Rajasthan High Court
Nishant Gupta vs State Of Raj And Anr on 3 May, 2024
Author: Anil Kumar Upman
Bench: Anil Kumar Upman
[2024:RJ-JP:19168]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
(1) S.B. Criminal Miscellaneous (Petition) No. 2216/2018
Shaliwahan Singh Rathore S/o Shri Raj Singh Rathore, R/o B-74,
Vallabh Nagar, Kota Raj.
----Petitioner
Versus
1. State Of Rajasthan Through P.p.
2. M/s Vibrant Academy (I) Pvt. Ltd., A-14-A, Indraprast,
Ind. Area, Road No. 1, Kota through General Manager
Ravidutt S/o Shri Somdutt, R/o 265-A, Talvandi Kota Raj.
----Respondents
(2) S.B. Criminal Miscellaneous (Petition) No. 2220/2018
Ravi Pratap Singh S/o Ram Kripal Singh, R/o Faculty Bansal
Classes, Bansal Tower, Indraprast, Ind. Area, Road No.1 Kota
Raj.
----Petitioner
Versus
1. State of Rajasthan Through P.P.
2. M/s Vibrant Academy (I) Pvt. Ltd., A-14-A, Indraprast,
Ind. Area, Road No. 1, Kota through General Manager
Ravidutt S/o Shri Somdutt, R/o 265-A, Talvandi Kota
Raj.
----Respondents
(3) S.B. Criminal Miscellaneous (Petition) No.2221/2018
Nishant Gupta S/o Late Shri Dr. Suresh Gupta, R/o E-801,
Ashirwad Anandram, Shreenathpuram Kota Raj.
----Petitioner
Versus
1. State of Rajasthan through P.P.
2. M/s Vibrant Academy (I) Pvt. Ltd., A-14-A, Indraprast,
Ind. Area, Road No. 1, Kota through General Manager
Ravidutt, S/o Shri Somdutt, R/o 265-A, Talvandi Kota
Respondents
(4) S.B. Criminal Miscellaneous (Petition) No. 2224/2018
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Nirbhay Pandey S/o Shri V.n.pandey, A-405,shakun Enclave,
Anantpura, kota Raj.
----Petitioner
Versus
1. State of Rajasthan through PP.
2. M/s Vibrant Academy (I) Pvt. Ltd., A-14-A, Indraprast,
Ind. Area, Road No. 1, Kota through General Manager
Ravidutt, S/o Shri Somdutt, R/o 265-A, Talvandi Kota
Raj.
----Respondents
For Petitioner(s) : Mr. Dushyant Singh Naruka
For Respondent(s) : Mr. M.K. Sheoran, PP
Ms. Harshita Sharma
Ms. Vibhu Sakshi Sharma
HON'BLE MR. JUSTICE ANIL KUMAR UPMAN
JUDGMENT
DATE OF PRONOUNCEMENT : 03/05/2024
(Reportable)
1. These misc. petitions have been filed by respective
petitioners for quashing of the entire criminal proceedings of the
complaint cases (details whereof are mentioned hereinbelow) for
offence under Section 138 of the N.I. Act., filed by respondent
No.2 i.e., M/s Vibrant Academy against them:-
S.No. Complaint Party Name Other details
Case No.
1. 891/2017 Vibrant Academy (I) pending trial before
Pvt. Ltd. vs learned Special
Shaliwahan Singh Judicial Magistrate
Rathore N.I. Act Cases NO.3,
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Kota, Rajasthan
2 20682/2017 Vibrant Academy (I) pending trial before
Pvt. Ltd. vs Ravi learned Special
Pratap Singh Judicial Magistrate
N.I. Act Cases No.3,
Kota, Rajasthan
3. 16289/2017 Vibrant Academy (I) pending trial before
Pvt. Ltd. vs Nishant learned Special
Gupta Judicial Magistrate
N.I. Act Cases No.3,
Kota, Rajasthan
4. 20609/2017 Vibrant Academy (I) pending trial before
Pvt. Ltd. vs Nirbhay learned Special
Pandey Judicial Magistrate
N.I. Act Cases No.3,
Kota, Rajasthan
2. Since common question of law has been involved in all these
misc. petitions and all the aforementioned criminal complaint
cases have been filed by one and common complainant alleging
similar and identical allegations in the same court i.e. learned
Special Judicial Magistrate, N.I. Act Cases No.3, Kota, Rajasthan,
all these four misc. petitions are heard and decided together by
this common judgment.
