Gujarat High Court
M/S.Conlecta Capital Advisors Pvt Ltd. ... vs M/S. Pyramid Spaces Privated Limited on 15 October, 2025
NEUTRAL CITATION
R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025
undefined
Reserved On : 10/10/2025
Pronounced On : 15/10/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 28758 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J. C. DOSHI
==========================================================
Approved for Reporting Yes No
==========================================================
M/S.CONLECTA CAPITAL ADVISORS PVT LTD. THRO'KARMVIRSING
GANAGSINGH RAJPUROHIT & ANR.
Versus
M/S. PYRAMID SPACES PRIVATED LIMITED, & ANR.
==========================================================
Appearance:
MR ASIFKHAN I PATHAN(2459) for the Applicant(s) No. 1,2
HURAINN S DHOLKAWALLA(7450) for the Respondent(s) No. 1
MR SP HASURKAR(345) for the Respondent(s) No. 1
MR CHINTAN DAVE, APP for the Respondent(s) No. 2
==========================================================
CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
CAV JUDGMENT
1. In this petition filed under section 482 of Cr.P.C. the petitioners who are arraigned as accused in Criminal Case No.20204 of 2013 filed under section 138 of NI Act are claiming following reliefs :-
"(a) That the Criminal Application be admitted.
(b) That this Hon'ble Court be pleased to quash and set aide the order of issuance of process dated 14.05.2013 Page 1 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined passed in Criminal Complaint No.20204 / 2013 by the learned 7th Additional Chief Metropolitan Magistrate, Vadodara, Gujarat against the applicants.
(c) That this Hon'ble Court be pleased to call for the records and proceedings of Criminal Complaint No.20204 / 2013 from the file of the learned 7 th Additional Chief Metropolitan Magistrate, Vadodara, Gujarat.
(d) That pending the hearing and final disposal of the present Criminal Application, this Hon'ble Court may be pleased to stay the further proceedings in Criminal Complaint No.20204 / 2013 from the file of the learned 7 th Additional Chief Metropolitan Magistrate, Vadodara, Gujarat.
(e) Interim and ad-interim reliefs in terms of prayers (a) to
(d) above be granted.
(f) Any other and further relief as the nature and circumstances of the case may require."
2. Facts of the case are as under :-
2.1. That complainant company is doing business of purchase and sale of immovable properties and long term and short term capital investment for the purpose of acquiring developing/purchasing and selling of land and immovable properties. That accused no.1 company is also engaged in the Page 2 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined said business. That accused no. 1 M/s. Conlecta Capital Advisors Pvt. Ltd., is a company incorporated under the Indian Companies Act, 1956 and the accused no.2 to 4 are the authorized signatory/ directors of the said companies and are managing the day to day affairs of the company and are responsible for the act of the accused no-1 and other companies.
Through some contacts, acquaintance had taken place between complainant and accused and accordingly accused no.2 had marketed/ offered various business opportunities for acquiring/developing/ purchasing and selling and investing its funds into short term investment with a view of earning short term gains. That accused had offered various scheme for purchase of property and land and scheme for short term investments. The complainant relying upon words and assurance of accused had invested huge amount as shown in the complaint. That accused here in failed to full fill commitment as promised hence complainant has asked to refund his amount with profit as agreed. To pay the legitimate dues of complainant accused has drawn cheques in favour of complainant company, with assurance that it will honoured on due date, On 22.01.2013, accused in lieu of the settlement worked out for the project at Sky Villa and Dahej, issued cheques no. 031438 worth Rs. 2.00 crores dated 29.01.2013 and cheque no. 031439 worth Rs.1.98 crores dated 29.01.2013 drawn in favor of M/s. Pyramid Spaces Pvt. Ltd. On 14.03.2013 complainant presented the abovementioned cheques no.031438 worth Rs. 2.00 crores and cheque no.031439 worth Rs.1.98 crores dated 29.01.2013 drawn by M/s. Conlecta Capital Advisors Pvt. Ltd. favoring M/s. Pyramid Spaces Pvt. Ltd. for acceptance and encashment with Page 3 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined its bankers Corporation Bank, Alkapuri Branch, Vadodara, and said cheques were presented before bank of accused for acceptance, but the said cheques has been returned dishonored by bank of accused to bank of complainant with cheque return memo dated 15.03.2013. That bank of accused has returned and dishonored the said cheque for the reasons "Insufficient Funds"
as mentioned in said memo. As cheques drawn by accused were returned unpaid, complainant has served all the accused demand notice, with a request to pay the amount of dishonored cheques. The notice was served to all accused and they had given false and evasive reply of the notice and they failed to make payment of dishonored cheques as demanded in notice. Hence complainant filed complaint for offence under section 138 read with section 141 of N.L.Act.
