Madras High Court
Dr. Sundarakrishnan G vs M/S. Reliance Home Finance Pvt. ... on 21 December, 2021
Crl.O.P.Nos.16445,19526 & 21288 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 21.12.2021
Coram:
THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR
Crl.O.P.Nos.16445, 19526 & 21288 of 2017 and
Crl.M.P.Nos.10122,10123, 11795, 11796, 12545 and 12546 of 2017
1.Dr. Sundarakrishnan G
2. Dr. Kanthamani S
3. M/s. Krishna Eye & ENT Hospital
Represented by its Partner
Dr. Sundarakrishnan G
No.39, Burkit Road, T.Nagar
Chennai 600017 ...Petitioners
[in all Crl.O.Ps.]
Vs
M/s. Reliance Home Finance Pvt. Ltd.,
Represented by its Collection Manager
Mr.R.Frazer
No.5, Haddows Road,
Nungambakkam, Chennai 600006. ...Respondents
[in all Crl.O.Ps.]
PRAYER: Criminal Original Petitions filed under Section 482 of Criminal
Procedure Code, to call for the records in CC.No.4615 of 2016 pending on the file
of XVIII Metropolitan Magistrate, Saidapet, CC.No.323 of 2017 pending on the
file of Metropolitan Magistrate, Fast Track Court No.III, Saidapet and
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C.C.No.4438 of 2017 pending on the file of XVIII Metropolitan Magistrate,
Saidapet, Chennai and quash the same.
For Petitioners : Mr.S. Kamalakannan
[in all Crl.O.Ps.]
For Respondents : Mr.K.J.Parthasarathy
[In all Crl.O.Ps.]
COMMON ORDER
These three petitions have been filed to quash the proceedings initiated
under Section 138 of the the Negotiable Instruments Act.
2. The case of the complainant is that the Respondents/Petitioners herein
availed loan under the scheme `Housing Loan` under Agreement
No.RHHLCHE000009671. The 1st Accused / 1st Petitioner herein is borrower; 2nd
Accused / 2nd Petitioner herein is co-appplicant and the 3rd Accused is company.
The Accused promised to repay the loan amount as stipulated in the agreement.
The 3rd Accused had arranged Auto Debit/ECS with their banker, monthly
instalment of Rs.2,41,056/-. The same was dishonoured on 05.07.2016,
05.10.2016 and 09.03.2017 respectively, when the cheque was deposited for ECS
with the banker with endorsement of Miscellaneous and insufficient funds. After
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complying the statutory notice, three private complaints have been filed under
Section 138 of the Negotiable Instruments Act.
3. The quash petitions are filed mainly on the ground that the Petitioners /
accused have obtained housing loan of Rs.2,00,95,000/- on 15.07.2011 from the
Respondent by entering into a loan agreeement for purchase of the property
situated at Plot 7, Balaji Nagar, 21st Street, Velacherry, Chennai. The said amount
was payable with monthly rests (EMI) of Rs.2,22,130/- and with an EMI of
Rs.2,41,056/- with interest revision payable in 180 equated monthly instalments.
The petitioners also executed a mortgage in favour of the Respondent over the
property and the Petitioners also regularly remitting the monthly EMI rests for the
said Loan Account until 2014.
4. When the matter stood thus, it has come to the notice of the petitioners
that the property was acquired by the Government prior to their purchase for the
purpoe of MRTS usage. They have challenged the 4(1) notification of the State
Government under the Land Acquisition Act before this Court in W.P.No.6406 of
2014 wherein the respondent sought the withdrawal of the compensation award as
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a secured creditor in lieu of the loan amount challenging the right of the petitioners
to claim the award. Hence, it is the contention as the compensation received by the
respondent, the complaint is not maintainable.
5. Learned counsel appearing for the Petitioners submitted that as the
property was acquired and the compensation was paid to the Secured Creditor,
there cannot be criminal prosecution u/s. 138 of the N.I. Act. Though the
Petitioners have raised objections for withdrawal of the compensation, since the
Respondent sought to discharge of entire loan outstanding in the Section 138
N.I.Act proceedings in CC No.3769 of 2015 and the same came to be dismissed
for want of jurisdiction. The Respondent claimed compensation with respect to
said property secured in November 2018 by releasing the title deed and other
original documents pertaining to the property. Hence it is his contention that as
the compensation has been paid, there is no legally enforceable debt. It is his
further contention that pursuant to the notification under Section 4(1) of the Land
Acquisition Act, any transaction after the notifiction is void ab initio. The Collector
ought to have made reference to the concerned court under Section 18 of the L.A.