3. The background of these misc. petition in a nutshell is that
the complainant-respondent M/s Vibrant Academy (I) Pvt. Ltd. is
running a IIT JEE Coaching Institute. The respondent-company
invited petitioners herein to enter into contract for their
employment as faculty upon certain terms and conditions. The
complainant respondent obtained cheques in question (mentioned
below) from the respective petitioners in order to indemnify itself
for any future losses which could have incurred to it by violation of
any condition of the contract by the petitioners:-
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Sr. No. Drawer (petitioner) of Cheque Number and other
the Cheque details
1. Shaliwahan Cheque No.976147 dated
22.06.2017 for a sum of
Rs.6,00,000/- of State Bank of
Bikaner and Jaipur,
Instrumentation Township
Branch Kota
2. Ravi Pratap Singh Cheque No.839169 dated
22.06.2017 for a sum of
Rs.28,50,000/- of State Bank of
Bikaner and Jaipur,
Instrumentation Township
Branch Kota
3. Nishant Gupta Cheque No.891853 dated
22.06.2017 for a sum of
Rs.41,50,000/- of State Bank of
Bikaner and Jaipur,
Instrumentation Township
Branch Kota
4. Nirbhay Pandey Cheque No.525401 dated
22.06.2017 for a sum of
Rs.34,50,000/- of State Bank of
Bikaner and Jaipur,
Instrumentation Township
Branch Kota
4. The cheques in questions were issued by the respective
petitioners to the complainant as security and dates were not
mentioned therein at that time. It was agreed between the parties
that the complainant-respondent would be free to present the
cheques for encashment in case of breach of any of the terms of
the agreement and the petitioners would be bound to honour the
cheques on presentation. Thereafter, the petitioners resigned their
jobs and for breach of condition of the contract, the complainant
issued multiple legal notices (both civil and criminal) to the
petitioners for breach of the conditions of the contract. The
petitioners filed separate reply to the notices mentioning therein
their grievances/defence, and when the cheques in question could
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not be honoured, the respondent company filed separate cases
under Section 138 of the N.I Act against the petitioners before
learned Special Judicial Magistrate, N.I. Act Cases, No.3, Kota.
Cognizance has been taken by the learned trial court against the
petitioners for offence under Section 138 of the N.I. Act and
proceedings are going on there. Hence, the petitioners have filed
these misc. petitions seeking quashing of the entire criminal
proceedings of the complaint cases, pending against them before
the learned trial court.
5. Shri Dushyant Singh Naruka, learned counsel representing
the petitioners, vehemently and fervently submits that entire
criminal proceedings of the complaint cases, pending against the
petitioners before the learned trial court are liable to be quashed
and set aside as it is an admitted case of the complainant
company itself that there was no legal debt or other liability
existing on the date when the contract came into existence
between the complainant and the petitioners. The cheques in
question were drawn on the same date i.e. date of contract in
favour of the complainant but these are undated. It is argued that
the contract through which the liability arose is a non-competent
and vague contract and the cheques were drawn merely as
indemnity bond to secure any future losses which may or may not
occur in future. It is also argued that the interpretation of the
expression 'for discharge of any debt or other liability' occurring in
Section 138 of the N.I. Act is significant and decisive of the
matter. This expression means a legally enforceable debt or other
liability. It leaves no manner of doubt that to attract an offence
under Section 138 of the N.I. Act, there should be legally
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enforceable debt or other liability subsisting on the date of drawal
of the cheque. But as there was no legal enforceable debt on the
date when the cheques in question were drawn, the proceedings
under Section 138 N.I. Act against the petitioners would not be
maintainable and are liable to be quashed. He has placed reliance
on the Supreme Court judgment in the case of Indus Airways
Pvt. Ltd. & Ors. vs Magnum Aviation Pvt. Ltd. & Anr.
reported in 2014 Cr.L.R. (SC) 387. He draws attention of this
Court towards the following observations made in Indus Airways
(supra):-
"19. The above reasoning of the Delhi High Court is clearly
flawed inasmuch as it failed to keep in mind the fine
distinction between civil liability and criminal liability under
Section 138 of the N.I. Act. If at the time of entering into a
contract, it is one of the conditions of the contract that the
purchaser has to pay the amount in advance and there is
breach of such condition then purchaser may have to make
good the loss that might have occasioned to the seller but
that does not create a criminal liability under Section 138.
For a criminal liability to be made out under Section 138,
there should be legally enforceable debt or other liability
subsisting on the date of drawal of the cheque. We are
unable to accept the view of the Delhi High Court that the
issuance of cheque towards advance payment at the time of
signing such contract has to be considered as subsisting
liability and dishonour of such cheque amounts to an offence
under Section 138 of the N.I. Act. The Delhi High Court has
traveled beyond the scope of Section 138 of the N.I. Act by
holding that the purpose of enacting Section 138 of the N.I.
