M/S Lords Creative Infra Solutions Pvt. Ltd. And Another vs State Of Uttarakhand & Another

Ravindra Maithani, J

Challenge in this petition under Section 482 of the Code of Criminal Procedure, 1973 (for short “the Codeâ€) is to an order dated 21.01.2019

passed in Complaint Case No. 8523 of 2018, M/S Tanuk Pharma India Limited Vs. M/S Lords Creative Infra Solutions Pvt. Ltd. and others, by the

court of learned IVth Additional Chief Judicial Magistrate, Dehradun, District Dehradun (for short “the Caseâ€). By this impugned order, the

petitioners have been summoned under Sections 138 of the Negotiable Instruments Act, 1881 (for short “the Actâ€​).

Heard learned counsel for the parties through video conferencing and perused the record.

Facts necessary for disposal of the instant petition are as hereunder:-

The respondent no.2 filed a complaint under Section 138 of the Act against the petitioners. According to the complaint, the parties entered into an

agreement on 28.09.2016. In pursuance thereof, a cheque amounting to Rs.1 crore was given by the respondent no.2 to the petitioners. When the

petitioners did not honour the terms of the agreement, they gave a cheque of Rs.1 crore to the respondent no.2, which on presentation was

dishonoured. Notice was given, but the amount of cheque was not paid. Hence, the present complaint has been filed. After conducting enquiry, by the

impugned order, the petitioners and one another have been summoned under Section 138 of the Act. Aggrieved by it the instant petition has been filed.

Learned Senior counsel for the petitioners would raise the following points in his submission:-

i. The summoning order is bad in the eyes of law because to arrive at a conclusion that prima-facie, case is made out, the agreement was never

perused by the Court; without perusal of the agreement, it could not have been detected that any terms of the agreement was ever violated by the

petitioners.

ii. It was a case of ‘stop payment’ and not a case of dishonor of cheque, due to insufficient funds.

iii. The cheque was given as a security. The petitioners wanted the security cheque back from respondent no.2. When the cheque was not returned by

the respondent no.2, in fact, the petitioners complained it to the Senior Superintendent of Police, District Alwar, Rajasthan.

iv. It has not been shown that the cheque was given for discharge of any debt or liability.

v. The agreement was executed in the year 2016, and on that date itself, the cheque was given as post-dated cheque. It has been pleaded by the

petitioners in their petition, which reflects that, in fact, on the date when cheque was given, there was no existing debt or liability. In support of his

contention leaned counsel for the petitioners placed reliance on the principles of law as laid down by the Hon’ble Supreme Court in the case of

Sampelly Satyanarayana Rao Vs. Indian Renewable Energy Development Agency Limited, (2016) 10 SCC 458.

vi. Since, there was no existing debt or liability, there is no question of presumption under Section 139 of the Act.

vii. In the proceedings under Section 482 of the Code, the Court should consider the documents to find out as to whether continuance of the criminal

proceedings would amount to an abuse of process of Court. In support of his argument, learned counsel has placed reliance on the principle of law as

reported in the case of HMT Watches Ltd. Vs. M.A. Abida and another, (2015) 11 SCC 776.In para 11 of the judgment in the case of HMT

Watches Ltd. (supra) the principles laid down in the case of Suryalakshmi Cotton Mills Ltd. Vs. Rajvir Industries Ltd,(2008) 13 SCC 678,has been

referred to, wherein, it was ,inter-alia, held that “It, however, does not mean that documents of unimpeachable character should not be taken into

consideration at any cost for the purpose of finding out as to whether continuance of criminal proceedings would amount to an abuse of process of

court….â€​

On behalf of the respondent learned senior counsel would argue that the cheque is not post-dated; parties entered into an agreement on 28.09.2016

and on that date, it is the respondent no.2, who had given a cheque of Rs.1 crore to the petitioners. When the petitioners did not honour the terms of

the agreement, they issued the cheque. Therefore, it is argued that the cheque was given for the discharge of existing liability. It is also argued that

even, if the cheque was given as security, it would attract the provisions of Section 138 of the Act and presumption under Section 139 of the Act could

be raised. In support of his argument reliance has been placed to the principles laid down in the case of HMT Watches Ltd. (supra) wherein, it was

,inter-alia, held whether the cheque was given as security or not, is a question of fact’ which could have been determined only by the trial court

after recording evidence of the parties’.