3. Learned Advocate Mr.Jahangir Khajotia with learned advocate Mr.A.I.Pathan for the petitioners seeking quashment of issuance of process mainly submitted that cheques which are subject matter of the Criminal Case have been dishonored twice, firstly on 01.02.2013 and subsequently on 15.03.2013, and having been deposited on 29.01.2013 and 14.03.2013 respectively. It is further submitted that between time period from 01.02.2013 to 28.02.2013 which is subsequent to the dishonor of the cheque, first time the petitioners by way of RTGS tendered amount of Rs.3.98 crores being amount of cheques and accordingly amount of cheque was accepted / paid on the first occasion of it being dishonored.
3.1. Learned advocate for the petitioners further submitted that Page 4 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined subsequently second time deposit of cheque for which amount was already paid is illegal act on the part of the complainant. It is further submitted that there is no question of dishonor of cheque which is already paid yet, the complainant first got the cheeques dishonored and then issued statutory notice under Section 138(B) of NI Act on subsequent dishonor of the cheque on 15.03.2013. Learned Advocate would submit that act of issuance of notice is uncalled for and is bad in law. Referring to verification of the complainant, learned Advocate for the Petitioners would submit that complainant has admitted that cheques were firstly drawn on 29.01.2013 but could not make payment as those cheques were returned unpaid with endorsement of insufficient fund. However, complainant has deliberately suppressed material fact that he has received Rs.3.98 crores between 01.02.2013 to 28.02.2013. Reference has been made to Annexure C and submitted that Federal Bank Limited made communication to the complainant about transfer of amount of Rs.3.98 crores through RTGS in his favour by letter dated 27.04.2013. Therefore, it is submitted that amount of cheque was already paid prior to cheque being dishonored second time. But since facts was suppressed by the complainant, learned Trial Court got carried by the facts and issued process to the petitioners.
3.2. Learned advocate for the petitioners having referred to averments made in para 1 of the complaint confirmed in verification by the complainant, would submit that complainant stated only one form of transaction between complainant and petitioners, amount of which is already repaid by the petitioners Page 5 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined and therefore, reply to the reply of the notice that amount of Rs. 3.98 Crores paid by the petitioners is for some other account cannot be accepted. It is further submitted that cheque amount was of Rs.3.98 crores and exact amount has been paid by the petitioner by way of RTGS and matching of the figures makes it clear that amount stated in the cheques has been paid after it being dishonored first time.
3.3. Learned advocate for the petitioners further submitted that in aforesaid circumstances, it would be incumbent upon the complainant to state for which account amount of Rs.3.98 crores has been received and credited. But complainant is silent on this issue. Learned advocate for the petitioners further submitted that statutory notice is replied explaining these aspects. Referring to page 46 to 48 of the petition, it is submitted that statutory presumption under section 139 of NI Act is fully discharged by the petitioners. Therefore, now burden lies upon the complainant to prove that cheques in a question was given for legally enforceable debt.
3.4. Learned advocate for the petitioners in support of his submissions relied on plethora of judgments. However, most of them are on the subject that complainant has to prove that cheque in question is for legally enforceable debt and any liability stated in section 138 of NI Act only means that any kind of liability of the drawer and not any other's liability. Learned advocate for the petitioners relied on following judgments :-
(1) Hiten Sagar and Anr. v/s. IMC Ltd. [2001 (3) Mh.L.J. Page 6 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined 659] (2) Ashwin Negandi v/s. M/s. D.G.Metal Product and Ors. [Criminal Application No.1267 of 2008 of Hon'ble High Court of Bombay].
