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Madhya Pradesh High Court · body

2016 DIGILAW 910 (MP)

Rajendra Upadhyay v. Prem Motors Pvt. Ltd.

2016-10-06

ANAND PATHAK

body2016
ORDER : Anand Pathak, J. 1. This order shall also govern disposal of M. Cr. C. No. 10130/2016 and 10131/2016 as facts and circumstances of both the case are similar. However, for the sake of arguments, facts of M. Cr. C. No. 10130/2016 are being taken for consideration. Present petition under section 482 of Criminal Procedure Code has been filed by the petitioner/accused challenging the order dated 8.7.2016 passed by 11th Additional Sessions Judge, Gwalior in Criminal Revision No. 6400162/2016; whereby, the order dated 6.5.2016 passed by JMFC, Gwalior in Criminal Case No. 464/2015 has been confirmed. Petitioner has also challenged the criminal proceedings initiated by the respondent against him under section 138 of Negotiable Instruments Act. 2. Learned counsel for the petitioner submits that as per the Collaboration Agreement dated 20.6.2014, present petitioner had to make available certain pieces of land to the respondent and had to share the profit in 50-50 % ratio. In pursuance to the agreement, the petitioner has made available certain pieces of land to the respondent for which the respondent has paid the amount to land-owners directly, through account payee cheques. Later on due to certain disputes the respondent asked the petitioner to deposit some security amount in favour of the respondent, therefore, petitioner under compulsion has issued blank cheque bearing No. 091287 (undated) of Axis Bank, Gwalior in favour of respondent. The cheque accompanied the letter dated 20.6.2014; wherein, reference (of cheque to be kept in safe custody) has been mentioned. The said letter dated 20.6.2014 is on record. 3. When the cheque was presented by the respondent for honouring the same, the cheque got bounced and dishonoured and therefore, respondent has preferred a criminal complaint against the petitioner under section 138 of the Negotiable Instruments Act contending inter-alia that the petitioner has not completed his part of compromise and has issued a cheque which got bounced due to insufficiency of funds. The Judicial Magistrate First Class, Gwalior has issued summons under section 204 of Criminal Procedure Code to the petitioner who appeared before the Court and filed an application for dismissal of the complaint on the ground as alleged in the present petition. The said application got rejected by the JMFC, Gwalior vide order dated 6.5.2016, which was challenged in the revisional jurisdiction before the Sessions Court but met with the same result. The said application got rejected by the JMFC, Gwalior vide order dated 6.5.2016, which was challenged in the revisional jurisdiction before the Sessions Court but met with the same result. Therefore, petitioner is before this Court under section 482 of Criminal Procedure Code. 4. The main ground for agitating the case raised by the petitioner is that as per the provisions as contained in Explanation to section 138 of Negotiable instruments Act for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability and in the present case no legally enforceable debt or liability exists on the shoulder of present petitioner so as to discharge the same, he issued the same. According to him, the agreement contemplates share of profit at the ratio of 50-50% once the project is completed, Here in the present case as per the collaboration agreement, no project has, been undertaken therefore, no question of any liability exists in respect of petitioner. He further submitted that the collaboration agreement was notarised on 30th June, 2014; whereas, the land agreement between the respondent and the land owners has been executed between the period 20.5.2014 to 30.6.2014, therefore, no liability in respect of the transactions completed before 30.6.2014 exists and on this count alone, the petitioner stressed over the explanation clause of section 138 of Negotiable Instruments Act and submitted that no case is made out. 5. Petitioner's further grievance is that once the legally enforceable debt is not available to be discharged by the petitioner, therefore, the cheque if at all issued as security cannot be encashed by the respondent. He submitted that a bare reading of the complaint does not disclose any cognisable offence under Section 138 of Negotiable Instruments Act, therefore, prayed for dismissal of the complaint. Learned counsel for the petitioner has relied upon the decision of Hon'ble Supreme Court in the case of Indus Airways Pvt. Ltd. vs. Magnum, (2014) 12 SCC 539 and decisions of this Court in the matter of Mohinder Singh Bhasin vs. S. Sangyong Engineering and Construction Co. Learned counsel for the petitioner has relied upon the decision of Hon'ble Supreme Court in the case of Indus Airways Pvt. Ltd. vs. Magnum, (2014) 12 SCC 539 and decisions of this Court in the matter of Mohinder Singh Bhasin vs. S. Sangyong Engineering and Construction Co. Ltd. 2015 (4) MPLJ 134 and in the matter of Jitendra Singh Flora vs. Ravikant Talwar, 2001 (1) MPLJ 229 : 2001 (1) MPHT 130 to contend that Hon'ble Supreme Court as well as this High Court in the aforesaid cases, at the time of pendency of criminal proceedings while considering said aspect has quashed the criminal proceedings. 