Urmi Dairy Enterprise Through ... vs State Of Gujarat
2021 Latest Caselaw 4295 Guj

   R/CR.MA/4620/2021                            ORDER DATED: 17/03/2021




           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

           R/CRIMINAL MISC.APPLICATION NO. 4620 of 2021

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    URMI DAIRY ENTERPRISE THROUGH ASHOKBHAI SULTANBHAI
                           VASAVA
                            Versus
                     STATE OF GUJARAT
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Appearance:
MR NIRAV C BHATT(7420) for the Applicant(s) No. 1
for the Respondent(s) No. 2
MS MONALI BHATT, APP for the Respondent(s) No. 1
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 CORAM:HONOURABLE MR. JUSTICE B.N. KARIA

                          Date : 17/03/2021

                            ORAL ORDER

Notice to respondent No.1-State returnable forthwith. Learned APP waives service of notice for and on behalf of the respondent No.1-State.

By way of present application filed under Section 482 of the Code of Criminal Procedure, present applicant seeks to quash and set aside the complaint being Criminal Case No. 1731 of 2020 pending before the court of learned Additional Chief Judicial Magistrate, Halol under Section 138 of the Negotiable Instruments Act 1881(hereinafter be referred to as "the NI Act") and all incidental and consequential proceedings thereof.

Brief facts of the present case may be referred as under: That the respondent no.2 has filed a complaint under

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Section 138 of the NI Act before the court of learned Chief Judicial Magistrate, Halol being Criminal Case No. 1731 of 2020 stating that the lease agreement was executed between the complainant and present applicant in connection with to use half portion of the open land of Gordhan Quarry Works wherein the accused person made his signature along with his wife Urmilaben Ganeshbhai Vankar, as a partner of Dev Sales Corporation and such agreement was executed before the Notary namely S. N. Desai on 04.12.2019. As part payment of the lease agreement, two cheques were issued by the accused in favour of the complainant drawn on Bank of Baroda, Halol Branch under the name of Urmi Enterprise. It was not shown in the cheques that Urmi Enterprise is a proprietorship firm or partnership firm. That, the accused, inspite of continuing the lease agreement for the period stipulated in the agreement, handed over the possession of the Kvory to the complainant on 27th February 2020. That, the complainant was compelled to pay the electricity bill for the period of lease agreement. That, the complainant had also instructed in connection with the reply of the notice dated 06.06.2020 that on failure to deposit the agreed amount of rent as per the lease agreement with the complainant, he would compel to deposit the cheque with the bank authority issued by the accused. Thereafter, the complainant deposited the cheque No. 000024 dated

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10.08.2020 of Bank of Baroda, Halol Branch for the amount of Rs. 6,32,916/- in his account of Bank of Baroda, Halol Branch. The said cheque was returned back by the Bank of Baroda, Halol Branch with an endorsement of "Funds Insufficient" on 04.09.2020 alongwith return memo. That, thereafter the complainant issued a legal notice through his advocate to the accused on 1st October 2020, which was duly received by the accused and he gave evasive reply of notice on 5th October 2020 with a view to not paying the amount as demanded by the complainant. That, on failure to pay the rent amount, as per the lease agreement, cheque of Rs. 6,32,916/- lacs was deposited by the complainant with the bank authority which was dishonoured. After issuing notice by the complainant, no amount was paid by the accused to the complainant and therefore, the impugned complaint was filed.

Learned Additional Chief Judicial Magistrate passed an order below Ex. 1 on 4th November 2020 considering the affidavit of the complainant as well as documentary evidence produced on record and issued process by registering the complaint. Present applicant/accused has challenged the impugned complaint by preferring this application under Section 482 of the Code of Criminal Procedure.

Having heard learned advocate for the applicant, this court was not pleased to issue notice to the respondent no.2

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considering the legal issue settled by the Hon'ble Apex Court in case of Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited reported in 2016 Law Suit (SC) 891, judgment of this Court passed in case of "Deepak Shyamsunder Agrawal v. State of Gujarat reported in 2017 Law Suit (Guj) 343. Another judgment in case of in case of "Sunilbhai Dhirubhai Patel and 7 others v. State of Gujarat and others" reported in 2017 Law Suit (Guj.) 1732; in case of "Patel Bachubhai Ramjbhai owner/partner of Gopi Dairy Pvt v. Parsottambbai P Rami and two others reported in 2016 Law Suit (Guj) 1372 and in case of "Chintan Jayant Manjaratkar v. Rashidkhan Rasulkhan Pathan and one other" reported in 2019 Law Suit (Guj) 298.

