2025 (7) TMI 629 - HC - Indian Laws

Delhi HC upholds trial court order directing production of Income Tax Returns and Bank Statements in Section 138 NI Act dishonor case

Suninder Sandha Versus State of NCT Of Delhi, Mr. Jeevesh Sabharwal.

Delhi HC dismissed complainant's petition challenging trial court's order directing production of Income Tax Returns and Bank Statements in dishonor of ... Dishonor of Cheque - Denial of production of documents - Rebuttal of presumptions - principles of natural justice - Seeking certain documents from the accused - Necessary and desirable for the purpose of cross-examination of the Complainant or not. - HELD THAT:- The two documents are the Income Tax Returns and the Bank Statements, have rightly been held to be the relevant documents for adjudication of the Complaint under S.138 NI Act. The challenge by the Complainant to the impugned Order dated 23.10.2024 directing production of these two documents has no merit and the CRL.M.C. 9251/2024 & 9252/2024 of the Complainant has no merit. The documents, other than those at Serial number 6 & 14, production of which is sought by the Accused person, are neither necessary nor required for the proper adjudication of the complaint case filed by the Complainant herein under Section 138 N.I. Act. and are also stated to be not in the possession of the Complainant. There are no merit in the petition - petition dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court include:(a) Whether the learned Magistrate was justified in partially allowing the application under Section 91 of the Code of Criminal Procedure, 1973 ('Cr.P.C.') directing the Complainant to produce certain documents during the trial under Section 138 of the Negotiable Instruments Act, 1881 ('N.I. Act');(b) Whether the documents sought by the Accused were necessary or desirable for the purposes of the trial or other proceedings under the Cr.P.C., as mandated by Section 91;(c) Whether the learned Magistrate erred in refusing to direct production of certain documents on the ground that they were not in the possession or power of the Complainant;(d) The scope and applicability of Section 91 Cr.P.C. in the context of a Section 138 N.I. Act complaint, including the limits on 'roving and fishing' inquiries;(e) The relevance and materiality of various categories of documents sought by the Accused for adjudication of the complaint under Section 138 N.I. Act.2. ISSUE-WISE DETAILED ANALYSISIssue (a) & (b): Justification of partial allowance of application under Section 91 Cr.P.C. and necessity/desirability of documents soughtThe Court examined the language of Section 91 Cr.P.C., which empowers a court to summon a person in possession or control of documents or other things if their production is considered 'necessary or desirable' for investigation, inquiry, trial, or other proceedings under the Code. The Court emphasized two essential elements for invoking Section 91:The document must be in the possession or power of the person from whom production is sought;The document must be necessary or desirable for the purpose of the trial or proceeding.The Court relied on authoritative precedents including the Supreme Court's decision in State of Orissa v. Debendra Nath Padhi, which clarified that necessity and desirability must be assessed with reference to the stage of the proceedings and that the law does not permit roving or fishing inquiries. Further, the Court cited its own earlier ruling in Sukhmohinder Singh Sandhu v. CBI, which held that the accused cannot claim documents as a matter of right and must specify the documents and demonstrate their relevance.Applying these principles, the Court upheld the learned Magistrate's order partially allowing production of two categories of documents: (i) Income Tax Returns along with audited balance sheets and schedules for specified financial years, and (ii) Bank statements of the Complainant's HDFC Bank account. These were held necessary for adjudication of the complaint under Section 138 N.I. Act, as the financial documents could shed light on the Complainant's financial dealings relevant to the dispute.Issue (c): Denial of production of documents not in possession of the ComplainantThe Court upheld the learned Magistrate's refusal to direct production of documents which were stated to be not in the possession or power of the Complainant. The Court reiterated the statutory mandate under Section 91 that production can only be compelled from the person believed to have possession or control. Documents such as CRM and IT data hosted on a now-defunct URL, employment documents relating to the Complainant and others, lists of buyers and receipts related to the company CHIPL, correspondence between the Complainant and the Accused, bank statements of other companies, and various corporate documents were