Dismissed

Gulafsha v. State of U.P. and Another

Allahabad HC22 Feb 2023A482/21382/2022

Case brief

AI extract

What is this about?

The High Court dismissed an application under Section 482 CrPC filed to quash summoning proceedings in a Section 138 NI Act case. The court held that the applicant's contention that the cheque was a security without underlying debt raised disputed questions of fact. Since the summons was based on a prima facie case and there was no legal infirmity, the interference under Section 482 CrPC was not w

What did the court decide?

The prayer for quashing the summoning order dated 11.03.2022 and the entire proceedings under Section 138 of NI Act is refused and the application is dismissed.

Gulafsha Vs State of U.P. and Another — Cheque Dishonour | Allahabad HC (2023)

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Court No. - 45 Case :- APPLICATION U/S 482 No. - 21382 of 2022 Applicant :- Gulafsha Opposite Party :- State of U.P. and Another Counsel for Applicant :- Gagan Pratap Singh Counsel for Opposite Party :- G.A.,Ashok Trivedi,Mahesh Chandra Tiwari

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Hon'ble Mrs. Manju Rani Chauhan,J.

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Supplementary affidavit filed by learned counsel for the applicant today in the Court, is taken on record.

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Heard Mr. Gagan Pratap Singh, learned counsel for the applicant, Mr. Ashok Trivedi, learned counsel for the opposite party no.2 and Mr. K.P. Pathak, learned AGA for the State and perused the records.

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The present application under Section 482 Cr.P.C. has been filed to quash the summoning order dated 11.03.2022 as well as the entire proceedings of Complaint Case No.13105 of 2021 (Sanjay Kumar Jain Vs. Gulafsha), under Section 138 of Negotiable Instruments Act, 1881, Police Station-Lohamandi, District-Agra, pending in the Court of the Special Chief Judicial Magistrate, Agra.

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Brief facts of the case are that the opposite party no.2 filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act') against the applicant stating therein that the opposite party no.2, who is running a firm in the name and style of S.K. Steel Industries situated at Agra, is the owner and proprietor of the same and was in business relationship with the applicant as well as his other family members. For purchase of certain iron material, the applicant has issued a cheque of Rs.4,07,000/- from Punjab National Bank, Pashchim Puri Road, Shastripuram (Agra), bearing cheque no.279257 dated 12.10.2021 in favour of opposite party no.2. On receipt of the same, opposite party no.2 has presented the same before the concerned Bank for encashment on 13.10.2021, but the same was dishonoured due to insufficient amount. Thereafter, opposite party no.2 sent a legal notice to the applicant on 30.10.2021 which has been received by him on 01.11.2021. After the notice neither any amount was paid nor reply was submitted by the applicant, therefore, the present compliant has been filed on 30.10.2021. Subsequently, the learned Magistrate after recording

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the statement under Sections 200 and 202 Cr.P.C. summoned the applicant vide order dated 11.03.2022, under Section 138 of the Act.

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Learned counsel for the applicant submits that the applicant has no business transactions with the opposite party no.2. It is her brother-in-law with whom all the transactions took place and the said cheque was given to the opposite party no.2 by the brother-inlaw of the applicant as security cheque, which was misused by the opposite party no.2. He further submits that in the said cheque, only signature is appended by the applicant whereas the amount payable and date mentioned in the cheque were filled by the complainant/opposite party no.2 in his writing and misusing the same. The said cheque in question was security cheque and the same was not issued against any existing legally enforceable debt or liability, therefore, the present case has been instituted with mala fide intentions, in order to harass and extract money from the applicant. Thus, the summoning order as well as the entire proceedings is liable to be quashed.

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On the other hand, Mr. K.P. Pathak, learned AGA for the State, has submitted that in the complaint itself, it has been mentioned that the said cheque was issued in lieu of payment said to be made in regard to business transaction, therefore, the submission made by the learned counsel for the applicant in this regard is also not acceptable. He further submits that the summoning order passed by the concerned Magistrate is legal and just in the eyes of the law and at this stage, only a prima facie case is to be seen and the complaint cannot be thrown at the threshold. Therefore, the present application is liable to be dismissed.

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I have carefully considered the submissions advanced by learned counsel for the parties and have also gone through the material available on record.

