Allowed

Mohinder Singh Dudharta v. Bal Krishan Rawat

Himachal Pradesh HC9 Sept 2024CRMMO/131/2024

Case brief

AI extract

What is this about?

In a cheque dishonour case, the accused sought to summon the complainant's Income Tax returns and sundry debtor/creditor lists to challenge his financial capacity. The High Court allowed the revision, holding such evidence highly relevant and that Section 311 Cr.P.C. can be invoked at any stage, subject to costs.

What did the court decide?

Order dated 29.02.2024 dismissing the Section 311 Cr.P.C. application set aside; petitioner permitted to summon Income Tax records subject to payment of Rs. 10,000 costs as condition precedent.

Mohinder Singh Dudharta Vs Bal Krishan Rawat — Cheque Dishonour | Himachal Pradesh HC (2024)

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Neutral Citation No. ( 2024:HHC:8091 )

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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Cr. MMO No 131 of 2024. Reserved on: 24.08.2024. Date of Decision: 09.09.2024.

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Mohinder Singh Dudharta ...Petitioner Versus Bal Krishan Rawat ...Respondent Coram Hon’ble Mr Justice Rakesh Kainthla , Judge. Whether approved for reporting?¹ No For the Petitioner : Mr. K.B. Khajuria, Advocate. : For the Respondent Mr. Janesh Gupta, Advocate.

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Rakesh Kainthla, Judge

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The petitioner has filed the present petition for setting aside the order dated 29.02.2024 passed by learned Additional Chief Judicial Magistrate, Court No.1, Rohru, District Shimla, H.P. (learned Trial Court) vide which the application filed under Section 311 Cr.P.C. by petitioner (accused before learned Trial Court) was dismissed. (Parties shall hereinafter be referred to in the same

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1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

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manner as they were arrayed before the learned Trial Court for convenience).

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Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court for taking action against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as NI Act). It was asserted that the accused was well known to the complainant. The accused demanded a sum of ₹20,00,000/- from the complainant to clear a bank loan in the year 2012. The complainant paid ₹20,00,000/- to the accused. The accused issued a cheque of ₹20,00,000/-drawn on Punjab National Bank, Rohru to discharge his legal liability. The complainant presented the cheque before his bank, but the cheque was dishonoured with an endorsement of “funds insufficient”. The complainant issued a notice to the accused asking him to pay the amount within 30 days from the date of the receipt of the notice. However, the accused failed to pay the amount. Hence, the complaint was filed for taking action against the accused.

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The learned Trial Court took cognizance and put the notice of accusation to the accused. The accused pleaded not guilty and claimed to be tried.

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The applicant/accused filed an application under Section 311 Cr.P.C. to examine the clerk from the office of Income Tax Department Rampur Bushehar to produce the Income Tax return along with the Sundry Debtor/creditor list for the years 2011-2012, 2012-2013 and 2013 to 2014 filed by the complainant before the Income Tax authorities. It was asserted that the complainant is habitual of filing frivolous complaints for the commission of an offence punishable under Section 138 of the NI Act. He had filed about 500 complaints, which were pending before various Courts in District Shimla. The total amount involved in the complaints is more than ₹25 crore stated to have been advanced by the complainant as a friendly loan. The complainant admitted this fact in his cross-examination. He also admitted that he had not filed any supporting document to show his financial capacity. The filing of various complaints cast doubt on the financial capacity of the complainant; therefore, it had become necessary to lead evidence regarding the financial capacity of the complainant. The accused intended to examine the Clerk from the office of the

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Income Tax Department along with Sundry Debtor/creditor lists for the years 2011-2012, 2012-2013 & 2013-2014. No prejudice would be caused to the other side. Hence, the application.

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The application was opposed by filing a reply denying the contents of the application. It was asserted that the accused had to establish that he had no liability. The Income Tax Department had nothing to do with the present case. Any default in the payment of the tax is between the complainant and the Income Tax Department. The applicant/accused was given ample opportunity to prove his defence and call the witnesses but he failed to do so. The application has been filed for prolonging the trial. Hence, it was prayed that the application be dismissed.

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The learned Trial Court held that the complainant admitted during his cross-examination that he had filed an Income Tax return. Many opportunities were granted to the accused to lead the evidence and he closed the evidence on 06.04.2021. He again sought the opportunity which was granted on 26.08.2021 and he closed the evidence on 23.09.2021. There is a delay in the filing of the application. The application was filed at the fag end of the trial

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and its purpose appears to delay the proceedings, consequently, the application was dismissed.

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Being aggrieved from the order passed by the learned Trial Court, the accused has filed the present petition asserting that the complainant had failed to prove his financial capacity to lend a huge amount of ₹25 crore. This aspect was not considered by the learned Trial Court. The application was dismissed on the ground that the applicant/accused was at fault and the application was filed to prolong the trial. These findings are not correct. The examination of the witness was essential and the accused should not have been deprived of leading evidence on a technical ground. Therefore, it was prayed that the present petition be allowed and the order passed by the learned Trial Court be set aside.

