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of <h1>Court rejects quashing plea in cheque bounce case, allows defense during trial</h1> <h3>Shri Pati Hanamant Gangareddi Versus The State Bank of India</h3> The court refused to quash the criminal proceedings under Section 138 of the Negotiable Instruments Act, noting the petitioner's failure to dispute the ... Dishonor of Cheque - validity of criminal proceedings - mortgaged property - present petitioner has entered into a registered partition deed with his brother under which, the mortgaged property had fallen to the share of his brother - case of petitioner is that the liability of repayment of the entire loan amount falls on the shoulder of his brother - HELD THAT:- The admitted fact remains that the petitioner was one among the loanee having availed considerable amount as loan from the respondent-bank. The petitioner herein has not denied or disputed that the said loan account has become a default account and the loan amount with interest is yet to be repaid to the respondent-bank. But the only contention of the present petitioner is that the liability to clear the loan falls upon his brother, since the property upon which the loan was lent has gone to his share - For the said contention, the argument of the learned counsel for the respondent that the alleged partition agreement between the accused brothers would not bind the petitioner in a criminal proceeding, cannot be discarded at this stage in this proceeding. If any such contention is there, then it is open for the petitioner to agitate the same at the appropriate stage before the appropriate forum. Nothing prima facie material is placed by the petitioner to show criminal proceedings initiated against him for the alleged offence under Section 138 of N.I. Act, is prima facie without any merit, as such, has resulted into an abuse of process of law against him - Petition dismissed. Issues:Quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act based on liability dispute and cheque dishonour.Detailed Analysis:The petitioner sought quashing of criminal proceedings in C.C. No. 1682/2017 under Section 138 of the Negotiable Instruments Act. The petitioner, represented by an Amicus Curiae, was accused of issuing a dishonoured cheque to a banking company. The banking company filed a complaint alleging default on a sanctioned loan. The petitioner argued that a registered partition deed absolved him of repayment liability as the mortgaged property was transferred to his brother. The petitioner claimed to have informed the bank about this. The respondent contended that the loan transaction was between them and the petitioner, as a co-applicant, was liable. The respondent denied misusing blank cheques and asserted the partition agreement was not binding. The court noted the loan default and the dishonoured cheque issued by the petitioner.The court found that the petitioner did not dispute the default on the loan or the dishonoured cheque. The petitioner's defense that his liability was transferred to his brother due to the partition deed was noted. The court held that the partition agreement's relevance in the criminal proceeding could be raised at the appropriate stage. The court emphasized that the petitioner's defense against the presumption in favor of the complainant should be presented in the trial court. The court concluded that the criminal proceedings under Section 138 of the N.I. Act were not prima facie without merit and dismissed the petition. The court commended the Amicus Curiae's assistance and recommended an honorarium for him. The court directed the registry to transmit a copy of the order to the trial court where the case was pending.In summary, the court refused to quash the criminal proceedings based on the dispute over liability arising from a loan default and a dishonoured cheque. The court emphasized that the petitioner's defense should be presented in the trial court and that the partition agreement's relevance could be raised at the appropriate stage. The court dismissed the petition, acknowledging the Amicus Curiae's assistance and recommending an honorarium for him.
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