2011 (11) TMI 866 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the dishonor of a post-dated cheque given as security constitutes an offense u/s 138 of the Negotiable Instruments Act.
2. Whether suppression of material facts in the complaint warrants quashing of the complaint.

Summary:

Issue 1: Dishonor of Post-Dated Cheque Given as Security
The petitioners sought to quash Criminal Case No. 2088 of 2002, pending in the Court of learned JMFC, Surat, for the offense u/s 138 of the Negotiable Instruments Act. The petitioners argued that the cheque in question was given as security and not for an ascertained debt or liability, thus not constituting an offense u/s 138. They relied on Supreme Court decisions in M.S. Narayana Menon @ Mani v. State of Kerala and Sudhir Kumar Bhalla v. Jagdish Chand & Others. However, the court noted that the cheque was issued under an MOU dated 11.10.2001, on the settlement of accounts, and was for an ascertained amount of Rs. 3 lacs. The court held that even if the cheque was post-dated and given as security, its dishonor on grounds of "insufficient fund" and non-payment despite statutory notice u/s 138 constitutes an offense. The court emphasized the presumption u/s 139 of the N.I. Act that the cheque was issued for discharge of debt or liability, citing M/s. M.M.T.C Ltd. v. M/s. Medchl Chemicals and Pharma (P) Ltd.

Issue 2: Suppression of Material Facts
The petitioners contended that the complaint should be quashed due to suppression of the MOU dated 11.10.2001. The court dismissed this argument, stating that non-mentioning of the MOU in the complaint is not fatal. The essential facts required for an offense u/s 138 were sufficiently stated in the complaint, including issuance, deposit, dishonor of the cheque, service of statutory notice, and non-payment. The court found no merit in the argument for quashing the complaint based on suppression of material facts, referencing S.P. Chegalvaraya Naidu (dead) by L.rs v. Jaganath (dead) by Lr.s.

Conclusion:
The court dismissed the application to quash the complaint, ruling that a case u/s 138 of the N.I. Act is made out. The presumption u/s 139 supports the complainant's case, and the suppression argument was insufficient to warrant quashing. The ad-interim relief granted earlier was vacated.