2019 (2) TMI 2 - HC - Indian Laws

Dishonor of Cheque - it was contended that cheque in question did not represent an amount that could be termed as legally enforceable or other liability which was due - section 138 of Negotiable Instruments Act - Jurisdiction under Section 482 Cr.P.C. - Held that - This Court finds that the petitioners at best raise questions of fact mixed with questions of law which cannot be examined or effectively addressed in the limited jurisdiction under Section 482 Cr.P.C., it being desirable that the same be left to be adjudicated upon on the basis of formal evidence led by both sides at the trial. The contention of the petitioners is that the amount of cheque represented a liability which was not due on the date of issuance of the cheque - This contention cannot be accepted as correct at this stage of the process without proper inquiry. A presumption arises from the act of issuance of cheque that it was for the discharge in whole or in part, of a debt or other liability and in terms of Section 139 NI Act, onus to prove facts to the contrary so as to rebut the said presumption would be of the petitioners. This Court declines to interfere at this stage in the ongoing criminal prosecution of the petitioners on the complaint of the respondent - petition dismissed.

Summary

Issues:
Summoning order under Section 138 of Negotiable Instruments Act, 1881; Abuse of process of law; Jurisdiction under Section 482 of Cr.P.C.; Vicarious criminal liability under Section 141 of NI Act; Lease agreement terms; Security deposit payment dispute; Dishonor of cheque; Premature termination of lease contract; Arbitration proceedings; Pending objections under Section 34 of Arbitration and Conciliation Act, 1996.

Analysis:
The petitioners were summoned as accused based on a criminal complaint alleging offense under Section 138 of the Negotiable Instruments Act, 1881, due to the dishonor of a cheque issued against a security deposit as per a lease agreement. The petition sought to set aside the summoning order and quash the complaint, claiming it was an abuse of process of law. The court found that the petition raised questions of fact and law best left for trial, citing limited jurisdiction under Section 482 of Cr.P.C. and the need for formal evidence [Rajiv Thapar vs. Madan Lal Kapoor, (2013) 3 SCC 330].

The lease agreement between the parties included clauses regarding a lock-in period, breach consequences, and security deposit payment terms. The lessor received two parts of the security deposit, with the second part being a deferred payment via a post-dated cheque dated 01.02.2014, which was dishonored. Disputes arose leading to the lessee vacating the premises, and subsequent demands for damages and payment under the lease terms.

The court noted that the arbitration resulted in an award favoring the petitioners, directing the refund of the disputed amount. However, objections to the award were pending under Section 34 of the Arbitration and Conciliation Act, 1996. The petitioners argued that the cheque amount was not due at the time of issuance, invoking legal precedents. The court rejected this argument, emphasizing that the cheque represented a deferred installment of a due liability acknowledged under the lease terms. The court held that the petitioners failed to rebut the presumption under Section 139 of the NI Act, shifting the burden of proof to them.

Ultimately, the court declined to interfere in the ongoing criminal prosecution, dismissing the petition and associated application. The judgment highlighted the importance of proper inquiry and trial for resolving the complex factual and legal issues involved in the case.