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2025 (3) TMI 1339 - SC - Indian LawsDishonour of Cheque - presumption under Section 139 of the NI Act in favor of the cheque holder could be rebutted at the stage of issuing process by the Judicial Magistrate First Class (JMFC) or not - HELD THAT - In the present case a statutory notice under Section 138 of the NI Act was issued by the advocate for the respondent on 11th November 2016 to the appellant. The notice proceeds on the footing that the respondent a Co-operative Credit Society is providing financial assistance to its members and is also carrying on banking business. The allegation in the notice served to the appellant is that the appellant was a member of the credit society and had taken an overdraft facility from the respondent in the sum of Rs.11, 97, 000/-. Paragraph 1 of the notice specifically relies upon the fact that the appellant has executed necessary documents and that the appellant has agreed and acknowledged to make repayment of the amount advanced with interest. Thereafter the notice proceeds to describe how the cheque issued by the appellant in the sum of Rs.27, 27, 460/- was returned unpaid. It is pertinent to note that in the notice under Section 138 of the NI Act in paragraph 1 the respondent specifically relied upon documents executed by the appellant and the acknowledgment of the loan made by the appellant. By a reply dated 28th November 2016 the appellant informed the respondent that by filing a written application the appellant had demanded certain documents which had not been provided. What is pertinent to note is that the respondent does not deny the receipt of the reply dated 28th November 2016. No reply was sent by the respondent pointing out that the documents were supplied. Even in the letter dated 13th December 2016 the appellant made the same grievance regarding the non-supply of the documents relied upon in the demand notice. Before filing the complaint the respondent failed to respond to the said letter. The fact remains that in the complaint the respondent has suppressed the reply dated 28th November 2016 and the letter dated 13th December 2016 sent by the appellant s advocate. These two documents have also been suppressed in the statement on oath. The respondent made out a false case that the appellant did not reply to the demand notice. Moreover the case that the documents as demanded were supplied is not pleaded in the complaint and statement under Section 200 of CrPC. While filing a complaint under Section 200 of CrPC and recording his statement on oath in support of the complaint as the complainant suppresses material facts and documents he cannot be allowed to set criminal law in motion based on the complaint. Setting criminal law in motion by suppressing material facts and documents is nothing but an abuse of the process of law. Conclusion - The complaint filed under Section 138 of the NI Act is held invalid due to the suppression of material facts and the non-supply of requested documents. The impugned order of the High Court is set aside - Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The Court considered the following core legal issues:
ISSUE-WISE DETAILED ANALYSIS 1. Validity of the Complaint under Section 138 of the NI Act The relevant legal framework involves Section 138 of the NI Act, which penalizes the dishonor of a cheque for insufficiency of funds or if it exceeds the arrangement. The Court noted that for an offense under Section 138 to be made out, certain conditions must be satisfied, including the presentation of the cheque within its validity period, issuance of a demand notice within 30 days of the cheque being dishonored, and failure of the drawer to pay within 15 days of receiving the notice. The Court found that the respondent suppressed material facts, specifically the appellant's letters dated 28th November 2016 and 13th December 2016, which requested documents necessary to respond to the demand notice. The suppression of these documents was deemed significant as it impacted the appellant's ability to rebut the presumption under Section 139 of the NI Act. 2. Presumption under Section 139 of the NI Act Section 139 of the NI Act creates a presumption in favor of the holder of the cheque that it was received for the discharge of a debt or liability. The Court emphasized that this presumption could be rebutted by the accused by adducing evidence during the trial. However, the Court noted that the presumption does not relieve the complainant from disclosing all material facts in the complaint. 3. Non-Supply of Documents The appellant argued that the non-supply of documents by the respondent affected her ability to respond to the demand notice and rebut the presumption under Section 139. The Court agreed, noting that the respondent failed to provide the documents requested by the appellant, which were essential for her defense. The Court held that the non-supply of documents amounted to an abuse of the process of law, as it hindered the appellant's ability to present a complete defense. 4. High Court's Dismissal of the Appellant's Challenge The High Court had dismissed the appellant's challenge to the issuance of process by the JMFC, holding that the contentions raised could only be decided at trial. However, the Supreme Court found that the High Court erred in its decision by not considering the suppression of material facts and the non-supply of documents, which were critical to the appellant's defense. SIGNIFICANT HOLDINGS The Court made the following significant holdings:
The Court concluded that the complaint filed under Section 138 of the NI Act was invalid due to the suppression of material facts and the non-supply of requested documents. Consequently, the Court set aside the High Court's decision and quashed the complaint and the order of cognizance issued by the JMFC. The Court clarified that the respondent's other remedies for recovery of the amount allegedly due remain open, allowing the respondent to pursue civil remedies in accordance with the law.
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