Gujarat High Court
Drishty Shoe Mall, Through Authorised ... vs State Of Gujarat on 19 December, 2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 5475 of 2017
With
R/SPECIAL CRIMINAL APPLICATION NO. 6341 of 2017
With
R/SPECIAL CRIMINAL APPLICATION NO. 6342 of 2017
With
R/SPECIAL CRIMINAL APPLICATION NO. 6343 of 2017
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DRISHTY SHOE MALL, THROUGH AUTHORISED SIGNATORY
SONALBEN JATINBHAI CHOVATIYA
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
A R SHAH(7768) for the Applicant(s) No. 1
MR DUSHYANT BHATT FOR MR PM DAVE(263) for the Respondent(s) No.
2
MR SOAHAM JOSHI, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 19/12/2023
ORAL ORDER
1. These petitions are filed under Section 482 of the
Code of Criminal Procedure, 1973 (`the Code' for short) for
quashing and setting aside the complaints being Criminal
Case Nos.22032 of 2017, 22022 of 2017, 22668 of 2017 and
22666 of 2017 pending in the Court of learned Additional
Chief Metropolitan Magistrate, NI Act, Court no.27,
Ahmedabad qua the petitioner filed under the provisions of
Section 138 of the the Negotiable Instruments Act (`NI Act'
for short).
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2. The facts as stated in the petition are such that
Drishty Shoe Mall is a firm and is engaged in the business
of shoes; that Jatinbhai Chovatiya is the sole proprietor of
the firm and the firm has taken business loan for the
purpose of expansion of business; that the authorized person
of the firm has issued post dated cheques to respondent no.2
for repayment of the said loan; the cheques were presented
and they were dishonoured by the banker for the reasons
`Funds Insufficient'; therefore, the respondent company issued
notice under Section 138 of the NI Act; thereafter, the
impugned complaints were filed.
3. Heard learned advocate for the parties.
3.1. Learned advocate for the petitioner submitted that
there are no specific allegations against the petitioner in the
complaint; that the petitioner is not the authorized signatory
of the firm and she is neither partner nor in-charge of the
day-to-day affairs of the accused-firm; that the petitioner has
not signed the cheque in question. He, therefore, submitted
that the petitioner cannot be held liable for the offence in
question and therefore prayed to quash the same against the
petitioner.
3.2 In support of his submissions, learned advocate
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Mr.Shah for the petitioner has relied on the citations in the
cases of (i) Gunmala Sales Privated Limited V/s Anu Mehta
and Others reported in (2015)1 SCC 103, (ii) S.P.Mani and
Mohan Dairy V/s Dr.Snehalatha Elangovan reported in 2022
SCC Online SC 1238 and (iii) Alka Khandu Avhad V/s Amar
Syamprasad Mishra and Another reported in (2021)4 SCC
675.
4. Per contra, learned advocate Mr.Dave for the
respondent no.2 has submitted that the notice was issued to
the petitioner before filing of the complaint as authorized
signatory of the accused-firm, to which, the petitioner has not
replied and therefore, the impugned complaints are filed. He,
relied on the decision of this Court in the case of
V.S.Synthetics Through Umashankar Shyamlal Agrawal V/s
Reliance Commercial Finance Ltd., Through Authorized
Officer reported in 2023 JX(Guj.) 682 and submitted that
these petitions deserve to be dismissed as they require full
fledged trial.
5. Learned APP for respondent no.2-state has objected
these petitions and submitted that this Court should not
exercise its powers by interfering with the proceedings of
recovery of amount and the proceedings initiated under
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Section 138 of the Act are perfectly justified.
6. I have considered the rival submissions and
perused the material on record.
7. Section 138 of the NI Act is required to be seen,
which 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 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.
139. Presumption in favour of holder.--It shall be presumed,
unless the contrary is proved, that the holder of a cheque
received the cheque of the nature referred to in section138
for the discharge, in whole or in part, of any debt or other
liability."
