TaxTMI 
TaxTMI 
2025 (6) TMI 525
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....urther proceedings of the complaint lodged by the respondent no.2 (Annexure 'A') with the additional Chief Metropolitan Magistrate, NI. Court No.29, Ahmedabad being Criminal Case No. 5969/2016, in the ends of justice." 2. Heard learned advocate Mr. Ravish Bhatt for the petitioners, learned advocate Mr. Aditya Gupta for the respondent No.2 and learned APP Mr. Manan Maheta for the respondent-State. BRIEF FACTS OF THE CASE:- 3. The petitioner and respondent No.2 were business partners in a firm named Harikrishna Infrastructure, and they also had extensive inter se business dealings involving various individuals and entities, including M/s. Jalaram Jyot Sales Agency, Ghanshyambhai G. Thakkar (HUF), M/s. Universal Polymers, M/s. Shreeji Polymers, M/s. Phoenix Plastotrade Pvt. Ltd., and others. Respondent No.2, a chartered accountant by profession, was entrusted with various cheque books belonging to the petitioner and his associated firms, as he was handling bank liaisons, billing, and account entries. Around 2012, the parties initiated a housing project titled Rajipa Greenland, and the petitioner was authorized by the firm to execute sale deeds in favour of allottees. ....
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....ainst the petitioner. In absence of such a resolution, the institution of the complaint is vitiated. 4.3. The petitioner respectfully submits that there exists no legally enforceable debt or liability. In view of the settlement arrived at between the parties-culminating in the consent decree dated 25.03.2015 in RCS No. 593 of 2014-it stands conclusively recorded that the petitioner is not liable for any financial obligations of Harikrishna Infra Project Ltd. prior to 25.03.2015, which includes the financial year 2014-15. 4.4. It is further submitted that in light of the consent decree and the MoU dated 17.03.2015, it is not open to Respondent No. 2 to now allege that any cheque was issued for repayment of an advance allegedly extended in 2012-2013. Notably, the existence of a blank cheque book lying with Respondent No. 2 is itself acknowledged in the pleadings of Special Civil Suit No. 593 of 2014, thereby casting serious doubt on the bona fides of the complaint. 4.5. Lastly, learned advocate for the petitioners prayed to allow the present petition. SUBMISSIONS OF THE RESPONDENTS : - 5. Per contra, learned advocate Mr. Aaditya Gupta for the respondent No.2 submitted ....
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....012 and 16.04.2013. It is further alleged that a cheque for an amount of Rs. 6,39,01,600/- was handed over to the petitioner. It is not in dispute that the said cheque was deposited with the State Bank of India; however, it was returned unpaid. A statutory notice, as contemplated under Section 138 (b) of the Negotiable Instruments Act, was issued and duly replied to. Nonetheless, as the amount under the cheque was not repaid, the complainant proceeded to file the present criminal complaint. 6.2. It is an admitted position that the learned trial Court took cognizance and issued process against the partnership firm and Mr. Ghanshyambhai C. Thakkar, the signatory of the cheque. Notably, the learned trial Court declined to issue process against the other two partners of the firm on the ground that they are not involved in day to day affairs of partnership firm, which prima facie indicates proper application of judicial mind. 6.3. The first contention raised by learned advocate Mr. Ravish Bhatt for the petitioners is that the complainant has failed to produce any supporting evidence to establish that such a substantial amount was advanced to the accused. It is, however, pertinent ....
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.... action under the income-tax laws but, if the complainant succeeds in showing the lending of amount, the existence of legally enforceable debt cannot be denied. The High Court also observed that the issue regarding washing away of the cheques in rain water was of no significance when the accused had accepted his liability in clear terms. The High Court found that the defence plea of the accused that the money was given as hand loan by his friend Shri Jagdishbhai got falsified by the version of the said Shri Jagdishbhai, who was examined as a witness on behalf of the complainant. The High Court, therefore, set aside the impugned orders and, while convicting the accused-appellant for the offence under Section 138 of the NI Act, sentenced him in the manner noticed hereinbefore. The High Court, inter alia, observed and held as under: "24. It is necessary at this stage also to refer to the emphasis laid by the learned counsel appearing for the respondent No.2 on the source of the fund which has been lent by the appellant. It has emerged from the detailed examination of the record, as also detailed examination-in-chief as well as cross-examination, that the complainant runs the ....
