2015 (10) TMI 2696 - HC - Indian Laws

Offence under Section 138 of NI Act - Held that - Nothing shown by complainant of debt paid, stamp duty and of the legal fees and not produced any agreement as to the arrangement thereby the presumption in favour of the complainant under Section 139 that could be drawn as per the law not drawn as complainant being an advocate has not proved the debt amount payable to him by accused and engaged him as lawyer to conduct the case and thereby the finding of the trial Court does not suffer for any interference that too as per the settled law, the appellate Court must be slow in reversal of trial Court s judgment. Infact from its proposition, there is no conclusive finding laid down on presumption under Section 139 cannot be drawn if the cheque issued by the client to the advocate towards fees and expenses, but for saying on the factual matrix of no agreement filed and not proved by the advocate of what are the expenses besides what is the fees due. There is also not decided as to only advocate fees rules is the yardstick and beyond that no fees to be claimed. It is not even decided whether any such agreement under Contract Act is unenforceable and if so on what criteria. Thereby the decision noway helpful at this stage in seeking to quash the proceedings, but for at best of use before the trial Court as part of any defence version in discharging the burden by accused under reverse onus clause. Having regard to the above, this Court cannot go into the disputed factual aspect to quash the C.C. proceedings but for left open to the both sides to agitate before the trial Court, in view of the matter to be decided by trial Court and on the limitation against this Court in a quash petition in going into the detailed factual disputed aspects. Thus, none of the observations herein shall prejudice any of the rights of the parties particularly of the accused in defence before the trial Court, for disposal of the case on merits after full dressed trial. Accordingly, the Criminal Petition is disposed of. The interim stay passed seizes its force for the trial Court to proceed with the trial for disposal on merits.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act.
2. Validity of professional fees claimed by the advocate.
3. Presumptions under Sections 118 and 139 of the Negotiable Instruments Act.
4. Applicability of Advocate Fee Rules.
5. Quashing of criminal proceedings under Section 482 of Cr.P.C.

Issue-wise Detailed Analysis:

1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act:
The petitioner, accused of issuing a dishonoured cheque, argued that the claim did not constitute a legally enforceable debt. The court noted that the cheque was issued for professional and court expenses and was dishonoured. The statutory notice was served, and the accused failed to pay, leading to the presumption of a legally enforceable debt under Section 139 of the N.I. Act. The court referenced the Apex Court's decision in Rangappa v. Mohan, which established that once a cheque is dishonoured, there is a statutory presumption of it being for a legally enforceable debt or liability.

2. Validity of professional fees claimed by the advocate:
The accused contended that the professional fees claimed were exorbitant and against public policy, as they were based on a percentage of the compensation awarded, contrary to Advocate Rules and ethics. The court examined various payments made to the advocate and noted that the fees claimed were not forbidden by law. The court highlighted that the Advocate Fees Rules are guidelines and not the sole yardstick for fixing fees between an advocate and a client.

3. Presumptions under Sections 118 and 139 of the Negotiable Instruments Act:
The court reiterated the statutory presumptions under Sections 118 and 139 of the N.I. Act, which favor the payee unless rebutted by the accused. The accused's reply to the statutory notice did not dispute the cheque's routing from her account or her signature. The court emphasized that the burden of rebutting these presumptions lies on the accused.

4. Applicability of Advocate Fee Rules:
The accused argued that the fees claimed were in violation of the A.P. Advocates' Fee Rules 2010, which prescribe a maximum fee of 10% for money suits. The court clarified that these rules are only guidelines for fees awarded against the opposite party and not for fixing fees between an advocate and a client. The court noted that the fees claimed were not forbidden by law and did not violate public policy.

5. Quashing of criminal proceedings under Section 482 of Cr.P.C.:
The court addressed the accused's petition to quash the criminal proceedings, stating that the factual disputes regarding the enforceability of the debt and the fees claimed should be decided by the trial court. The court emphasized that it cannot conduct a roving inquiry into disputed facts in a quash petition. The court cited the recent expression of the Apex Court in the HMT case, which limits the scope of Section 482 of Cr.P.C. in quashing proceedings involving disputed facts.

Conclusion:
The court concluded that the criminal petition to quash the proceedings could not be entertained at this stage. The trial court was directed to proceed with the trial and decide the factual disputes on merits. The interim stay was lifted, and the miscellaneous petitions were closed. The court's observations were not to prejudice the rights of the parties in the trial.