2002 (3) TMI 951 - HC - Indian Laws

Summary

Issues Involved:
1. Competence of the complainant to file the complaint.
2. Existence of a legal liability or debt.
3. Validity of the cheque issued and its dishonor.
4. Rebuttal of the presumption under Section 139 of the Negotiable Instruments Act.
5. Maintainability of the criminal proceedings under Section 138 of the Negotiable Instruments Act.

Detailed Analysis:

1. Competence of the complainant to file the complaint:
The petitioner argued that the complaint was filed by Mr. Surjeet Singh Macker, who was not a valid Power of Attorney holder for Mr. C. L. Verma at the time of filing the complaint. The court accepted this argument, noting that Mr. Macker lacked the authority to file the complaint on behalf of Mr. C. L. Verma. The absence of a specific Power of Attorney was critical, especially since Mr. C. L. Verma had passed away a few months prior, rendering any such Power of Attorney void.

2. Existence of a legal liability or debt:
The petitioner contended that there was no legal liability or debt owed to Continental Textile Mills Ltd. (C.T.M.) since the cheque for Rs. 1 crore was issued to Mr. C. L. Verma in his personal capacity for a personal transaction involving the transfer of shares. The court found that the petitioner was not obliged to pay any amount to C.T.M. as there was no legal debt or liability towards the mill company.

3. Validity of the cheque issued and its dishonor:
The cheque issued by the petitioner for Rs. 1 crore was dishonored. The court noted that the cheque was given for a personal transaction with Mr. C. L. Verma and not for any liability towards C.T.M. The court referenced affidavits filed by Mr. C. L. Verma, which stated that there was no concluded contract for the sale of shares, thereby negating the obligation to honor the cheque.

4. Rebuttal of the presumption under Section 139 of the Negotiable Instruments Act:
The court acknowledged that under Section 139 of the Negotiable Instruments Act, there is a presumption that the cheque was issued for a debt or liability. However, the petitioner successfully rebutted this presumption by demonstrating that there was no existing debt or liability at the time of the cheque's presentation for encashment. The court found the petitioner's rebuttal convincing, based on the conduct and admissions of Mr. C. L. Verma in other legal proceedings.

5. Maintainability of the criminal proceedings under Section 138 of the Negotiable Instruments Act:
The court considered whether the allegations in the complaint, if taken at face value, constituted an offense under Section 138 of the Negotiable Instruments Act. It concluded that the allegations were inherently improbable and that the criminal proceedings were manifestly attended with mala fide intent. The court emphasized that the petitioner had satisfactorily established the basic infirmity in the complaint and its maintainability.

Conclusion:
The court allowed the petition, quashing and setting aside the criminal complaint dated 21-11-1998 (Criminal Case No. 1010 of 1998) pending in the Court of Metropolitan Magistrate, Ahmedabad. The rule was made absolute, and a notification was sent to the concerned court.