2022 (3) TMI 96 - HC - Indian Laws

Court dismisses petition to quash complaint under Section 138 of Negotiable Instruments Act, upholding presumption of liability.

Sh. Satinderjeet Singh Versus Sameer Sondhi

The court dismissed the petition seeking to quash a complaint under Section 138 of the Negotiable Instruments Act. It emphasized the presumption of ... Dishonor of Cheque - rebuttal of presumption - cheque amount is large than the debt due - cheque issued towards the debt incurred by the petitioner, or not - debt due and default or not - HELD THAT:- The purpose of inserting Chapter XVII in the Negotiable Instrument Act, 1881 was to bring out sanctity in commercial transactions. It is admitted that the petitioner had issued a cheque for a sum of ₹ 15,00,000/-. Section 139 of the Negotiable Instrument Act, 1881, creates a presumption that unless contrary is proved, the holder of a cheque has received the cheque for discharge in whole or in part of any debt or other liability. The contention of the petitioner is that out of the loan amount, a sum of ₹ 2,69,000/- has been paid and, therefore, the cheque, which has been deposited by the complainant, was for an amount greater than the amount due and payable. The bank transfers have been admittedly made by the nephew of the petitioner in the bank account of the wife of the complainant. Whether the amounts given by the nephew of the petitioner was at the behest of the complainant or it was deposited in the bank account of the wife of the complainant in lieu of the debt incurred by the petitioner or not, are pure questions of fact which can be established only by leading evidence by the petitioner - It is well settled that the Courts should primarily proceed on the averments in the complaint, and the defence of the accused cannot be looked at the stage of issuing summons unless it can be shown on admitted documents which the Apex Court describe as 'unimpeachable in nature and sterling in quality' to substantiate that there was no debt due and payable by the person who has issued the cheque or that the cheque amount is large than the debt due. It is well settled that the inherent powers should be exercised sparingly, with circumspection and in the rarest of rare cases when the Court is convinced, on the basis of material on record, that allowing the proceedings to continue would be an abuse of the process of law or if the ends of justice is required that the proceedings ought not to be quashed - it cannot be accepted that the amounts deposited by the nephew of the petitioner in the bank account of the wife of the complainant was towards the debt incurred by the petitioner. This Court finds that, no case of quashing the complaint is made out - Petition disposed off. Issues Involved:1. Quashing of Complaint Case No.1740/2021 under Section 138 of the Negotiable Instruments Act, 1881.2. Lack of documentary proof for cash payment of Rs. 1,10,000/-.3. Part-payment of Rs. 2,69,000/- through UPI by the petitioner’s nephew.4. Presentation of cheque for an amount greater than the debt due.5. Rebuttal of statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881.Detailed Analysis:Issue 1: Quashing of Complaint Case No.1740/2021 under Section 138 of the Negotiable Instruments Act, 1881The petitioner sought to quash Complaint Case No.1740/2021 for the offence under Section 138 of the Negotiable Instruments Act, 1881. The complaint was registered after the petitioner issued a cheque for Rs. 15,00,000/- which was dishonored due to 'Exceeds Arrangement.' The court noted that the purpose of Chapter XVII of the Negotiable Instruments Act, 1881, is to ensure sanctity in commercial transactions. The presumption under Section 139 of the Act is that the holder of a cheque has received it for discharge of any debt or liability unless proven otherwise.Issue 2: Lack of Documentary Proof for Cash Payment of Rs. 1,10,000/-The petitioner argued that the complainant did not provide any documentary proof to establish that a cash payment of Rs. 1,10,000/- was made as part of the loan. The court did not find this argument sufficient to quash the complaint, emphasizing that the cheque issued by the petitioner creates a presumption of liability under Section 139 of the Act.Issue 3: Part-payment of Rs. 2,69,000/- through UPI by the Petitioner’s NephewThe petitioner contended that his nephew had deposited Rs. 2,69,000/- through UPI in the bank account of the complainant’s wife, which should be considered as part-payment of the debt. The court observed that whether these payments were made towards the debt incurred by the petitioner or at the behest of the complainant are factual questions that need to be established through evidence.Issue 4: Presentation of Cheque for an Amount Greater than the Debt DueThe petitioner argued that after receiving Rs. 2,69,000/-, the complainant should not have presented the cheque for Rs. 15,00,000/-, which was more than the amount due. The court referred to Section 56 of the Negotiable Instruments Act, which allows for endorsement on a negotiable instrument in case of part-payment. The court found that the amounts deposited by the petitioner’s nephew could not be considered unimpeachable evidence to quash the complaint.Issue 5: Rebuttal of Statutory Presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881The court cited Supreme Court judgments in Bir Singh v. Mukesh Kumar and Rohitbhai Jivanlal Patel v. State of Gujarat, which emphasize that the presumption under Sections 118 and 139 of the Act can only be rebutted by cogent evidence. The petitioner’s arguments and the evidence provided were not sufficient to rebut the presumption that the cheque was issued for discharge of a debt.Conclusion:The court concluded that the petitioner failed to present unimpeachable evidence to substantiate his claims and dismissed the petition, finding no case for quashing the complaint. The inherent powers of the court should be exercised sparingly and only in rare cases where allowing the proceedings to continue would be an abuse of the process of law. The petition was disposed of along with any pending applications.