Harjeet Singh Bhatia vs Smt. Dhanvinder Kaur Bhatia
2022 Latest Caselaw 6447 Chatt

                                     1

                                                             NAFR

        HIGH COURT OF CHHATTISGARH, BILASPUR

                      Cr.M.P. No. 1217 of 2022

                    Order reserved on 19.09.2022
                    Order delivered on 21.10.2022

      Harjeet Singh Bhatia, S/o. Mangal Singh Bhatia, aged about
      64 years, R/o. 241, ICRC, Transport Nagar, Indira Vihar,
      Korba, District Korba (C.G.)
                                         ---- Petitioner/Accused
                                Versus

      Smt. Dhanvinder Kaur Bhatia, W/o. Parvinder Singh Bhatia,
      aged about 54 years, R/o. 136, ICRC, Transport Nagar,
      Korba, District Korba (C.G.)

                                        ----Respondent/Complainant


For Petitioner              :   Mr. Manoj Paranjpe & Mr. Rishabh
                                Gupta, Advocate.
For Respondent              :   Mr. A.K. Prasad, Advocate.


             Hon'ble Shri Justice N.K. Chandravanshi

                         ORDER [C.A.V.]

1.    Instant petition has been preferred by the petitioner under
Section 482 of the Code of Criminal Procedure, 1973 (henceforth
"Cr.P.C.')    for    quashment     of     complaint   case   filed   by
respondent/complainant bearing No. 630/2021 and all consequential
proceedings pending before the Judicial Magistrate, First Class, Korba,
District Korba (C.G.).

2.    Facts

of the case, in nutshell, are that respondent/complainant has filed complaint under Section 200 read with Section 138 of the Negotiable Instruments Act, 1881 (for brevity "NI Act") against the petitioner alleging therein that pursuant to the agreement dated 9.11.2017 (Annexure P-4) executed between partners, including petitioner & respondent, who were running hotel business in the name

and style of "Blue Diamond Hotel", the petitioner has issued a cheque amounting to Rs.20,83,000/- in favour of respondent/complainant as part payment against the transfer of share of respondent/complainant in his favour as per terms and condition of the agreement. The said cheque was presented for encashment in the Bank on 16.3.2020, which was dishonoured due to insufficient fund and was returned to the respondent/complainant on the same day. Thereafter, a notice was issued for payment of amount of cheque, but despite service of notice, neither the cheque was honoured nor amount was paid to the complainant. Thereafter, respondent/complainant filed complaint case in the Court of Judicial Magistrate First Class, Korba, which was registered against the petitioner and after service of summons, he made his appearance in the aforesaid case. Thereafter, instant petition was filed seeking relief, as has been stated in preceding paragraphs.

3. Learned counsel appearing for the petitioner would submit that, although subject cheque was issued in respect of agreement executed between the parties/partners but a bare perusal of the agreement makes it clear, that obligation of both the parties were reciprocal in nature, as the obligation of one was depended upon the obligation of other partner. It is further submitted that in compliance of terms & conditions of the agreement, petitioner (party No. 2) has paid an amount of Rs.5,00,00,000/- to respondent (party No. 1) after borrowing the said amount from the Bank and the petitioner has also paid a sum of Rs.1,18,00,000/- to him against remaining amount of Rs.2,62,00,000/-, which was to be paid alongwith interest by petitioner/party No. 2 to them. It is next submitted that subject cheque and other cheques were issued only as security of remaining amount i.e. Rs.2,62,00,000/- along with interest, but it was also agreed by both the parties in condition No. 8 of the agreement that if petitioner (party No. 2) will be failed to comply with the conditions of the agreement, then respondent (party No. 1) will be reinstated as partner automatically, on the refund of the amount paid by petitioner (party No.2) and, therefore, the petitioner has requested the

respondent/complainant to refund the entire amount and re-instate their position as partner. This fact clearly shows absence of mens rea on the part of the petitioner. It is next submitted that since the agreement between the parties could not be given effect to and there was no subsisting liability on the date of issuance of subject cheque, the liability would have been created, if the respondent/party No. 1 would have been eliminated without any payment of the amount fixed for their elimination, but such is not a situation in the instant case, hence, considering the conditions of agreement dated 9.11.2017 executed between the parties, offence under Section 138 of the NI Act is not attracted in the instant case. Therefore, order impugned passed by learned Magistrate with regard to registration of complaint case is bad in law, hence, it is prayed that petition be allowed and relief may be granted to the petitioner.