Learned senior counsel for the respondent no. 2 would also argue that in the proceedings under Section 482 of the Code, the disputed question of

facts cannot be gone into and they may be decided at the trial. In support of his contention, learned counsel has placed reliance on the principles of

law as laid down by the Hon’ble Supreme Court in the case of A.R. Radha Krishna Vs. Dasari Deepthi and others, (2019) 15 SCC 550 .In the

case of A.R. Radha Krishna, the Hon’ble Court emphasized the requirement of describing the role of directors in cases under section 138 of the

Act.

Before the arguments are appreciated, it may be noted that there has been another argument, which is advanced by the learned senior counsel for

the petitioners with regard to the judgment given in the case of HMT Watches Ltd. (supra). Learned senior counsel for the petitioners, on the one

hand placed reliance on para 11 of the judgment in the case of HMT Watches Ltd. (supra), but on the other hand, after the arguments of the learned

senior counsel for the respondent no. 2 were concluded, he would argue that the judgment in the case of HMT Watches Ltd. (supra) is per-

incuriam, in view of the judgment in the case of Rajiv Thapar & Others Vs. Madan Lal Kapoor (2013) 3 SCC 330. When the court requested learned

senior counsel to tell as to how, it is per-incuriam, he would refer to para 29 of the judgment of Rajiv Thapar (supra), which is as hereunder:-

“ 29. The issue being examined in the instant case is the jurisdiction of the High Court under Section 482 CrPC, if it chooses to quash the initiation

of the prosecution against an accused at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charges. These

are all stages before the commencement of the actual trial. The same parameters would naturally be available for later stages as well. The power

vested in the High Court under Section 482 CrPC, at the stages referred to hereinabove, would have far-reaching consequences inasmuch as it would

negate the prosecution's/complainant's case without allowing the prosecution/complainant to lead evidence. Such a determination must always be

rendered with caution, care and circumspection. To invoke its inherent jurisdiction under Section 482 CrPC the High Court has to be fully satisfied that

the material produced by the accused is such that would lead to the conclusion that his/their defence is based on sound, reasonable, and indubitable

facts; the material produced is such as would rule out and displace the assertions contained in the charges levelled against the accused; and the

material produced is such as would clearly reject and overrule the veracity of the allegations contained in the accusations levelled by the

prosecution/complainant. It should be sufficient to rule out, reject and discard the accusations levelled by the prosecution/complainant, without the

necessity of recording any evidence. For this the material relied upon by the defence should not have been refuted, or alternatively, cannot be

justifiably refuted, being material of sterling and impeccable quality. The material relied upon by the accused should be such as would persuade a

reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court

would persuade it to exercise its power under Section 482 CrPC to quash such criminal proceedings, for that would prevent abuse of process of the

court, and secure the ends of justice.â€​

A bare perusal of the above observation, in the case of Rajiv Thapar (supra), would reveal that it relates to the scope of the jurisdiction under

Section 482 of the Code. In the case of HMT Watches Ltd. (supra), the Hon’ble Supreme Court discussed the jurisdiction of the High Court

under Section 482 of the Code, vis-Ã -vis, Section 138 of the Act. How is it per-incuriam? Neither any statute nor any Law declared has been

ignored by the Hon’ble Supreme Court in the case of HMT Watches Ltd. (supra). Not only these two cases, but there are number of cases

dealing with the scope of the High Court under Section 482 of the Code. In the case of R.P. Kapoor Vs. State of Punjab, AIR 1960 Supreme Court

