Shiv Charan Khandelwal vs State of Rajasthan and Others

M.N. Bhandari, J.—By this petition, a challenge is made to the order dated 30.05.2007, whereby cognizance of offence was taken against the petitioner under Section 138 of Negotiable Instruments Act, 1881 (in short "the Act").

Learned counsel submits that cheques were issued with the understanding that the property of M/s. Hari Agro Industries would be transferred to the petitioner. The MOU was executed on 01.02.2006 followed by cheque. When the property of M/s. Hari Agro Industries was not transferred, the petitioner did not put sufficient amount in the Bank for encashment of cheque. The non-petitioner-complainant malafidely sent the cheque for encashment. When it was dishonoured, notice was given to the petitioner. He had filed detailed reply to the notice, however, ignoring the aforesaid, cognizance of offence was taken against the petitioner. The liability on the petitioner was to come, if property of M/s. Hari Agro Industries would have been transferred and not otherwise. In view of the above and in absence of transfer of the property of M/s. Hari Agro Industries, complaint under Section 138 of the Act is not maintainable. A reference of judgment of Hon''ble Apex Court in the case of State of Haryana and others Vs. Ch. Bhajan Lal and others, has been given.

Per contra, learned counsel for complainant submits that at the stage of cognizance of offence, only prima facie case is seen by the court. The defence of accused is not considered, rather it is not even at the stage when charges are framed. In the instant case, there is no process to frame the charges. The petitioner has taken excuse in reference to MOU, though defence aforesaid can be taken by leading evidence in trial and not at the initial stage. There is no element of malafide because the petitioner had issued cheque and when it was sent for encashment, dishonoured for want of funds. If malafide is alleged, it is required to be proved. The only argument is regarding non-transfer of property of M/s. Hari Agro Industries. If aforesaid argument is also considered, the cheque was given to the non-petitioner in the month of July, 2006. After giving the cheque, if property was not transferred, in common parlance, one will take action immediately thereupon. The petitioner never served notice or asked for transfer of the property of M/s. Hari Agro Industries and otherwise issue aforesaid is nothing but can be a defence of the petitioner. The notice under Section 138 of the Act was given on 14.02.2007. It was after five months from the date of issuance of cheque. The petitioner did not react in reference to MOU till the date of notice, thus question of malafide does not arise. The petition is nothing but to delay the proceedings under Section 138 of the Act.

I have given my thoughtful consideration to the rival submissions made by the parties.

On a complaint under Section 138 of the Act, cognizance of offence has been taken finding satisfaction regarding completion of all the formalities for maintaining complaint. The petition has been filed to challenge the order of cognizance of offence by putting defence and for its consideration at the initial stage without leading evidence. The defence is shown to establish malafide by the non-petitioner. It is in reference to MOU for the property of M/s. Hari Agro Industries. In pursuance to the MOU, cheque said to have been given. When property was not transferred, the petitioner did not put sufficient funds in the bank. It is, however, a fact that even after issuance of cheque, if property was not transferred, the petitioner did not react. What remains is the dishonoured cheque and notice by the non-petitioner. At that stage, petitioner reacted to the notice. In the facts and circumstances of the case, issue of malafide is not made out, rather aforesaid can be said to be a defence. It is also kept in mind that as per Section 118 read with Section 139 of the Act, presumption exist in regard to negotiable instrument, which includes even cheque. Both the provisions are quoted hereunder for ready reference:

"118. Presumptions as to negotiable instruments.--Until the contrary is proved, the following presumptions shall be made--

(a) of consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date--that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance--that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) as to time of transfer--that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of endorsements--that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamps--that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course--that the holder of a negotiable instrument is a holder in due course:

Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him." "139. Presumption in favour of holder.--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."

The perusal of Section 118 read with Section 139 of the Act, there are presumption against the accused, if not reacted or contrary is proved. The presumption can be rebutted through evidence. It can be led by the petitioner in defence and not by submitting documents at the stage of cognizance of offence. It is settled law that even documents cannot be submitted while arguing the case for framing charges though proceedings on complaint under Section 138 are through summary trial or in given circumstances can be by summon trial. The petitioner is trying to put his defence at the stage of cognizance of offence, which is not permissible because it remains subject to evidence to be led by the parties. In the background aforesaid, only ground taken by the petitioner for quashing of order of cognizance of offence cannot be accepted.

The petition is accordingly dismissed with cost of Rs. 2,000/- to be deposited with the Rajasthan State Legal Services Authority, Jaipur within a period of 15 days. The Deputy Registrar (Judicial) to see compliance of the order.