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2017 (7) TMI 545 - HC - Indian LawsIssued cheques in good faith without acknowledgment of its liability - NI Act - jurisdiction of this Court under Section 482 Cr.P.C. - Held that - The act of due care and attention is to be acted by a person who is acting in good faith and he has reason to act so in good faith. Simple belief or actual belief by itself is not enough. Instant is a petition under the Code of Criminal Procedure and Section 52 IPC puts the burden on the petitioner to show that whether the cheques issued were without acknowledging its liability under the aforesaid agreement. Mere escaping the liability by using the word good faith is not enough. The factum of issuance of the aforesaid cheques in good faith without acknowledgment of its liability in the instant petition lies on the petitioner which will be determined during the trial. The petitioner cannot escape its liability under Section 52 IPC by mere saying that the cheques issued were in good faith only. The determination of good faith of issuance of cheques with acknowledgement of outstanding liability remains to be determined during the trial. In the instant petition both the aforesaid facts are emerging as a question of facts and law which unequivocally are giving rise to a mixed question of facts and law which is to be determined during due course of trial. Therefore invocation of inherent jurisdiction of this Court under Section 482 Cr.P.C. is unwarranted at this stage.
Issues Involved:
1. Quashing of the summoning order dated 30.07.2016. 2. Validity of cheques issued and their enforceability under Section 138 of the Negotiable Instruments Act, 1881. 3. Allegations of time-barred cheques and their implications. 4. Legal presumption under Section 20 of the Negotiable Instruments Act. 5. Determination of good faith and acknowledgment of liability. Detailed Analysis: 1. Quashing of the Summoning Order: The petition under Section 482 Cr.P.C. sought to quash the summoning order dated 30.07.2016 issued by the learned Metropolitan Magistrate, South East, New Delhi. The petitioners contended that the summoning order was bad ab initio and an abuse of the process of law. However, the court found no merit in this contention, stating that the proceedings under Section 138 read with Section 142 of the NI Act are criminal proceedings and the standard of proof is higher than that of civil proceedings. The court emphasized that such proceedings aim to promote the efficacy of banking operations and ensure credibility in transacting business through cheques. 2. Validity of Cheques Issued: The core issue revolved around the validity and enforceability of the cheques issued by the petitioners. The respondent/complainant company had filed a complaint under Sections 138/141/142 of the Negotiable Instruments Act, 1881, alleging that the petitioners had issued cheques which were subsequently dishonored due to insufficient funds. The petitioners argued that the cheques were time-barred and did not fall under the purview of Section 138 NI Act. However, the court noted that the issuance of cheques was not disputed and that the cheques were issued in consequence of agreements dated 23.03.2007 and 07.05.2009. The court also highlighted that there was no plea from the petitioners stating that the liability to repay the amount had been discharged. 3. Allegations of Time-Barred Cheques: The petitioners argued that the cheques issued in 2011 were time-barred and that the date filled in 2016 did not create any fresh liability. The court, however, referred to the Bombay High Court's observation that when a drawer delivers a signed cheque, they give authority to the holder to put a date of their choice, thus negating the argument of the cheques being time-barred. The court also cited Section 20 of the NI Act, which presumes that a person signing a cheque gives prima facie authority to the holder to complete it for any amount specified therein. 4. Legal Presumption under Section 20 of the Negotiable Instruments Act: Section 20 of the NI Act was pivotal in this case. It states that a person signing and delivering a paper stamped in accordance with the law gives prima facie authority to the holder to complete it as a negotiable instrument. The court emphasized that the petitioners had acknowledged the outstanding payments and had authorized the respondent/complainant to fill in the date on the undated cheques. The court relied on the judgment of the Bombay High Court and other precedents to conclude that the petitioners were liable for the cheques issued. 5. Determination of Good Faith and Acknowledgment of Liability: The petitioners claimed that the cheques were issued in good faith and in furtherance of their bona fide intent to repay. However, the court noted that the burden of proving good faith lies on the petitioners, as per Section 52 IPC, which states that an act is done in good faith if it is done with due care and attention. The court found that the petitioners' mere assertion of good faith was insufficient to escape liability. The determination of whether the cheques were issued in good faith and with acknowledgment of liability was deemed a matter to be decided during the trial. Conclusion: The court dismissed the petition, finding no merit in the contentions of the petitioners. It concluded that the issues raised involved mixed questions of fact and law, which could only be determined during the trial. The invocation of inherent jurisdiction under Section 482 Cr.P.C. was deemed unwarranted at this stage. Consequently, the summoning order dated 30.07.2016 was upheld, and the petition was dismissed with no order as to costs.
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