(3) M/s. Indus Airways Pvt. Ltd. v/s. M/s. Magnum Aviation Pvt. Ltd. [2014 ALL MR (Cri) 1948 (SC). (4) Ramesh s/o. Ratilal Tanna v/s. Gautam s/o. Jayantilal Nagarwala [2001 ALL MR (Cri) 2881] (5) Mrs. Usha Badri Poonawalla v/s. K.Kurien Babu and Anr. [2005 ALL MR (Cri) 2728].
(6) M/s. CPEC Engineering Ltd. v/s. The Bombay Mercantile Co-operative Bank Ltd. [2014 ALL MR (Cri) 1180].
(7) Mrs. Kanchan Sunil Mansingani v/s. Mrs. Sharmila Raj Thackery [2012 ALL MR (Cri) 2039].
(8) Sri Don Ayengia v/s. State of Assam and Anr. [2014 ALL MR (Cri) Journal 292].
(9) Arumughan Pillai v/s. State of Kerala [2005 CRI LJ 3259].
(10) Othiappan v/s. State of AP [2012 ALL MR (Cri.) Journal 35].
(11) M/s. IKF Technologies Ltd. v/s. Sasi Bhusan Raju [2013 ALL MR (Cri) Journal 49].
(12) Bank of India v/s. Anjali Textiles [First Appeal No.1800 of 1994] of Gujarat High Court.
3.5. Learned advocate for the petitioners would also submit that Co-ordinate Bench of this Court in Criminal Miscellaneous Application No.18909 of 2013 has quashed the complaint Page 7 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined against some of the other accused. In this regard, he referred to Annexure B. 3.6. By making aforesaid arguments, Learned advocate for the petitioners submitted to allow this petition and quash the complaint against the petitioners accused.
4. Learned advocate Mr.S.P.Hasurkar for respondent No. 1 - original Complaint as against aforesaid submissions, made limited submission, that complainant relies on certain factual aspects of the case, and it is a case under Section 138 of N.I. Act. Hence, provision of section 139 of NI Act attracts and it provides legal presumption in favour of the complainant. Prima facie, it is upon the accused to discharge burden that the cheques in question are not given for legally enforceable debt. It is further submitted that various documents referred by the petitioners to show that statutory presumption under section 139 of NI Act is discharged, can be examined during trial. This Court, at the time of deciding petition under Section 482 of Cr.P.C. cannot hold mini-trial to believe that the accused has discharged burden, envisaged under section 139 of N.I.Act.
4.1. Insofar as payment of Rs. 3.98 crores paid in the month of February 2013, learned advocate for complainant referred to para 1 to 5 of the complaint, and also Para 7 and 8 of the statutory notice issued under Section 138 of N.I.Act at page number 34, and submitted that petitioner has told complainant to invest amount in various ongoing construction projects with promise to return hefty profit in the investment. It is further Page 8 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined submitted that profit was worked out to Rs. 5.53 crores. It is further submitted that subsequently settlement was arrived between the parties for Rs.4.33 crores as against total outstanding amount of Rs.7.63 crores. It is further submitted in the statutory notice it is specifically mentioned that Rs.3.98 crores has been paid, and other amounts are pending or remain outstanding.
4.2. In view of above, learned Advocate for the respondent No. 1 submits that it is complainant who is required to prove outstanding debt or liability, and it is a question of trial. Merely putting word against word or facts against facts would be insufficient to put the case to rest. Learned advocate for respondent No.1 relied upon judgment in the case of Arjun Thapar v/s. Machhar Polymer Pvt. Ltd. [2025(0) AIJEL HC 251073] and submitted to dismiss the petition.