4. The reference is made by learned counsel for the petitioner on the judgment delivered by the Supreme Court in the matter of Swastik Coaters Pvt.Ltd. v. Deepak Brothers and others 1, wherein their Lordships of the Supreme Court have held as under :-

" The Single Judge of the Andhra Pradesh High Court while considering the Explanation to Section 138 held :

'........... Explanation to Section 138 of the Negotiable Instruments Act clearly makes it clear that the cheque shall be relatable to an enforceable liability or debt, and as on the date of the issuing of the cheque there was no existing liability in the sense that the title in the property had not passed on to the accused since the goods were not delivered......"

5. Reliance is also made by learned counsel for the petitioner in the case of Shanku Concretes (P) Ltd. v. State of Gujarat 2, wherein it has been held that to attract Section 138 of the NI Act, there must be subsisting liability of debts on the date when the cheque was delivered.

1    1997 CRLJ 1942 (AP)
2    2000 Cri LJ 1988 (Guj)

The very fact that the payment was agreed to some future date and there was no debt or liability on the date of delivery of the cheques would take the case out of the purview of Section 138 of the NI Act. In the aforesaid case, the Gujarat High Court followed a decision of the Madras High Court in the matter of Balaji Seafoods Exports (India) Ltd. v. Mac Industries Ltd. 3. While arguing the case, learned counsel for the petitioner also referred the judgments of the Supreme Court in the cases of Indus Airways Private Limited and others v. Magnum Aviation Private Limited and another 4 ; Sunil Todi and others v. State of Gujarat and another 5 and Ramveer Upadhyay and Another v. State of U.P. and Another 6 in support of his submissions.

6. On the other hand, learned counsel appearing for the respondent while referring the return filed by him would submit that complaint filed by respondent discloses all necessary ingredients to attract the provisions contained in Section 138 of the NI Act against the petitioner, as the petitioner has not denied the issuance of subject cheque in favour of respondent/complainant and after presentation of the same for encashment, cheques were dishonoured. It is further submitted that submissions made by learned counsel for the petitioner that the cheque was advanced as security of the amount of Rs. 2,62,00,000/- and as per the agreement, obligation of both the parties were reciprocal in nature and there was no liability subsisting on the date of drawal of the cheque are the matter of defence, which cannot be adjudicated at this stage invoking inherent power of this Court, because such fact could only be decided by the trial Court after evaluating the evidence adduced by both the parties. It is further submitted that the grounds raised by the petitioner in the instant petition cannot be entertained in this petition under Section 482 of the Cr.P.C. at an interlocutory stage, because such fact cannot be considered in this petition, as scope of enquiry under Section 482 of the Code is limited. Learned counsel for the respondent placed reliance upon the judgment of the Supreme 3 (1999) 1 CTC 6 (Mad) 4 (2014) 12 SCC 539 5 2021 SCC OnLine SC 1174 6 2022 SCC OnLine SC 484

Court in the matter of Paramjeet Batra v. State of Uttrakhand 7, M/s. Womb Laboratories Pvt. Ltd. v. Vijay Ahuja & another 8, Sripati Singh (Since Deceased) Through His Son Gaurav Singh v. State of Jharkhand and another 9 and Rathish Babu Unnikrishnan v. State (Govt. of NCT of Delhi ) and another 10 in support of his submissions.

7. Heard learned counsel appearing for the parties and perused the material available on record with utmost circumspection.

8. It is not in dispute that pursuant to the agreement dated 9.11.2017 (Annexure P-4) executed between partners of Firm M/s. Blue Diamond Associates including both the parties, subject cheque was issued by the petitioner in favour of respondent/complainant against transfer of their share in his favour, which was said to be dishonoured by the Bank and despite service of legal notice, amount of cheque was not paid by the petitioner, thus, all the necessary ingredients under Section 138 of the NI Act are attracted against the petitioner in the instant case.

9. A perusal of the said agreement would also show that for transfer of shares of respondent (party No. 1), Rs.7,62,00,000/- was to be paid by petitioner (party No. 2), out of which Rs. 5,00,00,000/- had been paid by taking loan from the Bank and for remaining amount of Rs.2,62,00,000/-, various cheques including subject cheque was given as a security of the said amount. As per agreement, aforesaid remaining amount i.e. Rs.2,62,00,000/- was to be paid by petitioner (party No. 2) to respondent (party No. 1) till 31.12.2019 alongwith agreed rate of interest. It was also agreed by both the parties that if the amount was not paid within the stipulated period i.e. 31.12.2019, then, party No. 1 will be entitled to encash the cheque given to them as security. Since the petitioner (party No. 2) could not pay the remaining amount i.e. Rs. 2,62,00,000/- with interest to respondent (party No. 1) 7 (2013) 11 SCC 673 8 Criminal Appeal Nos. 1382 - 1383 of 2019, decided on 11th September, 2019 9 2021 SCC OnLine SC 1002 10 2022 SCC OnLine SC 513

within the stipulated period i.e. till 31.12.2019, therefore, they deposited the subject cheque for encashment, which was dishonoured by the Bank.