Act. However, the 1st and 2nd petitioners permitted to withdraral of compensation
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by the Respondent in good faith without objections. Whereas the Respondent did
not seek further enhancement of the compensation as contemplated under Section
18 of L.A. Act within the period of six months from the date of Collector's Award.
Therefore, it is his contention that once the amount has been discharged, there
cannot be any prosecution and the secured assets already repossesed and amount
has been realised no offence under Section 138 of Negotiable Instruments Act is
attracted.
6. In support of his contention he relied upon the following judgements:
1. N. Rajangan vs. Centurian Bank Ltd., [2001-1-L.W.(Crl) 831]
2. Rajkumar Sharma vs. Shriram Finance Co. Ltd., [2014 (143) AIC 682]
3. Prakash Finacne vs. R. Babu [2018-2-L.W.(Crl) 419]
4. Sudha Beevi vs. State of Kerala [2004 (21) AIC 336]
7. It is his further contention that if there had been a valid mortgage, the
compensation amount received by the Respondent is a security substituted in the
place of the original mortgage property as contempated under Section 73 of
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Transfer of Property Act. It is further contention that even the right of the
Respondent exist under Section 73 of the T.P. Act, the enhancement of
compensation not been claimed by the Respondent, it is not open to the
Respondent to claim insufficient amount due under the mortgage. Hence,
submitted that the cheque in question is not enforceable. In support of his
contention he also relied upon the Honourable Apex Court judgment in Krishna
Prasad and ors. vs. Gauri Kumari Devi [AIR 1962 SC 1464] and Sundaram
Finance Ltd., vs. State of Kerala and Ors. [AIR 1966 SC 1178]. Therefore,
submitted that entire proceedings has to be quashed.
8. Learned counsel appearing for the Respondent submitted that the plea
sale and mortage void after issuance of 4(1) Notification is unsustainable. The sale
after Section 4(1) notification is at the risk of the purchaser and only after under
Section 6 declaration the land vest with the State. He has also contended that the
purchaser after 4(1) notification would not be entitled to challenge the acquisition,
however, he would be entitled to compensation or enhanced compensation as
lawful owner. Hence the sale and mortgage are valid and binding. It is his further
contention that under Section 73(2) of the Transfer of Property Act, the mortgagee
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shall be entitled to claim payment of the mortgage money in whole or in part out of
the amount due to the mortgager as compensation. The right/remedy to the
mortgage is statutroy and the Petitioners cannot raise any objection to the same.
Hence it is the contention that as against the sanctioned loan amount of
Rs.2,00,95,000/- the compensation received is only Rs.56,14,840/-. Since there is
a shortfall and it has to necessarily be discharged/collected only from the
borrowers/Petitioners. Therefore, it is his contention that the debt and liabilitty of
the Petitioners/Accused does not get discharged on receipt of the compensation
amount and the shortfall of the amount the mortgagee is entitled to proceed for
recovery against the borrowers. Therefore, he submitted that there exist a legally
enforceable debt as there is a shortfall and the debt had not been dischrged fully
rom the compensation amount.
9. Learned counsel further submitted that the proceedings under Section 138
of N.I. Act is a penal provision, at this stage the same cannot be quashed. The
alleged plea of legally enforceable debt or not though is untenable and
unsustainable in the above case, it at all to be considered can only be a defence
before the trial court. Hence opposed the quashing of the proceedings.
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10. In support of his contention he has also relied upon the following
judgments:
1. M.M.T.C. Ltd., & Another vs. M/s. Medchi Chemicals
& Pharma Pvt. Ltd., [(2002) 1 SCC 234]
2. Sampelly Satyanarayanan Rao vs. Indian Renewable
Energy and Development Agency Ltd., [(2016) 10
SCC 458]
3. Sripati Singh (since deceased) vs. The State of
Jharkhand [2021 SCC Online SC 1002]
4. M/s.Synergy Credit Corporation Limited vs.
M/s.Midland Industries Limited & Others [2006
Crl.L.J.3267]
5. Krishna Prasad and others vs. Gaurikumari Devi
[AIR 1962 SC 1464]
11. Heard both side arguments and materials perused. The borrowal of the
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loan of Rs.2,00,95,000/- is not in dispute. Similarly, prior to the Notification under
Section 6 of the Land Acquisition Act, the property has been mortgaged in favour
of the Respondent is also not in dispute. The fact remains that the property has
been acquired, acquisition also put in challenge in a writ petition, which is also not
disputed. The Respondent being a secured creditor was paid a compensation
amount of Rs.56,14,840/-. Much emphasis have been made by the learned
counsel for the Petitioner that as the acquired property Compensation has already
been paid and cheque issued towards the such loan is not enforceable and there is
no legal encroceable debt. Much reliance has been placed in the Judgment of the
Kerala High Court in Sudha Beevi vs. State of Kerala [2004 Crl.L.J. 3418]
wherein it is held that once the financier/owner under hire purchase agreement
exercised the option of seizure of the vehicle, the post dated cheques obtained from
the hirer cannot be presented for encashment after the seizure. The owner has to
take recourse to other legal remedies for recovery of the balance amount. If and
when the vehicle is sold subsequently, the owner can recover the balance amount
after adjusting the sale proceeds of the vehicle.
