TaxTMI 
TaxTMI 
2025 (10) TMI 1124
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....tituted by Respondent No. 2/Complainant, M/s Magnifico Minerals Pvt. Ltd., for the offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "N.I. Act"). 2. The case of the Complainant/Respondent No. 2 is that they are engaged in the business of resale of imported Steam Coal and other related products under the name and style of M/s Magnifico Minerals Pvt. Ltd., New Delhi, having offices in Delhi as well as in other parts of the country. The Complainant on different occasions supplied the Coal to the Petitioner. As per the accounts maintained by the Complainant, a sum of Rs. 1,91,72,159.51/- (Rupees One Crore Ninety-One Lakh Seventy-Two Thousand One Hundred Fifty-Nine and Paise Fifty-One only) was due and recoverable from the Petitioner as on 03.11.2014, besides interest. 3. According to the Complainant, in discharge of the aforesaid liability, the Petitioner issued the following cheques (details below) drawn on State Bank of Mysore, Industrial Finance Branch, Bellary, duly signed by the authorised signatory of the Petitioner Company in connection with the business transactions between the parties. On presentation by the Complainant through....
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....M, Delhi, without recording pre- summoning evidence, adopted the Order of the Ld. MM, Bellary, who had no jurisdiction to issue summons against the Petitioner. 9. The Impugned Summoning Order dated 27.04.2015, 08.04.2015, and 18.05.2015 in the aforesaid Complaints are challenged by the Petitioner on the ground that the summons issued by the Ld. MM, Bellary, later adopted by the Ld. MM, Delhi are contrary to law and facts on record, and were passed mechanically without consideration of the documents placed before the Court. They were obtained by fraud, concealment, and suppression of material facts, which, if disclosed, would have resulted in dismissal of the complaints at the threshold. 10. It is asserted that a Memorandum of Understanding dated 06.05.2014 was entered into between the Petitioner and Respondent No. 2, which is reproduced as under:- Dated 06.05.2014 MEMORANDUM OF UNDERSTANDING Entitled between M/s Sri Sai Sapatgiri Sponge Pvt Ltd., Bellary and Magnifico Minerals Pvt. Ltd, New Delhi. We are issuing following cheques for Rs. 1.75 Crores for Security Purpose only. Cheques you are insisting for audit purpose, for showing to banker and Security purpos....
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....st disclose necessary facts, including that at the time of the offence, the accused person was in charge of and responsible for the conduct of the business of the Company. This is an essential requirement, without which Section 141 cannot be said to be satisfied. 16. It is also submitted that the Impugned Summons dated 27.04.2015, 18.05.2015, and 08.04.2015 were issued by the Ld. MM, Bellary, Karnataka which itself, vide Order dated 14.10.2015, who returned the Complaints to be presented before the Court of competent jurisdiction. The question that arises is whether a Summoning Order passed by a Court which itself held that it had no jurisdiction to entertain a Complaint under Section 138 N.I. Act can be sustained, being without jurisdiction. 17. It is further submitted that all the necessary averments required for the maintainability of a Complaint under Section 138 of the N.I. Act are absent in the present Complaints. Hence, they are liable to be dismissed at the threshold. It is reiterated that the Petitioner is innocent and has been falsely implicated in the present case. 18. Accordingly, a prayer is made that the present Petitions be allowed and the Impugned Summoning....
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....this Court in K.S. Bakshi v. State, 2008 (3) JCC (NI) 267, wherein it was observed that a distinction must be drawn between a cheque issued purely as security and one issued towards discharge of liability. It was held that where a cheque is issued as security for due performance of a contract, it becomes enforceable upon failure to perform the obligation. 25. It is also submitted that the judgment of the Apex Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Ors., (2005) 8 SCC 89, relied upon by the Petitioner, has no application to the present case. In that case, the Court observed that to bring a case under Section 141 of the N.I. Act, specific averments are required against the person in charge of and responsible for the conduct of the business of the Company. In the present case, however, the accused persons are the Managing Director and Director of the Petitioner Company. 26. Reliance is also placed on the judgment of a Coordinate Bench of this Court in Credential Leasing & Credits Ltd. v. Shruti Investments & Anr., 2015 (4) JCC (NI) 252, wherein it was observed that "debt or other liability" must be a legally enforceable debt or liability. Neither Section 138 nor i....
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....he relevant part of the MOU dated 06.05.2014, specifically records: "We are issuing the following cheques for Rs. 1.75 Crores for Security Purpose only. Cheques you are insisting for audit purpose, for showing to banker and Security purpose and not for depositing into Bank. So these cheques are not for presenting into Bank for clearing." 35. On the other hand, the defence of the Complainant is that even if these cheques were issued as security, they subsequently crystallised into a legally enforceable debt and could be presented to the Bank in case of any outstanding dues. For this purpose, Respondent No. 2 has relied upon the second paragraph of the said MOU to contend that although the cheques were issued as security, they were subsequently converted into a debt. The relevant paragraph of the MOU, reads as under: "We are issuing LC's for fresh supply. And it can be adjusted towards old outstanding amount for old out standings. We will clear the old dues by making RTGS after some period." 36. The perusal of the MoU as recorded above, clearly records that the cheques were issued only for the purpose of being shown as security to the Banks, and not for presen....
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....roached for quashing of a criminal proceeding, it will not appreciate the defence of the accused, nor will it consider the veracity of the documents relied upon by the accused. However, an exception has been carved out in appropriate cases where the document relied upon is a public document, or where the veracity thereof is not disputed by the complainant; in such cases, the same may be considered. 41. In Harshendra Kumar D. v. Rebatilata Koley, (2011) 3 SCC 351, the Apex Court has observed that it is fairly settled now that while exercising inherent jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an enquiry in respect of merits of the accusations. However, in an appropriate case, if on the face of the documents - which are beyond suspicion or doubt - placed by the accused, the accusations against him cannot stand, it would be travesty of justice if the accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent in....
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....the N.I. Act, whereby sub-section (2) of Section 142 and Section 142-A were inserted with effect from 15.06.2015. 50. Section 142 (2) reads as under; 142. Cognizance of offences.- ...... (2) The offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction,- (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or (b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated. Explanation.-For the purposes of Clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account. 51. Section 142-A reads as under; 142 A. Validation for transfer of pending cases (1) Notwithstanding any....
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....ummoning stage, either by affidavit or by oral statement, the complaint will be maintainable only at the place where the cheque stands dishonoured. To obviate and eradicate any legal complications, the category of complaint cases where proceedings have gone to the stage of Section 145(2) or beyond shall be deemed to have been transferred by us from the court ordinarily possessing territorial jurisdiction, as now clarified, to the court where it is presently pending. All other complaints (obviously including those where the respondent-accused has not been properly served) shall be returned to the complainant for filing in the proper court, in consonance with our exposition of the law. 54. In Bridgestone India (P) Ltd (Supra), the Apex Court while deciding the issue of territorial jurisdiction has observed that in case the complaint filed by the appellant has been returned, it shall be re-presented before the Judicial Magistrate, First Class, Indore, Madhya Pradesh, on the date of appearance indicated hereinabove. 55. In the aforesaid cases, the Hon'ble Supreme Court has specifically clarified that where the stage under Section 145(2) of the N.I. Act is not reached, the Complai....