2014 (7) TMI 1342 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption u/s 139 of NI Act - whether complainant/respondent No. 2 can be said to be holder of a cheque that is received by him in discharge of any debt or other liability as envisaged under Section 139 of the Negotiable Instruments Act? - HELD THAT - It is not possible to agree with the submission that presumption under Sec. 139 of the Negotiable Instruments Act does arise in the case on hand or not cannot be considered by the Court while exercising of powers under Sec. 482 of Cr.P.C. No absolute rule can be laid down. It depends upon the facts and circumstances of the case. The present case is a illustration of need for interference by this Court and quash the proceedings in exercise the powers under Sec. 482 of Cr.P.C. - it is not possible to say that cheques in the present case is issued in discharge of any liability or debt. Once it is conceded that facts and circumstance of the case dominates and play decisive role then it would not be difficult to accept the myth of might of presumption under Sec. 139 of the Act. At least in two ways presumption becomes vulnerable to an attack by other side. One fact may makes way for the accused and special facts or peculiar fact of the case may hold back the operation of presumption or in peculiar facts of the case the Court may look into the material brought on record by the accused in support of his say that cheque is not issued in discharge of any debt or liability. In order to prevent injustice the Court may look into such material - submission about rigours and all pervasive effect of presumption read with limitation of Court under Sec. 482 of Cr.P.C. is not possible to accept in the circumstances of the case. Petition allowed.

Summary

Issues Involved:
1. Whether the cheque was issued in discharge of any liability or debt under Sec. 138 of the Negotiable Instruments Act.
2. Whether the presumption under Sec. 139 of the Negotiable Instruments Act applies.
3. Whether the High Court can quash the proceedings under Sec. 482 of Cr.P.C.

Detailed Analysis:

1. Whether the cheque was issued in discharge of any liability or debt under Sec. 138 of the Negotiable Instruments Act:

The petitioner sought to quash complaints under Sec. 138 of the Negotiable Instruments Act, arguing that the cheque was not issued in discharge of any liability or debt. The complainant, the petitioner's son, claimed that the petitioner issued a Rs. 2 crore cheque, which was dishonored due to "stop payment" instructions. The petitioner contended that the cheque was not issued for any debt or liability, but was misused by the complainant who had possession of blank signed cheques. The court noted that the complainant did not mention the cheque in earlier notices demanding dissolution of H.U.F. properties and payment for services, which was incredible and suggested misuse of the cheque.

2. Whether the presumption under Sec. 139 of the Negotiable Instruments Act applies:

The court examined whether the complainant could be considered a holder of the cheque received in discharge of any debt or liability as per Sec. 139. The complainant argued that the presumption under Sec. 139, read with Sec. 118, should apply, making it a rebuttable presumption that the cheque was issued for a legally enforceable debt. However, the court found that the facts and circumstances, including the relationship between the parties and the lack of clarity in the complainant's notices, did not support the existence of a debt or liability. The court referenced several judgments, including *Shree Meenakshisunderam Textile Ltd. v. State of Gujarat* and *M/s. M.M.T.C. Limited v. M/s. Medchl Chemicals and Pharma (P) Ltd.*, to illustrate the conditions under which the presumption could be rebutted.

3. Whether the High Court can quash the proceedings under Sec. 482 of Cr.P.C.:

The court considered whether it could quash the proceedings under Sec. 482 of Cr.P.C. The complainant argued that the question of debt or liability should be addressed at trial, not in quashing proceedings. However, the court held that in cases where the material on record clearly indicates the absence of debt or liability, it is within the court's power to quash the proceedings to prevent injustice. The court found that the circumstances of the case, including the petitioner's letters and the complainant's inconsistent claims, supported the conclusion that the cheque was not issued in discharge of any debt or liability. Consequently, the court quashed the criminal complaints pending before the Metropolitan Magistrate, Ahmedabad.

Conclusion:

The court concluded that the facts and circumstances of the case did not support the complainant's claim of debt or liability, and the presumption under Sec. 139 was successfully rebutted by the petitioner. The court exercised its inherent power under Sec. 482 of Cr.P.C. to quash the proceedings, preventing the petitioner from facing an unjust trial. The criminal complaints were quashed and set aside, and the related applications were disposed of accordingly.