Gujarat High Court

Ashish Pravinchandra Bhadaliya vs State Of Gujarat on 22 August, 2023

Bench: Sandeep N. Bhatt

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     R/CR.MA/14088/2018                           ORDER DATED: 22/08/2023

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

           R/CRIMINAL MISC.APPLICATION NO. 14088 of 2018
                               With
         CRIMINAL MISC.APPLICATION (FOR STAY) NO. 2 of 2023
          In R/CRIMINAL MISC.APPLICATION NO. 14088 of 2018
                               With
           R/CRIMINAL MISC.APPLICATION NO. 14089 of 2018
                               With
         CRIMINAL MISC.APPLICATION (FOR STAY) NO. 2 of 2023
          In R/CRIMINAL MISC.APPLICATION NO. 14089 of 2018
                               With
           R/CRIMINAL MISC.APPLICATION NO. 14091 of 2018
                               With
         CRIMINAL MISC.APPLICATION (FOR STAY) NO. 2 of 2023
          In R/CRIMINAL MISC.APPLICATION NO. 14091 of 2018
                               With
           R/CRIMINAL MISC.APPLICATION NO. 14093 of 2018
                               With
         CRIMINAL MISC.APPLICATION (FOR STAY) NO. 2 of 2023
          In R/CRIMINAL MISC.APPLICATION NO. 14093 of 2018
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                      ASHISH PRAVINCHANDRA BHADALIYA
                                   Versus
                        STATE OF GUJARAT & 2 other(s)
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Appearance:
MR PRATIK Y JASANI(5325) for the Applicant(s) No. 1
for the Respondent(s) No. 3
MR HARSHIT S TOLIA(2708) for the Respondent(s) No. 2
MR PARTH S TOLIA(5617) for the Respondent(s) No. 2
MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1
SHIRISHCHANDRA B TOLIA(8163) for the Respondent(s) No. 2
==========================================================

 CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT

                              Date : 22/08/2023

                           COMMON ORAL ORDER

1. All these applications are filed under Section

482 of the Code of Criminal Procedure, 1973 (`the Code'

for short) for quashing and setting aside the complaints

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being Criminal Case Nos.7830 of 2017, 7824 of 2017,

6843 of 2017 and 6842 of 2017 respectively, pending

before the learned Chief Judicial Magistrate, Rajkot

under the provisions of the Negotiable Instruments Act

(`NI Act' for short).

2. As the common question of facts and law are

involved in these applications, at the request of learned

advocates for the parties, they are heard together and

disposed of by this common oral order.

3. Rule returnable forthwith. Learned APP

Mr.Jayswal waives service of notice of rule for

respondent no.1 and learned advocate Mr.Tolia waives service of notice of rule for respondent no.2-complainant.

4. For the sake of convenience, the facts of

Criminal Miscellaneous Application No.14088 of 2018 are

considered, as stated in the application, which are as

under:

4.1 It is averred in the application that respondent

no.2-complainant has filed the complaint interalia alleging

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that as the business of the applicant was not running

well and he happens to know the applicant since many

years, the applicant was in need of liquidity, he had

requested respondent no.2 to help him and therefore the

respondent no.2 gave Rs.5 lacs in cash to the applicant

with an understanding to repay it in one year; that after

one year, the applicant did not repay the amount and on

insistence gave two cheques of Rs.2.5 lacs each and

when the same were deposited, they were returned with

the endorsement `funds insufficient'; that the notice was

issued which was returned by the postal department

with the endorsement `refused' and thereafter the

complaint was filed; which is prayed to be quashed by

way of these applications.

5. Heard learned advocates for the parties.

5.1 Learned advocate for the applicants submitted

that the cheques were issued by an entity named Jay

Nagnath Traders and that he is not the owner of the

said firm and is not having any account in such bank;

the applicant learnt from the said account number that

it is a proprietary firm and the proprietor of the firm is

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one Shri Jatinkumar; that the applicant is not having

any connection with the respondent no.2 and the account

from which the cheques were issued does not belong to

the applicant; that no offence is made out against the

applicant in the entire complaint; that the impugned

complaint filed by the respondent no.2 does not satisfy

the ingredients of Section 138 of the NI Act; that the

cheque in question is not issued from the bank account

of the applicant and the applicant is not maintaining the

said bank account; that the applicant is not the

signatory of the cheque and the applicant is not

managing the said account and is not a proprietor of the

said proprietory concern. He, therefore, submitted that

the ingredients of the provisions invoked under NI Act are not made out. He, therefore, prayed to allow these

applications.

6. Per contra, learned APP for respondent no.1- state has objected these applications and submitted that

this Court should not exercise its powers by interfering

with the proceedings of recovery of amount and the

proceedings initiated under Section 138 of the Act are

perfectly justified.

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7. Learned advocate Mr.Tolia for the respondent

no.2-complainant has submitted that it was not disclosed

by the applicant to the complainant at the time of

giving the cheque that he is not connected with the said

proprietory firm; that the applicant has played mischief

and fraud with the complainant and therefore, he cannot

take advantage of his own wrong; that the applicant has

refused the notice issued before filing of the complaint;

that refusal of notice is deemed service and there is no

reply given by the applicant to the same; that the

cheque is issued by the applicant in capacity of

proprietor/authorized signatory of Jay Nagnath Traders;

that the cheque is not dishonoured on the ground that the applicant is not the holder of the account but it is

dishonoured on the ground of `funds insufficient'; that

under the provisions of NI Act, the complainant was the

holder of the cheque in due course and therefore under

the provisions of Section 139 read with Section 140 of

the NI Act, presumption arises in the favour of the

complainant. Learned advocate submitted that all these

points require a full fledged trial and therefore, prayed

to dismiss these applications.