10. Contention of learned counsel for the petitioner in this case is that the subject cheque and other cheques were given to party No. 1 (respondent/complainant) as security and on the date of issuance of cheque, there was no subsisting enforceable debt or liability against petitioner (party No. 2), therefore, in view of explanation to Section 138 of NI Act, the said offence is not attracted against the petitioner. It is also a contention of learned counsel for the petitioner that since there was specific condition No. 8 in the agreement that if petitioner (party No. 2) will be failed to comply with the part of the agreement, then respondent (party No. 1) will be reinstated as partner automatically on the refund of the amount paid by petitioner (party No. 2) and, therefore, the petitioner has requested the respondent/complainant to refund the entire amount and re-instate their position as partner, thus, their position was not eliminated on the date of issuance of cheque, hence, considering the obligation of both the parties, which was reciprocal in nature, registration of complaint case under Section 138 of the NI Act is clearly abuse of process of law.

11. This court is not impressed at all with the submissions made hereinabove by learned counsel for the petitioner, as there was specific condition in the agreement dated 19.11.2017 that remaining amount i.e. Rs.2,62,00,000/- has to be paid by petitioner (party No. 2) to respondent (party No. 1) necessarily along with interest till 31.12.2019. It is also specifically mentioned in the agreement that if the amount was not paid within the stipulated period i.e. till 31.12.2019, then respondent/complainant (party No. 1) would have all the right to encash the cheques and it is also a matter of fact that since aforesaid amount i.e. Rs.2,62,00,000/- alongwith interest was not paid by petitioner (party No. 2) within the stipulated period and, thereafter, the cheque was deposited for encashment, which was dishonoured by the Bank,

therefore, it cannot be said that since the cheque was given as security cheque, hence, offence under Section 138 of the NI Act is not attracted against the petitioner.

12. In the case of Ripudaman Singh v. Balkrishna 11, their Lordships of the Supreme Court have held that though agreement to sell does not create interest in immovable property, however it constitutes enforceable contract between parties, therefore, cheques issued under and in pursuance to agreement to sell is payment made in pursuance of legally enforceable debt or liability.

13. In the case of M/s. Womb Laboratories Pvt. Ltd. (supra), their Lordships of the Supreme Court have held as under :-

" 5. In our opinion, the High Court has muddled the entire issue. The averment in the complaint does indicate that the signed cheques were handed over by the accused to the complainant. The cheques were given by way of security, is a matter of defence. Further, it was not for the discharge of any debt or any liability is also a matter of defence. The relevant facts to countenance the defence will have to be proved - that such security could not be treated as debt or other liability of the accused. That would be a triable issue. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques."

14. In the case of Rajeshbhai Muljibhai Patel and others v. State of Gujarat and another 12 , their Lordships of the Supreme Court have held in paragraph 22 as under :

"22..........When once the issuance of cheque is admitted/established, the presumption would arise under Section 139 of the N.I. Act in favour

11 (2019) 4 SCC 767 12 (2020) 3 SCC 794

of the holder of cheque that is the complainant-

appellant No.3. The nature of presumptions under Section 139 of the N.I. Act and Section 118(a) of the Indian Evidence Act are rebuttable. Yogeshbhai has of course, raised the defence that there is no legally enforceable debt and he issued the cheques to help appellant No.3-

Hasmukhbhai for purchase of lands. The burden lies upon the accused to rebut the presumption by adducing evidence. The High Court did not keep in view that until the accused discharges his burden, the presumption under Section 139of N.I. Act will continue to remain. It is for Yogeshbhai to adduce evidence to rebut the statutory presumption. When disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of the N.I. Act ought not to have been quashed by the High Court by taking recourse to Section 482 Cr.P.C.

Though, the Court has the power to quash the criminal complaint filed under Section 138 of the N.I. Act on the legal issues like limitation, etc. Criminal complaint filed under Section 138 of the N.I. Act against Yogeshbhai ought not have been quashed merely on the ground that there are inter se dispute between appellant No.3 and respondent No.2. Without keeping in view the statutory presumption raised under Section 139 of the N.I. Act, the High Court, in our view, committed a serious error in quashing the criminal complaint in C.C.No.367/2016 filed under Section 138 of N.I. Act."

