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TMI Blog2017 (4) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... clause should fail and is hereby rejected. Only because the possession of the premises came to be handed over to the complainant by terminating the lease agreement at an early stage, will not absolve the accused from their liability incurred under the agreement. The cheques, at the relevant point of time, could be said to have been issued in favour of the complainant in discharge of a legally enforceable debt. Indisputably, on the date when the cheques were issued, there was a debt / liability in presenti in terms of the lease agreement. However, I leave it upon the Trial Court to look into this issue after appreciating the evidence that the parties may lead in the course of the trial. Ordinarily, a defence of an accused, although appears to be plausible, should not be taken into consideration for exercise of jurisdiction under Section 482 of the Cr.P.C. Section 142(c) invests certain Magistrates with the power of trying offences punishable under Section 138. When power is given to try an offence, it includes the power to convict or acquit and, in case of conviction, to exercise the sentencing discretion also to award an appropriate sentence, allowed by law. In order to convict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointly and severally responsible and liable for the Act of the company. That both the companies are related with each other, as such both companies are responsible and liable for the transactions entered with complainant, therefore their directors are also equally responsible as such they are arraigned as accused in this complaint. 3 That accused No.7, Pavers England wanted to open its exclusive show room in Ahmedabad, as such inquired and approached complainant for leasing his property, CEO and Managing Director Mr. Utsav Seth accused No.9, of Pavers England has negotiated and finalized the terms and conditions of the lease agreement with complainant, after finalization of the terms and conditions and lease amount accused No.1 entered to execute the agreement being franchise of pavers England accordingly lease agreement dated 09/08/2012 was executed, which is registered with the SubRegistrar of Ahmedabad 3(Memnagar) under Serial Number : 4603 dated 09/08/2012, with consent and permissible of Pavers England Ltd who is also jointly and severely responsible and liable. As such agreement executed is also binding on accused No.7 i.e. Pavers England Ltd. 4 It is the say of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / HDFC BANK 998042 '10/01/2015 3,07,080/ HDFC BANK 998043 '10/02/2015 3,07,080/ HDFC BANK TOTAL AMOUNT 9,21,240/- That complainant have to recover from accused a total amount of ₹ 9,21,240/-( Rupees Nine Lacs Twenty One Thousand Two Hundred forty Only) against the licence fee due and payable by accused. Complainant has several time demanded the above said amount from accused but they have avoided to pay the amount on the one or other pretext, at the time of issuing the cheques accused have assured complainant that the cheques will be honour as and when will be presented for encashment on its due date. 9 That on the due dates of cheques complainant has deposited 2 cheques with his banker but same were returned unpaid, complainant immediately contacted accused and informed them about the dishonoured of cheques. Accused are avoiding legal dues of complainant, accused are bound by the agreed terms and condition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues which attract the Penal provisions of Negotiable Instruments Act. 13 It is humbly further submitted that, as accused have issued cheques towards the licence fee, which are legal dues as such complainant will deposit the remaining cheques at the end of the month on its due date, and if the said cheques are also dishonour in the event complainant reserves his right to initiate appropriate legal action available to him. 14 Complainant thereafter address notice dated 20/02/2016 to accused as required u/s. 138 of Negotiable Instrument Act proviso B calling upon accused to pay the amount of the dishonoured cheque i.e. ₹ 9,21,240/-( Rupees Nine Lacs Twenty One Thousand Two Hundred Forty Only). 15 Complainant further humbly submits before the Hon'ble Court that the notice was posted to the accused by the advocate of complainant by Speed Post at accused registered office address and to each individual directors at their respective addresses, as such notice is duly served upon the accused. 16 Thus, after receiving the notice, the accused have neither replied the said notice or acted as per the notice issued by the complainant in his notice, even accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of commencement of Lease rent) of the tenure of lease shall be minimum lock in period. During such period the Lessee is not entitled to terminate this Deed for any reason/s whatsoever. During such period the Lessor ceases his rights to terminate/determinate this Deed for any reason whatsoever. During such period if this Deed is terminated and or determined for any reason whatsoever, whether by the Lessee, the Lessee shall pay to the Lessor compensation and all other monies payable under the terms and conditions hereof, for the unpaid tenure of the minimum lock in period. In such event the Lessor shall be entitled to forfeit deposits and credits (limited to the extent of monies payable) lying with it. If the value of such deposits/credits is less than the monies payable, then the Lessor shall have lien on the equipment and stocks, inventories etc, lying in the said premises. The extent of this lien will be limited in the amount recoverable. For this purpose, the value of such equipment and stocks, inventories etc. lying in the said counter will be the actual price realized by the Lessor of the same. 7 The Clause 17 is with regard to the jurisdiction. It reads as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this arrangement, except for reasonable wear and tear. The Lessee hereby undertakes to the Lessor that on termination of this Deed it shall remove their employees, agents belonging and its articles from the leased premises and vacates and give charge of the leased premises together with the fixtures and fittings (loft, shutters and glass doors) belonging to Lessor, if any, in the same status and condition in which it was at the beginning of this Deed. e) In the event of the Lessee failing to leave the leased premises on the date as may be mentioned in