It was submitted by learned advocate for the applicant that before the trial court, respondent no.2 has not produced a copy of rent agreement executed between the complainant and the present applicant. That, possession of the Kvory Plant was snatched by the respondent no.2 from the applicant on 27 th February 2020 threatening and beating him and therefore, police complaint was filed by the applicant against the respondent no.2 and his son-in-law. That, the complainant has failed to prove that how the applicant has not paid the rent of Kvory plant. That, the complainant has issued legal demand notice on 25th September 2020 wherein it is stated that the

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applicant had handed over the possession of Kvory plant on 27th February 2020 ie. Immediately after two months from the date of execution of rent agreement then there is no question of non payment of rent, and therefore, the respondent no.2 has malafidely deposited the cheque no. 000024, which was given only for security purpose. That, the applicant has also specifically mentioned in the reply of notice dated 5 th October 2020 that from 04.12.2019, instead of earning profit, the applicant had to incurred huge expenses in repairing and maintaining the parts and machinery of the Kvory plant and had incurred huge loss and therefore, he is entitled to recover the amount from the complainant. That, the applicant has inquired about the land, on which the respondent no.2 has carried out his Kvory plant and came to know that this land belongs to the government and respondent no.2 had not got N.A. permission of the said land and therefore, he had filed an application before the Collector to take the actions against the respondent no.2. That, there was no legal dues to be paid to the complainant as the cheque was given only for the security purpose, and therefore, it was requested by learned advocate for the applicant/accused to quash and set aside the Criminal Case No. 1731 of 2020 filed before the court of learned Chief Judicial Magistrate, Halol for the offence punishable under Section 138 of the NI Act and all incidental and consequential

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proceedings thereof.

Learned APP for the respondent-State has objected to entertain this application questioning the maintainibility. It was argued by learned APP that question raised by the applicant in his application under Section 482 of Code of Criminal Procedure may not be decided by this Court as they are based on factual aspects. Not producing vouchers by the complainant, giving/issuing cheque by the applicant to respondent no.2 for security purpose, no legal dues for recovery etc requuires recording of evidence before the trial Court. It was further submitted that this Court may not examine any factual dispute or answer in application filed under Section 482 of Code of Criminal Procedure. Learned APP raised maintainibility of this application filed by the applicant before this Court and requested to dismiss threshhold.

After having heard learned advocate for the applicant, learned APP for the respondent No.1-State and having gone through the complaint filed against the applicant, documents produced on record, it appears that certain correspondence was made between the parties through their learned advocates ie. one legal notice was issued by the present applicant to the complainant on 18th March 2020. It also appears from the record that the complainant had also issued legal notice

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through advocate on 1st October 2020 demanding Rs. 6,32,916/- lacs in respect of cheque No. 000024 issued by the accused persons and reply of the notice issued by the complainant was also given by the present applicant/accused through his advocate on 5th October 2020 wherein he has denied to pay any amount and raised certain disputes in respect of the lease agreement, period of lease, possession of Kvory plant and misuse of the cheque issued by him as there was no legal debt on his part. One copy of the complaint given by the present applicant against the accused person (respondent No.2 herein) and his son in law addressing to the competent officer , ST/ST Cell, Godhra, Dist: Panchmahal on 01.10.2020 is produced on record. Main ground raised by the applicant before this court in his arguments was that the complainant has malafidely deposited the cheque No. 000024 which was given only for security purpose.

This Court would like to refer the judgment of Hon'ble Apex Court in case of "Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited" reported in "2016 Law Suit (SC) 891", wherein Hon'ble Apex Court has questioned for consideration was whether in the facts of the present case, the dishonour of a post-dated cheque given for repayment of loan installment which is also described as "security" in the loan agreement is covered by Section 138 of

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the Negotiable Instruments Act, 1881. Hon'ble Apex Court has referred the case of "Indus Airways Private Limited versus Magnum Aviation Private Limited reported in 2014 12 SCC 539, wherein a contrary view was taken in the similar facts of the case holding that while the purchaser may be liable for breach of the contract, when a contract provides that the purchaser has to pay in advance and cheque towards advance payment is dishonoured, it will not give rise to criminal liability under Section 138 of the Act. Issuance of cheque towards advance payment could not be considered as discharge of any subsisting liability.