5. Learned APP submitted to pass necessary order since the issue pertains to private dispute between the parties.
6. Regard had been to the rival submission of both the sides, and considering the documents on records, summarizing the case of the petitioners, it is noticeable that petitioners are seeking quashment of issuance of process for Criminal Case instituted for the offence under section 138 of NI Act, under Section 482 of Cr.P.C. It is the case of the petitioners that they have paid an amount of cheque being Rs.3.98 crores after it being dishonored on 01.02.2013. They rely on RTGS instructions placed on record at Annexure C. It is therefore, the say of learned advocate for the petitioners that amount of the cheque Page 9 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined which is subject matter of Criminal Case was already paid prior to it being dishonored second time. It could be noticed that after RTGS payment of Rs. 3.98 crores, the petitioners who are accused in Criminal Case did not intimate to the complainant that they are making payment against the cheque which dishonored on 01.02.2013. The petitioners remained silent till they received statutory notice as cheques were returned second time. In reply to the notice, the petitioners first time came out with the case that they have already paid amount of cheques which are in question.
7. If we go through the contents of the complaint which is quite comprehensive, complainant has averred that he has invested amount in respect to the land development and construction carried by the petitioners and was promised to have hefty profit. Details of investment and promise exchanged between the parties are also made in the complaint.
8. In paragraph 8 of the complaint, it is stated that petitioner was agreed to issue cheque of Rs.3.98 crores to be paid through RTGS. In total, the petitioner was required to pay Rs. 4.33 crores as settlement took place due to lower side of the market. Total outstanding of Rs.7.63 crores was reduced to Rs.4.33 crores. Whether all these averments are correct and sufficient enough to attract section 138 of NI Act is subject matter of trial. Statutory notice is placed at page No.34 which was served to the accused. Reply is placed at page No.46. Reply to the reply is placed at page No.49. In statutory notice, specific contention is raised to make payment of cheques. Accused in reply to the notice came Page 10 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined out with a defence that he has already paid amount of the cheque. In reply to the reply of the notice, complainant came out with explanation that amount paid through RTGS is not in regard to the payment of dishonour of cheque but it is in regard to some other transaction between the parties.
9. Now in juxtaposition of above, it is case where facts is against facts. Complainant asserts about dishonour of the cheque based upon one set of facts. Accused comes out with a defence upon another set of facts that he has already paid amount of cheque. These all questions can be examined only during trial.
10. The Court at the stage of deciding the issue under section 482 of Cr.P.C. cannot proceed in manner to sift and weigh evidence in manner that Judge conducts trial in evidence collected during trial. It is impermissible for the Court to hold mini trial and to decide rival contentions. Hon'ble Apex Court in Dharambeer Kumar Singh v. State of Jharkhand, (2025) 1 SCC 392 held that the Court cannot hold mini trial. The relevant para from the judgment reads as under:-
"17. This Court, in a series of judgments, has held that while exercising inherent jurisdiction under Section 482 of the Criminal Procedure Code, 1973, the High Court is not supposed to hold a mini-trial. A profitable reference can be made to the judgment in CBI v. Aryan Singh [CBI v. Aryan Singh, (2023) 18 SCC 399: 2023 SCC OnLine SC 379]. The relevant paragraph from the judgment is extracted hereunder: (SCC paras 6-7)
6. ... As per the cardinal principle of law, at the stage of discharge and/or quashing of the criminal Page 11 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined proceedings, while exercising the powers under Section 482CrPC, the Court is not required to conduct the mini-trial. ...
7. ... At the stage of discharge and/or while exercising the powers under Section 482CrPC, the Court has very limited jurisdiction and is required to consider 'whether any sufficient material is available to proceed further against the accused for which the accused is required to be tried or not'."
11. Let us have worthy assistance from the case of Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd, (2016) 10 SCC 458, Hon'ble Apex Court in para 13, 14 and 16 has held as 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 defence of the accused. Negativing the contention, this Court held :-
"10. Having heard the learned counsel for the parties, we are of the view that the accused (Respondent 1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its Page 12 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined view on the disputed questions of fact in a petition under Section 482 of the Code of Criminal Procedure, to come to a conclusion that the offence is not made out. The High Court has erred in law in going into the factual aspects of the matter which were not admitted between the parties. The High Court further erred in observing that Section 138(b) of the NI Act stood uncomplied with, even though Respondent 1 (accused) had admitted that he replied to the notice issued by the complainant. Also, the fact, as to whether the signatory of demand notice was authorised by the complainant company or not, could not have been examined by the High Court in its jurisdiction under Section 482 of the Code of Criminal Procedure when such plea was controverted by the complainant before it.