Act would stand defeated if after placing orders and giving
advance payments, the instructions for stop payments are
issued and orders are cancelled. In what we have discussed
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above, if a cheque is issued as an advance payment for
purchase of the goods and for any reason purchase order is
not carried to its logical conclusion either because of its
cancellation or otherwise and material or goods for which
purchase order was placed is not supplied by the supplier, in
our considered view, the cheque cannot be said to have been
drawn for an existing debt or liability."
6. With these submissions, learned counsel for the petitioners
has prayed that the misc. petitions may be accepted and entire
proceedings of the cases, pending against the petitioners, before
the trial court may be quashed.
7. Per contra, Ms. Harshita Sharma and Ms. Vibhu Sakshi
Sharma, learned counsel representing the respondent complainant
oppose the submissions of the petitioners' counsel. It is contended
by them that the learned trial court, on the basis of the material
available on record, after due application of mind, has taken
cognizance for offence under Section 138 of the N.I. Act, against
the petitioners and that there is no illegality in the orders taking
cognizance. Since, the petitioners failed to pay the amount of the
cheques in question within the stipulated time period, proceedings
under the N.I. Act have been initiated against them. It is
contended that when the cheques were issued and the signatures
thereon were admitted, the presumption of a legally enforceable
debt would arise in favour of the holder of the cheque. If the
signatures have been admitted by the drawer of the cheque, then,
the argument with regard to non-bearing of date on cheque or
cheque being undated at the time of its drawal/issuance, would be
of no avail to the opposite party. They contend that a post-dated
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cheque is deemed to have been drawn on the date it bears and
only the date which the cheque bears is the relevant date and on
that date, it would assume the character of "cheque".
8. Learned counsel for the respondent rely upon the Supreme
Court judgment in the case of I.C.D.S. Ltd. vs Beena Shabeer :
2002 (2) SCC 426. They submit that in Beena Shabeer (supra),
the Hon'ble Supreme Court held that security cheques would fall
within the purview of Section 138 N.I. Act, and a person cannot
escape his liability. When there is an existing liability on the date
of presentation of the cheque, and the "security cheques‟ issued
are dishonoured, the accused will be liable under Section 138 N.I.
Act. They submit that the above-quoted observations in Indus
Airways (supra) are obiter dicta, as they were not necessary for a
decision of the case under consideration. The earlier decision in
Beena Shabeer (supra) was not brought to the notice of the
Hon'ble Supreme Court. Reliance has also been placed on the
following Supreme Court judgments:-
(i). Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel
& Anr. reported in 2022 LiveLaw (SC) 830; and
(ii). M/s Shree Daneshwari Traders vs Sanjay Jain & Anr. reported
in (2019) 16 SCC 83.
Learned counsel thus, crave dismissal of the misc. petitions.
9. I have heard and considered the arguments advanced at bar
and have gone through the material available on record.
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10. The issuance of the cheques in question under the signatures
of the petitioners to the complainant company is not in dispute at
all. It is also not in dispute that when the cheques in question
were given to the complainant, dates were not mentioned therein
and they were given as security purpose. The core argument,
upon which, learned counsel for the petitioners is trying to set up
his case is that since there was no legally enforceable debt or
other liability at the time of drawal/issuance of the cheques, the
provisions of Section 138 of the N.I. Act would not attract.
11. The petitioners with open eyes entered into contract with the
complainant company for their employment upon certain terms
and conditions and in pursuance of the contract entered between
the parties, duly signed undated cheques, were given by the
petitioners to the Company and when the petitioners breached the
terms of the contract, the cheques in question were presented by
the respondent-complainant and upon their dishonour,
proceedings under Section 138 of the N.I. Act. were initiated
against them by the respondent Company. The petitioners ought
to have opposed and challenged the said contract at its very initial
stage, if they were having any suspicion or doubt with respect to
its terms and conditions. However, the petitioners have
themselves accepted the contract.
12. Be that as it may. Whether or not the contract/s entered
into between the petitioners and the respondent company is a
valid contract or not and whether it gives rise to liability on breach
of condition of the contract, cannot be adjudicated at this stage
and needs to be examined and evaluated before the trial court as
while exercising powers under Section 482 Cr.P.C., appreciation of
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evidence is not desirable. Thus, this Court is not inclined to make
any observation on this aspect of the matter. I fortify this view
from the judgment passed by Hon'ble Supreme Court in the case
of Rathish Babu Unnikrishnan v. State (NCT of Delhi), 2022
SCC OnLine SC 513, wherein it was held as under:-
"...In any case, when there is legal presumption, it would not
be judicious for the quashing Court to carry out a detailed
enquiry on the facts alleged, without first permitting the trial
Court to evaluate the evidence of the parties. The quashing
Court should not take upon itself, the burden of separating
the wheat from the chaff where facts are contested. To say it
differently, the quashing proceedings must not become an
expedition into the merits of factual dispute, so as to
conclusively vindicate either the complainant or the
defence."
