2025 (9) TMI 1082 - HC - Indian Laws

Quash petition dismissed in cheque dishonour matter under Section 138 NI Act; Section 139 presumption applied, Section 482 denied

NOUAM FINANCIAL CONSULTANTS PVT. LTD. & ANR Versus THE STATE (GOVT. OF NCT DELHI) & ANR

HC dismissed the petition seeking quashing of summoning orders in a cheque dishonour prosecution under Section 138 NI Act. The court held the presumption ... Dishonour of cheque - legally enforceable debt or liability - seeking quashing of summoning orders - rebuttal of statutory presumption u/s 139 of the Negotiable Instruments Act - HELD THAT:- There is no dispute that to constitute an offence under Section 138 of NI Act, the cheque in question should have been issued in discharge of some legally enforceable debt or liability. However, it is also well-settled that once certain facts have been shown to exist, the presumptive clauses under the scheme of the NI Act, such as Section 139, get attracted, whereby it has to be mandatorily presumed that the cheque in question had been issued in relation to a legally enforceable debt. In this regard, the Hon’ble Supreme Court in case of Oriental Bank of Commerce v. Prabodh Kumar Tewari [2022 (9) TMI 264 - SUPREME COURT] has held that a drawer who signs a cheque and hands it over to the payee, is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued towards payment of a debt or in discharge of a liability. This Court finds, upon a perusal of the record, that it is admitted that the cheque in question, i.e. cheque dated 31.03.2017 had been issued by the petitioner no. 1 in favour of the respondent no. 2 (complainant) in lieu of the shares of respondent no. 2, kept as security for the loan taken by it from petitioner no. 1. Further, the cheque was admittedly returned unpaid to the respondent no. 2 when the same had been presented for encashment. The return memo dated 05.06.2017, placed on record, corroborates the same - A perusal of the Trial Court Record also reveals that at the time of framing of notice, the petitioner no. 2 herein did not dispute the issuance of cheque in question, and rather stated that a duly-filled cheque had been issued to the respondent no. 2, but disputes the purpose of issuance of the said cheque. However, since the issuance of cheque, including the filling of details and the signatures put on the same, were admitted by the petitioners, the presumption under Section 139 of the NI Act squarely gets attracted against petitioners, that is, it has to be presumed that the cheque pertains to a legally enforceable debt or liability. Considering the fact that presumption under Section 139 of NI Act is prima facie attracted against the petitioners and the only argument of the petitioner pertains to the cheque being not issued a legally enforceable debt or liability – which is a matter of trial, this Court finds no ground to exercise its power under Section 482 of the Cr. P.C., which has to be sparingly exercised and cannot be invoked casually, to quash the impugned summoning orders and the proceedings arising therefrom. Petition dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether summoning orders issued under Section 138 of the Negotiable Instruments Act can be quashed at the pre-trial stage on the ground that the cheque was issued merely as a 'security' and not in discharge of a legally enforceable debt or liability. 2. Whether the statutory presumption under Section 139 of the Negotiable Instruments Act is attracted at the stage of issuance of summons and, if so, whether it can be rebutted at the summons/quashment stage or only at trial. 3. Whether the pendency of trial (including advanced stage of trial) and delay in seeking quashing affect the propriety of exercising inherent/extraordinary powers under Section 482 Cr.P.C. to quash summoning orders in Section 138 proceedings. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Quashment of summoning orders where cheque alleged to be 'security' and not for legally enforceable debt Legal framework: Section 138 requires that a cheque be drawn for payment of money towards discharge of a legally enforceable debt or liability; the proviso prescribes presentation and notice requirements. Section 482 Cr.P.C. confers inherent power to quash proceedings but is to be exercised sparingly. Precedent Treatment: The Court follows authoritative pronouncements that emphasize the ingredients of Section 138 and that disputed factual questions about the purpose of a cheque (security versus discharge of debt) are ordinarily to be adjudicated at trial rather than by quashing at the pre-trial stage. Interpretation and reasoning: The record admits issuance, filling and signature on the cheque and its dishonour. The petitioners' sole contention is the purpose (security), which raises a factual dispute. Given admitted issuance and statutory return and notice compliance, the Court finds the dispute about purpose is material but triable. The Court rejects the contention that the mere characterization of the cheque as 'security' disentitles the complainant from proceeding when facts triggering the statutory presumption exist. Ratio vs. Obiter: Ratio - Quashment of Section 138 proceedings is not appropriate where the drawer admits issuance and dishonour, and the contention that the cheque was given as 'security' raises triable issues of fact to be determined at trial. Conclusion: The Court will not quash the summoning orders on the ground that the cheque was issued as security; that is a matter for trial. Issue 2 - Applicability and effect of Section 139 presumption at summons stage and burden of rebuttal Legal framework: Section 139 creates a statutory presumption that a cheque drawn by the accused and received by the payee was issued towards discharge of a legally enforceable debt or liability; the drawer bears the burden of rebutting this presumption by evidence. Precedent Treatment: The Court adheres to settled law that once facts of issuance and dishonour are established or admitted, the presumption under Section 139 is attracted; the burden to rebut lies on the accused and is generally to be discharged at trial. High Court intervention to quash is inappropriate where the presumption stands unless the presumption is rebutted by clear, demonstrable materials at the pre-trial stage. Interpretation and reasoning: Petitioners admitted issuance and filling of the cheque though dispute its purpose. The presumption under Section 139 is therefore prima facie attracted. The Court notes that rebuttal requires adducing evidence and cannot ordinarily be achieved by preliminary submissions in a Section 482 petition challenging summoning orders. Detailed fact-finding to rebut the presumption is the province of the trial court. Ratio vs. Obiter: Ratio - Where the presumption under Section 139 is attracted by admission of issuance and dishonour, the High Court should refrain from conducting a detailed factual inquiry to rebut that presumption at the quashment stage; such rebuttal is to be undertaken at trial. Conclusion: Section 139 presumption is prima facie attracted and cannot be effectively rebutted at the pre-trial/quashment stage on the pleaded material; therefore summoning orders stand. Issue 3 - Effect of trial stage and delay in filing quash petition on exercise of Section 482 Cr.P.C. Legal framework: Exercise of inherent power under Section 482 is exceptional and discretionary; courts avoid interference where trial is ongoing and where there is delay or laches in approaching the High Court for relief. Precedent Treatment: The Court follows authority that discourages quashment by High Court when the trial court is seised and when disputed questions of fact remain to be adjudicated; delay in seeking quashment weakens the petitioner's case for extraordinary relief. Interpretation and reasoning: The trial was close to completion and at the stage of defence evidence; no stay had been granted. The petition was filed approximately four years after issuance of summons. Given the advanced stage of trial and delay, the Court finds no compelling grounds to invoke Section 482 to quash the proceedings. Ratio vs. Obiter: Ratio - Where trial is substantially advanced and the petitioner approaches the High Court after significant delay, the inherent jurisdiction should not be exercised to quash summons/orders under Section 138 unless exceptional circumstances are shown. Conclusion: Delay and the near-conclusion of trial militate against the exercise of Section 482 to quash the summoning orders; the petition is dismissed. Cross-References - The conclusions on Issues 1 and 2 are interdependent: admission of issuance/dishonour triggers Section 139 presumption (Issue 2), which renders the 'security' contention a triable fact (Issue 1). - Issue 3 reinforces the refusal to quash: even if arguable defenses exist, lateness and trial-stage considerations counsel refusal to exercise inherent jurisdiction.