11. In Suryalakshmi Cotton Mills Ltd. v. Rajvir Industries Ltd.[(2008) 13 SCC 678], this Court has made the following observations explaining the parameters of jurisdiction of the High Court in exercising its jurisdiction under Section 482 of the Code of Criminal Procedure: (SCC pp. 685-87, paras 17 & 22) "17. The parameters of jurisdiction of the High Court in exercising its jurisdiction under Section 482 of the Code of Criminal Procedure is now well settled. Although it is of wide amplitude, a great deal of caution is also required in its exercise. What is required is application of the well-known legal principles involved in the matter.
22. Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of unimpeachable character should not be taken into consideration at any cost 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 Page 13 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined 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 the said liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the earlier partnership was dissolved and since what date the respondents ceased to be the partners of the firm."
12. In the recent judgment rendered in the case of Rathish Babu Unnikrishnan v. State (Govt. of NCT of Delhi) and Another, 2022 reported in SCC OnLine SC 513, the Hon'ble Supreme Court, while referring to the ratio laid down in Rajeshbhai Muljibhai Patel v. State of Gujarat, (2020) 3 SCC 794, has categorically held that disputed questions of fact are not required to be adjudicated at the threshold stage. Instead, such issues ought to be considered and decided only after the parties have had the opportunity to lead evidence. The relevant paragraphs of the judgment are reproduced hereinbelow:-
"12. At any rate, whenever facts are disputed the truth Page 14 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined should be allowed to emerge by weighing the evidence. On this aspect, we may benefit by referring to the ratio in Rajeshbhai Muljibhai Patel vs. State of Gujarat5 where the following pertinent opinion was given by Justice R. Banumathi: -
"22. .............. When disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of the NI Act ought not to have been quashed by the High Court by taking recourse to Section 482 CrPC. Though, the Court has the power to quash the criminal complaint filed under Section 138 of the NI Act on the legal issues like limitation, etc. criminal complaint filed under Section 138 of the NI Act against Yogeshbhai ought not to have been quashed (2010) 11 SCC 441 5 (2020) 3 SCC 794 merely on the ground that there are inter se disputes between Appellant 3 and Respondent 2. Without keeping in view the statutory presumption raised under Section 139 of the NI Act, the High Court, in our view, committed a serious error in quashing the criminal complaint in CC No. 367 of 2016 filed under Section 138 of the NI Act."
13. Bearing in mind the principles for exercise of jurisdiction in a proceeding for quashing, let us now turn to the materials in this case. On careful reading of the complaint and the order passed by the Magistrate, what is discernible is that a possible view is taken that the cheques drawn were, in discharge 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 Lal6, and the suggested precautionary principles serve as good law Page 15 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined 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 be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice."
15. In the impugned judgment, the learned Judge had rightly relied upon the opinion of Justice J.S.Khehar for a Division Bench in Rajiv Thapar (supra), which succinctly express the following relevant parameters to be considered by the quashing Court, at the stage of issuing process, committal, or framing of charges, "28. The High Court, in exercise of its jurisdiction under Section 482 CrPC, must make a just and rightful choice. This is not a stage of evaluating the truthfulness or otherwise of the allegations levelled by the prosecution/ complainant against the accused. Likewise, it is not a stage for determining how weighty the defences raised on behalf of the accused are. Even if the accused is successful in showing some suspicion or doubt, in the allegations levelled by the prosecution/ complainant, it would be impermissible to discharge the accused before trial. This is so because it would result in giving finality to the accusations levelled by the prosecution/complainant, without allowing the prosecution or the complainant to adduce evidence to substantiate the same."
16. The proposition of law as set out above makes it abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence need to be of an unimpeachable Page 16 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined quality, so as to altogether disprove the allegations made in the complaint.
17. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial Court is ousted from weighing the material evidence. If this is allowed, the accused may be given an un-merited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.
18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited."
13. Taking clue from aforesaid judgment, according to this Court issue raised by the petitioner cannot be decided at threshold under section 482 of Cr.P.C. It requires trial.
14. Section 118 read with section 139 of NI Act provides rebuttal of presumption and gives accused opportunity to prove contrary by leading evidence which includes cross examination of complainant and discharge burden that there is no liability Page 17 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025 NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined and cheque is not issued towards liability claimed by the complainant, but certainly this cannot be done at the stage of quashing Criminal Case.
15. The Hon'ble Apex Court in case of Mahendra K.C. v. State of Karnataka [(2022) 2 SCC 129] has observed thus:-
"16. ... the test to be applied is whether the allegations in the complaint, as they stand, without adding or detracting from the complaint, prima facie establish the ingredients of the offence alleged. At this stage, the High Court cannot test the veracity of the allegations, nor, for that matter, can it proceed in the manner that a judge conducting a trial would, based on the evidence collected during the course of the trial."
16. In the case of State of Haryana Vs. B.Bhajanlal & ors., AIR 1992 SC 604, the Hon'ble Apex Court stated note of caution for quashing FIR at threshold, which reads as under:-
"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 be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice."
17. In view of above aforesaid aspects, judgments relied by learned advocate for the petitioner would not render any assistance.
Page 18 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined (1) Judgment in the case of Hiten Sagar (supra) was on fact that complaint itself shows that cheque in question was issued by petitioner no.1 for liability of petitioners nos.2 and 3 and in that context, Hon'ble Court passed order.
(2) Judgment in the case of Ashwin Negandhi (supra) is decided after completion of trial. It does not bear any significance to the present petition which is seeking quashment of issuance of process.
(3) Judgment in the case of Indus Airways (supra) is not applicable to the facts of the present case. It is in regard to post dated cheques.
(4) Judgment in the case of Ramesh s/o. Ratilal Tanna (supra) is in regard to case where rebuttal documents was to be proved that amount of cheque is paid. Facts of the case are different from present petition. (5) Judgment in the case of Mrs.Usha Poonawalla (supra), it is held that power under section 482 of Cr.P.C. can be examined to quash Criminal case. It was case where dispute was amicably settled and complainant agreed to withdraw the case and later on turned away from his promise.
(6) Judgment in the case of M/s. CPEC Engineering Ltd. (supra), it is case where complainant is neither payee nor holder of the cheque. Said judgment is on different facts. (7) Judgment in the case of Mrs. Kachan Sunil Mansingani (supra), it is case where cheque was issued for investment and not towards repayment of debt and it was admitted by the complainant.
Page 19 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025NEUTRAL CITATION R/CR.MA/28758/2016 CAV JUDGMENT DATED: 15/10/2025 undefined (8) Cheques given as collateral security cannot be enforced is ratio in the case of Sri Don Ayengia (supra). However, this has been taken care in the judgment of Sampelly Satyanarayana Rao (supra).
(9) In the case of Arumughan Pillai (supra), Mediator has issued cheque to fulfill another promise which had arrived during mediation process. It was held that same would not fall within definition of legally enforceable debt. (10) Judgment in the case of Othiappan (supra), is in regard to cheque issued on behalf of the company for discharge of personal guarantee given by Managing Director to concerned, yet there being no enforceable liability against the company.
(11) Judgment in the case of M/s. IKF Technologies Ltd. (supra) is on different facts.
(12) Judgment in the case of Bank of India (supra) is on different facts.
18. In view of above and for foregoing reasons, since the petition being devoid of merits, deserve to be dismissed. Accordingly, present petition is dismissed. Rule is discharged. Interim relief granted earlier, if any, stands vacated.
(J. C. DOSHI,J) SATISH Page 20 of 20 Uploaded by SATISH C. VEMULLA(HC00206) on Wed Oct 15 2025 Downloaded on : Thu Oct 16 02:33:34 IST 2025