TaxTMI 
TaxTMI 
2025 (4) TMI 429
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...., and in default of payment of fine, to further undergo simple imprisonment for a period of six months. 3. The brief facts leading to filing of the present petition are as follows: 3.1. The complaint was instituted by the respondent due to dishonour of a cheque drawn by the petitioner for a sum of Rs. 15,00,000/-. It was alleged that the respondent/ complainant had known the petitioner since a long time and he had provided her with financial assistance for investments in TV serials and film projects, on the basis of assurances of repayment after completion of the projects. It is alleged that the petitioner never repaid the loaned amount and evaded payments on one pretext or the other. Against the aforesaid liability, the petitioner issued a cheque that was dishonoured upon presentation. The respondent filed a criminal complaint, being, CC No. 2152/1/08, but the matter was subsequently settled between the parties. It is alleged that as part of the said settlement, the respondent withdrew the earlier complaint and the petitioner handed over the cheque in question for Rs. 15 lakhs to the respondent. The said cheque was dishonoured due to "insufficient funds", which led to filing of ....
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.... adduced by the petitioner only showed that she was engaged in some transactions with Mr. Mamgain. The Trial Court further observed that the petitioner had preferred no evidence to show that she had asked for the return of cheque or taken any steps after Mr. Mamgain refused to return her security cheques or even issued any Stop payment instructions to her banker and initiated any civil or criminal proceedings against Mr. Mamgain. 3.7. The learned Trial Court found the petitioner's subsequent claim that she had been coerced into executing the settlement by Mr. Prashant Mamgain to be an afterthought, noting her failure to raise such a defense at earlier stages or produce evidence in its support and held that the settlement created an independent contractual liability, which was legally enforceable. 3.8. By order on sentence dated 06.10.2020, the learned Trial Court sentenced the petitioner to undergo simple imprisonment for a period of two years and directed payment of compensation of Rs. 30,00,000/- (twice the cheque amount) to the complainant, and on default of the payment of the said compensation, the petitioner was directed to further undergo simple imprisonment for a per....
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....itioner had no direct financial dealings with the respondent and that the complaint is a proxy litigation initiated at the behest of a third party-Mr. Prashant Mamgain, who allegedly misused security cheques that had been given for an earlier transaction. He submitted that the evidence presented includes a Memorandum of Understanding dated 22.07.2002 with Mr. Mamgain (Ex. DW1/1), 164 deposit receipts proving repayments totaling over Rs. 45,87,000/-[Ex. DW 1/4 (Colly)], and other supporting documents. He submitted that the petitioner's defense was ignored solely because she did not testify, despite proving her case through cross-examination of the complainant and documentary evidence. 9. He submitted that the learned Appellate court did not allow an opportunity to present arguments on sentencing, and the learned Trial court did not justify the harsh punishment imposed. He submitted that an imprisonment sentence is unnecessary, given the civil nature of the offence under Section 138 of the NI Act and the long duration of the trial. He further submitted that the fine of Rs. 30,00,000/- is excessive, especially considering that the alleged loan amount was only Rs. 10,00,000. He also s....
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....said revisional power cannot be equated with the power of an appellate court nor can it be treated even as a second appellate jurisdiction. Ordinarily, therefore, it would not be appropriate for the High Court to reappreciate the evidence and come to its own conclusion on the same when the evidence has already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise tantamount to gross miscarriage of justice...." (emphasis supplied) 15. It is also well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque received the cheque in discharge of a legally enforceable debt or liability are raised against the accused [Ref. Rangappa v. Sri Mohan : (2010) 11 SCC 441]. 16. The Hon'ble Apex Court in Rajesh Jain v. Ajay Singh : (2023) 10 SCC 148, while discussing the appropriate approach in dealing with presumption under Section 139 of the NI Act, observed the following : "54. .... Once the ....
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....t in order to support his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque." (emphasis supplied) 17. In the present case, initially, the petitioner stated in her statement under Section 313 of the CrPC that she had never taken any loan from the complainant and the cheque had instead been given as a security to Mr. Prashant Mamgain as a security cheque, who misused the same despite repayment of loan. She also denied having ever settled the matter with the complainant earlier. Subsequently, after the order dated 20.08.2009 (Ex. CW-1) was brought on record by the respondent and the additional statement of the petitioner was recorded under Section 313 of the CrPC, she stated that Mr. Prashant Mamgain had coerced her into entering into the settlement. 18. The petitioner had also raised the defence of non-receipt of legal demand notice before the learned Trial Court as well as the learned Appellate Court. The said argument has not been pressed before this Court. 19. I....
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....vate Limited v. Manoj Goel (supra), it is important to succinctly discuss the factual matrix of that case. In the present case, the Hon'ble Apex Court was seized with the issue of parallel prosecutions where the second set of complaints arise from a compromise that was effected to put a quietus to the first set of complaints. The complainant had filed the first set of complaints under Section 138 of the NI Act against dishonor of a number of cheques by Aanchal Cement Ltd. ('ACL'). A criminal complaint was also lodged by the complainant, in relation to which, one of the Directors of ACL was arrested. During the pendency of the bail application of the said Director, ACL allegedly approached the appellant for a compromise. On the basis of the compromise deed, the arrested Director was granted bail. The suit instituted by ACL alleging that the compromise was illegal was rejected and the appellant filed a second set of complaints under Section 138 of the NI Act against dishonor of cheques given in pursuance of the compromise deed. The second complaint was quashed by the Hon'ble High Court and the first set of complaints were allowed to continue. While dealing with the appeals in this re....
