TaxTMI 
TaxTMI 
2025 (9) TMI 924
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....o the fourth floor, and subsequently failed to carry out the remaining construction, which led the applicant to terminate the agreement on 07.05.2020. Meanwhile, respondent presented one of the cheques in question; while respondent claims it was deposited on 06.05.2020, the applicant asserts it was presented on 08.05.2020, as shown in the return memo. However, the cheque was dishonoured, and in pursuance of this, a statutory notice was issued, which the applicant denied liability for. 3. Thereafter, respondent filed Complaint Case No. 2822 of 2020 on 27.08.2020 against the applicant before the learned Fifth Additional Chief Judicial Magistrate, Dehradun, under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as the Act, 1881) which in turn initiated proceedings against the applicant. Parallel to these proceedings, respondent also filed Writ Petition No.2185 of 2020 dated 20.12.2020, contending that the cheque had in fact been presented prior to the termination of the agreement, i.e., on 06.05.2020. However, the applicant, relying on the return memo, contends that the cheque was deposited after termination and also questions the authenticity of the bank l....
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....as completed. The learned counsel, therefore, submits that since the work was not completed, there was no legally enforceable debt and as such applicant was not liable to pay and thus, the condition precedent for cheque encashment was never fulfilled. The Hon'ble Supreme Court in Indus Airways Pvt. Ltd. & others v. Magnum Aviation Pvt. Ltd. & another, (2014) 12 SCC 539, held that where cheque payment is subject to fulfillment of contractual terms, failure thereof renders proceedings under Section 138 non-maintainable. 6. The learned counsel for the applicant also asserts that part payments were made between 12.12.2019 and 25.03.2020 against the cheques, however, no endorsement of such payments appears on the instruments themselves, in violation of Section 56 of the Act, 1881, which mandates endorsement for partial payments. He submits that in the absence of such endorsement-or disclosure in the complaint-the cheque cannot represent a legally enforceable debt, rendering prosecution under Section 138 impermissible. This position is supported by the Hon'ble Supreme Court in Dashrathbhai Lal v. Trikambhai Patel & Anr., (2023) 1 SCC 578 (Paras 11, 29, 30), which held that partial pay....
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....s to proceed and rightly took cognizance under Section 138 of the N.I. Act. It is emphasized that the order summoning the applicant is not a mechanical one but is based on the Magistrate's satisfaction that a prima facie case was made out. Once such satisfaction is recorded upon application of judicial mind, the proceedings cannot be lightly interfered with under Section 482 CrPC unless a glaring abuse of process is demonstrated, which is not the case here. 10. The learned counsel for the respondent further submits that the cheques in question were issued in discharge of a legally enforceable liability arising from a construction agreement, the work under which had already been completed by the respondent. Learned counsel places reliance on specific clauses of the compromise deed dated 11.12.2019 to demonstrate that the applicant had acknowledged completion of the agreed construction. Furthermore, even if there were delays, the agreement only prescribed imposition of a penalty or fine-not the withholding of payment altogether. It is argued by the learned counsel that the dispute raised by the applicant is misconceived. While the applicant claims the cheques were presented af....
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....ed on: Priti Saraf & another v. State (NCT of Delhi) & Anr, 2021 SCC Online SC 206 in which the Hon'ble Supreme Court has categorically held that "32...simply because there is a remedy provided for breach of contract or arbitral proceedings initiated at the instance of the appellants, that does not by itself clothe the court to come to a conclusion that civil remedy is the only remedy, and the initiation of criminal proceedings, in any manner, will be an abuse of power of the process of court". Similarly in Nagarjun Vallupalli v. state of Andhra Pradesh, 2018 SCC online Hyd 97, the Hon'ble High Court has held that the existence of an arbitration clause does not bar the maintainability of a complaint under the Act, 1881. The learned counsel for the respondent submits that the complaint was filed within the period of limitation, considering the extension of limitation by the Hon'ble Supreme Court during the COVID-19 pandemic. The trial court condoned the delay after due consideration by order dated 26.02.2021, and Complaint Case No. 2822 of 2020 was accordingly registered. 13. The learned counsel for the applicant, by means of his rejoinder, submits that the respondent's counter a....
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....sh the proceedings. The case involves multiple sets of disputed facts which can only be settled before the trial court after a proper trial. This Court is also of the view that the dispute regarding whether the cheque was deposited on 06.05.2020 or 08.05.2020-whether presentation was prior to or subsequent to the alleged termination of the agreement-is a factual controversy that cannot be resolved in proceedings under Section 482 CrPC. Both parties have placed conflicting documents and interpretations of the same and such matters are best left to the trial court for resolution upon proper appreciation of evidence. 17. Furthermore, this Court notes that the defence under Section 56 of the NI Act, relating to the alleged part payments made by the applicant without endorsement on the cheques, though relevant, does not render the complaint non-maintainable at the threshold. The existence or effect of such part payments is again a matter of factual proof and legal interpretation. Moreover, it is also well settled that even where a cheque is dishonoured due to 'stop payment' instructions issued by the drawer, the statutory presumption under the Act, 1881 continues to apply. In....