The Supreme Court recently comprising of a bench of observed Justices K M Joseph and Hrishikesh Roy observed that High Courts should exercise caution when granting the relief of quashing a complaint under Section 138 of the Negotiable Instruments Act during the pre-trial stage. (Rathish Babu Unnikrishnan vs State (Govt Of NCT Of Delhi)).
Facts of the case
A criminal complaint was filed by the second respondent against the appellant as the cheque given by the appellant got dishonoured due to insufficient funds.
The Trial Court had ordered framing notice as well as a summons to the appellant as per Section 18, N.I. Act.
A petition was filed before the High Court whereby the Delhi High Court denied the application under Section 482 of the Code of Criminal Procedure, 1973 for the quashing of a summons issued against the appellant under Section 138 of the Negotiable Instruments Act, 1881.
Issue before the Court
Whether summons and trial notice should have been quashed on the basis of factual defences.?
Contention of the Parties
The appellant argued that the criminal process could not have been issued unless the essential ingredients for the offence under Section 138 of the N.I. Act were satisfied, namely that the dishonoured cheque received by the complainant was against a “legally enforceable debt or liability.”
On the other hand respondents supported the impugned judgement and contended that when the cheque is issued and the signatures on it are admitted, the presumption of a legally enforceable debt arises in favour of the holder of the cheque.
Courts Observation and Judgment
The bench noted, "the learned Judge of the Delhi High Court while considering the petition under Section 482 Cr.P.C kept in mind the scope of limited enquiry in this jurisdiction by referring to the ratio in HMT Watches Limited vs. M.A. Abida & Anr1 . and in Rajiv Thapar & Ors. vs. Madan Lal Kapoor2 and opined that the exercise of powers by the High Court under Section 482 Cr.P.C, would negate the complainant’s case without allowing the complainant to lead evidence. Such a determination should necessarily not be rendered by a Court not conducting the trial. Therefore, unless the Court is fully satisfied that the material produced would irrefutably rule out the charges and such materials being of sterling and impeccable quality, the invocation of Section 482 Cr.P.C power to quash the criminal proceedings, would be unmerited. Proceeding on this basis, verdict was given against the appellant, who was facing the proceeding under Section 138 of the N.I. Act. With all liberty given to the appellant to raise his defence in the trial court, his quashing petition came to be dismissed."
The bench further noted that the burden of proving that there is no existing debt or liability, was to be discharged in the trial.
The bench noted, "On careful reading of the complaint and the order passed by the Magistrate, what is discernible is that a possible view is taken that the cheques drawn were, in discharge of a debt for purchase of shares. 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."
Also, as the cheque and the signature were not disputed by Unnikrishnan, It was held that balance of convenience at this stage was in favour of the complainant, as Unnikrishnan would have due opportunity to adduce defence evidence during the trial, to rebut the presumption.
The bench further noted that quashing of proceedings must not become an expedition into the merits of factual dispute.
The bench remarked, "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."
The bench dismissing the appeal remarked, “The proposition of law as set out above makes it abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence need to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint."
Read Judgment @Latestlaws.com
Picture Source :