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....e appellants were made parties. In this backdrop, the Court noted that in respect of the first cheques, the appellants were not proceeded against and though a compromise was entered into between Manish Arora and Ashish Narula and the complainant, the complaint had not been withdrawn and the two Directors had been found guilty of an offence under Section 138 of the NI Act. Manish Arora had issued the second cheque in terms of the settlement between the parties. It was in this backdrop that the Court observed : (Lalit Kumar Sharma case [Lalit Kumar Sharma v. State of U.P., (2008) 5 SCC 638 : (2008) 2 SCC (Cri) 682], SCC p. 642, paras 15 & 17). "15. Evidently, therefore, the second cheque was issued in terms of the compromise. It did not create a new liability. As the compromise did not fructify, the same cannot be said to have been issued towards payment of debt. *** 17. Thus, the second cheque was issued by Manish Arora for the purpose of arriving at a settlement. The said cheque was not issued in discharge of the debt or liability of the Company of which the appellants were said to be the Directors. There was only one transaction between Shri Ashish Narula, Shri Manish Arora,....
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....08) 5 SCC 638 : (2008) 2 SCC (Cri) 682] by holding that the dishonour of the cheques in pursuance of the order of the Lok Adalat gave rise to a fresh cause of action under Section 138. Moreover, the Court was persuaded to act on the second complaint as the first complaint had resulted in a clear finding of guilt, however no punishment had been granted owing to the compromise. Thus, there was no doubt regarding the existence of a debt or liability in furtherance of which the cheque was issued. Hence, the decision in Arun Kumar [Arun Kumar v. Anita Mishra, (2020) 16 SCC 118 : (2021) 2 SCC (Cri) 124] would indicate that the question as to whether the dishonour of a subsequent cheque (in that case pursuant to a settlement before the Lok Adalat) gives rise to a fresh cause of action is a question of fact to be determined in each case. In other words, the earlier decision in Lalit Kumar Sharma [Lalit Kumar Sharma v. State of U.P., (2008) 5 SCC 638 : (2008) 2 SCC (Cri) 682] cannot be construed as laying down an invariable or inflexible principle that a cheque issued subsequently in terms of a settlement, after the dishonour of an earlier cheque does not create a new liability. Lalit Kumar....
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....ity arises from a settlement agreement is a matter of trial and evidence. While adjudication of liability in the original complaint is a factor, other factors like the underlying settlement agreement have to be also given due consideration. It cannot be said that it is incumbent on the complainant to establish the existence of a legally enforceable debt in the original complaint in each and every case where the settlement in question is effected before adjudication of liability. 26. Coming to the facts of the present case, a bare perusal of Ex. CW-1 shows that when the complainant withdrew the first complaint, being, CC 2152/1/08, in terms of the compromise between the parties, he had received the subject cheque as part of the settlement. The cheque details were duly noted in the said order and the statements of the petitioner as well as the respondent was also recorded. The petitioner had assured that the subject cheque shall be encashed and she would abide by the terms of the compromise deed between the parties. The petitioner had affirmed her signature on the compromise deed as well. 27. The learned Appellate Court held that the bald averments made by the petitioner in her sta....
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....en entered into between the parties, the parties are bound by the terms of the agreement and any violation of the same may result in consequential action in civil and criminal law. xxx 53. ...First, as held above, a settlement agreement effaces the original complaint and thus, it is not up to the parties, either complainant or accused, to simply reverse the effects of that agreement and relitigate the original complaint relating to the same underlying transaction under Section 138 of the NI Act. ..." (emphasis supplied) 30. As noted by the Hon'ble Apex Court, once the parties have entered into a settlement they cannot be allowed to reverse the effects of the same. Just as a complainant undertakes the risk of the accused failing to honor the settlement, the accused is also bound to the said settlement and cannot be allowed to violate the same and then raise defences as available in the original complaint. If the said proposition is accepted, it would render the settlement to be of no import. The accused would be at an unfair advantage where he could enter into a settlement and reap its benefits by getting exonerated in the original complaint, and subsequently, in case a secon....
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....use there is no mention of the compromise in the legal notice does not act to the benefit of the petitioner. The legal notice clearly makes a mention of the cheque details and the respondent also made mention of the compromise in his pre-summoning evidence. 35. At this juncture, this Court also deems it apposite to comment on the propensity of the petitioner to enter into a settlement and thereafter deny the same. The petitioner has evidently given a false statement when her statement under Section 313 of the CrPC was recorded. There is no doubt that the parties entered into a settlement in the original complaint, in terms of which, the complainant withdrew the same. The petitioner cannot be allowed to claim any advantage merely because the compromise deed was not brought on record at the first instance by the complainant. 36. In view of the aforesaid discussion, it is clear that the petitioner has not been able to raise a probable defence and this Court finds no infirmity in the conviction of the petitioner for the offence under Section 138 of the NI Act. 37. Insofar as the sentence is concerned, the learned Trial Court appreciated the prior convictions of the petitioner as wel....