2021 (6) TMI 466 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - documents were sought to be produced on issuance of summons - rebuttal of presumption - HELD THAT - According to the reply notice issued by the accused, he agreed to provide labour for harvesting the sugarcane and also transport the same to the factory premises. He had to sign some documents and provide blank signed cheque as security for the work undergone by him and he signed the documents prepared by the complainant and handed over blank cheque duly signed by him and the contents of the documents were never explained and the said blank cheque has been misused which was given by the accused as security towards performance of the work. It is needless to say that the complainant who has filed the complaint has to prove his case. The learned Magistrate has further observed that the accused has entered into contract with the complainant/factory and it is the defence of the accused that he has taken loan from State Bank of India/Bank of India, M.K. Hubli, for which the complainant/factory stood as a corporate guarantor and that till the debt is cleared by the complainant, there can be no legally enforceable debt from the accused - To show that there is no legally recoverable debt and for that purpose, the document sought are not required. It has also observed that if the documents sought are summoned then it will be nothing but assuming the powers of the Civil Court to look into the fact of the amounts due/set off such as who is entitled for what amount etc., which is impermissible in a prosecution under Section 138 of the Act. Petition dismissed.

Summary

Issues:
Accused seeks to quash the order rejecting application under Section 91 of Cr.P.C. for production of documents in a complaint under Section 138 of Negotiable Instruments Act.

Analysis:
The accused filed an application under Section 91 of Cr.P.C. before the trial Court, requesting the production of various documents related to the agreement between the parties. The Magistrate rejected the application, prompting the accused to challenge this decision. The accused argued that the documents were necessary to rebut the presumption based on the agreement. The accused contended that Section 91 empowers the Court to call for documents, citing a Supreme Court decision supporting the accused's right to receive all relevant documents and move applications for production. However, the Court noted that the complaint was based on a dishonored cheque under Section 138 of the Act, focusing on the accused's failure to honor the cheque amount.

The accused's defense included providing labor for sugarcane harvesting and transport, signing documents, and handing over a blank signed cheque as security. The Court emphasized that the burden of proof lies with the complainant, citing a Supreme Court decision where the production of account books was deemed irrelevant in a criminal case under Section 138 of the N.I. Act due to the presumption in favor of the cheque holder. The Magistrate observed the accused's defense regarding a loan from a bank and the complainant's role as a corporate guarantor, highlighting that the accused could prove the absence of a legally recoverable debt by rebutting the presumption under Section 139 of the Act. The Magistrate concluded that summoning the documents would exceed the scope of a prosecution under Section 138, as it would involve determining amounts due or set off, which is impermissible in such cases.

Ultimately, the Court found no merit in the petitioner's argument and dismissed the petition. The reasons provided by the Magistrate for rejecting the application were deemed legal and not perverse. The Court emphasized that the pending application was disposed of accordingly, indicating that it did not survive for further consideration.