8. It is also fruitful to refer to refer to recent
judgment of Hon'ble Apex Court in case of Rajesh Jain V/s
Ajay Singh reported in (2023)10 SCC 148, wherein it is held
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in paragraphs 24 to 29 as under:
"24. Essentially, in all trials concerning dishonour of cheque,
the courts are called upon to consider is whether the
ingredients of the offence enumerated in Section 138 of the
Act have been met and if so, whether the accused was able
to rebut the statutory presumption contemplated by Section
139 of the Act.
25. In Gimpex Private Limited vs. Manoj Goel, (2022) 11
SCC 705 this Court has unpacked the ingredients forming
the basis of the offence under Section 138 of the NI Act in
the following structure: (1) The drawing of a cheque by
person on do account maintained by him with the banker
for the payment of any amount of money to another from
that account; (i) The cheque being drawn for the discharge
in whole or in part of any debt or other liability; (iii)
Presentation of the cheque to the bank arranged to be paid
from that account, (iv) The return of the cheque by the
drawee bank as unpaid either because the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount (v) A
notice by the payee or the holder in due course making a
demand for the payment of the amount to the drawer of the
cheque within 30 days of the receipt of information from the
bank in regard to the return of the cheque; and (vi) The
drawer of the cheque failing to make payment of the
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amount of money to the payee or the holder in due course
within 15 days of the receipt of the notice.
26. In K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7
SCC 510 this Court had summarised the constituent
elements of the offence in fairly similar terms by holding:
"14. The offence Under Section 138 of the Act can be
completed only with the concatenation of a number of acts.
The following are the acts which are components of the said
offence: (1) drawing of the cheque, (2) presentation of the
cheque to the bank, (3) returning the cheque unpaid by the
drawee bank, (4) giving notice in writing to the drawer of
the cheque demanding payment of the cheque amount, (3)
failure of the drawer to make payment within 15 days of
the receipt of the notice."
27. The five (5) acts as set out in K Bhaskaran's case
(supra) are, generally speaking, matters of record and would
be available in the form of documentary evidence as early
as, at the stage of filing the complaint and initiating
prosecution. Apart from the above acts, it is also to be
proved that cheque was issued in discharge of a debt or
liability (Ingredient no. (ii) in Gimpex's case). The burden of
proving this fact, like the other facts, would have ordinarily
fallen upon the complainant. However, through the
introduction of a presumptive device in Section 139 of the
NI Act, the Parliament has sought to overcome the general
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norm as stated in Section 102 of the Evidence Act and has,
thereby fixed the onus of proving the same on the accused.
Section 139, in that sense, is an example of a reverse onus
clause and requires the accused to prove the non-existence
of the presumed fact, i.e., that cheque was not issued in
discharge of a debt/liability.
Burden of Proof and Presumptions: Conceptual
Underpinnings
28. There are two senses in which the phrase burden of
proof is used in the Indian Evidence Act, 1872 (Evidence
Act, hereinafter). One is the burden of proof arising as a
matter of pleading and the other is the one which deals
with the question as to who has first to prove a particular
fact. The former is called the legal burden and it never
shifts, the latter is called the evidential burden and it shifts
from one side to the other. [See Kundanlal v. Custodian
Evacuee Property]
29. The legal burden is the burden of proof which remains
constant throughout a trial. It is the burden of establishing
the facts and contentions which will support a party's case.
If, at the conclusion of the trial a party has failed to
establish these to the appropriate standards, he would lose
to stand. The incidence of the burden is usually clear from
the pleadings and usually, it is incumbent on the plaintiff
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or complainant to prove what he pleaded or contends. On
the other hand, the evidential burden may shift from one
party to another as the trial progresses according to the
balance of evidence given at any particular stage; the
burden rests upon the party who would fail if no evidence
at all, or no further evidence, as the case may be is
adduced by either side (See Halsbury's Laws of England, 4th
Edition para 13). While the former, the legal burden arising
on the pleadings is mentioned in Section 101 of the
Evidence Act, the latter, the evidential burden, is referred to
in Section 102 thereof. [ G.Vasu V. Syed Yaseen (AIR 1987
AP139 affirmed in Bharat Barrel & Drum Mfg.Co. Vs. Amin
Chand Payrela]."