13. It is not disputed by both the parties that at the time of
drawal of the cheques, there was no debt or liability subsisting.
The cheques in question (undated) were given as security and as
per the case of the complainant, on breach of the conditions of the
contract, they were presented for encashment. In Salar Solvent
Extractions Ltd. v. South India Viscose Ltd. : (1994) 3
Crimes 295 (Mad)., it has been held that only the dates which
the cheques bear are the relevant dates. A post dated cheque is
deemed to have been drawn on the date it bears.
14. I have also carefully gone through the judgment cited by
learned counsel for the petitioners. In my considered opinion, the
facts and circumstances of the Indus Airways Pvt. Ltd. (supra)
is totally different to the facts and circumstances of the present
case. In the said case, the cheques were issued by way of
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advance payment for the purchase orders. One of the terms and
conditions of the contract therein was that the entire payment
would be given to the supplier in advance as it had to procure the
parts from abroad. In the said case, the purchaser cancelled the
purchase order and requested to supplier to return both the
cheques. However, the cheques got dishonoured when they were
presented on the ground that the purchaser had stopped
payment. Thus, while dealing with such situation, Hon'ble Apex
Court held that for a criminal liability to be made out, under
Section 138 of the N.I. Act, there should be legally enforceable
debt subsisting on the date of drawal of the cheque. But in the
instant case, the facts are totally different and the observations of
Hon'ble Supreme Court have to be viewed in the light of the
background facts of the case.
15. The Hon'ble Apex Court, in the case of Dashrathbhai
Trikambhai Patel (supra), after taking into consideration the
aforesaid view passed in the case of Indus Airways (supra) has
held that for the commission of any offence under Section 138 of
N.I. Act, the cheque that is dishonoured must represent a legally
enforceable debt on the date of maturity or presentation. The
relevant observations are reproduced hereinbelow for the sake of
ready-reference:-
"14. The judgments from Indus Airways (supra) to Sunil Todi
(supra) indicate that much of the analysis on whether post-
dated cheques issued as security would fall within the
purview of Section 138 of the Act hinges on the relevance of
time. In Indus Airways (supra), this Court held that for the
commission of the offence under Section 138, there must
have been a debt on the date of issuance of the cheque.
However, later judgments adopt a more nuanced position
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while discussing the validity of proceedings under Section
138 on the dishonour of post-dated cheques. This Court
since Sampelly Satyanarayana Rao (supra) has consistently
held that there must be a legally enforceable debt on the
date mentioned in the cheque, which is the date of maturity.
15. This Court in NEPC Micon Ltd. v. Magna Leasing Ltd.6
held that the Courts must interpret Section 138 with
reference to the legislative intent to supress the mischief and
advance the remedy. The objective of the Act in general and
Section 138 specifically is to enhance the acceptability of
cheques and to inculcate faith in the efficacy of negotiable
instruments for the transaction of business. 7 Section 138
criminalises the dishonour of cheques. This is in addition to
the civil remedy that is available. Through the criminalisation
of the dishonour of cheques, the legislature intended to
prevent dishonesty on the part of the drawer of a negotiable
instrument.8 The interpretation of Section 138 must not
permit dishonesty of the drawee of the cheque as well. A
cheque is issued as security to provide the drawee of the
cheque with a leverage of using the cheque in case the
drawer fails to pay the debt in the future. Therefore, cheques
are issued and received as security with the contemplation
that a part or the full sum that is addressed in the cheque
may be paid before the cheque is encashed.
16. The judgments of this Court on post-dated cheques when
read with the purpose of Section 138 indicate that an offence
under the provision arises if the cheque represents a legally
enforceable debt on the date of maturity. The offence under
Section 138 is tipped by the dishonour of the cheque when it
is sought to be encashed. Though a post- dated cheque
might be drawn to represent a legally enforceable debt at the
time of its drawing, for the offence to be attracted, the
cheque must represent a legally enforceable debt at the time
of encashment. If there has been a material change in the
circumstance such that the sum in the cheque does not
represent a legally enforceable debt at the time of maturity
or encashment, then the offence under Section 138 is not
made out."
