Bharatbhai Chhaganbhai Patel vs Dharmendra Maganlal Dabhi
2021 Latest Caselaw 6195 Guj

     R/SCR.A/1563/2019                           JUDGMENT DATED: 17/06/2021



       IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

     R/SPECIAL CRIMINAL APPLICATION NO. 1563 of 2019

FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE GITA GOPI

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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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             BHARATBHAI CHHAGANBHAI PATEL & 1 other(s)
                             Versus
              DHARMENDRA MAGANLAL DABHI & 1 other(s)
=============================================
Appearance:
MR. KULDEEP D VAIDYA(7045) for the Applicant(s) No. 1,2
MR HARSHIT S TOLIA(2708) for the Respondent(s) No. 1
MR PARTH S TOLIA(5617) for the Respondent(s) No. 1
MS MONALI BHATT APP for the Respondent(s) No. 2
=============================================

CORAM:HONOURABLE MS. JUSTICE GITA GOPI

                            Date : 17/06/2021

                            ORAL JUDGMENT

1. Rule. Mr. Harshit S.Tolia, learned advocate for

the respondent no.1 and Ms. Monali Bhatt, learned APP,

for the respondent no.2, waive service of notice of Rule

on behalf of respective parties. With the consent of the

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parties, the matter is heard finally today.

2. This petition has been filed under Article 226 of

the Constitution of India as well as Section 482 of the

Code of Criminal Procedure for quashing and setting

aside the complaint being Criminal Case No.2288 of 2014

pending before the learned 6th Additional Chief Judicial

Magistrate, Bhavnagar under Section 138 of the

Negotiable Instruments Act, 1881 (hereinafter referred to

as the 'N.I. Act' for short) and the consequential

proceedings, if any, initiated in pursuance thereof.

3. It is stated in the petition that a Memorandum

of Understanding (MoU) was signed between the

respondent no.1 and 23 clients of the respondent no.1,

which included the present petitioners and even by

Arvindbhai Pragjibhai Jogani with regard to the land

belonging to respondent no.1. It is stated that the said

land was acquired by the Government and vested to the

Agricultural Department and thereafter to Bhavnagar

University. It is contended that from the very beginning

the said MoU had no legal force or legal binding, as the

persons signing it as the owners of the land, were not at

R/SCR.A/1563/2019 JUDGMENT DATED: 17/06/2021

all competent to sign the MoU. It is stated by the

petitioners that they had no active role in execution of

MoU except the fact that their names were included in

the MoU as parties.

3.1 It is stated that a Cheque bearing No.131875,

dated 22.12.2013 of Rs.5,50,000/- signed by Mr.

Arvindbhai Pragjibhai Jogani, drawn on HDFC Bank,

Hazira Branch, Surat, was given to the complainant, who

is respondent no.1 in the present petition, while the

present two petitioner have no connection and nowhere

are related to that transaction of Arvindbhai Pragjibhai

Jogani with that of respondent no.1.

3.2 The subject cheque got dishonoured on

05.03.2014 on the ground of insufficiency of fund.

Statutory legal notice was issued on 20.03.2014 to the

present petitioners and Mr. Arvindbhai Pragjibhai Jogani,

alleging that the cheque was issued as a part of MoU. It is

stated by the present petitioners that legal notice does

not allege issuance of cheque as in compliance of MoU

and further in the notice respondent no.1 has admitted

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the fact of cheque being signed by Mr. Arvindbhai

Pragjibhai Jogani.

3.3 It is contended in the petition that the

petitioners neither signed the cheque nor have issued the

same to the respondent no.1 - complainant of Criminal

Case No.2288 of 2014. The entire grievance of the

complainant is against Mr. Arvindbhai Pragjibhai Jogani,

who had signed the cheque, which came to be

dishonoured and after the legal notice, criminal complaint

filed under Section 138 of the N.I. Act.

4. Heard Mr. Kuldeep D.Vaidya, learned advocate

for the petitioners, Mr. Harshit S.Tolia, learned advocate

for respondent no.2 and Ms. Monali Bhatt, learned APP

for the respondent no.1 - State.