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....iling of the complaint, he has chosen not to reply to four of the notices. Either on account of insufficiency of the funds or because he has closed account that the cheques could not be realized. All these circumstances cumulatively lead this Court to conclude that the appellant succeeded in proving the legally enforceable debt and no probable defence for rebutting the statutory presumption is raised by the respondent No.2. 25.2 Initial presumption as contemplated under section 139 of the Negotiable Instruments Act, when the proof of lending of the money and acceptance of the signatures on the cheques, shall need to be raised by the Court in favour of the appellant. 28. .......... Reasonably, when the appellant had proved the legally enforceable debt, not only through his own evidence, but also through the evidence of his friend Jagdishbhai and also other contemporaneous record, more particularly, the document at Exhibit 24, which is a writing by which the respondent No.2 clearly indicates and accepts his liability to the tune of Rs. 22.50 lakh. Thus, the burden had shifted upon the respondent No. 2. The presumption which was needed to be drawn by the Court under section 1....
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....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 "118. Presumption as to negotiable instruments.----- Until the contrary is proved, the following presumptions shall be made:-- (a) of consideration-----that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; (b) as to date---that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance-----that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer----that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements----that the indorsements appearing upon a negotiable instrument were made in the order....
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....- "26. In the light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it is based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttal presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. 27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litig....
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.... not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the not....
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....t whether while drawing compromise decree, whole dispute was compromised or no amount remained outstanding. Whether transaction averred in complaint is also covered by said compromise or not. All this disputed questions cannot be adjudicated in exercise of inherent power also extraordinary jurisdiction. 6.9. In case of Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd, (2016) 10 SCC 458, Paras 14, 13, and 16 reads as under:- "13. In Balaji Seafoods (supra), the High Court noted that the cheque was not handed over with the intention of discharging the subsisting liability or debt. There is, thus, no similarity in the facts of that case simply because in that case also loan was advanced. It was noticed specifically therein - as was the admitted case of the parties - that the cheque was issued as "security" for the advance and was not intended to be in discharge of the liability, as in the present case. 14. In HMT Watches Ltd. versus M.A. Abida[8], relied upon on behalf of the respondent, this Court dealt with the contention that the proceedings under Section 138 were liable to be quashed as the cheques were given as "security" as per de....
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....st for the purpose of finding out as to whether continuance of the criminal proceedings would amount to an abuse of process of court or that the complaint petition is filed for causing mere harassment to the accused. While we are not oblivious of the fact that although a large number of disputes should ordinarily be determined only by the civil courts, but criminal cases are filed only for achieving the ultimate goal, namely, to force the accused to pay the amount due to the complainant immediately. The courts on the one hand should not encourage such a practice; but, on the other, cannot also travel beyond its jurisdiction to interfere with the proceeding which is otherwise genuine. The courts cannot also lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable." 12. In Rallis India Ltd. v. Poduru Vidya Bhushan (2011) 13 SCC 88], this Court expressed its views on this point as under: (SCC p. 93, para 12) "12. At the threshold, the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged the respondents of t....
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....charge of a debt for purchase of shares. In any case, when there is legal presumption, it would not be judicious for the quashing Court to carry out a detailed enquiry on the facts alleged, without first permitting the trial Court to evaluate the evidence of the parties. The quashing Court should not take upon itself, the burden of separating the wheat from the chaff where facts are contested. To say it differently, the quashing proceedings must not become an expedition into the merits of factual dispute, so as to conclusively vindicate either the complainant or the defence. 14. The parameters for invoking the inherent jurisdiction of the Court to quash the criminal proceedings under S.482 CrPC, have been spelled out by Justice S. Ratnavel Pandian for the two judges' bench in State of Haryana v. Bhajan Lal ^6, and the suggested precautionary principles serve as good law even today, for invocation of power under Section 482 of the Cr.P.C. "103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not b....