16. A cheque is a monetary instrument. In several cases, it gets
dishonoured or bounced. This happens when the amount
mentioned in the cheque is greater than the amount available in
the account from which the cheque has been drawn of.
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Section-138 of the Negotiable Instruments Act aims to lay down
legal consequences of a case where a cheque gets dishonoured. It
essentially provides a shield to the payees and protects their
rights. Section-138 not only imposes criminal liability against the
payee but also provides for a civil suit which the payee can initiate
against the drawer.
17. A post-dated cheque is an instrument in which a future date
is written implying that the cheque could only be encashed on or
beyond that future date. Two important dates in cases of
dishonoured cheques are the date of issuance of cheque and the
date of maturity of cheque. Usually the debt or the liability
existing on both the dates is of the same amount. But in some
instances a part payment is made between the two date, which in
turn reduces the amount liable on the date of maturity. Regarding
this, the issue whether the offence of section-138 of Negotiable
Instruments Act is made out from liability/debt existing on date of
issuance of cheque or date of maturity comes up. The Hon'ble
Apex Court, in case Dashrathbhai Trikambhai Patel (supra)
decided that as to when Section-138 will be attracted in cases of
part-payment made after the cheque was issued but before the
cheque was encashed. The Court held that such a payment must
be endorsed on the cheque under Section 56. The Apex Court in
the above-mentioned judgment observed many previous Supreme
Court judgments to decide the instant case including
Indus Airways Private Limited (supra). In later judgment, the
Apex Court delved deeper into this issue and considered that in
cases of part payment, it is unjust to consider the date of issuance
of cheque for the purposes of Section-138 as the amount liable on
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the date of issuance will be more than the amount liable on the
date of encashment of the cheque. This is unjust to the drawer
who made a part payment already by some other means. Hence
the court considered this submission and held that the date of
maturity of the cheque should be considered to decide on the debt
occurring under Section-138.
18. In case of Sampelly Satyanarayana Rao v. Indian
Renewable Energy Development Agency Limited reported in
(2016) 10 SCC 458, it was held that the test for the application
of Section 138 is whether there was a legally enforceable debt on
the date mentioned in the cheque. It was held that if the answer is
in the affirmative, then the provisions of Section 138 would be
attracted.
19. The Hon'ble Supreme Court has not only taken Principles of
Natural Justice to determine these issues, but also considered
legislative intent of The Negotiable Instruments Act, especially in
the light of Section-138. In the cases of NEPC Micon Ltd. v.
Magna Leasing Ltd AIR 1995 SC 1952, and Sunil Todi v.
State of Gujarat, Criminal Appeal No. 1446 of 2021 the
courts held that in order to suppress the wrongdoing and advance
the remedy, they must read Section 138 in light of the legislative
intent. The Act's overarching goal, as articulated in Section 138, is
to increase the acceptance of cheques and foster confidence in the
usefulness of negotiable instruments for doing business. To
understand more on the issue of legislative intent, the latter case
is of utmost importance. In the case of Sunil Todi, a two-judge
bench expounded on the phrase "debt or other liability" in Section-
138 to understand the true intention of legislation. In previous
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cases it was held that the word "debt" only includes the amount
owed by the drawer to the payee on the date of issuance of the
cheque. But it is pertinent to note that "other liabilities" is a
separate phrase within the section, and it has to distinguished
from the word "debt". And hence the liability arising on the date of
maturity will be covered under Section-138.
20. In wake of the aforesaid discussion, I am of the considered
opinion that the petitioners cannot shirk their liability to pay the
cheque amount to the complainant by taking plea that there was
no legally enforceable debt or liability subsisting on the date of
issuance/drawl. The relevant date for determining the existence of
a legally enforceable debt or liability under the N.I. Act would be
the date of presentation/maturity of the cheque in question. If
there subsists any legally enforceable debt or liability on the date
of presentation of cheque; the cheque gets dishonoured and the
drawer fails to make payment of the cheque amount within the
stipulated time period, after serving legal notice, the drawer of the
cheque in question has to face trial under the N.I. Act. However,
the accused petitioners would be at liberty to cross-examine the
complainant and adduce other evidence during trial to rebut the
presumption of legally enforceable debt or liability subsisting on
the date of presentation of cheques in question for encashment;
disprove the validity of the contract and produce any other
material, favouring their cases.
21. Further, looking to the fact that the aforementioned cases
were filed before the learned trial in the year 2017 and till date,
nearly seven years have been passed, the trial court is directed to
expedite the proceedings.
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22. With the aforesaid observations, the misc. petitions fail and
are dismissed. Stay applications are also disposed of.
(ANIL KUMAR UPMAN),J
Sudhir Asopa/
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