this deed upon termination of this Deed or earlier determination thereof, the Lessor shall be entitled to remove the Lessee from the leased premises and prevent them and/or their employees, agents and suppliers from entering in the building and/or the leased premises. The Lessor shall be at liberty to remove the goods, articles, and other things belonging to the Lessee and lying in the leased premises and to store the same at any other place or dispose off the same at the risk and cost of the Lessee. f) Neither the termination nor the premature determination of this Deed shall release either party from its obligations t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any other statutory modification thereof or any other reenactment for the time being in force. b) the parties have mutually agreed that in case of anydispute, not settle mutually by the parties hereto, then and in such an event before referring such dispute to the arbitration, the Lessee shall have the option either to hand over the leased premises to the Lessor after bringing the leased premises in the same State and condition (except normal wear and tear) in which it was at the beginning of this Deed or to continue conducting the said Business from the leased premises against the prompt and regular payments of amounts due to the Lessors as provided herein. c) It is specifically agreed by the Lessee that in such case before referring such dispute to the Arbitrator, the Lessee shall pay to the Lessor in respect of the leased premises as per the terms and conditions hereof for the balance of the lock in period and can't stop business of the Lessee. d) And in case if such dispute is referred to the Arbitration after the completion of the lock in period, such references of dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to relevant prevailing rules of the Government and the Association rules. 11 Mr. R.S. Sanjanwala, the learned senior counsel assisted by Mr. Sahil M. Shah, the learned counsel appearing for the applicants submitted that the lease agreement dated 9th August 2012 was terminated by mutual consent in a meeting convened between the parties on 5th September 2015 in Ahmedabad. It was agreed by the applicants that they would pay the lease rental for a period of three months from July 2015 by way of compensation for the early termination of the lease agreement. Mr. Sanjanwala submits that the complainant had unconditionally agreed to the same, and thereafter, the applicants vacated the premises in question and handed over the peaceful and vacant possession of the same to the complainant. According to the learned counsel, the understanding was arrived at in good faith, and therefore, at the relevant point of time, it was not found necessary to reduce the same in writing. Mr. Sanjanwala submits that vide letter dated 17th April 2015, the complainant was informed that in view of the understanding arrived at, the complainant now be estopped from enforcing his alleged right under the leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed by Mr. Nair, the learned counsel appearing for the complainant. According to Mr. Nair, none of the contentions canvassed merit any consideration. Mr. Nair submitted that the understanding was distinct and the same was reduced into writing in the form of a lease agreement. What is sought to be enforced by the complainant are the terms of the lease agreement. While entering into the lease agreement, the postdated cheques were issued by the accused persons towards rent, and thereby, they created a debt, which could be termed as legally enforceable. Merely because they were unable to continue with the business and handed over the possession of the premises, will not absolve them from their liability created under the lease agreement. 17 Mr. Nair submitted that merely because there is an arbitration clause in the lease agreement, the same will not make the complaints under Section 138 of the Negotiable Instruments Act not tenable in law. The complainant is not precluded from prosecuting the accused under Section 138 of the N.I. Act for the dishonour of the cheques. It is for the Trial Court to consider whether the accused has a legally enforceable liability or not. 18 Mr. Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otiable Instruments Act, if the complainant comes forward with a case that the cheque was issued in discharge of an admitted liability by the accused. The question as to whether it is an admitted liability and whether there is any legally enforceable debt for which the cheque was issued, etc, are matters to be considered by the Trial Court on appreciation of evidence adduced on both the sides. 23 In view of the above discussion, the contention as regards the arbitration clause should fail and is hereby rejected. 24 Let me now deal with the contention that at the time of issuing the stop payment instructions to the Bank, there was sufficient balance in the current account of the accused company maintained with the H.D.F.C. Bank. For the purpose of answering this contention, I can do no better than refer to and rely upon a decision of the Supreme Court in the case of M.M.T.C. Limited vs. Medchl Chemicals and Pharma Private Limited [(2002) 1 SCC 234]. I may quote the relevant observations as under: 13. The learned Judge has next gone into facts and arrived at a conclusion that the cheques were issued as security and not for any debt or liability existing on the date they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only be maintained if the cheque was dishonoured for reason of funds being insufficient to honour the cheque or if the amount of the cheque exceeds the amount in the account. It is submitted that as payment of the cheques had been stopped by the drawer one of the ingredient of Section 138 was not fulfilled and thus the complaints were not maintainable. 18. Such a just contention has been negatived by this Court has, in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi reported in (1998) 3 SCC 249. It has been held that even though the cheque is dishonoured by reason of 'stop payment' instruction an offence under Section 138 could still be made out. It is held that presumption under Section 139 is attracted in such a case also. The authority shows that even when the cheque is dishonoured by reason of stop payment instructions by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the stop payment instructions were not issued because of insufficiency or paucity of funds. If the accused sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Too many definitions of the word debt have been given though the word debt is not defined in the Act. 