12. Similar view also taken by the Chattisgarh High Court at Bilaspur in
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Rajkumar Sharma vs. Shriram Fianance and Co.Ltd., [MANU/CG/0171/2014 =
2014 (143) AIC 682].
13. In Shiv Kumar and Anr vs. Union of India and Ors [(2019) 10 SCC
229] the Honourable Apex Court relying upon the previous judgment of the
Supreme Court in M. Venkatesh & Ores vs. Commissioner, Bangalore
Development Authority etc., [(2015 17 SCC 1] in which it is held that after the
notification under Section 4(1) is published in the gazette, any encumbrance
created by the owner does not bind the Government and the purchaser does not
acquire any title to the property. Further he cannot question proceedings of taking
possession.In the above judgment it is also held that after notification, acquisition
cannot be challenged by the purchaser.
14. This Court also in Prakash Finance vs. R. Babu [2018-2-L.W.(Crl.)
419] has held that once the vehicle is repossessed there cannot be any prosecution
under Section 138 of the Negotiable Instruments Act. Similar views also taken by
Madurai Bench of this Court in N. Rajangan v. Centurian Bank Ltd., [2010-1-
LW (Crl) 831].
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15. The Apex Court in Krishna Prasad and Others vs. Gouri Kumari Devi
[AIR 1964 SC 1464] has held that the provision under section 24(5) of the Land
Acquisition Act is some what similar to the provision of section 73(2) of
the Transfer of Property Act which provides, inter alia that where the mortgaged
property is acquired under the Land Acquisition Act, or any other enactment for
the time being in force providing for the compulsory acquisition of immoveable
property, the mortgagee shall be entitled to claim payment of the mortgage-money,
in whole or in part, out of the amount due to the mortgagor as compensation. In a
sense, the compensation amount payable to the respondent may prima facie, be
treated to be like a security substituted in the place of the original' mortgaged
property under section 73(2) of the Transfer of Property Act. However that may
be, the terms of the decree require that the appellants must first seek their remedy
from the said compensation amount before they can proceed against the non-
mortgaged property of the respondent. The relevant directions in the decree do not
justify the appellants' contention that because the mortgaged property has vested in
the State, they are entitled to execute the personal decree without taking recourse
to the remedy available to them under section 24(5) of the Act. The Apex Court in
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the above judgment makes it very clear that for the remaining amount mortgage is
entitled to proceed against the mortgager.
16. In Sundaram Finance Ltd., vs. State of Kerala and Ors. [AIR 1966 SC
1178] the Apex Court has held that the intention of the appellants in obbtaining
the hire-purchase and the allied agreement was to secure the return of loans
advanced to their customers, and no real sale of the vehicle was intended by the
customer to the appellants. The transactions were merely financing transactions.
17. As per the dictum of the Apex Court in the Hire Purchase Agreement the
ownership retained such agreement is only to intend to secure the loan not intend
to sale of vehicle and such contracts made were merely a financial transaction.
Whereas in the given case it is the admitted case that there was a mortgage
executed between the parties. Though it is contended that the petitioner that such
mortgage itself is not void, this Court cannot go into the issue at present. Whether the
mortgage is affected after notification u/s 4(1) or u/s. 6 Declaration is not an issue before
this Court. It is admitted case of both sides that there was mortgage in favour of the
Respondent, after the acquisition, the Respondent has obtained the compensation
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of Rs.56,14,840/- as indicated above.
18. Sub-clause 2 Section 73 of the Transfer of Property Act makes it very
clear that where the mortgaged property or any part thereof or any interest therein
is acquired under the Land Acquisition Act, 1894 (1 of 1894); or any other
enactment for the time being in force providing for the compulsory acquisition of
immovable property, the mortgagee shall be entitled to claim payment of the
mortgage-money, in whole or in part, out of the amount due to the mortgagor as
compensation.
19. A careful perusal of the above provision makes it clear that the above
merely enacts the principle of substituted security, that is to say , not taking for the
purpose of the security entitled not only to proceed against the mortgage property
but anything that is substituted for it. The mortgagee certainly recover for
remaining amount also other then the compensation amount. Therefore, merely
because compensation withdrawn and challenge has not made to refer the matter to
the Land Acquisition Tribunal, it cannot be said that the entire proceeing has been
discharged.