The Hon'ble Supreme Court in case of Sampelly Satyanarayana Rao (Supra) has observed as under:

10. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (supra) with reference to the explanation to Section 138 of the Act and the expression "for discharge of any debt or other liability" occurring in Section 138 of the Act. We are of the view that the question whether a post- dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise.

11. Reference to the facts of the present case clearly shows that though the word "security" is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly

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disbursed on 28th February, 2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.

12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract under Section 138, which arises on account of dishonour of cheque issued was not by itself at par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of cheque issued for discharge of later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque there was a debt/liability in presenti in terms of the loan agreement, as against the case of Indus Airways (supra) where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan installment which had fallen due though such deposit of cheques towards repayment of installments was also described as "security" in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque.

13. Crucial question to determine applicability of Section 138 of the Act is whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the underlying principle as can be discerned from discussion of the said cases in the judgment of this Court.

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14. 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.

15. 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 view on the disputed questions of fact in a petition under Seciton 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.

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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 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."

This court in case of "Deepak Shyamsunder Agrawal v.

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State of Gujarat and another" reported in 2017 Law Suit (Guj) 343, in para 15, has held as under:

"Considering the above stated legal settled principles of law, while dealing with a quashing petition, the Court has ordinarily to proceed with all the averments in the complaint, defence of the accused cannot be considered at this stage. The Court considering the prayer for quashing, does not adjudicate upon the disputed questions of fact. Therefore, the question has to be answered in favour of the respondent no.2 and against the applicant. Accordingly, this court did not find any merits in this petition, thereofre, the same is dismissed. Ad interim relief stands vacated. Rule nisi discharged with no order as to costs."

This court in case of Patel Bachubhai Ramjbhai owner/partner of Gopi Dairy Pvt v. Parsottambbai P Rami and two others reported in 2016 Law Suit (Guj) 1372, has observed as under:

"The issue raised by the learned advocate Mr. MIG Mansuri that the cheque in dispute was never signed by the petitioner and it was possessed by the respondent having no signature of the petitioner as it was a blank cheque, and therefore, the complaint itself is not maintainable in the eyes of law. Raising dispute of blank cheque without signature of the petitioner, allegedly in the possession of both the respondents is a question of fact which requires evidence before the trial Court. At this juncture, this Court cannot come to the conclusion that the cheque in question was not signed by the petitioner and was illegally within the possession of both the respondents. On this issue, learned advocate Mr. Mansuri has placed reliance upon decision of this Court rendered in Criminal Misc. Application No. 968 of 2014 and allied cases wherein it was evident from the facts that the

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cheque in dispute was issued by the Managing Director & Vice President of the Company was a blank signed cheque in favour of the complainant-firm as security. Ultimately, the complainant thought fit to fill up the blank signed cheque which was drawn by the M.D on behalf of the Company as security. These facts are revealed from para 2.4 to 2.7 of the said decision. Here, this is not a position, as argued by the learned advocate for the petitioner that disputed cheque was a blank signed cheque and was illegally in possession of the respondents or misused by them. The question requires consideration by recording evidence of the parties, and therefore, judgment relied upon by learned advocate Mr. Mansuri would not be applicable at this stage. Hence, on all counts, petition requires to be rejected, holding that prosecution can be based upon second or successive dishonour of the cheque, which is also permissible so long as it satisfies the requirements stipulated under the provisions of Section 138 of the Negotiable Instruments Act"

In a similar fact, this Court in case of "Sunilbhai Dhirubhai Patel and another v. State of Gujarat and others" reported in 2017 Law Suit (Guj.) 1732 has observed as under:

11. In the present case, as stated herein above, it is an admitted position that the accused were aware that they are paying the post-dated cheques to the complainant and those amounts which he had already paid to the original land owner, which in my opinion, would be debt / liability in praesenti. The petitioner firm was aware that if the cheques are dishonoured, a right was given to the holder in due course to take all legal recourses available under the various proceedings. Since the complainant is a Banakhat holder would be entitled to file civil suit for specific performance / damages etc., that does not mean that he cannot file any complaint under Section 138 of the Act, when the case would fall under Explanation to Section 138 of the Act. Even otherwise, the Hon'ble Supreme Court in the case of HMT Watches Limited v. M. A. Abida and another, (2015) 11 SCC 776 while dealing with the provisions of Sections 139 and 140, has

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held that presumption would be in favour of holder and the defences which have been raised in the present petition would not be available if the proceedings are initiated under Section 138 of the Act.

This Court in case of Chintan Jayant Manjaratkar v.