866, State of Haryana and Others Vs. Bhajan Lal and Others, 1992 Supp (1) SCC 335 and in many other cases, guidelines have been laid down for

exercising, the jurisdiction under Section 482 of the Code. In fact, the principles in regard to this matter have been culled out in the case of Indian Oil

Corporation Vs. NEPC India Limited and others, (2006) 6 SCC 736 as follows:

“12. The principles relating to exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal

proceedings have been stated and reiterated by this Court in several decisions. To mention a fewâ€"Madhavrao Jiwajirao Scindia v. Sambhajirao

Chandrojirao Angre [(1988) 1 SCC 692 : 1988 SCC (Cri) 234], State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426 ], Rupan Deol

Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194 : 1995 SCC (Cri) 1059 ], Central Bureau of Investigation v. Duncans Agro Industries Ltd. [(1996)

5 SCC 591 : 1996 SCC (Cri) 1045 ], State of Bihar v. Rajendra Agrawalla [(1996) 8 SCC 164 : 1996 SCC (Cri) 628,] Rajesh Bajaj v. State NCT of Delhi

1999) 3 SCC 259 : 1999 SCC (Cri) 401,] Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd .[(2000) 3 SCC 269 : 2000 SCC (Cri) 615,] Hridaya

Ranjan Prasad Verma v. State of Bihar 8 [(2000) 4 SCC 168 : 2000 SCC (Cri) 786 ], M. Krishnan v. Vijay Singh [(2001) 8 SCC 645 : 2002 SCC (Cri) 19]

and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque 0[(2005) 1 SCC 122 : 2005 SCC (Cri) 283.] The principles, relevant to our purpose

are:

(i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety,

do not prima facie constitute any offence or make out the case alleged against the accused.

For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a

meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining

prayer for quashing of a complaint.

(ii) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been

initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

(iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with

abundant caution.

(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the

complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the

complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence.

(v) A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A

commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal

offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a

commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal

proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.â€​

Merely, because the judgment of Rajiv Thapar case (supra) has not been referred to in the case of HMT Watches Ltd. (supra), the judgment in

the case of HMT Watches Ltd. (supra) does not become per- incurium. Therefore the argument that the judgement in the case of HMT Watches

Ltd. (supra) is per-incuriam has no force.

Undoubtedly, the jurisdiction under Section 482 of the Code is of wide magnitude and the principles, which governs the jurisdiction is to do

complete justice. The principles are based on Quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest i.e.

when the law gives anything to anyone, it gives also all those things, without which the thing itself would be unavailable. The section does not confer

any new power. It is, in fact, to act ex debito justitiae, which means to do real and substantial justice for the administration of which, alone the Court

exists [Dinesh Datt Joshi Vs. State Rajasthan and Another, (2001) 8 SCC 570 and Amit Kapoor Vs. Ramesh Chander, (2012) 9 SCC 460]. One of

the principles, which govern the jurisdiction under Section 482 of the Code is that the disputed question of facts should not be generally gone into. But

then instant is a case, which is little different than any other criminal case. The basic principle of criminal jurisprudence is ‘innocent until proved

guilty’, but in the cases of presumption, there is “reverse evidentiary burdenâ€​ on the accused.

In cases of legal presumption, the standard for establishing prima-facie case is different, because, once basic facts to raise presumptions are

established the presumption clause would come into play. This presumption may be rebutted by the accussed by the standard of “preponderance of

probabilitiesâ€​. But, it is a matter for evidence during trial.

Instant is a case, which makes certain presumptions. It is a case under Section 138 of the Act. The Act makes certain presumptions with regard

to Negotiable Instruments “that the holder is a holder in due courseâ€​ it is given under Section 118 of the Act, which this Court need not reproduce.

There is another very important section, which is Section 139 of the Act, which is as hereunder:-

 “Presumption in favour of holder.â€" It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of

the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.â€​

Reference has been made by learned senior counsel for the petitioners to the judgment in the case of Sampelly Satyanarayana Rao (supra) and

specifically para 8 to it, in which the Hon’ble Supreme Court placed reliance in the judgment of Indus Airways Private Limited and others Vs.