all held to be either not in the Complainant's possession or irrelevant to the Section 138 complaint.The Court observed that many such documents pertain to the affairs of the accused company or other entities and should ordinarily be maintained by the accused persons themselves. Hence, the learned Magistrate correctly declined to order their production from the Complainant.Issue (d): Scope and limits of Section 91 Cr.P.C. in the context of Section 138 N.I. Act complaintThe Court emphasized that Section 91 Cr.P.C. is a procedural provision to aid investigation, inquiry, or trial, but it cannot be used as a tool for 'roving or fishing' expeditions. The accused must demonstrate the relevance and necessity of the documents sought. The Court noted that the accused's application appeared to be a blanket attempt to obtain voluminous documents pertaining to the company's affairs, which was impermissible. The Court's approach was to ensure that only documents genuinely necessary for the just decision of the case are summoned, maintaining the balance between the parties' rights and preventing abuse of process.Issue (e): Relevance and materiality of documents soughtThe Court scrutinized the relevance of each category of documents sought by the Accused:Documents related to employment of Complainant and others, CRM data, lists of buyers, receipts, and correspondence between the parties were held irrelevant to the complaint under Section 138 N.I. Act, which is narrowly concerned with dishonour of cheques and legally enforceable debt.Documents relating to other companies, bank accounts not connected to the complaint, and electricity bills used as address proof were also held irrelevant.The Court found only the Income Tax Returns, audited balance sheets, and the Complainant's bank statements to be relevant and necessary for adjudication, as they could potentially establish financial transactions or liabilities relevant to the cheque dishonour dispute.The Court's findings demonstrate a careful application of the law to ensure that the scope of document production under Section 91 Cr.P.C. is confined to what is essential for the trial and not used to burden the Complainant with irrelevant or unavailable documents.3. SIGNIFICANT HOLDINGS'From a bare reading of the above provision it is manifestly clear, that the two essential elements which are required to be proved by the Applicant are that: (i) it can be invoked against the person in whose possession or power such document obtained is believed to be and he can be directed to produce the same; and (ii) only those documents shall be called which are 'necessary or desirable' for the purpose of trial or other proceeding, in the opinion of the court.''We are of the view that jurisdiction under Section 91 of the Code when invoked by the accused, the necessity and desirability would have to be seen by the court in the context of the purpose - investigation, inquiry, trial or other proceedings under the Code. It would also have to be borne in mind that law does not permit a roving or fishing inquiry.''The accused under section 91 Cr. P.C. cannot ask the production of documents as a matter of right. However, while making application he has to specify the document and show its relevance. He cannot ask the court to make roving and fishing enquiry as has been done in the applications under consideration.''The documents, other than those at Serial number 6 & 14, production of which is sought by the Accused person, are neither necessary nor required for the proper adjudication of the complaint case filed by the Complainant herein under Section 138 N.I. Act. and are also stated to be not in the possession of the Complainant.'Core principles established include:Section 91 Cr.P.C. mandates production only of documents in possession or power of the person summoned and which are necessary or desirable for the proceeding;The necessity and desirability must be assessed with reference to the stage and purpose of the proceeding;Accused cannot use Section 91 as a tool for fishing expeditions or to burden the Complainant with irrelevant or unavailable documents;Documents relevant to the financial transactions underlying the Section 138 complaint, such as Income Tax Returns and bank statements of the Complainant, are necessary and can be ordered produced;Documents pertaining to the accused company's affairs or other unrelated entities are not relevant and cannot be compelled from the Complainant if not in his possession.Final determinations:The learned Magistrate's order dated 23.10.2024 partially allowing production of Income Tax Returns and Complainant's bank statements was upheld;The refusal to direct production of all other documents on grounds of irrelevance or non-possession was affirmed;The petitions challenging the order were dismissed for lack of merit.