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2021 (11) TMI 989 - HC - Indian LawsDishonor of Cheque - legally enforceable debt or not - pure and simple civil dispute or not - proceedings challenged primarily on the ground that the cheque, alleged to have been dishonored, was not issued by the petitioner in favour of the respondent for any legally enforceable debt - HELD THAT - It is true that if the dispute has the contours of dispute of civil nature and does not constitute a criminal offence, this Court may be justified to quash the complaint or the criminal proceedings as the case may be, in the exercise of inherent power under Section 482 Cr.P.C. The criminal proceedings ought not to be permitted to degenerate into weapon of harassment. It is trite law that that the offence under Section 138 of N.I. Act is always committed in the course of civil transactions and if a cheque is given by the accused to the complainant in the discharge of his civil liability, which, of course, must be the legally enforceable debt or liability and same, if presented before the Bank, is returned unpaid by the Bank for insufficiency of funds or that it exceeds the amount arranged to be paid, the complainant may serve a notice upon the accused to make the payment within thirty days from the receipt of the said notice - the complaint filed by the respondent, if viewed in this context, does not lack the ingredients of the offence under Section 138 N.I. Act. In view of the clear provisions of Sections 138 and 139 of N.I. Act and the legal position on the point explained by the Hon ble Supreme Court, there is hardly any reason to doubt the proposition that the probable defence of the accused in a complaint under Section 138 of N.I. Act, that the cheque issued by him which was later dishonored was not for any legally enforceable debt or liability, can be raised by the accused only at the stage of leading evidence and cannot be considered by the Magistrate at the threshold at the time of taking cognizance. It, however, remains to be seen that in a case where, from a plain reading of the complaint and the documents appended thereto, it clearly comes out that the cheque issued by the accused, as per own showings of the complainant, was not for discharge of any legally enforceable debt or other liability. Petition dismissed.
Issues Involved:
1. Whether the dispute regarding the bounced cheque is purely civil and thus not maintainable under Section 138 of the N.I. Act. 2. Whether the plea of the accused that the cheque was not issued for a legally enforceable debt can be examined at the threshold or constitutes a defense to be proved during the trial. Issue-wise Analysis: 1. Civil vs. Criminal Nature of the Dispute: The petitioner argued that the dispute was of a civil nature and that the criminal complaint under Section 138 of the N.I. Act was filed to harass him. The court acknowledged that criminal proceedings should not be used as a tool for harassment in civil disputes. However, it emphasized that certain offenses like those under Section 138 of the N.I. Act arise from civil transactions and can be pursued criminally if the ingredients of the offense are made out. The court referred to the Supreme Court's ruling in Ripudaman Singh vs Balkrishna, which held that cheques issued under an agreement to sell constitute a legally enforceable debt. Thus, the court concluded that the complaint under Section 138 of the N.I. Act was maintainable as it involved a legally enforceable debt. 2. Examination of the Accused's Plea at the Threshold: The petitioner contended that the cheque was not issued for a legally enforceable debt and that this should be examined at the threshold. The court noted that under Section 139 of the N.I. Act, there is a presumption that a cheque is issued for discharging a legally enforceable debt. This presumption can be rebutted by the accused during the trial. The court cited the Supreme Court's judgment in Laxmi Dyechem vs State of Gujarat, which highlighted that the burden of proving a probable defense lies on the accused and should be done during the trial. The court also referred to the Supreme Court's decision in Shiv Kumar vs. Ramavtar Agarwal, which upheld that rebuttal of the presumption under Section 139 can only be done after adducing evidence. Consequently, the court held that the accused's plea that the cheque was not for a legally enforceable debt could not be examined at the threshold and constituted a defense to be proved during the trial. Conclusion: The court dismissed the petition, finding no merit in the arguments presented by the petitioner. It held that the complaint under Section 138 of the N.I. Act was maintainable and that the accused's plea regarding the enforceability of the debt should be examined during the trial. The court reiterated that criminal proceedings should not be used to harass individuals in civil disputes but recognized that Section 138 of the N.I. Act involves both criminal and compensatory aspects, making it a valid legal remedy for dishonored cheques.
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