NEUTRAL CITATION
R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 19743 of 2018
With
R/CRIMINAL MISC.APPLICATION NO. 19943 of 2018
With
R/CRIMINAL MISC.APPLICATION NO. 19941 of 2018
With
R/CRIMINAL MISC.APPLICATION NO. 19945 of 2018
With
R/CRIMINAL MISC.APPLICATION NO. 19946 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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MANOHAR GELARAM NARANG
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
MR HARDIK A DAVE(3764) for the Applicant(s) No. 1
MR AFTABHUSEN ANSARI(5320) for the Respondent(s) No. 2
MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 28/08/2023
COMMON ORAL JUDGMENT
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1. All these applications are filed under Section 482 of the Code of Criminal Procedure, 1973 (`the Code' for short) for quashing and setting aside the complaints being Criminal Case Nos.23058 of 2017, 23286 of 2017, 23056 of 2017, 23052 of 2017, 24368 of 2017 respectively pending before the learned 2 nd Additional Senior Civil Judge and Additional Chief Judicial Magistrate Court, Surat filed under the provisions of the Negotiable Instruments Act (`NI Act' for short) and all the subsequent proceedings thereto.
2. As the common question of facts and law are involved in all these applications, at the request of learned advocates for the parties, they are heard together and disposed of by this common oral judgment.
3. Rule. Learned APP waives service of notice for respondent no.1 and learned advocate Mr.Ansari waives service of notice for respondent no.2.
4. For the sake of convenience, the facts of Criminal Miscellaneous Application No.19743 of 2018 are considered, which are as under:
4.1 The applicant has averred in the application that the applicant is a retired person; that it is alleged by the Page 2 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined complainant that applicant and other co-accused had purchased goods from the complainant and different cheques were given to the complainant by the co-accused person towards the payment of the goods delivered by the complainant; the said cheques were dishonoured with the endorsement insufficient funds; that notice was issued by the respondent no.2-complainant and reply to the same was given by the applicant and thereafter the impugned complaints are filed, which are prayed to be quashed by way of these applications.
5. Heard learned advocate Mr.Dave for the applicant, learned APP Mr.Jayswal for respondent no.1-state and learned advocate Mr.Ansari for respondent no.2-complainant. 5.1 Learned advocate Mr.Dave for the applicant submitted that the applicant is not a signatory of the cheques; that though the original accused no.1 is proprietary firm of the original accused no.2, the applicant being a brother of the original accused no.2 is also joined as accused in the present cases; that there is signature of the co-accused on the cheques who is maintaining the account; that the account is not maintained by the applicant and therefore applicant is not liable for the act done by the co-accused as the applicant is not the partner or proprietor of the said Page 3 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined firm; that section 138 of the NI Act is invoked, however, the ingredients of the same are not satisfied and therefore these applications may be allowed.
5.2 In support of his submissions, he placed reliance on the judgment in the cases of Patel Nitaben Chetanbhai V/ s State of Gujarat reported in 2017 JX (Guj) 259 and Aparna A Shah V/s Sheth Developers Pvt.Ltd. And Ors., reported in (2013)8 SCC 71.
6. Per contra, learned APP Mr.Jayswal for respondent no.1-state and learned advocate Mr.Ansari for respondent no.2-complainant have objected these applications and submitted that this Court should not exercise its powers by interfering with the proceedings of recovery of amount and the proceedings initiated under Section 138 of the Act are perfectly justified and therefore, this Court should not exercise inherent powers under Section 482 of the Code, which otherwise, should be exercised sparingly. They, therefore, prayed to dismiss all these applications. Learned advocate Mr.Ansari for the respondent no.2-complainant has submitted that as the present applicant is also a partner of the firm, he is vicariously liable for the offence under Section 138 of the NI Act.
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7. I have considered the rival submissions and perused the material on record.
8. At the outset, the provisions of Sections 138 of the NI Act are required to be seen, which read as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.
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 provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or Page 5 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."
