2024 (2) TMI 1296 - HC - Indian Laws

Dishonour of Cheque - non-application of mind - denial of an opportunity to cross-examine the Complainant by disclosing specific defence in the Application - Preponderance of probabilities - violation of principles of natural justice - HELD THAT - The Petitioner is an Accused in a complaint filed under Section 138 of the N.I. Act by the Respondent-Finance Company, in which, the Magistrate has issued a summons on satisfaction that a case is made out for summary trial. The Accused appeared before the learned Magistrate and after explaining the substance of accusation as provided under Section 251 of Cr.P.C., wherein the Petitioner/Accused pleaded not guilty and claimed to be tried, filed an Application under Section 145(2) of the N.I. Act for permission to cross-examine the Complainant. The impugned order shows that the learned Magistrate after considering the objections raised by the Complainant observed in paragraph 5 that such an Application is filed in the most casual manner and without disclosing any valid defence. The vague statements cannot be considered a valid defence to grant leave to the Accused to cross-examine the Complainant. The grounds mentioned in the Application have no substance as there is no denial about the loan transaction and hence, there is no question of cross-examining the witness - The ground regarding misuse of the cheque is again not explained in the Application and thus, Application was rejected. The proceedings under Section 138 of the N.I. Act are special proceedings wherein the Complainant is equipped with a presumption in his favour under Section 139 of the N.I. Act when the signature on the cheque is not denied by the Accused. In such a situation, the reverse burden is on the Accused to disprove such presumption though on preponderance of probabilities. It is also well settled by a catena of decisions that in order to dispel the presumption which arises out of Section 139 of the N.I. Act, the Accused either do so by pointing out the defects, discrepancies and inconsistencies in the case of the Complainant by way of cross-examination of the Complainant and his witnesses - the Accused is entitled to rebut such presumption either by showing that the cheque is not issued for legally recoverable debt through the cross-examination of the Complainant or by leading evidence. The learned Magistrate committed an error in observing that the defence raised by the Accused/ Petitioner is vague and does not disclose the details and the same is found to be incorrect. There are grounds raised in the Application which only after permitting cross-examination of the Complainant could be ascertained as a specific defence. Such defence raised in the Application could be considered as sufficient to bring the case of the Petitioner in terms of setting up a specific defence as held by the Apex Court in the case of Meters and Instruments Pvt. Ltd. 2017 (10) TMI 218 - SUPREME COURT as at that stage, nothing more is expected from the Petitioner/Accused. Admittedly, the Petitioner/Accused is entitled to have a fair trial which includes cross-examination of the Complainant and his witnesses. The impugned order therefore suffers from improper exercise of jurisdiction. Hence, needs to be quashed and set aside - Application filed by the Petitioner under Section 145(2) of the N.I. Act is accordingly allowed.

Summary

Issues Involved:
1. Application under Section 145(2) of the N.I. Act for permission to cross-examine the Complainant.
2. Evaluation of the grounds of defence disclosed by the Accused.
3. Right of the Accused to a fair trial and cross-examination.

Issue-wise Comprehensive Details:

1. Application under Section 145(2) of the N.I. Act for permission to cross-examine the Complainant:
The Petitioner, accused under Section 138 of the Negotiable Instruments Act, challenged the rejection of his application under Section 145(2) of the N.I. Act by the learned Magistrate. The application was filed to cross-examine the Complainant on grounds such as misrepresentation of facts, no legally enforceable debt/dues, misuse of the cheque, and the Complainant not being a holder in due course of the cheque. The Trial Court rejected the application, stating the grounds were vague and did not provide specific details.

2. Evaluation of the grounds of defence disclosed by the Accused:
The Petitioner argued that the learned Magistrate committed a jurisdictional error by denying the right to cross-examine the Complainant and misconstrued the law laid down by the Apex Court. The Petitioner cited several decisions, including Mandvi Cooperative Bank Ltd. Vs. Nimesh B. Thakore and Meters and Instruments Pvt. Ltd. Vs. Kanchan Mehta, to support the argument that an application disclosing specific defence need not elaborate on each ground. The Respondent countered that the application was vague and an attempt to prolong the procedure, citing decisions like Rukmakar @ Bharat Tulshidas Naik Vs. Santosh Shaba Gaonkar.

3. Right of the Accused to a fair trial and cross-examination:
The judgment emphasized that Section 145 of the N.I. Act allows the Complainant to lead evidence on affidavit, and the Accused has the right to summon and examine the Complainant on application. The Apex Court's decisions, including Expeditious Trial of Cases under Section 138 of NI Act, 1881, in Re, highlighted the importance of quick disposal of cases under Section 138 while ensuring the Accused's right to a fair trial. The judgment concluded that the learned Magistrate improperly exercised jurisdiction by rejecting the application despite the Petitioner disclosing probable defence grounds. The impugned order was quashed, and the application under Section 145(2) was allowed, ensuring the Accused's right to cross-examine the Complainant.