Magnum Aviation Private Limited and another, 2014 (12) SCC 539.

In the case of Indus Airways (supra), a cheque was given as advanced payment for purchase of goods but the purchase order could not be

carried out to its logical conclusion, under such circumstances the Hon’ble Supreme Court held that such cheque “cannot be said to have been

drawn for an existing debt or liabilityâ€​.

Instant is not a case of advance payment. According to the learned senior counsel for the petitioners himself, it was a cheque given as a security.

Although according to the respondent no. 2, it was a cheque given for discharge of existing liability. It’s a question of fact, which is in dispute now.

The presumption if made under law, are to be rebutted. Though the legal burden always remains with the prosecution to prove its case beyond

reasonable doubt, but once presumption is raised the onus shifts on the accussed to rebut it by the standard of “preponderance of probabilitiesâ€.

There is no dispute about the fact that the cheque was given by the petitioners. There is no dispute that the respondent no.2 was holder of the cheque

in due course. It is this situation, which raises presumption under Section 139 of the Act. The following principles may be just considered in the context

of Section 138 of the Act vis-Ã -vis Section 482 of the Code;

i. At the initial stage, a plea of the accused cannot be entertained and accepted by the High Court to quash the complaint (Maruti Udyog Limited Vs.

Narender and others, (1999) 1 SCC 113).

ii. The Court cannot go into the merits and/or come to a conclusion that there was no existing debt or liability. (M.M.T.C. Ltd case (supra) para 13).

iii. Applying the said definitions of “proved†or “disproved†to the principle behind Section 118(a) of the Act, the court shall presume a

negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not

exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act

upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the

said purpose, the evidence adduced on behalf of the complainant could be relied upon (M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39

para 30).

iv. There is no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability (M.M.T.C. Ltd case

(supra) para 17).

v. Even though the cheque is dishonoured by reason of “stop payment†instruction, an offence under Section 138 of the Act could still be made

out (M.M.T.C. Ltd case (supra) para 19).

vi. The presumption mandated by Section 138 of the Act, does indeed include the existence of a legally enforceable debt or liability. (Rangappa Vs. Sri

Mohan, (2010) 11 SCC 441 para 26)

vii. Whether the cheque was given as a security or not or whether there was an outstanding liability or not is a question of fact, which could have been

determined only by the trial court, after recording the evidence of the parties. These aspects cannot be examined under Section 482 of the Code.

(HMT Watches Ltd. (supra) para 10)

In the instant case, what is being argued is that the learned court below did not peruse the agreement and without it, it could not have been

detected that any condition of the agreement was violated or offence made out. This argument has no substance because it is a case under Section

138 of the Act; because the respondent no.2 is holder in due course of the cheque; because there is a presumption under Section 139 of the Act that

unless, the contrary is proved it shall be presumed that the holder of a cheque received the cheque in whole or in part for the discharge of any debt or

liability; because “stop payment†also attracts the provision of Section 138 of the Act; because even if the cheque is given as security, and is

dishonoured, it also attracts the provision of Section 138 of the Act. It may also be noted that disputed question of facts cannot be examined in the

proceedings under Section 482 of the Code.

An argument has also been raised on behalf of learned counsel for the petitioners that the presumption under Section 139 of the Act cannot be

raised because the cheque was not given in discharge of any liability. As stated, in cases like the instant case, even the complainant need not write

about the factum of the liability. He has categorically stated that he was given a cheque and he is holder in due course of the cheque. In view of the

settled legal position, the presumption under Section 139 of the Act is automatically raised. Petitioners may have the liberty to rebut the presumption at

the trial.

In view of what is stated hereinbefore, this Court is of the view that there is no merit in the petition and it deserves to be dismissed.

The instant petition is dismissed.