9. Considering the above legal position, if the facts of
the present case are seen, the signature in the cheques
produced before this Court is not clear as to who has signed
the cheques; further, the notice is issued to the petitioner,
the complaint is filed against the petitioner as the authorized
signatory of the accused-firm; however, it is disputed that the
cheque is not signed by the petitioner and the petitioner is
not in-charge of the affairs of the accused-firm; these are
disputed questions of facts and in absence of any
uncontrovertible material produced in these petitions for the
same, it needs a full-fledged trial and cannot be decided at
this stage of quashing of petitions.
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10. It is also fruitful to reproduce paragraph 30 of the
judgment in the case of Gunmala Sales Private Ltd. V/s Anu
Mehta & Ors. Navkar Infra Projects Pvt.Ltd. & Etc., which
reads as under:
"[30] When in view of the basic averment process is issued
the complaint must proceed against the Directors. But, if
any Director 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 uncontrovertible material
or acceptable circumstances to substantiate his contention.
He must make out a case that making him stand the trial
would be abuse of the 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 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."
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11. Further, when, there is no reply to the demand
notice by the petitioner, such contentions cannot be taken
into consideration while deciding the petitions under Section
482 of the Code, unless there is some uncontrovertible
documents produced on record. In the present case, this
Court has found none of such documents are produced along
with the present petitions. Therefore, in my opinion, this
Court should not exercise discretion in favour of the present
petitioner. Let the petitioner face trial by contending all the
defences raised in the present petitions and the trial Court
shall decide the same in accordance with law considering the
record available, in view of the judgment in the case of
Neeharika Infrastructure Pvt.Ltd. V/s State of Maharashtra
reported in 2021 SCC Online SC 315, wherein, it is held in
paragraph 80 as under:
"80. In view of the above and for the reasons stated above,
our final conclusions on the principal/core issue, whether the
High Court would be justified in passing an interim order of
stay of investigation and/or "no coercive steps to be
adopted", during the pendency of the quashing petition
under Section 482 Cr.P.C and/or under Article 226 of the
Constitution of India and in what circumstances and
whether the High Court would be justified in passing the
order of not to arrest the accused or "no coercive steps to
be adopted" during the investigation or till the final
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report/chargesheet is filed under Section 173 Cr.P.C., while
dismissing/disposing of/not entertaining/not quashing the
criminal proceedings/complaint/FIR in exercise of powers
under Section 482 Cr.P.C. and/or under Article 226 of the
Constitution of India, our final conclusions are as under:
i) Police has the statutory right and duty under the
relevant provisions of the Code of Criminal Procedure
contained in Chapter XIV of the Code to investigate into a
cognizable offence;
ii) Courts would not thwart any investigation into the
cognizable offences;
iii) It is only in cases where no cognizable offence or offence
of any kind is disclosed in the first information report that
the Court will not permit an investigation to go on;
iv) The power of quashing should be exercised sparingly
with circumspection, as it has been observed, in the 'rarest
of rare cases (not to be confused with the formation in the
context of death penalty).