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Before proceeding to consider the respective submissions of learned counsel for the parties, it is useful to extract the provisions of Section 138 of the Act, which is as under:-

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"138. Dishonor of cheque for insufficiency, etc., of funds in the accounts:-

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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 honor the cheque or that it exceeds the amount arranged to be paid from that account

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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 one year, or with fine which may extend to twice the amount of the cheque, or with both:

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PROVIDED that nothing contained in this section shall apply unless-

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(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.

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(b) the payee or the holder in due 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and

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(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.

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Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."

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The aforesaid section deals with a cheque drawn by a person "for the discharge, in whole or in part, of any debt or other liability." The section does not say that the cheque should have been drawn for the discharge of any debt or other liability of the drawer towards the payee. Thus in complaint under Section 138 of N.I. Act, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. The applicant being holder of cheque and the signature appended on the cheque having not been denied by the Bank, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. Before this Court refers to various judgments of the Apex Court considering Sections 118 and 139, it is relevant to notice the general principles pertaining to burden of proof on an accused especially in a case where some statutory presumption regarding guilt of the accused has to be drawn.

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A Three Judges' Bench of the Hon'ble Apex Court in the case of C.C. Alavi Haji Vs. Palapetty Muhammed and Another, reported in (2007) 6 SCC 555 , has held as under:-

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"14.Section 27 gives rise to a presumption that service of notice has been

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effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement refused or not available in the house or house locked or shop closed or addressee not in station, due service has to be presumed. [Vide Jagdish Singh Vs. Natthu Singh,3 [AIR 1992 SC 1604]; State of M.P. Vs. Hiralal & Ors.,4 [(1996) 7 SCC 523] and V.Raja Kumari Vs. P.Subbarama Naidu & Anr.,5 [(2004) 8 SCC 774]. It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved.

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17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran case, if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."

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Further the Apex Court in Bharat Barrel & Drum Manufacturing Company Vs. Amin Chand Pyarelal, reported in (1999) 3 SCC 35 had considered Section 118(a) of the Act and held that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable and defendant can prove the non-existence of a consideration by raising a probable defence. In paragraph No.12 following has been laid down:-

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"12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is

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admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non- existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist......"

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In its latest judgment, the Apex Court in the case of Basalingappa Vs. Mudibasappa reported in (2019) 5 SCC 418 , specifically in paragraph nos. -23 and 24 has noticed as follows:-

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"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendantaccused cannot be expected to discharge an unduly high standard of proof."

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23. No evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High Court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW 1, himself has not been explained by the High Court.

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24. The above Kishan Rao case was a case where this Court did not find the defence raised by the accused probable. The only defence raised was that cheque was stolen having been rejected by the trial court and no contrary opinion having been expressed by the High Court, this Court reversed the judgment of the High Court restoring the conviction. The respondent cannot take any benefit of the said judgment, which was on its own facts." (Emphasis added)

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In view of the settled legal position, as noticed above, it is clear that at this stage, only a prima facie case is to be seen and the complaint cannot be thrown at the threshold. In the complaint itself it has been mentioned that the said cheque was issued in lieu of payment said to be made in regard to business transaction, therefore, the applicant being holder of cheque and the signature appended on the cheque having not been denied by the Bank, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. There is nothing on record to show that the cheque in question was issued against any security by the applicant to the opposite party no.2. All the submissions made by learned counsel for the applicant is disputed questions of fact. Therefore, when the facts have to be established by way of evidence, this Court while exercising the powers under section 482 of Cr.P.C., cannot interfere with such proceedings. Hence, no grounds are made out for quashing of the proceedings under section 138 of the Negotiable Instruments Act.

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On the basis of discussions made herein above, this Court finds that there is no illegality or infirmity in the summoning order dated 11.03.2022 passed by the concerned court below. Therefore, the prayer for quashing the impugned summoning order as well as the entire proceedings of the aforesaid case are refused, as I do not see any abuse of the court's process at this pre-trial stage.

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In view of the aforesaid, the application is, accordingly, dismissed .

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Order Date :- 22.2.2023 Jitendra/-

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Digitally signed by :- JITENDRA KUMAR YADAV High Court of Judicature at Allahabad

Gulafsha v. State of U.P. and Another

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Gulafsha v. State of U.P. and Another

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