2018 (1) TMI 740 - HC - Indian Laws

Undated cheques - jurisdiction of Courts to decide the matter - the cheques in questions were handed over as security deposit to the complainant/opposite party - Held that - an agreement was executed by and between the parties and the petitioners executed bank guarantee and also handed over some cheques in favour of the complainant/opposite party. Clause 10 clearly reveals that the parties had agreed that the complainant/opposite party shall have the liberty to take legal actions against the present petitioner under Section 138 of the Negotiable Instrument Act, 1881 or any other Act or law in the event of any default or non-performance on the part of the petitioners in honouring the said cheque. It is therefore apparent from the said clause that authority was given to the complainant/opposite parties to take appropriate action under Negotiable Instrument Act and the present petitioners also agreed to that effect. It is well settled principle of law that while exercising jurisdiction under Section 482 of the Code of Criminal Procedure, the Courts should not indulge in meticulous examination of the factual aspect thereby usurping the jurisdiction of the learned Magistrate to decide the actual state of affairs. In that view of this case simply on the basis of the fact that such cheques were undated, it cannot be said that the said cheques were issued as security and without having any existing debt or liability. The application appears to be premature, if not devoid of merit and accordingly the application under Section 482 of the Code of Criminal Procedure stands dismissed.

Issues Involved:
1. Quashing of proceedings under Section 138/141 of the Negotiable Instrument Act, 1881.
2. Legality of cheques issued as security deposit.
3. Jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure.

Detailed Analysis:

1. Quashing of Proceedings under Section 138/141 of the Negotiable Instrument Act, 1881:
The petitioners sought to quash the proceedings of complaint case no. CS/63257 of 2016 under Sections 138/141 of the Negotiable Instrument Act, 1881. The complaint was initiated by M/s. JMS Mining Services Private Limited, represented by its authorized representative, against the petitioners for dishonor of cheques. The Magistrate took cognizance and issued summons to the petitioners.

The petitioners argued that the cheques were handed over as security deposits, and there was no legally enforceable debt. They cited various precedents, including the decision in Indus Airways Private Limited & Ors. Vs. Magnum Aviation Private Limited & Anr., to support their claim that the trial court erroneously took cognizance of the offense. The opposite party refuted this, arguing that Section 139 of the Negotiable Instrument Act presumes the existence of a liability, and such factual disputes should be resolved at trial.

2. Legality of Cheques Issued as Security Deposit:
The petitioners contended that the cheques were undated and issued as security, not against any existing liability. They referred to Clause 10 of the agreement, which allowed the complainant to take legal action under Section 138 of the Negotiable Instrument Act in case of default.

The opposite party argued that the presumption under Section 139 of the Negotiable Instrument Act applies, and the burden of proving no existing debt lies on the petitioners at trial. The court noted that whether cheques were issued as security or against a liability is a factual question to be determined by the trial court, not in a Section 482 proceeding.

3. Jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure:
The court emphasized that its jurisdiction under Section 482 should be exercised with caution and not to meticulously examine factual disputes, which are the domain of the trial court. The court referred to various decisions, including Sampelly Satyanarayana Rao Vs. Indian Renewable Energy Development Agency Limited, which distinguished between cheques issued as security and those against a liability.

The court concluded that the High Court should not interfere with the Magistrate's satisfaction at the stage of issuing summons. The factual aspects and defenses raised by the petitioners should be addressed during the trial. The court dismissed the application under Section 482, stating it was premature and devoid of merit.

Conclusion:
The application for quashing the complaint under Sections 138/141 of the Negotiable Instrument Act was dismissed. The court held that the factual disputes regarding the nature of the cheques should be resolved at trial, not in a Section 482 proceeding. The remaining CRR No. 2682 of 2016 and CRR No. 2685 of 2016 were also dismissed. The court reiterated the limited scope of its jurisdiction under Section 482 and the necessity to allow the trial court to determine the factual issues.

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