2022 (4) TMI 872 - HC - Indian Laws

Court Dismisses Petitions Challenging Section 138 Cases, Emphasizes Evidence Assessment

Mr. R. Mariappan Versus Mr. R. Thangamariappan, Mr. R. Mariappan Versus Mrs. S. Periyathai, Mr. R. Mariappan Versus Mr. S. Malik Hussain And Mr. R. Mariappan Versus Mr. V.S. Mariappan

The court dismissed the petitions seeking quashment of cases under section 138 of the Negotiable Instruments Act. The court emphasized that the offense ... Dishonor of Cheque - insufficiency of funds - discharge of legally enforceable debt or not - section 138 of the Negotiable Instruments Act - HELD THAT:- The learned counsel appearing for the petitioner on the issue, cannot be agreed upon, that the cheques were not returned not for insufficiency of funds, but directing the petitioner to present the same before the proper zone - The offence under 138 of the Negotiable Instrument Act will complete, after the accused persons failed to response to the demand notice. So, whether in the facts and circumstances of the case, the offence will be attracted or not is for the trial court to consider. Since the trial is already commenced, unless there is a compelling circumstances brought on record by the petitioner, based upon the RBI circular, the proceedings cannot be quashed. Petition dismissed. Issues:Quashment of cases in STC Nos. 2514, 2286, 2468, and 2287 of 2019 before the Judicial Magistrate No.1, Kovilpatti.Analysis:The petitions sought quashment of cases under section 138 of the Negotiable Instruments Act. The respondent filed complaints alleging that the petitioner received money as a hand loan and issued post-dated cheques which were dishonored due to insufficient funds. The complainant demanded payment, but the petitioner failed to respond adequately. The petitions involved varying loan amounts and dates, with cheques returned for being 'present in proper zone.' The petitioner argued that the cheques were void due to the migration of the cheque processing system. However, the respondent contended that the cheques were dishonored due to insufficient funds, supported by bank statements showing low balances during the relevant period.During the proceedings, it was highlighted that witnesses, including the Bank Manager, were examined but not cross-examined by the petitioner. The petitioner claimed that the criminal proceedings were an abuse of court process, emphasizing that section 138 of the Act applies only if the cheque is dishonored due to non-payment. Conversely, the respondent argued that the dishonor was due to insufficient funds, supported by bank records showing meager balances in the petitioner's account. The Bank Manager's statement indicated that cheques were processed electronically through the Central Collection Unit.The court rejected the petitioner's argument that the cheques were not dishonored due to insufficient funds, emphasizing that the offense under section 138 completes when the accused fails to respond to the demand notice. The court held that the trial court must determine whether the offense is established based on the evidence presented. As the trial had commenced, the proceedings could not be quashed solely based on the RBI circular. The court also noted that the return of a cheque as 'not drawn with' in one case required trial court consideration to assess if it constitutes an offense under section 138. Ultimately, the court found no merit in the petitions and dismissed them, closing the connected Miscellaneous Petitions.