15. In case of Sripati Singh (Since Deceased) Through His Son Gaurav Singh (supra), their Lordships of the Supreme Court have held that any defence of cheque being issued as a security is to be considered during the stage of trial under Section 138 of the NI ACT. The relevant portion of the judgment at paragraphs 17 & 18 as under :-

"17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same.

On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.

18. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is

issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the

fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."

16. Thus, applying the ratio of law laid down by the Supreme Court in the afore-cited cases (supra) to the facts of the present case, it is quite vivid that the complaint filed by respondent/complainant under Section 138 of the NI Act cannot be quashed merely for the fact that cheques presented and dishonoured was issued as security, because since the remaining amount i.e. Rs.2,62,00,000/- was not paid within the stipulated period i.e. till 31.12.2019, therefore, the cheques given as security cheque against transfer of share of respondent (party No. 1) in favour of petitioner, became matured for encashment, as it was agreed between the parties to be presented for encashment after stipulated date, therefore, it was incumbent upon the petitioner to arrange sufficient balance in the account to draw the cheque, which was to be presented subsequent to 31.12.2019. Hence, contention of learned counsel for the petitioner, that subject cheque was issued as security in favour of respondent/complainant, therefore, offence under Section 138 of the NI Act is not attracted against the petitioner, is not in accordance with law laid down by Hon'ble Apex Court in afore-cited cases.

17. So far as contention of learned counsel for the petitioner that the obligation of both the parties were reciprocal in nature and there was no subsisting liability on the date of issuance of cheque is concerned, the same is also not acceptable because maximum part of the agreement was complied with by petitioner (party No. 2) and Rs. 5,00,00,000/- had already been paid and it has also been stated that out of remaining amount of Rs.2,62,00,000/-, a sum of Rs. 1,18,00,000/- has also been paid. Although, condition No. 8 of the agreement stipulates that if party No. 2 fails in payment of the amount, then the party No. 1 will be reinstated automatically as partner, subject to refund of the entire amount paid by the party No. 2 to the party No. 1, but this contention does not absolve liability of the petitioner from the

offence under Section 138 of the NI Act, as that condition specifically speaks that respondent's position can be reinstated only when she will refund the amount paid by petitioner (party No. 2). In other words, if she will not refund the amount paid to her by the petitioner, then her position as partner cannot be reinstated. Whereas conditions No. 6 & 7 of the agreement specifically speak that if the amount i.e. Rs. 2,62,00,000/- alongwith interest is not paid till 31.12.2019, then the cheques given as security will be matured for encashment, hence, considering the law laid down by Hon'ble Supreme Court in case of Rajeshbhai Muljibhai Patel (supra) and Sripati Singh (Since Deceased) Through His Son Gaurav Singh (supra), aforesaid submission made by counsel for the petitioner is unsustainable.

18. As has been mentioned above that the grounds raised by the petitioner in the instant petition are grounds of defence and factual aspects of the matter, which can be adjudicated after adducing evidence by the parties. Whereas, all the necessary ingredients in respect of offence under Section 138 of the NI Act against the petitioner are present and, therefore, presumption contemplated under Section 139 of the NI Act is also present in favour of respondent / complainant. Therefore, in view of observations made by Hon'ble Supreme Court in the matter of Rajeshbhai Muljibhai Patel (supra) , complaint case under challenge, cannot be quashed.

19. It is also pertinent to mention here that ambit and scope of the power under Section 482 of the Cr.P.C. for quashing of complaint case under Section 138 of the NI Act has been considered by Hon'ble Supreme Court recently, in the matter of Rathish Babu Unnikrishnan v. State (Govt. of NCT of Delhi) and other 13, wherein while referring various judgments, Hon'ble Supreme Court has held in paragraphs 16 & 17 as under :-

"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,

13 2022 SCC OnLine SC 513

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 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."

20. In the instant case also, objection/grounds raised by petitioner, registering the complaint case under Section 138 of the NI Act against him are grounds of his defence, which are required to be proved by him before the learned trial Court by adducing evidence. If those grounds are allowed to be entertained at this interlocutory stage, then it will amount to grant the petitioner/accused unmerited advantage.

21. As a fallout and consequence of the aforesaid discussion, the petition under Section 482 of the Cr.P.C., being devoid of substance, is liable to be and is hereby dismissed.

22. However, it is made clear that, observations made in this order are only with regard to decide the instant petition and the petitioner is at liberty to raise all the grounds of his defence before the learned trial Court and,

in turn, the learned trial Court shall consider & decide the case without being influenced by any of the observations made in this order.

23. There shall be no order as to costs.

Sd/-

(N.K. Chandravanshi) Judge

D/-