2022 (9) TMI 994 - HC - Indian Laws

Dishonor of Cheque - existence of legally enforceable debt or not - post-dated cheque issued as security for further extension of lease period - section 138 of NI Act - HELD THAT - It is clear that the post-dated cheque issued after it has been covered and the cheque issued towards security are very much covered under Section 138 of Negotiable Instruments Act and the issues as to whether the cheque was issued as post-dated one or whether the cheque was issued as security are the matter of defence and as such, the disputed question cannot be resolved in the proceedings under Section 482 Cr.P.C. Even assuming for arguments sake that the case putforth by the respondent is absurd or improbable even then, since the same touches upon the facts of the case, the same cannot be gone into at this stage as they are the matters which are required to be established by way of the evidence and this Court, exercising its powers under Section 482 Cr.P.C. will not be justified to try these factual aspects - It is also settled law that the High Court cannot embark upon the appreciation of evidence while considering the petition filed under Section 482 Cr.P.C., for quashing the criminal proceedings. A perusal of the complaint and other records available, makes out a prima facie case against the petitioner at this stage and there appear to be sufficient ground for proceeding against the petitioner. Hence, this Court concludes that the above Criminal Original Petition is devoid of merits and the same is liable to be dismissed - this Criminal Original Petition is dismissed.

Summary

Issues:
1. Dispute over the issuance and purpose of a post-dated cheque.
2. Allegations of fraud and misrepresentation in a private complaint under the Negotiable Instruments Act.
3. Interpretation of Section 138 of the Negotiable Instruments Act regarding debt or other liability.
4. Invocation of Section 482 Cr.P.C. to quash criminal proceedings.

Analysis:
1. The petitioner and respondent were close family friends, with the respondent alleging that the petitioner borrowed Rs.3,36,000 and issued a cheque that bounced. In contrast, the petitioner claimed the cheque was for additional advance towards extending a lease agreement. The court held that the disputed aspects could only be determined at trial, not under Section 482 Cr.P.C.

2. The petitioner argued that no offense under Section 138 of the Negotiable Instruments Act was committed as the cheque was post-dated and issued as security, not for repayment. The respondent disputed this, leading to conflicting narratives. The court emphasized that such factual disputes could not be resolved summarily under Section 482 Cr.P.C.

3. Citing the Supreme Court judgment in Sunil Todi v. State of Gujarat, the court clarified that post-dated cheques and those issued as security fall under Section 138. The interpretation of debt or other liability was crucial, emphasizing that the issuance of a cheque after incurring a debt is covered. The court stressed that the matter of defense regarding the purpose of the cheque issuance required trial for resolution.

4. Referring to legal precedents, the court highlighted that the power to quash proceedings under Section 482 Cr.P.C. is an exception, not a rule. The court cannot delve into evidentiary matters but must focus on whether a prima facie case exists. In this case, the court found sufficient grounds to proceed against the petitioner, dismissing the petition and directing expeditious trial completion within three months.

In conclusion, the judgment underscores the need for a trial to resolve factual disputes regarding the issuance and purpose of the cheque, emphasizing that Section 138 covers post-dated cheques and those issued as security. The court's decision to dismiss the petition and prioritize expeditious trial completion reflects adherence to legal principles and procedural fairness.