5. Mr. Kuldeep D.Vaidya, learned advocate for the

petitioners submitted that the learned Additional Chief

Judicial Magistrate, Bhavnagar has mechanically passed

the order of taking cognizance under Section 204 of the

Cr.P.C. against all the arraigned accused and summons

were ordered to be issued. Mr. Vaidya, submitted that

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cheque was signed by Mr. Arvindbhai Pragjibhai Jogani

in whose name the Bank Account was running. He

submitted that the present petitioners were not the joint

bank account holders, thus no liability can be attached

towards the cheque issued by Mr. Arvindbhai Pragjibhai

Jogani. Advocate Mr. Vaidya, referring to the order

passed in Special Criminal Application (Quashing)

No.1638 of 2015 dated 19.04.2017, submitted that

petitioner no.1 - Bharatbhai Chhaganbhai Patel had also

challenged the process issued in Criminal Case No.2287

of 2014, which was pending in the Court of 2 nd Additional

Chief Judicial Magistrate, Bhavnagar under Section 138

of the N.I. Act; the co-ordinate bench relied on the

judgment of Hon'ble Supreme Court in case of Mrs.

Aparna A.Shah Vs. M/s. Sheth Developers Private

Limited & Anr., reported in AIR 2013 SC 3210,

wherein the Hon'ble Supreme Court had taken the view

that it is only the drawer of the cheque who can be held

responsible, found the case squarely falling under the

decision of the Hon'ble Supreme Court and thus, the

proceedings against the petitioner was ordered to be

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quashed.

6. Mr. Vaidya, learned advocate for the

petitioners, relied on the recent judgment of the Hon'ble

Supreme Court in case of Alka Khandu Avhad Vs.

Amar Syamprasad Mishra & Ors., reported in AIR

2021 Supreme Court 1616, to submit that the person,

who was not the signatory to the cheque dishonoured nor

was joint bank account holders, would not have joint

liability under Section 138, and therefore, relying on the

proposition laid down in the said judgment, prayed to

quash and set aside the proceedings qua the present

petitioners.

7. Mr. Harshit S.Tolia, learned advocate for

respondent no.2, submitted that during the trial, by

adducing the evidence, it should be decided whether the

petitioners would be jointly or severely liable for the

amount, as signed in the cheque by Mr. Arvindbhai

Pragjibhai Jogani. Mr. Tolia, submitted that the question

of facts would require a decision from the trial Court,

therefore, prayed for rejecting the petition.

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8. The legal notice issued under Section 138 dated

20.03.2014 is on record, which was part of the

proceedings before the learned 6th Additional Chief

Judicial Magistrate, Bhavnagar and accordingly Cheque

No.131875 of Rs.5,50,000/- dated 22.12.2013 was signed

by Mr. Arvindbhai Pragjibhai Jogani, in whose name the

Bank Account was running and the present petitioners

were not the joint bank account holders. Account

No.09041050003251 at HDFC Bank, Surat, is an

individual account in the name of Mr. Arvindbhai

Pragjibhai Jogani, the said impugned cheque is not signed

by the present petitioners.

9. In the case of Alka Khandu Avhad (supra), it

has been observed that the following ingredients are to

be satisfied to constitute the offence under Section 138 of

the N.I. Act:

"(i) that the cheque is drawn by a person and on an account maintained by him with a banker;

(ii) for the payment of any amount of money to another person from out of that account for the discharge, in whole or inpart, of any debt or other liability; and

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(iii) the said cheque 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."

