2003 (11) TMI 653 - HC - Indian Laws

Summary

Issues Involved:
1. Legality of the order by the Additional Sessions Judge quashing the Chief Judicial Magistrate's order regarding the delivery of muddamal cheques.
2. Entitlement of the petitioner to present the cheques for encashment.
3. Applicability of legal presumptions under the Negotiable Instruments Act.
4. Discretion of the Criminal Court in the disposal of property under the Code of Criminal Procedure.
5. Impact of alleged coercion and fraud on the negotiable instruments.

Detailed Analysis:

1. Legality of the Order by the Additional Sessions Judge:
The primary issue in this case was the challenge against the judgment and order dated 10.6.2003 by the Additional Sessions Judge, which quashed the earlier order of the Chief Judicial Magistrate. The Chief Judicial Magistrate had directed the delivery of muddamal cheques to the petitioner for presentation in the bank. The High Court found that the Additional Sessions Judge should not have interfered with the Magistrate's order in a revision application, as the issues raised could not be decided in a criminal court concerning property possession. The High Court held that the original order of the Chief Judicial Magistrate was legal and proper, and the interference by the Additional Sessions Judge was unwarranted.

2. Entitlement of the Petitioner to Present the Cheques:
The petitioner, claiming to be the holder in due course of the negotiable instruments, argued for the right to present the cheques for realization. The High Court emphasized that the cheques, being negotiable instruments, were subject to legal presumptions under the Negotiable Instruments Act. The court noted that the cheques were delivered to the petitioner, and retaining them in court would cause undue hardship if the petitioner was exonerated at the trial's end. The court concluded that presenting the cheques would not prejudice any party, as legal presumptions and defenses would be available.

3. Applicability of Legal Presumptions under the Negotiable Instruments Act:
The court discussed the legal presumptions under sections 118, 139, and other relevant provisions of the Negotiable Instruments Act. It noted that unless contrary evidence is presented, it is presumed that the holder of a cheque received it for discharging a debt or liability. The court highlighted that the burden of proving that the holder is not a holder in due course lies with the respondent if the instrument was obtained through fraud or unlawful means.

4. Discretion of the Criminal Court in the Disposal of Property:
The High Court analyzed the provisions under sections 451 and 457 of the Code of Criminal Procedure, which grant the Criminal Court wide discretion in disposing of property. The guiding principle is to deliver the property to the person entitled to possession, and if such a person cannot be determined, the court must make appropriate custody orders. The court emphasized that pending trial, the focus should be on entitlement to possession rather than deciding ownership issues, which are more appropriately resolved in civil court.

5. Impact of Alleged Coercion and Fraud on the Negotiable Instruments:
The respondent alleged that the cheques and undertaking were obtained under coercion and threats. The court noted that these allegations were yet to be proven in any court of law. It emphasized that the cheques, if not presented for encashment, might lose their value, turning into worthless pieces of paper. The court reasoned that the potential for further legal proceedings due to dishonored cheques should not outweigh the need for a fair trial for both parties.

In conclusion, the High Court set aside the impugned order of the Additional Sessions Judge, reinstating the original order of the Chief Judicial Magistrate. The court allowed the revision application, granting the petitioner the right to present the cheques for encashment, subject to conditions. The operation of the order was stayed for two weeks to allow the respondent time to approach a higher forum.