v) While examining an FIR/complaint, quashing of which is
sought, the court cannot embark upon an enquiry as to the
reliability or genuineness or otherwise of the allegations
made in the FIR/complaint;
vi) Criminal proceedings ought not to be scuttled at the
initial stage;
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vii) Quashing of a complaint/FIR should be an exception
rather than an ordinary rule;
viii) Ordinarily, the courts are barred from usurping the
jurisdiction of the police, since the two organs of the State
operate in two specific spheres of activities and one ought
not to tread over the other sphere;
ix) The functions of the judiciary and the police are
complementary, not overlapping;
x) Save in exceptional cases where non-interference would
result in miscarriage of justice, the Court and the judicial
process should not interfere at the stage of investigation of
offences;
xi) Extraordinary and inherent powers of the Court do not
confer an arbitrary jurisdiction on the Court to act according
to its whims or caprice;
xii) The first information report is not an encyclopaedia
which must disclose all facts and details relating to the
offence reported. Therefore, when the investigation by the
police is in progress, the court should not go into the merits
of the allegations in the FIR. Police must be permitted to
complete the investigation. It would be premature to
pronounce the conclusion based on hazy facts that the
complaint/FIR does not deserve to be investigated or that it
amounts to abuse of process of law. After investigation, if
the investigating officer finds that there is no substance in
the application made by the complainant, the investigating
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officer may file an appropriate report/summary before the
learned Magistrate which may be considered by the learned
Magistrate in accordance with the known procedure;
xiii) The power under Section 482 Cr.P.C. is very wide, but
conferment of wide power requires the court to be more
cautious. It casts an onerous and more diligent duty on the
court;
xiv) However, at the same time, the court, if it thinks fit,
regard being had to the parameters of quashing and the
self-restraint imposed by law, more particularly the
parameters laid down by this Court in the cases of R.P.
Kapur (supra) and Bhajan Lal (supra), has the jurisdiction
to quash the FIR/complaint;
xv) When a prayer for quashing the FIR is made by the
alleged accused and the court when it exercises the power
under Section 482 Cr.P.C., only has to consider whether the
allegations in the FIR disclose commission of a cognizable
offence or not. The court is not required to consider on
merits whether or not the merits of the allegations make
out a cognizable offence and the court has to permit the
investigating agency/police to investigate the allegations in
the FIR;
xvi) The aforesaid parameters would be applicable and/or the
aforesaid aspects are required to be considered by the High
Court while passing an interim order in a quashing petition
in exercise of powers under Section 482 Cr.P.C. and/or
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under Article 226 of the Constitution of India. However, an
interim order of stay of investigation during the pendency of
the quashing petition can be passed with circumspection.
Such an interim order should not require to be passed
routinely, casually and/or mechanically. Normally, when the
investigation is in progress and the facts are hazy and the
entire evidence/material is not before the High Court, the
High Court should restrain itself from passing the interim
order of not to arrest or "no coercive steps to be adopted"
and the accused should be relegated to apply for
anticipatory bail under Section 438 Cr.P.C. before the
competent court. The High Court shall not and as such is
not justified in passing the order of not to arrest and/or "no
coercive steps" either during the investigation or till the
investigation is completed and/or till the final
report/chargesheet is filed under Section 173 Cr.P.C., while
dismissing/disposing of the quashing petition under Section
482 Cr.P.C. and/or under Article 226 of the Constitution of
India. xvii) Even in a case where the High Court is prima
facie of the opinion that an exceptional case is made out for
grant of interim stay of further investigation, after
considering the broad parameters while exercising the powers
under Section 482 Cr.P.C. and/or under Article 226 of the
Constitution of India referred to hereinabove, the High Court
has to give brief reasons why such an interim order is
warranted and/or is required to be passed so that it can
demonstrate the application of mind by the Court and the
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higher forum can consider what was weighed with the High
Court while passing such an interim order.
xviii) Whenever an interim order is passed by the High
Court of "no coercive steps to be adopted" within the
aforesaid parameters, the High Court must clarify what does
it mean by "no coercive steps to be adopted" as the term
"no coercive steps to be adopted" can be said to be too
vague and/or broad which can be misunderstood and/or
misapplied."
12. In view of the above discussion, this is not a fit
case where this Court should exercise the inherent powers
under Section 482 of the Code. Let the petitioner as well as
complainant lead proper evidence in the trial Court to
establish their respective case on merits. Accordingly all these
petitions are dismissed. Notice is discharged. Interim relief, if
any, stands vacated.
(SANDEEP N. BHATT,J)
SRILATHA
