TaxTMI 
TaxTMI 
2021 (4) TMI 470
X X X X Extracts X X X X
X X X X Extracts X X X X
....str4ict Lucknow, Complaint No.6964 of 2019 (Asif Ali Ahmad Siddiqui and another v. Mohd.Yahya Farooqui) and for quashing the whole proceedings of the above criminal case. 3. Petitioner (opposite party) Mohd.Yahya Farooqui @ Firoz Farooqui and complainant no.2 (opposite party no.3) are real brother and sister and Complainant no.3 is a class III Government Employee. 4. Brief facts giving rise to this litigation are that opposite party nos.2 and 3 had instituted a Complaint Case under Section 138 of Negotiable Instruments Act, 1881, against the petitioner alleging therein that in the year 2017-18, opposite party (petitioner) and his brother Javed Farooqui had taken a loan of Rs. 12 lacs from complainant nos.1 and 2 on the condition that they will return Rs. 2 lacs with 10% interest by 31.03.2018 and on remaining 10 lacs they will pay Rs. 5 lacs as interest by June 30, 2018. The aforesaid amount, according to the complainants, was paid in parts through RTGS and NEFT in petitioner's bank account. Thereafter Rs. 3,55,000/- were stated to have been given to the petitioner by the complainants in the month of November, 2017 and complainant no.2 also stated to have given 18 Tolas o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and Rs. 18,18,340/- were transferred in the bank account of the petitioner by the complainants for the purpose of investment in the business of brick kiln and the petitioner as per the agreed oral terms had returned about Rs. 3,35,300/- to the complainants. 9. It is further submitted that in fact petitioner had lost his three cheques bearing nos.494041,494042 and 494043 and an application in this regard was submitted to the Manager, Indian Overseas Bank, Civil Lines, Allahabad on 26.04.2019 and he was also requested to stop the payment of these cheques. He further submits that on the same day i.e. 26.4.2019, the petitioner had also informed the Station House Officer, Shivkuti, Allahabad, informing that the above mentioned cheques, which were blank except his signatures, had gone missing. According to him the business of brick kiln failed and he came under financial constraints, however he had not taken any loan of Rs. 41 lacs from the complainants. 10. It is further submitted that as the cheques were not issued in discharge of any legally enforceable liability, the proceedings under Section 138 of Negotiable Instruments Act, are not maintainable as well as there is no relat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 has relied on following case laws : (i) Girish Kumar Suneja v. C.B.I. 2017 Cri.L.J.4980 (Paras 15,16,17 & 18) (ii) Goli Satyanarayana Reddy v. G. Mahesh 2020 Cri.L.J. 1696 (Paras 19,20,21,22,23 and 24) (iii) Mohit alias Sonu & Anr v. State of U.P. and Anr. AIR 2013 SC 2248 (Para 17). 14. Having heard learned counsel parties and having perused the record, it is fruitful to have a glance on the relevant provisions of Negotiable Instruments Act, which appears necessary for the disposal of this petition. Section 138 of Negotiable Instruments Act reads as under : " Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r maintains the account, is situated. 15. Under Section 138 of the Act, where a cheque is issued by the drawer in the discharge of any debt or any other liability is returned by the bank unpaid, because the amount standing to the credit of that account is insufficient to honour the cheque,the said person is deemed to have committed an offence, subject to proviso to Section 138 which provides that the cheque should have been presented to the bank within the period of six months from the date of which it is drawn or within the period of its validity, whichever is earlier. The payee must also make a demand for the payment of the said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of the cheque unpaid. If despite this demand, the drawer fails to make the payment within fifteen days of the receipt of the notice, a cause of action arises for prosecuting him for the offence punishable under Section 138 of the Act. Section 142 provides that the court shall take cognizance of an offence punishable under Section 138 of the Act upon receipt of a complaint in writing made by the paye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....received any notice. This statement of the petitioner was recorded on 3.2.2020 and a copy of the same has been filed by the petitioner himself at page no.79 of the paper book of this petition, thefore, having regard to the substance of accusation which has been communicated to the petitioner by the trial court, in the considered opinion of this Court, sufficient compliance of Section 251, Cr.P.C. has been made and proper and sufficient opportunity to explain the accusation has been given to the petitioner by the trial court. 20. It is also submitted by Ld. Counsel for the petitioner that a Government Servant could not lend or invest any amount in any business. I need not to dwell deep in this submission for the reason that violation of any service conduct rules of any employment may be a relevant fact for initiating any disciplinary inquiry against the Government Servant but the same could not adversely effect his right to receive any legally enforceable amount or debt and therefore even if the money has been given by complainant no.2 to the petitioner in violation of any service conduct rules the same could not be a ground to quash the proceedings of instant case. 21. The an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant accused cannot be expected to discharge an unduly high standard or proof." 25. In Kisan Rao vs. Shankargouda, (2018) 8 SCC 165 after considering the decision of this Court in the case of Kumar Exports vs. Sharma Carpets, (2009) 2 SCC 513, it is observed by Hon'ble Supreme Court that the accused may adduce evidence to rebut the presumption, of section 139 of N I Act but mere denial regarding existence of debt shall not serve any purpose. 26. Coming back to the facts in the present case and considering that the petitioner has admitted his signatures on the cheque in question and that even according to the petition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....teen days time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a complaint may be filed against him. As noted above, the object of the proviso is to avoid unnecessary hardship to an honest drawer. Therefore, the observance of stipulations in quoted Clause (b) and its aftermath in Clause (c) being a pre-condition for invoking Section 138 of the Act, giving a notice to the drawer before filing complaint under Section 138 of the Act is a mandatory requirement." "14. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the Court to draw presumption or inference either under Section 27 of the G.C. Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasis that the complaint must contain basi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act. whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfil their promise but on account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque. The proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, if being a part of their modus operandi to cheat unsuspecting persons. 16. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt paragraphs from Vinod Shivappa where this Court has held that service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for quashing of the proceeding Under Section 482 of the Code of Criminal Procedure........" 31. Hon'ble Supreme Court held in D. Vinod Shivappa Vs. Nanda Belliappa, MANU/SC/8187/2006 has held as under :- "12. We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus ev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cheque. (4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.. (5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this section." 34. In G.J. Raja Vs.Tejraj Surana reported in MANU/SC/1002/2019 Hon'ble supreme Court has held that " 9. A reading of Section 143A shows (i) interim compensation must not exceed 20% of the amount of the cheque; (ii) it must be paid within the time stipulated under Sub-Section....