoration of trial court’s judgment. (Para 26)

Supreme Court set aside judgments of Appellate and High Courts. Restored Trial Court’s judgment of 9th November, 2016. Directed compensation of Rs. 3,00,000/- to respondent — Remaining deposit to be reimbursed to appellant.

Acts and Sections Discussed:

• Negotiable Instruments Act, 1881 (NI Act) — Section 138 — Dishonour of Cheques due to Insufficient Funds — Legal Enforceability of Debt

• Karnataka Rent Act, 1999 — Ejectment Proceedings — Vacant Possession of Rented Property

Subjects:

• Dishonour of Cheques

• Security Deposit

• Legal Enforceable Debt

• Vacant Possession

• Ejectment Suit

• Compensation Amount

• Criminal Revision Petition

Nature of Litigation: Criminal appeals arising from dishonour of post-dated cheques given as security deposit refund, leading to conviction under Section 138 of the NI Act.

Relief Sought: Appellant sought quashing of the conviction and enhancement of compensation awarded by lower courts.

Reason for Filing the Case: The appellant challenged the conviction on grounds that the respondent failed to vacate the rented flat, making the refund of the security deposit conditional.

Decisions So Far:

1. Trial Court (9th November, 2016) — Convicted appellant under Section 138 of NI Act — Fine of Rs. 3,00,000/- awarded.

2. Appellate Court (6th March, 2018) — Enhanced compensation to Rs. 9,00,000/- — Upheld conviction.

3. High Court of Karnataka (8th July, 2024) — Dismissed revision petitions — Upheld conviction and enhanced compensation.

Issues:

• Whether the dishonoured cheques represented a legally enforceable debt.

• Whether the appellant’s liability to refund the security deposit arose despite the respondent’s failure to vacate the rented flat.

Submissions/Arguments:

• Appellant: a) Cheques issued were contingent upon handing over vacant possession of the flat. b) Respondent continued illegal occupation without paying rent for nearly five years. c) Ejectment suit was decreed in the appellant’s favor on 27th September, 2019.

• Respondent: a) Security deposit of Rs. 9,00,000/- was legally due. b) Dishonoured cheques represented an undisputed financial obligation.