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2018 (7) TMI 2145 - HC - Indian LawsDishonor of cheque - existence of legally enforceable debt or not - Section 138 of NI Act - HELD THAT - In order to attract Section 138 of the Negotiable Instruments Act the ingredients of Section 138 have to be established primarily by the complainant by pleading in the complaint with regard to the existence of any legally recoverable debt or liability on the part of the accused. Even a semblance of doubt is raised with regard to the existence or non existence of legally recoverable debt then also it should be established during the course of trial by means of pleading the facts and leading evidence. It is the defence taken up by the accused that there was no legally enforceable debt and further that it is not only the defence but also the court has to examine whether on complete reading of the complaint itself whether any offence u/s.138 of the Negotiable Instruments Act is constituted or not. It is a very well recognized principle of criminal jurisprudence that if on plain and meaningful reading of the complaint or the FIR the allegations made in the complaint or in the FIR do not constitute any offence or under any penal law for the time being in force the continuation of such prosecution amounts to abuse of process of law. Therefore the court has to examine without reference to the defence of the accused on the basis of the complaint itself whether there existed ingredients of Section 138 of the Negotiable Instruments Act. It is clear from the complaint averments that it is the case of the complainant that the complainant has a son by name B. Sharath the accused and complainant were known to each other since long. The complainant met the accused and in fact the accused had assured to provide a job to his son in HAL factory. In this context the accused had requested the complainant to pay an amount of 10 lakhs and he demanded the same for the purpose of providing a job to the son of the complainant. In this context it is stated that on various occasions the complainant has paid some amounts to him. As the accused could not get the job to the son of the complainant the complainant approached the accused. Then the accused again demanded for further amount for making payment to the Officers. As per the demand the complainant paid amount to him. In total lot of amount has been paid to the accused for the purpose of securing job to the son of the complainant. As the accused was not able to secure the job in HAL to the complainant s son the complainant demanded for repayment of the money. In that context it is said that on 1.5.2009 the accused issued a cheque bearing No.262871 for a sum of 10 lakhs and on presentation of the said cheque it came to be dishonoured on the ground of funds insufficient . After complying the other provisions of Section 138 of the Negotiable Instruments it appears the complaint came to be lodged - It is seen that there are absolutely no allegations whatsoever that the accused has taken this money as a loan or a debt or as a liability at any point of time. It is clear cut case of the complainant that he has paid money for the purpose of securing job for his son even without examining whether the accused has got any authority to provide job to his son or not and what is the procedure that is required to be followed by the HAL factory for the purpose of selecting any candidate for the purpose of providing any job. Therefore without examining anything the complainant himself has entered into a void contract with the accused and paid money as against the public policy for illegal purpose. Section 138 of the Negotiable Instruments Act mandates that there should be an existence of legally recoverable debt and in order to attract Section 138 of the Negotiable Instruments Act the party has to plead with regard to the existence of legally recoverable debt. If he pleads with regard to the existence of the legally recoverable debt u/s.138 of the Act then only presumption u/s.139 of the Act can be raised in favour of the complainant - even considering the provisions of Section 139 of the Negotiable Instruments Act there is no question of accused rebutting the presumption unless the presumption is raised in favour of the complainant. If the court for any reason comes to the conclusion that the ingredients of Section 138 of the Negotiable Instruments Act are not made out the court cannot take cognizance of such matter and for the purpose of calling the accused to appear before the court and contest the proceedings. The learned Magistrate in fact at the time of taking cognizance of the private complaint has to examine meticulously the contents of the complaint. It is more than several times made clear that when ever a complaint is filed the learned Magistrate has to look into the complaint he should not mechanically take cognizance or refer the matter to the police for investigation. The learned Magistrate has to look into the complaint averments for the purpose of ascertaining whether the court has got jurisdiction to try that matter. Secondly the contents of the complaint even meaningfully understood allegations made therein constitute any offence. Only for those offences where the allegations constitute offence the Magistrate is entitled to take cognizance and proceed with the matter. Petition allowed.
Issues Involved:
1. Legally recoverable debt under Section 138 of the Negotiable Instruments Act. 2. Applicability of Section 139 presumption in favor of the holder. 3. Legality of the contract under Section 23 of the Indian Contract Act. 4. Judicial discretion in quashing proceedings based on complaint averments. Detailed Analysis: 1. Legally Recoverable Debt under Section 138 of the Negotiable Instruments Act: The petitioner sought quashing of proceedings under Section 138 of the Negotiable Instruments Act, arguing that the complaint did not allege a legally recoverable debt. The court examined whether the complaint demonstrated the existence of such a debt, as required by Section 138, which penalizes the dishonor of a cheque issued for discharging a debt or liability. The court concluded that the complaint failed to establish a legally recoverable debt, as the money was paid for securing a job, an illegal consideration under Section 23 of the Indian Contract Act. 2. Applicability of Section 139 Presumption in Favor of the Holder: Section 139 of the Negotiable Instruments Act presumes that the holder of a cheque received it for discharging a debt or liability unless proven otherwise. The court noted that this presumption applies only if the complaint alleges a legally recoverable debt. Since the complaint did not establish a legal debt, the presumption under Section 139 could not be invoked. 3. Legality of the Contract under Section 23 of the Indian Contract Act: The court referred to Section 23, which deems agreements void if their consideration is illegal or against public policy. The court found that the payment for securing a job was illegal and void, thus not constituting a legally recoverable debt. Cases cited, including rulings from the Madras and Delhi High Courts, supported the view that agreements with illegal consideration are unenforceable, and money paid under such agreements cannot be recovered. 4. Judicial Discretion in Quashing Proceedings Based on Complaint Averments: The court emphasized the need for a meaningful reading of the complaint to ascertain the existence of a legally recoverable debt before proceeding under Section 138. It stressed that if the complaint does not prima facie establish the ingredients of the offense, continuing the prosecution would be an abuse of the legal process. The court criticized the mechanical approach of taking cognizance without scrutinizing the complaint's contents and reiterated the importance of safeguarding constitutional rights. Conclusion: The court allowed the petition and quashed the proceedings in CC No.22036/2009, concluding that the complaint did not establish a legally recoverable debt, and the contract was void due to its illegal consideration. The judgment underscored the necessity of a thorough judicial examination of complaint averments to prevent misuse of legal provisions and protect individual liberties.
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