2021 (10) TMI 309 - HC - Indian Laws

Dishonor of Cheque - search, seizure and production of income tax returns with books of accounts - application rejected on the ground that as per the complainant, they have not filed income tax returns, therefore there was no reason to believe that such document was in possession of the witness to invoke Section 91 of Cr.P.C. - HELD THAT - Having regard to the huge amounts involved in the transaction and production of the income tax returns for only one year, proper opportunity should have been given to the accused to substantiate his defence and depriving of such right amounts to depriving him of fair trial. So far as the allegations of delay, no doubt the matter is pending since 2014. But the documents produced by the petitioner go to show that delay had occurred on account of the acts of both the parties. The accused to substantiate his defence had sought production of income tax returns and the audited balance sheets annexed to the income tax returns and not seeking prosecution of the complainant for violation of the provisions of the Income Tax Act. Therefore rejection of the application on such ground was not justifiable. Application under Section 311 of Cr.P.C to be recalled to show that the income tax returns for the years 2010-2011 produced by him was not genuine - HELD THAT - The power to summon under Section 311 of Cr.P.C can be exercised at any stage of any enquiry or trial, or other proceedings also. Even in Mandvi Cooperative Bank Ltd. s case referred to supra the Hon'ble Supreme Court held that there shall not be any compromise with the fair trial. The said judgment cannot be pressed into service to say that there is total bar to summon or recall the witnesses after the defence evidence is over. Therefore the trial Court shall consider the application under Section 311 of Cr.P.C. after response of the income tax authorities consequent to the summons issued to them under Section 91 of Cr.P.C. - However in the application under Section 91 of Cr.P.C. the only relevant documents are income tax returns and the annexures to the income tax returns and not the documents as sought in the application. The impugned orders of the trial Court dated 06.10.2018 and 20.11.2018 are hereby set aside. The application of the accused under Section 91 of Cr.P.C. read with Section 311 of Cr.P.C. is hereby partly allowed. The trial Court shall issue summons to the Principal Commissioner of Income Tax, Bengaluru for production of income tax returns of the complainant along with the annexures enclosed with the said returns for the years 2009-2010 to 2013-2014 - Petition allowed in part.

Issues Involved:
1. Quashing of orders dated 06.10.2018 and 20.11.2018.
2. Application under Sections 91 and 311 of Cr.P.C. for summoning documents and recalling a witness.
3. Applicability of Section 311 of Cr.P.C. in proceedings under Section 138 of the Negotiable Instruments Act.
4. Relevance of income tax returns to the defense.
5. Procedural adherence in summary trials under the NI Act.

Detailed Analysis:

1. Quashing of Orders Dated 06.10.2018 and 20.11.2018:
The petitioner sought to quash the orders passed by the XX Additional Chief Metropolitan Magistrate, Bengaluru, which rejected the applications under Sections 91 and 311 of Cr.P.C. The trial court rejected the application to summon the Principal Commissioner of Income Tax for producing income tax returns and the application to recall PW.1 for further cross-examination.

2. Application Under Sections 91 and 311 of Cr.P.C.:
The petitioner filed an application under Section 91 of Cr.P.C. to summon the Principal Commissioner of Income Tax to produce the income tax returns and related documents of the respondent company for the years 2009-2014. Additionally, an application under Section 311 of Cr.P.C. was filed to recall PW.1 for further cross-examination regarding these documents. The trial court rejected these applications, stating that the complainant had not filed income tax returns for the specified years and that violations of the Income Tax Act were not relevant to the proceedings under Section 138 of the Negotiable Instruments Act.

3. Applicability of Section 311 of Cr.P.C. in NI Act Proceedings:
The court noted that the Negotiable Instruments Act is a special enactment and Section 143 of the Act mandates summary trial procedures. However, Section 311 of Cr.P.C., which allows summoning or recalling witnesses at any stage of the trial, is applicable if it is essential for a just decision. The court emphasized that the right to a fair trial should not be compromised, even in summary proceedings.

4. Relevance of Income Tax Returns to the Defense:
The defense argued that the income tax returns were necessary to rebut the presumption of liability under Section 138 of the NI Act by questioning the complainant's lending capacity. The court acknowledged that the accused must be given a fair opportunity to substantiate his defense, especially given the significant amounts involved. The trial court's rejection of the application on the grounds of irrelevance and procedural delay was deemed unjustifiable.

5. Procedural Adherence in Summary Trials Under the NI Act:
The court discussed the procedural requirements for summary trials under Sections 262 to 265 of Cr.P.C. and noted that the trial court had followed the procedure for summons cases, which was accepted by both parties. The court emphasized that the application under Section 91 of Cr.P.C. should have been considered even after the conclusion of the trial, as it pertains to the fair trial rights of the accused.

Conclusion:
The court set aside the impugned orders dated 06.10.2018 and 20.11.2018, partly allowing the petition. It directed the trial court to issue summons to the Principal Commissioner of Income Tax for the production of income tax returns and related documents for the years 2009-2014. The trial court was also instructed to consider the application under Section 311 of Cr.P.C. to recall PW.1 after receiving the response from the income tax authorities. This ensures that the accused's right to a fair trial is upheld, and relevant evidence is duly considered.

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