2024 (7) TMI 1250 - HC - Indian Laws

Dishonour of Cheque - issuance of summons - Cheque furnished as a security is covered under the provisions of Section 138 of N.I. Act or not? - Scope and limited jurisdiction of High Court under Section 482 of Cr.P.C. HELD THAT - The entire dispute is based on the books of accounts. It needs to be noted that, at the time of filing the complaint, the complainant submitted 128 documents which are in the form of invoices, ledger accounts, agreement etc. In the affidavit-in-reply, it has been specifically contended that, upon the instructions, the cheques were retained so as to enable the complainant to recover the outstanding. The complainant has placed on record five blank cheques, drawn by the accused, in favour of complainant company to substantiate the stand taken by the accused that the questioned cheques were not given as a security. The said blank cheques were given as a security against the payment and same still in the custody of the complainat and they are not presented for encashment. This Court is of primafacie opinion that, at this stage, it is difficult to examine the disputed question of facts which are in the form of defences, cannot be examined and therefore, the issue as to whether the cheques which were sent along with the purchase order can be considered to be in discharge of an outstanding amount or not is a subject matter of trial, because on 17.04.2021, the total outstanding dues was Rs.2,08,68,924/- and therefore, prima-facie, it can be said that, there was an outstanding liability subsisting on the date of issuance of cheques - entertaining the quashing petition at this stage will result in finality without giving the parties an opportunity to adduce the evidence as merely on the basis of pleadings and the stand taken by the parties and considering the presumption in favour of the complainant and the burden of the accused to disprove the fact that on the date of issuance of cheques, there was no legal debt, legally it would be required to be determined by the trial court after evaluation of the evidence. This Court do not find substance in the submission made by learned counsel for the applicants-accused that the ingredients of Section 138 are not made out and the complaint under Section 138 of N.I. Act is not maintainable - no case is made out to exercise extraordinary jurisdiction and inherent powers of this Court to quash the Criminal Case pending on the file of Judicial Magistrate Court at Surat. The petition stands dismissed.

Summary

Issues Involved:
1. Maintainability of complaint under Section 138 of the Negotiable Instruments Act, 1881.
2. Nature of cheques issued - whether as security or against outstanding dues.
3. Scope and jurisdiction of the High Court under Section 482 of Cr.P.C. for quashing the complaint.

Issue-wise Detailed Analysis:

1. Maintainability of Complaint under Section 138 of the Negotiable Instruments Act, 1881:
The applicants argued that the cheques were issued as security and not against outstanding dues, hence the complaint under Section 138 of the N.I. Act is not maintainable. They contended that the payments for the invoices were made through RTGS, which was reflected in the ledger accounts, and the cheques were retained inadvertently by the complainant. The complainant, however, maintained that the cheques were retained and presented towards the outstanding dues as per the instructions of the accused. The court referred to various judgments, including Indus Airways Private Limited vs. Magnum Aviation Private Limited, Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited, and Sunil Todi vs. State of Gujarat, to establish that cheques issued as security can still attract Section 138 if there is a legally enforceable debt or liability subsisting on the date of issuance of the cheques.

2. Nature of Cheques Issued - Whether as Security or Against Outstanding Dues:
The applicants claimed that the cheques were issued as security for specific invoices and not for outstanding dues. The complainant argued that the cheques were retained and presented towards the outstanding dues of Rs.2,08,68,924/-. The court noted that the issue of whether the cheques were issued as security or against outstanding dues is a question of fact that needs to be determined at the trial stage. The court emphasized that such disputed questions of fact cannot be resolved in proceedings under Section 482 of Cr.P.C. and should be evaluated based on evidence during the trial.

3. Scope and Jurisdiction of the High Court under Section 482 of Cr.P.C. for Quashing the Complaint:
The court highlighted the limited jurisdiction of the High Court under Section 482 of Cr.P.C. to quash criminal proceedings. It referred to judgments like HMT Watches Limited vs. M.A. Abida and Rathishbabu Unnikrisnan vs. State (Government of NCT of Delhi), which state that disputed questions of fact, such as whether cheques were given as security or for discharge of liability, should be determined at the trial stage. The court emphasized that the High Court should not prematurely extinguish the case by disregarding the legal presumption in favor of the complainant. The court concluded that the issue of whether the cheques were issued for security or against outstanding dues should be determined by the trial court after evaluating the evidence.

Conclusion:
The court found no substance in the applicants' submissions that the ingredients of Section 138 were not made out and that the complaint was not maintainable. It held that the disputed questions of fact regarding the nature of the cheques should be determined at the trial stage. Consequently, the court dismissed the petition, stating that no case was made out to exercise its extraordinary jurisdiction and inherent powers to quash the criminal case. The observations made were prima-facie and tentative, and the trial court was instructed not to be influenced by these observations while conducting the trial.