6. He further relied upon the decision rendered by Hon'ble Supreme Court in the matter of K. Subramani vs. K. Damodara Naidu, 2015 (2) MPLJ (SC) 251 : 2015 (1) MPLJ (Cri.) (SC) 529 : (2015) 1 SCC 99 ; wherein, after the completion of the trial, the accused has been convicted under the provisions of section 138 of Negotiable Instruments Act and thereafter the matter travelled to the Hon'ble Apex Court where the final adjudication had taken place. 7. He further relied upon the judgment rendered by Hon'ble Supreme Court State of Haryana vs. Bhajanlal 1990 MPLJ Online (SC) 1 : 1992 AIR SCW 237. It is submitted that a bare reading of the complaint does not disclose any cognizance offence under section 138 of Negotiable Instruments Act. He further submitted that at the time of issuance of cheque, no liability existed, therefore, provisions of section 138 of Negotiable Instruments Act are not attracted. Therefore, he prayed that present complaint be quashed. 8. Per contra, learned counsel for the respondent has relied upon section 139 of Negotiable Instruments Act in which a rebuttable presumption in favour of holder has been made and the said rebuttable presumption cannot be discharged/concluded, unless the trial completes. Therefore, according to him said presumption can only be proved once the trial is undertaken and parties are given opportunity to adduce evidence on their part. 9. Therefore, according to him said presumption can only be proved once the trial is undertaken and parties are given opportunity to adduce evidence on their part. 9. On the basis of collaboration agreement and its clause 4, he submits that the said clause contemplates an exigency wherein if any fraud is committed by the present petitioner and is discovered by the respondent then same shall be repaid or refunded by the present petitioner and in pursuance to the said clause, once the alleged fraud has been discovered, then petitioner himself had deposits the cheque with respondent on 20.6.2014. The said cheque had been duly filled up and signed by the petitioner himself before the respondent, therefore, the said cheque cannot be treated as security in any manner. The further contention of respondent is that vide letter dated 17.8.2014, petitioner himself had accepted the liability and in para 8 of the complaint, the conduct of the petitioner has been specifically mentioned. Learned counsel for the respondent has relied upon the decision of Hon'ble Supreme Court in the matter of Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited, 2016 (111) MPWN 39 and HMT Watches Limited vs. M.A. Abida and Another, (2015) 11 SCC 776 . He craved the attention of this Court over the paras 12, 13 and 15 of the judgment in the matter of HMT Watches (supra). He further stressed over the fact that letter dated 20th June, 2014, nowhere denotes that cheque was issued for security and it was given to be kept in safe custody of the respondent as per clause 4 of the collaboration agreement. He prayed for dismissal of the revision. 10. Heard learned counsel for the parties and perused the record. 11. Section 139 of the Negotiable Instruments Act creates a rebuttable presumption in favour of the holder. Section 139 of the Negotiable Instruments Act reads as under:- "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 section 138, for the discharge, in whole or in part, of any debt or other liability." Therefore, the holder (respondent in the present case) has a rebuttable presumption in its favour which has to be dislodged by the petitioner at appropriate forum i.e. trial Court, in the present case. 12. 12. The Collaboration Agreement and its clause 4 stipulates that if any fraud is committed by the present petitioner and is discovered by the respondent then the misappropriated fund shall be deposited by the mode of post dated cheque duly signed in favour of first party. Once the alleged fraud has been discovered then vide letter dated 20th June, 2014 the petitioner has issued two undated cheques duly signed and drawn in favour of the present respondent for keeping in safe custody. Vide fetter dated 17th August, 2014, the petitioner has categorically mentioned the fact that in case he fails to honour his commitment towards refund of dues of the respondent latest by 3rd September, 2014, then the respondent had the authority to put the cheques for encashment on or after 4th September, 2014. Once, the petitioner himself has given the authority to honour the cheque, petitioner at this stage cannot contend that cheque has been issued for the purpose of security. 