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20. Be that as it may. The main contention of the learned counsel for the
Respondent is that as the compensation amount has been received which is lesser
than the advance originally made to the tune of Rs.2 Crores, such receipt of lesser
amount itself amounts to discharge of entire mortgage amount. Therefore, whether
the receipt of the entire compensation towards the part of the loan will amount to
clear the entire mortgage loan cannot be gone into at this stage. The Negotiable
Instruments Act itself complete code. The special provision with regard to the
issuance of the cheque, issuance of the cheque is not in dispute. Therefore, while
exercising the power under section 482 Cr.P.C. Court cannot go into the issue as
to legally enforceable debt, etc., In this regard the Honourable Apex Court in
Rajeshbhai Muljibhai Patel and others vs. State of Gujarat and Another
[(2020) 3 SCC 794] has held as follows:
“22. The High Court, in our view, erred in quashing
the criminal case in C.C.No.367/2016 filed by appellant
No.3-Hasmukhbhai under Section 138 of N.I. Act. As
pointed out earlier, Yogeshbhai has admitted the issuance
of cheques. When once the issuance of cheque is
admitted/established, the presumption would arise
under Section 139 of the N.I. Act in favour of the holder of
cheque that is the complainant-appellant No.3. The nature
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of presumptions under Section139 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 illegally 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 139 of 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
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view, committed a serious error in quashing the criminal
complaint in C.C.No.367/2016 filed under Section 138 of
N.I. Act.”
21. In Sripati Singh vs. The State of Jharkhand [2021 SCC Online SC
1002] the Apex Court in Para 23 has held as follows:
“23. These aspects would primafacie indicate that
there was a transaction between the parties towards which
a legally recoverable debt was claimed by the appellant
and the cheque issued by the respondent No.2 was
presented. On such cheque being dishonoured, cause of
action had arisen for issuing a notice and presenting the
criminal complaint under Section 138 of N.I. Act on the
payment not being made. The further defence as to whether
the loan had been discharged as agreed by respondent
No.2 and in that circumstance the cheque which had been
issued as security had not remained live for payment
subsequent thereto etc. at best can be a defence for the
respondent No.2 to be put forth and to be established in the
trial. In any event, it was not a case for the Court to either
refuse to take cognizance or to discharge the respondent
No.2 in the manner it has been done by the High Court.
Therefore, though a criminal complaint under Section
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420 IPC was not sustainable in the facts and circumstances
of the instant case, the complaint under section 138 of the
N.I Act was maintainable and all contentions and the
defence were to be considered during the course of the
trial.”
22. In M.M.T.C. Ltd. & Another vs. M/s.Medchi Chemicals & Pharma (P)
Ltd., [(2002) 1 SCC 234] the Honourable Apex Court has held that the High Court
while exercising jurisdiction under section 482 Cr.P.C. cannot examine merit of the
complaint and also held that the burden of proving that there was no existing debt
or liability was on the respondents. They have to discharge in the trial.
23. In Sampelly Satyanarayanan Rao vs. Indian Renewable Energy and
Development Agency Limited [(2016) 10 SCC 458] the Honourable Apex Court
has held that 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 Section 482 Cr.P.C. of the Code of Criminal
Procedure, to come to a conclusion that the offence is not made out.
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24. Considering the above substantive provision of Transfer of Property Act
as the mortgage has already executed, though its validity is questioned before this
Court, this Court cannot make a roving enquiry. Therefore, this Court cannot go
into the merits whether there is legally enforceable debt or not, it has to be
discharged only by the accused before the trial Court. In such a view of the matter,
the petitions filed to quash the proceedings in CC.No.4615 of 2016, CC.No.323 of
2017 and C.C.No.4438 of 2017 are liable to be dismissed.
25. Accordingly all the three Criminal Original Petitions are dismissed.
Consequently connected M.Ps are closed.
26. At this stage, the learned counsel appearing for the petitioner seeks the
indulgence of this court for dispensation of the personal appearance of the
petitioners in all three cases, as they are senior citizens. Accordingly, the personal
appearance of the petitioners/Accused before the trial Court in the above cases is
dispensed with, except for receipt of copies, answering the charges, questioning
under Section 313 Cr.P.C., passing of judgment, or on any other date, as may be
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required by the trial Court
21.12.2021
ggs
Index : Yes / No
Internet : Yes / No
Speaking Order / Non Speaking Order
N.SATHISH KUMAR, J.
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ggs
Crl.O.P.Nos.16445, 19526 & 21288 of 2017 and
Crl.M.P.Nos.10122,10123, 11795,
11796, 12545 and 12546 of 2017
21.12.2021
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