Rashidkhan Rasulkhan Pathan and others" reported in 2019 Law Suit (Guj) 298, has held as under:

12. It is settled law that for considering the petition under Section 482 of the Code, it is necessary to consider as to whether the allegations in the complaint prima facie make out a case or not and the Court is not to scrutinize the allegations for the purpose of deciding whether such allegations are likely to be upheld in trial. It is also well settled that though the High Court possesses inherent powers under Section 482 of the Code, these powers are meant to do real and substantial justice, for the administration of which alone it exists or to prevent abuse of the process of the court. The Supreme Court, time and again, has observed that extraordinary power should be exercised sparingly and with great care and caution. The High Court would be justified in exercising the said power when it is imperative to exercise the same in order to prevent injustice.

13. The High Court, in the exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure, is required to examine whether the averments in the complaint constitute the ingredients necessary for an offence alleged under the Penal Code. If the averments taken on their face do not constitute the ingredients necessary for the offence, the criminal proceedings may be quashed under Section 482. A criminal proceeding can be quashed where the allegations made in the complaint do not disclose the commission of an offence under the Penal Code. The complaint must be examined as a whole, without evaluating the merits of the allegations. Though the law does not require that the complaint reproduce the legal ingredients of the offence verbatim, the complaint must contain the basic facts necessary for

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making out an offence under the Penal Code.

14. A court exercising its inherent jurisdiction must examine if on their face, the averments made in the complaint constitute the ingredients necessary for the offence.

16. Considering the facts and circumstances of the case, it is clearly found that the applicant and his father issued different cheques to the complainant and accordingly, the complainant lodged different complaints and he has also initiated civil proceedings. This shows that there is prima facie liability of payment on the part of the applicant. In view of the material placed in the matter, it clearly appears that this is not a fit case wherein inherent powers under Section 482 of the Code of Criminal Procedure could be exercised.

Considering the facts of the present case, question of snatching posession of the Kvory plant from the applicant by threatening and beating him on 27.02.2020 by the complainant and the contents of the police complaint filed by the applicant-accused against the complainant and his son-in- law are disputed question of facts and they can only be considered after recording evidence by the prosecution/accused before the learned Trial court. Non producing the lease agreement executed between the parties and no legal debt of the complainant would be also a question of facts, which can be considered by the trial court after recording evidence and examination/cross examination of the complainant/witnesses. Another question of facts failing to prove by the complainant not making payment of rent of Kvory plant by the accused would be covered as disputed

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question of facts which can only be proved or disproved after recording evidence. The contents of the issues raised by learned advocate for the applicant may be considered by the trial court while recording evidence of the either side.

Similarly, taking Kvory plant on rent from 4th December 2019 and instead of earning profit, the applicant had incurred huge expenses in repairing and maintaining the parts and machinery of the said Kvory plant and he had incurred huge loss and therefore, he was entitled to recover from the respondent no.2 may be considered by the learned trial court giving an opportunity of leading their evidences.

All these disputed question of facts or questions cannot be considered in a petition under Section 482 of the CrPC. Issuintg cheque by way of security purpose may be decided after giving an opportunity to the accused person before the trial Court. The applicant/accused has not denied in his reply through advocate that the cheque was not signed by him and given to the complainant. Here, the factual questions raised by the applicant are in a nature of defence to the complaint under Section 138(a) of the Negotiable Instruments Act. This is a case wherein the disputed questions of fact are involved. Under these circumstances, when there is disputed question of fact is involved and there is prima facie material showing that the cheques were issued by the accused to the complainant with

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his signature and there was monetary transaction between them, then in such case, inherent powers under Section 482 of the Code of Criminal Procedure cannot be exercised.

This court is of the considered view that the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court should not discharge the accused from his 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 alleged posession of Kvory plant was handed over to him and while the police complaint was given against the complainant and his son-in-law and what was the lease agreement executed between the parties.

Admittedly, cheque was under the signature of the present applicant given to the complainant. The purpose of alleged security, as argued by learned advocate for the applicant, can be considered before the trial Court on recording evidence.

Therefore, present applicant is dismissed at the stage of admission without issuing any notice to the respondent no.2.

As a parting note, it needs to mention here that this Court has not gone into the merits of the matter and only gone into the aspect of its entertainability for quashing the impugned complaint qua the applicant herein, and therefore, the

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applicant would at liberty to raise all the available contentions before the trial Court, which shall be gone into and dealt with by the concerned court on merits and in accordance with law.

Notice Stands discharged.

(B.N. KARIA, J) K. S. DARJI