Dismissed

Mohd Imran and Another v. State of U.P. and Another

Allahabad HC28 Mar 2023A482/42664/2022

Case brief

AI extract

What is this about?

In an application under Section 482 CrPC to quash a summoning order in a Section 138 NI Act case, the court held that disputes regarding service of notice and the existence of consideration are factual issues. The court refused to quash the proceedings, holding that a prima facie case existed and such matters require adjudication on evidence by the trial court.

What did the court decide?

Application for quashing of the summoning order and proceedings under Section 138 NI Act dismissed; no abuse of process found.

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

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Court No. - 68

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Case :- APPLICATION U/S 482 No. - 42664 of 2022

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Applicant :- Mohd Imran And Another Opposite Party :- State of U.P. and Another Counsel for Applicant :- Krishna Kumar Singh Counsel for Opposite Party :- G.A.

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Hon'ble Mrs. Manju Rani Chauhan,J.

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Heard Mr. Krishna Kumar Singh, learned counsel for the applicants, 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 impugned order dated 21.04.2022 passed by learned IInd Additional Civil Judge (J.D.)/J.M., Amroha in Complaint Case No.1712 of 2021, New Complaint Case No.5052 of 2022 (Ankit Sharma vs. M/s Hayat Construction and others) under Section 138 N.I. Act, P.S. Gajraula, DistrictAmroha.

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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 was working as contractor with the applicants and payment of Rs.9,00,000/was due against the applicants. The applicants have issued a cheque of Rs.9,00,000/- from Axis Bank, bearing cheque no.0407095 in favour of opposite party no.2 with assurance that when the amount of Rs.9,00,000/- is paid by the applicants to the opposite party no.2, the aforesaid cheque may be returned back. When the money was not given by the applicants, with the permission and information to the applicants, the cheque was presented before the bank on 10.09.2021, but the same was returned back with a remark of "Payment stopped by drawer". The aforesaid information was given to the applicants by the opposite party no.2 on telephone, but the applicants disconnected the phone after stating that they have issued the check and what can they do if it is not paid. They are not responsible in case payment is not made. Thereafter, opposite party no.2 sent a legal notice on 12.10.2021 to the applicants on 10.04.2019 through registered post and the same was returned back as the applicants had refused to accept the same. After the notice neither any amount was paid nor reply was submitted by the applicants, therefore, the present complaint has been filed on 24.11.2021. Subsequently, the learned Magistrate after recording the statement under Sections 200 and 202 Cr.P.C.

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summoned the applicants vide order dated 21.04.2022, under Section 138 of the Act.

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Learned counsel for the applicant submits that Wajid Ali, who is stated to be witness when the cheque was given by the applicants to opposite party no.2, has played fraud as he was working with the applicants' firm and was authorized to issue cheque in favour of the persons as directed by the applicants, however, he playing fraud, after leaving the company, started his own business and issued the cheque to Ankit Sharma, who is said to have worked with the applicant from the year 2017 till 2019 as has been stated by Wajid Ali. For the aforesaid facts, an FIR has been lodged on 13.10.2022, therefore, complaint is not maintainable as the cheque has been issued by Wajid Ali, who is the witness. Learned counsel for the applicants further submits that the Assistant Manager of Tata Projects Limited (T&D) Company has sent a email pm 15.01.2021 at 12:59 hrs to the applicants wherein it has been stated as under:-

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"Dear Sir,

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Refer to the trailing mail I would like to inform you that as per Mr. Wajid Ali and indecent behaviour with his petty contractor at office I have return all the cheques to Mr. Wajid Ali which were received by me.

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This is for your information."

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Learned counsel for the applicants further submits that though, the opposite party no. 2 has sent a notice dated 12.10.2021, but the service of notice has not been effected and therefore, the complaint which has been filed on 24.11.2021, is not maintainable, as, not knowing the date of service of notice, it cannot be said as to when the cause of action arose. Under the circumstances, pre-condition as contained under Section 138 N.I. Act has remained uncomplied with and, therefore according to him, proceedings are clearly not maintainable under the Negotiable Instruments Act, 1881. In support of his contention, he has relied upon the interim order passed by the co-ordinate Bench of this Court in the case of Chandra Rekha Tripathi (Tiwari) vs. State of U.P. and another . 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 FIR itself, which has been lodged on 13.10.2022 after passage of nearly one year, it is admitted that Wajid Ali worked with the applicants till the year 2021 and as per the version of the FIR itself, he was authorized to issue the cheque in favour of persons, who had worked with the applicants. It is also admitted case that the opposite party

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no.2 had worked with the applicant as the contractor. He further submits that the applicants 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. As regards the returning of cheques as stated by the Assistant Manager of Tata Projects Limited (T&D) company, it is not clear that as to which cheques have been returned to him. 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 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"

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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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9. 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 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

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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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It is not necessary to 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, the 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. In the judgment of the Apex Court in the case of Ajeet Seeds Ltd. vs. K. Gopala Krishnaiah, reported in 2014 12 SCC 685 , the Apex Court has held that absence of averments in the complaint about service of notice upon the accused is the matter of evidence. The paragraph nos. 10 and 11 of the said judgement are reproduced herein below:-

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"10. It is thus clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to 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.

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11. Applying the above conclusions to the facts of this case, it must be held that the High Court clearly erred in quashing the complaint on the ground that there was no recital in the complaint that the notice under Section 138 of the NI Act was served upon the accused. The High Court also erred in quashing the complaint on the ground that there was no proof either that the notice was served or it was returned unserved/unclaimed. That is a matter of evidence. We must mention that in C.C. Alavi Haji, this Court did not deviate from the view taken in Vinod Shivappa, but reiterated the view expressed therein with certain clarification. We have already quoted the relevant paragraphs from Vinod Shivappa where this Court has held that service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for

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quashing of the proceeding under Section 482 of the Cr.P.C. These observations are squarely attracted to the present case. The High Court's reliance on an order passed by a two-Judge Bench in Shakti Travel & Tours is misplaced. The order in Shakti Travel & Tours does not give any idea about the factual matrix of that case. It does not advert to rival submissions. It cannot be said therefore that it lays down any law. In any case in C.C. Alavi Haji, to which we have made a reference, the threeJudge Bench has conclusively decided the issue. In our opinion, the judgment of the two-Judge Bench in Shakti Travel & Tours does not hold the field any more."

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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 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 nonexistence 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 ,

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specifically in paragraph nos. -23 and 24 has noticed as follows:-

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"23. We may now notice judgment relied by the learned counsel for the complainant, i.e., judgment of this Court in Kishan Rao Vs. Shankargouda, (2018) 8 SCC 165 . This Court in the above case has examined Section 139 of the Act. In the above case, the only defence which was taken by the accused was that cheque was stolen by the appellant. The said defence was rejected by the trial court. In paragraph Nos. 21 to 23, following was laid down:-

"21…...

22. ……..

"26. …...

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 defendant-accused 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 and the factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court.

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In the complaint itself it has been mentioned that the said

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cheque was issued in lieu of payment said to be made in regard to business transaction, therefore, the applicants 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. All the submissions made by learned counsel for the applicants 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 21.04.2022 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 :- 28.3.2023 Jitendra/-

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

Mohd Imran and Another v. State of U.P. and Another

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Mohd Imran and Another v. State of U.P. and Another

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