2022 (1) TMI 858 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - misuse of blank signed cheques by power agent - HELD THAT - It is the uncontroverted case of the petitioner that her financial affairs were looked after by her husband and that she was not aware of all the transactions and the issuance of cheques and that even her income tax returns were filed by her husband. In this backdrop, a perusal of the complaint reveals that the alleged amount of ₹ 17,00,000/-, which is alleged to have been borrowed by the petitioner from her husband's brother, no details as to the manner in which the amount has been paid to the petitioner has been averred. Though it is the averment in the complaint that a sum of ₹ 14,00,000/- was borrowed by the petitioner through banking channels, however, no material whatsoever finds place in the complaint to substantiate such a payment - the contention of the petitioner that there is contradiction in the amount alleged to have been received by the petitioner in the notice and in the complaint assumes significance. In the absence of the Principal appearing before this Court to substantiate his case and there being no tangible materials based on which the complaint given by the Principal could be made out, this Court is of the considered opinion that the initiation of the complaint is only for the purpose of harassing the petitioner and cannot be said to be a pure case of cheque dishonour attracting Section 138 of the Negotiable Instruments Act. Petition allowed.

Summary

Issues:
Petition to quash proceedings in S.T.C.No.373/2017 based on alleged illegal and invalid complaint under Section 138 of the Negotiable Instruments Act.

Analysis:
1. The petitioner borrowed a sum of ?17,00,000 from the defacto complainant, her brother-in-law, for property purchase and personal expenses, with an undertaking to repay within a year. The cheque issued by the petitioner was dishonoured for insufficient funds, leading to a legal complaint.

2. The petitioner's counsel argued that the petitioner was unaware of financial transactions as her husband managed them, misusing her signed cheques in collusion with his brother. The petitioner claimed matrimonial discord and filed for separation, asserting no legally enforceable debt existed, seeking quashment of the complaint.

3. Despite notice, no representation was made by the respondent. The court relied on available records to adjudicate the matter, considering the petitioner's claim of cheque misuse by her husband in retaliation for matrimonial issues.

4. The complaint lacked details on the alleged loan transaction and failed to substantiate the amount borrowed through banking channels. The petitioner's husband, the Principal, did not contest the matter, leading the court to infer in favor of the petitioner due to the absence of evidence supporting the complaint.

5. The court noted the husband-wife relationship between the petitioner and the Principal, deeming it natural for the petitioner to provide signed blank cheques to her husband. Given the lack of evidence from the Principal and the petitioner's assertions of misuse, the court concluded the complaint was an attempt to harass the petitioner rather than a genuine case of cheque dishonour under Section 138.

6. Consequently, the court allowed the Criminal Original Petition, quashing S.T.C.No.373/2017, as the complaint lacked tangible evidence and appeared to be a means of harassment. The judgment favored the petitioner due to the absence of substantiated claims by the respondent, leading to the closure of the connected miscellaneous petition.