2023 (8) TMI 1228 - SC - Indian Laws

Supreme Court reinstates criminal complaints quashed under Section 138 NI Act, emphasizes need for evidence

RIYA BAWRI ETC. Versus MARK ALEXANDER DAVIDSON & ORS.

The Supreme Court set aside the High Court of Meghalaya's decision to quash criminal complaints under Section 138 of the NI Act and related IPC sections ... Dishonour of Cheque - insufficiency of funds - whether the order passed by the High Court quashing the summoning order and the proceedings against the respondent no.1 was justified? - HELD THAT:- It is not in dispute that the premises owned by the appellants was taken on rent by the respondent no.3 firm. Though Partnership Deed has not been placed on record before this Court, however, from para 42 of the impugned order of the High Court it is evident that the partnership firm consisted of three partners, namely, Mark Alexander Davidson and Sachhidanand Kanchan and the third one was not impleaded in any complaints as accused. To discharge the liability towards the payment of rent, various cheques were issued to the appellants. The cheques, when presented to the Bank, were dishonoured on account of insufficiency of funds. The High Court had accepted the argument raised by the respondent no.1 and quashed the summoning order as well as the complaints against him, accepting the plea that he had retired from the partnership firm for which a Retirement Deed was already executed on 01.04.2018 - The fact remains that, a public notice regarding retirement by the respondent no.1 from the firm was issued on 09.02.2022 i.e., much after the complaints had been filed and the summoning order had been issued by the trial Court on 05.02.2020. Even the quashing petitions were filed by the respondent no.1 in October 2021. The public notice was issued few days before the High Court decided the quashing petition on 14.03.2022. It is not the case set up by the respondent no.1 that in the Partnership Deed it is mentioned that he was a sleeping partner in the firm. It is well settled that the final judgment of the trial Court will depend on the evidence adduced before it. As there are specific allegations against the respondent no.1 in the complaint and he was admittedly a partner in the partnership firm when the rent deed was executed, he is liable to face prosecution. Powers under Section 482 of the Code can be exercised by the High Court in case when it comes across unimpeachable and incontrovertible evidence to indicate that the partner of the firm did not have any concern with the issuance of cheques. The case in hand is not of that kind. The impugned order passed by the High Court quashing the summoning order and the complaints against the respondent no.1 are set aside - Appeal allowed. Issues Involved:1. Quashing of Criminal Complaints under Section 138 of the NI Act and related IPC sections.2. Validity of the Retirement Deed and its impact on the liability of a retired partner.3. High Court's exercise of power under Section 482 of the CrPC.Summary:Issue 1: Quashing of Criminal Complaints under Section 138 of the NI Act and related IPC sectionsThe High Court of Meghalaya quashed the criminal complaints filed by the appellants under Section 138 read with Sections 141 and 142 of the NI Act, along with Sections 420, 418, 417, 403, 409, and 406 of the IPC. These complaints were filed due to the dishonour of cheques issued by the respondents to discharge their liability for rent payments. The High Court held that the complainant failed to produce sufficient evidence to hold the respondents liable for prosecution.Issue 2: Validity of the Retirement Deed and its impact on the liability of a retired partnerThe respondent no.1 argued that he had already resigned from the partnership firm before the cheques were issued, as evidenced by a Retirement Deed dated 01.04.2018. However, the appellants contended that the public notice of his retirement was issued only on 09.02.2022, after the trial court had already summoned the respondents. The Supreme Court held that the Retirement Deed and the public notice should be proved during the trial and cannot be accepted as conclusive evidence in quashing proceedings.Issue 3: High Court's exercise of power under Section 482 of the CrPCThe Supreme Court found that the High Court erred in quashing the complaints and the summoning order against respondent no.1 based on the Retirement Deed. The Court emphasized that the final judgment should depend on the evidence adduced before the trial court. The Supreme Court stated that powers under Section 482 of the CrPC should only be exercised when there is unimpeachable and incontrovertible evidence, which was not the case here.Conclusion:The Supreme Court allowed the appeals, setting aside the High Court's order quashing the summoning order and the complaints against respondent no.1. The complaints were revived to be tried by the concerned court.