2021 (7) TMI 1202 - HC - Indian Laws

Dishonor of Cheque - Fraudulent transaction or not - existing debt or advance payment - presumption available under Section 139 of the N.I.Act - no reply to the notice has been given - whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability? - Section 138 of the Negotiable Instruments Act 1881. HELD THAT - While approving the views of different High Courts noted earlier this is the underlying principle as can be discerned from discussion of the said cases in the judgment of this Court. In M/S. BALAJI SEAFOODS EXPORTS VERSUS MAC INDUSTRIES LTD. 1998 (10) TMI 528 - MADRAS HIGH COURT the Madras High Court noted that the cheque was not handed over with the intention of discharging the subsisting liability or debt. There is thus no similarity in the facts of that case simply because in that case also loan was advanced. It was noticed specifically therein as was the admitted case of the parties that the cheque was issued as security for the advance and was not intended to be in discharge of the liability as in the present case. The Court notices that there is no disputes with regard to the signature on the cheuqe and her defence is that the brother-in-law had obtained her signature under the pretext that for emergency purpose this would be required for the use of the cheque in the business. There is an initial admission of the cheque the presumption under Section 139 of the N.I.Act would come into play. It is also not out of place to make a mention that there is no reply to the notice issued by the complainant. With the elements referred to under the N.I.Act existing on record it is for the trial Court thereafter to appreciate at an appropriate stage as to whether the defence put forth by the accused are worth accepting and would lead to the stage where this rebuttal can be said to have succeeded. The present complainant is a friend of the brother in law who has misused such cheque - Private complaint appears to have been filed before the Court of learned Judicial Magistrate First Class Indore which has been dismissed. The allegation with regard to the disconnection of the electricity connection permanently from 10.01.2006 the closure of the factory at Sector 21-B and the account being dormant so also the non-filling of Form No.49 or stamping of the invoice needed under the VAT are some of the issues which are inter connected and require the appreciation at the end of the adducement of the evidence. The petition is dismissed without further elaboration so as to ensure that rights of the either side may not be prejudiced. Interim relief stands vacated.

Summary

Issues Involved:
1. Quashing of criminal complaint under Section 138 of the Negotiable Instruments Act, 1881.
2. Allegations of fraudulent transactions and misuse of signed cheques.
3. Maintainability of the complaint and legal presumptions under Section 139 of the N.I. Act.
4. Scope of interference under Section 482 of the Code of Criminal Procedure.

Analysis:

1. Quashing of Criminal Complaint under Section 138 of the N.I. Act:
The petitioners sought to quash the criminal complaint (Criminal Case No. 8905 of 2007) filed against them for the dishonor of a cheque amounting to ?2.70 lakh. The cheque was alleged to have been issued by petitioner No. 2 on behalf of petitioner No. 1 for goods sold by the respondent No. 1.

2. Allegations of Fraudulent Transactions and Misuse of Signed Cheques:
The petitioners claimed that the transactions were fraudulent and that the cheques were misused by the respondent No. 1 in collusion with Rajendra Singh Rajpal, the brother-in-law of petitioner No. 2. They argued that the cheques were signed under the pretext of business purposes and were later misused. The petitioners also detailed the family disputes and alleged dishonest activities by Rajendra Singh.

3. Maintainability of the Complaint and Legal Presumptions under Section 139 of the N.I. Act:
The respondent argued that the cheque in question was signed by petitioner No. 2, drawn from her bank account, and issued by petitioner No. 1 in consideration of the sale of goods. The respondent denied the allegations of fraud and maintained that the complaint was valid as the cheque was dishonored, satisfying the ingredients of Section 138 of the N.I. Act. The court noted the presumption under Section 139 of the N.I. Act, which places the burden on the accused to rebut the presumption of a legally enforceable debt.

4. Scope of Interference under Section 482 of the Code of Criminal Procedure:
The court referred to several judgments, including Suryalakshmi Cotton Mills Ltd vs. Rajvir Industries Ltd, Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited, and others, to emphasize the limited scope of interference under Section 482. The court highlighted that ordinarily, the defense of the accused should not be considered at this stage, and disputed questions of fact should be adjudicated at trial. The court also noted that documents of unimpeachable character could be considered to determine if the continuation of criminal proceedings would amount to an abuse of process.

Conclusion:
The court dismissed the petition, stating that the robust facts presented by the petitioners constituted their defense in the criminal matter and required evidence to be adduced at trial. The court emphasized that the presumption under Section 139 of the N.I. Act would come into play, and it was not the stage to appreciate the disputed questions of fact. The court also noted the absence of a reply to the notice of dishonor and the existence of elements required under the N.I. Act on record. The court directed that the trial proceedings be initiated and completed within six months and allowed for the possibility of the petitioner appearing via video conference due to her status as a senior citizen.