'Debt' is defined in the Stroud's Judicial Dictionary, ( 4th edition, volume 2) as a sum payable in respect of a liquidated money demand recoverable by action (Rawley vs. Rawley 1 QBD 460]. 28 In Dictionary of Banking by F.E. Perry (1979 edition, page 64), debt is mentioned as something owed to another, a liability, an obligation, a chose in action which is capable of being assigned by the creditor to some other person. Shri K.J. Aiyar's Judicial Dictionary (page 314) mentions debt as under: Debt is a pecuniary liability. A sum payable or recoverable by action in respect of money demand. It refers to the definition given by Lindey L.J. In Webb v. Stention (1888 QBD 518)... a debt is a sum of money which is now payable or will become payable in future by reason of a present obligation . In Union of India v. Raman Iron Foundry [AIR 1974 SC 1265] , it is decided as a existing obligation to pay a sum of money now or in future. Thus, there must be debitum in praesenti solvendum may or may not be praesenti. The following passage adopted from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation. For the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and the expression for discharge of any debt or other liability occurring in Section 138 of the Act. We are of the view that the question whether a postdated cheque is for discharge of debt or liability depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 11. Reference to the facts of the present case clearly shows that though the word security is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28th February, 2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the respondent, this Court dealt with the contention that the proceedings under Section 138 were liable to be quashed as the cheques were given as security as per defence of the accused. Negativing the contention, this Court held : 10. Having heard the learned counsel for the parties, we are of the view that the accused (Respondent 1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the disputed questions of fact in a petition under Section 482 of the Code of Criminal Procedure, to come to a conclusion that the offence is not made out. The High Court has erred in law in going into the factual aspects of the matter which were not admitted between the parties. The High Court further erred in observing that Section 138(b) of the NI Act stood uncomplied with, even though Respondent 1 (accused) had admitted that he replied to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged the respondents of the said liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the earlier partnership was dissolved and since what date the respondents ceased to be the partners of the firm. 16. We are in respectful agreement with the above observations. In the present case, reference to the complaint (a copy of which is Annexures P7) shows that as per the case of the complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of the dues under the loan agreement (para 5 of the complaint). 17. As is clear from the above observations of this Court, it is well settled that while dealing with a quashing petition, the Court has ordinarily to proceed on the basis of averments in the complaint. The defence of the accused cannot be considered at this stage. The court considering the prayer for quashing does not adjudicate upon a disputed question of fact. 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part, of a debt or other liability, the presumption operates in favour of the payee as well as in favour of a holder in due course as defined in Section 9. This construction receives support from the language employed in clause (a) of Section 142, which speaks of cognizance of offences, and provisions (b) and (c) of Section 138. Section 4 of the evidence Act defines the expression shall presume as, Whenever it is provided by this Act, that the court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved . It is, therefore, incumbent on the court, in a prosecution under Section 138, unless the contrary is proved to draw the inference that the cheque received by its holder was a cheque of the nature referred to under Section 139 for the discharge, in whole or in part, of any debt or other liability. The presumption is displaced only when the truth of the inference is disproved on other evidence. However, as pointed out above, the rebuttable presumption under Section 139 operates only in favour of the payee or a holder in due course but not in favour of a person, who, without consideration became the holder of the cheque. 32 I am of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil court and await its decision to proceed with the trial. 33 In the aforesaid context, I may quote the observations of the Supreme Court in the case of S. Krishnamoorthy vs. Chellammal [AIR 2015 SC 3182] as under: 4. The respondent (accused) challenged the proceedings of criminal complaint case by moving a Criminal Original Petition under Section 482 of the Code before the High Court. In said petition the accused pleaded that her soninlaw A. Raj and Ayyavu (father of A. Raj) had actually borrowed a sum of ₹ 2,00,000/- on 19.4.2005. The cheques in question were only taken as security. Actually, loan was taken by A. Raj and Ayyavu by mortgaging their house in favour of one Balakrishnan, brother of the present appellant. It is alleged by the present respondent (accused) in the petition that Balakrishnan, instead of getting the mortgage deed executed, obtained an agreement of sale from aforesaid two persons with false and incorrect recitals, that a sum of ₹ 2,00,000/- was paid as advance and part of consideration, and balance of ₹ 25,000/- shall be paid within 35 months. Cheques bearing Nos. 857491, 857492 and 857493 of Canara Bank, Dharapuram Branch, were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a case that making him stand the trial would be abuse of the process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint it must be shown that no offence is made out at all against the Director. 35 I shall conclude my judgment quoting the observations of the Supreme Court, as contained in paras 10 and 13, in the case of HMT Watches Ltd vs. M.A. Abida [2015 (3) Scale 832] as under: 10. Having heard learned counsel for the parties, we are of the view that the accused (respondent No.1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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