2023 (10) TMI 950 - HC - Indian Laws

Dishonour of Cheque - discharge of any legally enforceable debt or not - rebuttal of presumption - whether the amount due and payable on the part of petitioners towards the complainants, even as per the case of complainants, was less than the amount of cheques in question? HELD THAT - The essentials to constitute an offence under Section 138 of NI Act were discussed by Hon'ble Apex Court in case of DASHRATHBHAI TRIKAMBHAI PATEL VERSUS HITESH MAHENDRABHAI PATEL ANR. 2022 (10) TMI 424 - SUPREME COURT where it was held that For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation. Thus, there is no dispute regarding the arguments raised by learned counsel for respondent that to constitute an offence under Section 138 of NI Act, the cheque in question should have been issued in discharge of some legally enforceable debt. However, it is also well-settled through precedents of Hon ble Apex Court that the issue as to whether or not a cheque was issued in discharge of legally recoverable debt is to decided during the course of trial and the proceedings under Section 138 of NI Act ought not to be quashed on such grounds at pre-trial stage. In this regard, this Court deems it appropriate to refer to the decision of Hon ble Apex Court in case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) 2022 (4) TMI 1434 - SUPREME COURT wherein it was observed Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited. This Court notes that in the present case, the petitioners herein have not disputed the issuance of cheques in question including the signatures on the cheque, date on the cheque as well as the amount mentioned in the cheques, though they have disputed the purpose or reason behind issuance of cheques, which as per the petitioners, was not to discharge any liability or pay any legally enforceable debt. In these circumstances, there is merit in the argument of learned counsel for complainants that the presumption under Section 118(a) and 139 of NI Act shall be in the favour of complainants, since the issuance of cheques is not disputed and it has to be presumed that the cheques in question had been issued towards some legally enforceable debt. This Court is of the opinion that the issues raised before this Court can only be decided by the learned Trial Court at appropriate stage, on their own merits. Since a prima facie case exists against the petitioners under Sections 138/141 of NI Act, there are no reasons to quash the impugned complaint cases and orders framing notice against the petitioners. Petition dismissed.

Summary

Issues Involved:
1. Quashing of Complaint Cases under Section 138/141 of the Negotiable Instruments Act, 1881.
2. Validity of cheques issued towards discharge of legally enforceable debt.
3. Applicability of presumption under Sections 118(a) and 139 of the NI Act.
4. Jurisdiction and scope of the High Court under Section 482 Cr.P.C. to quash proceedings.

Summary:

Issue 1: Quashing of Complaint Cases
The petitioners sought quashing of Complaint Case No. 5892/2020 and Complaint Case No. 5888/2020, pending before the learned Metropolitan Magistrate, and setting aside of orders dated 25.08.2022 framing notice under Section 251 of Cr.P.C. against them. The petitioners were erstwhile Directors of Aarcity Infrastructure Pvt. Ltd., and the complaints were filed under Sections 138/141/142/143A of the NI Act for dishonor of cheques amounting to Rs. 40,00,000/- and Rs. 58,50,000/- respectively.

Issue 2: Validity of Cheques Issued
The petitioners argued that there existed no legal debt or liability at the time of cheque issuance, and the cheques were issued on the assurance of the complainant that a third party would reimburse the amount. The complainants contended that the cheques were issued to refund amounts paid by them to DHFL and included interest @ 24% per annum. The Court noted that the presumption under Sections 118(a) and 139 of the NI Act is in favor of the complainants, as the issuance of cheques was not disputed.

Issue 3: Applicability of Presumption under NI Act
The Court referred to the Hon'ble Apex Court's decisions, emphasizing that the presumption under Section 139 includes the existence of a legally enforceable debt or liability. The burden of proving otherwise lies on the accused, which can be rebutted by raising a probable defense. The Court cited the case of Basalingappa v. Mudibasappa, highlighting that the presumption is rebuttable and the standard of proof is preponderance of probabilities.

Issue 4: Jurisdiction and Scope of High Court under Section 482 Cr.P.C.
The Court reiterated that the issue of whether a cheque was issued in discharge of a legally recoverable debt is to be decided during the trial. The proceedings under Section 138 of the NI Act should not be quashed at the pre-trial stage based on factual defenses. The Court referred to Rathish Babu Unnikrishnan v. State (NCT of Delhi), emphasizing that quashing petitions should not negate the complainant's case without allowing evidence to be led.

Conclusion:
The Court concluded that the issues raised by the petitioners are triable in nature and can only be decided based on evidence during the trial. Since a prima facie case exists against the petitioners under Sections 138/141 of the NI Act, the petitions to quash the complaint cases and orders framing notice were dismissed. The judgment clarified that nothing expressed should be construed as an opinion on the merits of the case.