2005 (12) TMI 607 - HC - Indian Laws

Dishonour of Cheque - money lending business OR not - Prayer for discharge - complaint lodged u/s 138 of the NI Act - demand notice - rebuttal of presumption - non-application of the mind of the learned Magistrate - violation of provisions of Income Tax Act, Indian Contract Act and Money Lenders Act - HELD THAT - In the instant matter admittedly there was a cheque in the hand of the complainant and he was holder of the cheque and the said cheque bears the signature of petitioner. The said cheque was presented by complainant to his bank and it was dishonoured. The complainant thereafter sent demand notice to the accused in view of provisions of NI Act and the accused received the notice, but did not make payment of the dishonoured cheque within 15 days from the date of receipt of the notice. Instead he sent a reply denying everything and even denied issue of cheque in favour of complainant and taking loan from him. The facts of denial of the matter and the allegations made by the accused can be considered by the Court of learned Magistrate only after full trial on the basis of both oral and documentary evidence to be adduced by both parties in the trial. After closure of complainant's evidence the accused would be examined u/s 313 of the Code, and thereafter, the accused would lead his evidence in support of his case and would try to rebut the presumption which is in favour of complainant u/s 139 of the NI Act. After considering evidence of both parties at the time of delivery of judgment the learned Magistrate would reflect in his judgment and order whose case is believable, acceptable and has been proved. At this stage, there is no ground at all to quash the complaint case and to discharge the accused petitioner. The order of the learned CJM taking cognizance was perfect, proper and legal and it requires no interference. The order of the learned Judicial Magistrate, Is' Court dated 14.8.03 issuing process against the petitioner also was correct, legal and proper and the said order does not require any interference. There is no ground to accept the submission of accused petitioner. It has already been indicated above that learned Magistrate rightly issued process and rightly rejected prayer of the accused petitioner for discharging him. The alleged violation of provisions of Income Tax Act, Indian Contract Act and Money Lenders Act are not at all a bar for continuation of the present criminal proceeding u/s 138 of the NI Act in view of the materials disclosed in the petition of complaint read with demand notice. Here a cheque was dishonoured when presented by complainant for encashment and it was accompanied subsequently by demand notice to the accused petitioner who issued the cheque asking him to make payment of dishonoured cheque amount. In spite of receipt of demand notice the amount of the bounced cheque was not paid and naturally all the initial ingredients of initiation of a proceeding u/s 138 of the NT Act was complete. this Court in an earlier revisional application by order dated 8th July, 2004 directed the learned Magistrate to dispose of the criminal trial within 3 months from the date of communication of the order. It is evident that in spite of such direction the trial could not be completed and the accused petitioner by different methods is delaying the trial. First, after such order he filed an application for discharge and when it was rejected he moved this Court in this revisional application. Considering the entire matter and the facts and circumstances of the case and the position of law as it stands particularly in view of provisions of NI Act, I find that revisional application has no merit at all and it requires dismissal and it is accordingly dismissed. Thus, the application being C.R.A.N. No. 598/05 succeeds and is allowed. All the interim orders passed earlier stand vacated.

Summary

Issues Involved:
1. Legality of the complaint under Section 138 of the Negotiable Instruments Act (NI Act).
2. Validity of the issuance of the cheque and its dishonor.
3. Applicability of the Income Tax Act, Indian Contract Act, and Money Lenders Act.
4. Procedural propriety of the Magistrate's orders.
5. Rebuttal of presumption under Section 139 of the NI Act.
6. Timely disposal of the trial.

Detailed Analysis:

1. Legality of the Complaint under Section 138 of the NI Act:
The revisional application challenges the legality of the complaint filed under Section 138 of the NI Act. The petitioner argued that the complaint was based on a cheque handed over to a third party, Kamal Prasad Basu, as security and not in discharge of any debt or liability. The petitioner also contended that the complaint was false and aimed at harassment.

2. Validity of the Issuance of the Cheque and Its Dishonor:
The complainant alleged that a sum of Rs. 5,00,000/- was given to the accused for business purposes, and a cheque of Rs. 7,47,500/- was issued by the accused, which was dishonored due to the account being closed. The petitioner denied any transaction with the complainant and stated that the cheque was blank when handed over to Kamal Prasad Basu. The court noted that the cheque was indeed dishonored and the demand notice was sent and received, but the payment was not made within the stipulated time.

3. Applicability of the Income Tax Act, Indian Contract Act, and Money Lenders Act:
The petitioner argued that the transaction violated the Income Tax Act, which prohibits cash transactions exceeding Rs. 20,000/-. The petitioner also contended that the alleged loan was not legally enforceable under the Indian Contract Act and the Bengal Money Lenders Act due to the absence of a money lending license. The court held that the Income Tax Act has no role in a proceeding under Section 138 of the NI Act, and any violation of the Income Tax Act should be dealt with by the Income Tax authorities. The court further stated that the legality of the contract and the existence of a money lending license are not grounds to quash the complaint under Section 138 of the NI Act.

4. Procedural Propriety of the Magistrate's Orders:
The petitioner challenged the orders of the Magistrate taking cognizance of the offense and issuing process against him. The court found that the Magistrate had rightly issued the process after considering the complaint, the statement of witnesses, and the documents. The court emphasized that the defense's plea or alibi should be considered only after the closure of evidence from both sides.

5. Rebuttal of Presumption under Section 139 of the NI Act:
The court noted that the presumption under Section 139 of the NI Act is in favor of the complainant, and it is the accused's responsibility to rebut this presumption during the trial. The court stated that the accused could lead evidence to prove that there was no transaction with the complainant or that the cheque was not issued in discharge of any debt or liability.

6. Timely Disposal of the Trial:
The court observed that an earlier order had directed the trial to be completed within three months, but the trial was delayed due to the petitioner's actions. The court directed the learned Judicial Magistrate to dispose of the criminal case expeditiously, preferably within six months, without granting undue adjournments.

Conclusion:
The revisional application was dismissed, and the interim orders were vacated. The court directed the learned Judicial Magistrate to complete the trial within six months. The court's observations were tentative and did not influence the merits of the main case.