9. In the case on hand, the complaint is filed under Section 138 of the NI Act for the dishonour of cheques, the applicant herein has not signed the cheques, the accused no.1 is a proprietary firm and the accused no.2 is the proprietor of the said firm; there is no material showing that the applicant is anyway connected with the firm; the applicant has replied to the notice issued by the complainant denying that he is not the signatory of the cheques and he is not responsible for the acts and transactions of the firm. The section invoked is Section 138 of the NI Act and not Section 141 of the NI Act, which applies to firms/companies. As far as Section 138 of the NI Act is concerned, the ingredients of Page 6 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined the same are not satisfied in the present case as the applicant is not the drawer of the cheques in question, it is not transpired that the cheques are issued for discharge of any debt or liability.
10. In this factual background, if the settled legal proposition as laid down by the Hon'ble Apex Court in the case of Aparna A Shah (supra) is perused, it is held in paragraph nos.27 and 28 as under:
"27) In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains name of the appellant and her husband, the fact remains that her husband alone put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in- chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque.
28) We also hold that under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has Page 7 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case "except in case of Section 141 of the N.I. Act" be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage."
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11. In the case of Patel Nitaben Chetanbhai (supra), it is held in paragraphs 18 and 22 as under:
"18. Learned Single Judge of the Madras High Court in Devendra Pundir vs. Rajendra Prasad Maurya, Proprietor, Satyamev Exports S/o Sri Rama Shankar Maurya, 2008 Criminal Law Journal 777, following decisions of this Court, has concluded thus:
"7. This court is of the considered view that the above proposition of law laid down by the Hon'ble Apex Court in the decision cited supra is squarely applicable to the facts of the instant case. Even in this case, as already pointed out, the first accused is admittedly the sole proprietrix of the concern namely, "Kamakshi Enterprises" and as such, the question of the second accused to be vicariously held liable for the offence said to have been committed by the first accused under Section 138 of the Negotiable Instruments Act not at all arise." After saying so, learned Single Judge, quashed the proceedings initiated against the petitioner therein and permitted the Judicial Magistrate to proceed and expedite the trial in respect of others."
22. In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the Page 9 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains name of the appellant and her husband, the fact remains that her husband alone put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque."
12. It is also relevant to refer to the judgment of the Hon'ble Apex Court in the case of Inder Mohan Goswami and Another versus State of Uttaranchal reported in (2007) 12 SCC 1, more particularly para : 23 & 24 thereof, which read as under :
"23. This Court in a number of cases has laid down the scope and ambit of courts' powers under Sec. 482 CrPC. Every High Court has inherent power to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court. Inherent power under Sec. 482 CrPC can be exercised:
[(i) to give effect to an order under the Code;] [(ii) to prevent abuse of the process of court, Page 10 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined and] [(iii) to otherwise secure the ends of justice.]
24. Inherent powers under Sec. 482 CrPC though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified by the tests specifically laid down in this section itself'. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the statute. Discussion of decided cases."
13. In view of above settled position of law and after considering the facts as alleged in the complaints and circumstances of the present case, as prima facie ingredients of Section 138 of NI Act are not satisfied and applicant is not liable, the continuation of further proceedings pursuant to the said complaints will cause greater hardships to the applicant and no fruitful purpose would be served if such further proceedings are allowed to be continued. The Court must ensure that criminal proceedings is not used as instrument of harassment or for seeking private vendetta or with ulterior motive to pressurise accused or to settle the Page 11 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023 NEUTRAL CITATION R/CR.MA/19743/2018 JUDGMENT DATED: 28/08/2023 undefined score.
14. Resultantly, all these applications are allowed. The Criminal Case Nos.23058 of 2017, 23286 of 2017, 23056 of 2017, 23052 of 2017, 24368 of 2017 respectively pending before the learned 2 nd Additional Senior Civil Judge and Additional Chief Judicial Magistrate Court, Surat are hereby quashed and set aside qua the present applicant. Rule is made absolute. Direct service is permitted.
(SANDEEP N. BHATT,J) SRILATHA Page 12 of 12 Downloaded on : Sun Sep 17 02:46:10 IST 2023