13. Whether the cheques were given as security or not or whether there was any outstanding liability existed or not is a question of fact which could be determined only by the trial Court after recording of evidence of the parties. 14. The crucial question to determine the applicability of section 138 of the Negotiable Instruments Act is whether the cheque represents the discharge of any debts or liabilities or whether it represents advance payment without there being any subsisting debt or liability. Here in the present case, prima facie, it appears that the cheque has been issued for discharge of liability as created by the Collaborate Agreement and through the conduct of the petitioner a rebuttable presumption has been raised in favour of the respondent. Parties have to lead evidence in this regard and thereafter the question of presumption would be decided by the trial Court. This view has been further supported by the judgment rendered by Hon'ble Apex Court in the matter of Rangappa vs. Sri Mohan, (2010) 11 SCC 441 as well as Goa Plast (P) Ltd. vs. Chico Ursula D'Souza, 2003 (2) MPLJ (SC) 102 : (2003) 3 SCC 232 and HMT Watches (supra) and Sampelly Satyanarayana Rao (supra). 15. This view has been further supported by the judgment rendered by Hon'ble Apex Court in the matter of Rangappa vs. Sri Mohan, (2010) 11 SCC 441 as well as Goa Plast (P) Ltd. vs. Chico Ursula D'Souza, 2003 (2) MPLJ (SC) 102 : (2003) 3 SCC 232 and HMT Watches (supra) and Sampelly Satyanarayana Rao (supra). 15. Here in the present case a bare reading of the complaint discloses cognizance of offence under section 138 of the Negotiable Instruments Act therefore, the Court below has rightly taken the cognizance in the matter. The judgments relied upon by the petitioner move in different factual and interpretational realm; wherein, bare reading of the complaint does not disclose any cognisable offence. Similarly, the judgment rendered by Hon'ble Apex Court in the matter of Indus Airways (supra) has been duly considered by the Apes Court in the matter of Sampelly Satyanarayana Rao (supra). In the case of Indus Airways (supra) purchase order has been cancelled and cheques were issued towards advance payment. In that case it was found that cheque had not been issued for discharge of liability but as advance for the purchase order which was later on cancelled. Keeping in mind the factual aspects of the said case, the said judgment cannot be applied to the case of present nature wherein the cheque was given for discharge of liability as per the Collaboration Agreement and that too the said liability has been accepted by the petitioner himself in his correspondence. Therefore, because of this factual differentiation, the judgment relied upon by the petitioner is not applicable in the preset case. 16. It is well settled that while dealing with a case under section 482 of Criminal Procedure Code for quashment of criminal proceedings, the Court has ordinarily to proceed on the basis of averments made in the complaint. The defence of the accused cannot be considered at such stage. The Court while considering the prayer for quashment of criminal proceedings, does not adjudicate upon a disputed question of fact. 17. The defence of the accused cannot be considered at such stage. The Court while considering the prayer for quashment of criminal proceedings, does not adjudicate upon a disputed question of fact. 17. Once the Hon'ble Apex Court has held that a post dated cheque is well recognised mode of payment and once the issuance of cheque and signature thereon are admitted, presumption of a legal enforceable debt in favour of holder of the cheque arises although the said presumption is rebuttable, then this Court at this stage is not inclined to quash the cognizance taken by the Court below under section 138 of Negotiable Instruments Act, duly affirmed by the Sessions Court in revisional jurisdiction under section 397 of Criminal Procedure Code. 18. Resultantly, the order dated 6.5.2016 (Annexure P/2) passed by JMFC Gwalior in Criminal Case No. 464/2015 as well as order dated 8.7.2016; (Annexure P/1) passed by 11th Additional Sessions Judge, Gwalior in Criminal, Revision No. 6400162/2016; are hereby affirmed and the petition preferred by the petitioner under section 482 of Criminal Procedure Code is hereby dismissed. It is made clear that parties shall be at liberty to adduce their evidence and trial Court would decide the case on its own merits without being influenced by the expression of this Court employed while dismissing this petition.