9.1 In the case of Jugesh Sehgal Vs. Shamsher

Singh Gogi, reported in (2009) 14 SCC 683, referring

to the scope and ambit of powers of the High Court under

Section 482 of the Code, the Supreme Court, observed

that, the scope and ambit of powers of the High Court

under Section 482 of the Code has been enunciated and

reiterated by the Apex Court in series of decisions and

several circumstances under which the High Court can

exercise jurisdiction in quashing proceedings, have been

enumerated. The powers under Section 482 are very

wide, but it should be exercised in appropriate cases, ex

debito justitiate to do the real and substantial justice. The

inherent powers do not confer an arbitrary jurisdiction on

the High Court to act according to whim or caprice. The

powers have to be exercised sparingly, with

circumspection and in the rarest of rare cases, where the

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Court is convinced, on the basis of material on record,

that allowing the proceedings to continue would be an

abuse of the process of the court or that the ends of

justice require that the proceedings ought to be quashed.

9.2 In case of State of Haryana V. Bhajan Lal

and others, AIR 1992 SC 604, the Apex Court formulated

as many as seven categories of cases, wherein the

extraordinary power under Section 482 could be

exercised by the High Court to prevent abuse of process

of the court. It was clarified that it was not possible to lay

down precise and inflexible guidelines or any rigid

formula or to give an exhaustive list of circumstances in

which such power could be exercised.

9.3 Section 138 of the N.I. Act reads 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

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exceeds the amount arranged to be paid from that account by an arrangement 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 years, 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 within the period of its validity, whichever is earlier;

(b) the payee or the holder in due 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 cheque 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 purposes of this section, "debt or other liability" means a legally

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enforceable debt or other liability".

9.4 The plain reading of Section 138 makes it clear

that it has to be strictly interpreted, as penal provision is

made for commission of offence as prescribed under

Section 138 of the N.I. Act. It is drawer of the Cheque,

who has to be made liable for the payment of amount of

money due to the payee or the holder of the Cheque

within the statutory limits as provided, after the receipt of

the legal notice demanding the cheque money. If the

drawer of the Cheque fails to make payment of the said

amount of money, then such person shall be deemed to

have committed offence. Without prejudice to any of the

provisions of the N.I. Act, the penal provision is for the

punishment with imprisonment for a term which may

extend to two years or with fine which may extend to

twice the amount of the Cheque or with both. Criminal

prosecution is neither for recovery of money nor for

enforcement of any security. Section 138 of the N.I. Act

being a penal provision, it entails a conviction and

sentence at the end of the criminal proceedings. There is

a statutory presumption under Section 139 of the N.I. Act

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in favour of the holder of the Cheque. A prosecution

under Section 138 of the N.I. Act is ultimately to bring

the offender to suffer penal consequences.

10. The case of the complainant in Criminal Case

No.2288 of 2014 does not fall under the provisions of

Section 141 of the N.I. Act. It appears that the impugned

cheque has not been signed by the present petitioners,

the same has been signed and issued by Mr. Arvindbhai

Pragjibhai Jogani, from the individual bank account

maintained by him. The present petitioners cannot be

made vicariously liable for the act of Mr. Arvindbhai

Pragjibhai Jogani, who has issued the cheque in his

personal capacity. It appears that the learned trial Court

Judge has not considered the averments of the complaint

and has not examined the status of the accused prior to

order for issuance of summons against the present

petitioners. The proceedings under Section 138 of the

N.I. Act cannot be misused by any of the parties. The

culpability is attached with the dishonour of the Cheque

and it is only the drawer of the Cheque who can be made

accused in any proceedings under Section 138 of the N.I.

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Act. The analogy of section 141 of the N.I. Act, which

deals with the offences of the company, cannot be

stretched to make petitioners vicariously liable to face the

prosecution under Section 138 of the N.I. Act. The trial

against the present petitioners in Criminal Case No.2288

of 2014 would be abuse of process of Court. Hence, the

Court is of the opinion that this is a fit case where the

inherent powers of the Court under section 482 of the

Cr.P.C. could be exercised in favour of the petitioners for

securing the ends of justice.

11. In the result, the petition is allowed. The

Criminal Case No.2288 of 2014 pending before the

learned 6th Additional Chief Judicial Magistrate,

Bhavnagar under Section 138 of the N.I. Act and the

consequential proceedings initiated in pursuance thereof

are quashed and set aside qua the present petitioners.

Rule is made absolute. Direct service is permitted.

(GITA GOPI, J.) Pankaj