M/S Kumar Exports vs M/S Sharma Carpets

The Supreme Court set aside the Punjab and Haryana High Court's judgment, which had overturned the acquittal of the appellant under Section 138 of the Negotiable Instruments Act, 1881. The Court held that the issuance of cheques for the discharge of a liability, followed by their dishonor due to insufficient funds, constitutes an offense under Section 138. The matter was remitted to the Magistrate for appropriate sentencing after convicting the appellant.