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8. I have considered the rival submissions and

perused the material on record.

9. At the outset, the provisions of Sections 138,

141 and 142 of the NI Act are required to be seen,

which read as under:

"138. Dishonour of cheque for insufficiency, etc., of funds in the account.

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply

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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 induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation: For the purpose of this section, "debt or other liability"

means a legally enforceable debt or other liability."

"141 Offences by companies. (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and proceeded against and punished accordingly:

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Provided that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in subsection (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attribute to, any neglect on the part of, any director, Manager, secretary, or other office of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation. For the purposes of this section,

(a) "company" means any body corporate and includes a firm or other association of individuals; and

(b) "Director", in relating to a firm, means a partner in the firm."

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142. Cognizance of offences.--

[(1)] Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--

(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: 2 [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;]

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.].

[(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,--

(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or

(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the

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account, is situated.

Explanation.--For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.]

[142A. Validation for transfer of pending cases.-- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), shall be deemed to have been transferred under this Act, as if that sub-section had been in force at all material times. (2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of

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whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.

(3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015 (26 of 2015), more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been in force at all material times.]

10. In the present case, the statutory notice issued by the complainant was refused by the applicant and

therefore no reply is given to the same. The complainant

filed the impugned complaints thereafter and summons

was issued by the learned trial Court, where the

applicant appeared. There are disputed facts in this case

as regards whether the applicant is the owner of the

said firm; whether the applicant is holding the said

account from which the cheques are drawn; that the

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cheuques are dishonoured on the ground of `funds

insufficient' and not on the ground that the applicant is

not the holder of the said account. When there are

disputed question of facts, this Court cannot conduct

mini trial or roving inquiry at the stage of exercising

the powers under Section 482 of of the Code and

therefore, this Court cannot exercise the powers under

Section 482 of Code at this initial stage.

11. At this stage, it is also fruitful to refer to the

judgment rendered by the Hon'ble Apex Court in the

case of S.P.Mani and Mohan Dairy V/s Dr.Snehalatha

Elangovan reported in 2022(13) Scale, page 543, more particularly, paragraphs 43 and 46, which read as under:

"43. In the case on hand, we find clear and specific averments not only in the complaint but also in the statutory notice issued to the respondent. There are specific averments that the cheque was issued with the consent of the respondent herein and within her knowledge. In our view, this was sufficient to put the respondent herein to trial for the alleged offence. We are saying so because the case of the respondent that at the time of issuance of the cheque or at the time of the commission of offence, she was in no manner concerned with the firm or she was not in-

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charge or responsible for day-to-day affairs of the firm cannot be on the basis of mere bald assertion in this regard. The same is not sufficient. To make good her case, the respondent herein is expected to lead umimpeachable and incontrovertible evidence. Nothing of the sort was adduced by the respondent before the High Court to get the proceedings quashed. The High Court had practically no legal basis to say that the averments made in the complaint are not sufficient to fasten the vicarious liability upon the respondent by virtue of Section 141 of the NI Act.

46. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But if any Director or Partner wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case hat making him stand the trial would be an abuse of process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that

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his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner."

12. It is also fruitful to refer to the judgment in

the case of S.Krishnamoorthy V/s Chellammal reported in

(2015)4 SCC 559, wherein the Hon'ble Apex Court has

held in paragraphs nos.5,7 and 8 of which read as

under:

"5. The above defence of the respondent (accused) before the High Court, in the petition filed under Section 482 of the Code, is nothing but absolutely factual in nature, which is neither admitted by the complainant, nor apparent on the face of the record. Such type of disputed factual defences could have been appreciated only by the trial court, after the parties led their evidence. In our opinion, the High Court committed grave error of law in examining the allegations and counter allegations which are disputed and factual in nature in a proceeding under Section 482 of the Code.

7. In view of the above position of law, we have no option but to set aside the order passed by the High Court as it

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has entered into highly disputed questions of fact and concluded that the material before it was sufficient to cause reasonable suspicion in the case of the complainant. That is not the ground on which powers under Section 482 of the Code can be exercised by the High Court.

8. Therefore, the appeal is allowed. The impugned order dated 5.8.2009 passed by the High Court of Judicature at Madras in Criminal O.P. No. 7989 of 2009 is hereby set aside. The Criminal complaint (CC No. 120 of 2007) pending before the Judicial Magistrate, Dharapuram, shall stand revived. The trial court shall proceed in accordance with law."

13. It is pointed out that the trial before the

learned trial Court has already commenced and has

proceeded substantially.

14. In view of above discussion as well as settled

position of law and after considering the facts as alleged

in the complaint filed under Section 138 of the NI Act

and considering that no reply to notice under Section

138 of the NI Act was given by the applicant and

circumstances of the present case and considering the

disputed question involved in the matters which are

required to be tested by a proper trial of the matters

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