2024 (9) TMI 1404 - HC - Indian Laws

Petition dismissed seeking quashing of summons in dishonoured cheque case under Section 138 NI Act

Mr. Anil Kulshrestha Versus M/s. Fiitjee Ltd.

Delhi HC dismissed petition seeking quashing of summons in dishonoured cheque case. Petitioner argued security cheques were not for legally enforceable ... Dishonour of Cheque - legally enforceable debt or not - quashing of summons issued based on factual defences - whether the security cheques given by the petitioner were towards any future consideration or legally enforceable debt? - HELD THAT:- It is relevant to note that this Court can quash the summoning orders issued in NI Act cases in the exercise of its inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) if such unimpeachable material is brought forth by the accused persons which indicates that they were not concerned with the issuance of the cheques or that no offence is made out from the admitted facts. The Hon’ble Apex Court in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) [2022 (4) TMI 1434 - SUPREME COURT] had discussed the scope of interference by the High Court against the issuance of process under the NI Act held that 'to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited.' In the case of Sunil Todi and Others v. State of Gujarat and Another [2021 (12) TMI 175 - SUPREME COURT], the cheques were issued by the accused as a security deposit under a power supply agreement, and on non-payment of the amount, the cheques were dishonoured on its presentation. It was contended on behalf of the accused that the cheques were intended at all material times to be security towards debt and were not intended to be deposited and would not attract the provisions of Section 138 of the NI Act on its dishonour. Section 138 of the NI Act specifically mentions that the cheque must have been issued for discharge of not only any debt but can also be for “other liability”. It is, therefore, not necessary that when the cheques are issued, the drawer had any debt to discharge on the date of issuance - the allegations made in the complaint, at the stage when the complaint is sought to be quashed at the initial stage, are to be taken as correct unless evidence of unimpeachable character has been produced. When there is a legal presumption and where facts are contested, it would not be judicious for the Court to separate the wheat from the chaff under the garb of inherent powers. It has been held time and again that the power of quashing criminal proceedings while exercising power under Section 482 of the CrPC should be exercised sparingly and with circumspection. This Court finds that the petitioner, at best, has raised question of fact mixed with question of law which cannot be examined in the limited jurisdiction under Section 482 of the CrPC, for it is desirable that the same be left to be adjudicated upon based on the evidence led by both sides at the trial - Petition dismissed. Issues Involved:1. Validity of the service contract and whether it was signed under undue influence.2. Whether the cheques issued by the petitioner were for a legally enforceable debt or liability.3. Whether the clauses in the Service Rule Manual are unconscionable and contrary to public policy.4. Whether the summoning order issued by the Metropolitan Magistrate can be quashed based on factual defenses.Detailed Analysis:Validity of the Service Contract and Undue Influence:The petitioner argued that the service contract was invalid as it was signed under undue influence. The HR representative allegedly made the petitioner sign the contract hurriedly without allowing him to peruse its contents, and he was not given a copy of the agreement. The petitioner contended that the respondent exercised its position of power to acquire two blank signed cheques from him, which were later filled by the respondent institute.Legally Enforceable Debt or Liability:The petitioner contended that the cheques were issued as security and not towards any legally enforceable debt or liability. The petitioner argued that there was no liability owed to the respondent at the time the cheques were issued, and hence, the provisions of Section 138 of the NI Act would not attract. The petitioner relied on the judgment in Indus Airways Private Limited vs. Magnum Aviation Private Limited, which held that cheques issued as security do not constitute a legally enforceable debt.Unconscionable Clauses in the Service Rule Manual:The petitioner argued that the clauses in the Service Rule Manual requiring submission of undated blank cheques were unconscionable and contrary to public policy under Section 23 of the Contract Act. The petitioner relied on the judgment in Vivek Rai vs. Aakash Institute, where a similar clause was deemed unconscionable and opposed to public policy.Quashing of Summoning Order:The petitioner sought the quashing of the summoning order issued by the Metropolitan Magistrate. The court analyzed whether the summoning order could be quashed based on factual defenses, such as whether the cheques were given as security or towards a legally enforceable debt. The court referred to several judgments, including Rathish Babu Unnikrishnan vs. State (NCT of Delhi) and Sunil Todi vs. State of Gujarat, to emphasize that factual defenses should be determined at trial and not at the pre-trial stage.The court noted that the legal presumption under Section 139 of the NI Act, which assumes that the cheque was issued for the discharge of a debt or liability, must be given due weight. The court held that the factual defenses raised by the petitioner, such as the cheques being issued as security and the unconscionable nature of the Service Rule Manual, are matters to be determined at trial based on evidence. The court emphasized that it should be slow to quash complaints at the pre-trial stage when factual controversies exist.Conclusion:The court concluded that the petitioner had raised questions of fact mixed with questions of law, which could not be examined in the limited jurisdiction under Section 482 of the CrPC. The court held that these issues should be left to be adjudicated upon based on the evidence led by both sides at trial. Therefore, the petition to quash the summoning order was dismissed, and the pending applications were also disposed of.