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I have heard Mr. K.B. Khajuria, learned counsel for the petitioner/accused and Mr. Janesh Gupta, learned counsel for the respondent/complainant.

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Mr. K.B. Khajuria, learned counsel for the petitioner/accused submitted that the learned Trial Court erred in dismissing the application. The complainant had admitted in his cross-examination that he had filed the various complaints.

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Therefore, it was necessary to examine whether he had the financial capacity to lend an amount of ₹25 crore involved in the various complaints. Learned Trial Court failed to consider this aspect and was swayed by the fact that the application was filed at the fag end of the trial. The delay cannot be used to shut out the relevant evidence. Therefore, he prayed that the present petition be allowed and the order passed by the learned Trial Court be set aside.

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Mr Janesh Gupta, learned counsel for the respondent/complainant submitted that the learned Trial Court had rightly dismissed the application. No justifiable reason was assigned by the applicant/accused to file the application belatedly. He had himself closed the evidence and there was no justification for leading the evidence. Hence, he prayed that the present petition be dismissed.

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I have given considerable thought to the submissions made at the bar and have gone through the records carefully.

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The accused specifically stated in his application that the complainant had admitted in his cross-examination that he had filed various complaints against various persons for the commission of an offence punishable under Section 138 of the NI

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Act. This fact was not denied specifically in the reply. The applicant had filed the application under Section 311 of CrPC to show the financial capacity of the complainant. It was laid down by the Hon’ble Supreme Court in Tedhi Singh Versus Narayan Dass Mahant (2022) 6 SCC 735 that the accused has a right to demonstrate that the complainant did not have the financial capacity to advance the loan stated to have been advanced by him. It was observed: -

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“7. This is indeed a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. Act provides that the Court shall presume 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. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of ‘probable defence' has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa (supra) , this Court notes that Section 139 of the N.I. Act is an example of reverse onus [see (2010) 11 SCC 441 ). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist.” xxxxxx

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The Trial Court and the First Appellate Court have noted that in the case under Section 138 of the N. I. Act, the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the N. I.

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Act is not civil suits. At the time, when the complainant gives his evidence unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the Courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.”

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This question was also considered by the Hon’ble Supreme Court in BasalingappaVersus Mudibasappa (2019) 5 SCC 418 and it was held that where the financial capacity to pay ₹6,00,000/- was questioned and there was no satisfactory reply, the accused had raised a probable defence. It was observed:-

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“26. Applying the preposition of law as noted above, in facts of the present case, it is clear that the signature on the cheque having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In cross-examination of the PW1, when the specific question was put that a cheque was issued in relation to a loan of Rs.

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25,000/-taken by the accused, the PW1 said that he does not remember. PW1 in his evidence admitted that he retired in 1997 on which date he received a monetary benefit of Rs. 8 lakhs, which was encashed by the complainant. It was also brought in the evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs. 4,50,000/-to Balana Gouda towards sale consideration. Payment of Rs. 4,50,000/-being admitted in the year 2010 and further payment of loan of Rs. 50,000/with regard to which complaint No.119 of 2012 was filed by the complainant, copy of which complaint was also filed as Ex.D2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per the own case of the complainant, he made a payment of Rs. 18 lakhs. During his cross-examination, when the financial capacity to pay Rs. 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts.

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There was another evidence on the record, i.e., a copy of the plaint in O.S. No. 148 of 2011 filed by the complainant for recovery of a loan of Rs. 7 lakhs given to one Balana Gouda in December 2009. Thus, there was evidence on record to indicate that in December 2009, he gave ₹ 7 lakhs in a sale agreement, in 2010, he made a payment of ₹ 4,50,000/towards sale consideration and further, he gave a loan of ₹ 50,000/-for which complaint was filed in 2012 and further loan of ₹ 6 lakhs in November 2011. Thus, during the period from 2009 to November 2011, an amount of ₹ 18 lakhs was given by the complainant to different persons including the accused, which put a heavy burden to prove the financial capacity when it was questioned on behalf of the accused, the accused being a retired employee of State Transport Corporation, who retired in 1997 and total retirement benefits, which were encashed were ₹ 8 lakhs only. The High Court observed that though the complainant is a retired employee, the accused did not even suggest that pension is

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the only means for the survival of the complainant. The following observations were made in Paragraph 16 of the judgment of the High Court:

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"17. Though the complainant is a retired employee, the accused did not even suggest that a pension is the only means for the survival of the complainant. Under these circumstances, the Trial Court's finding that the complainant failed to discharge his initial burden of proof of lending capacity is perverse."

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There is one more aspect of the matter which also needs to be noticed. In the complaint filed by the complainant as well as in the examination-in-chief, the complainant has not mentioned as to on which date, the loan of Rs. 6 lakhs was given to the accused. It was during cross-examination, he gave the date as November 2011. Under Section 118 (b), a presumption shall be made as to the date that every negotiable instrument was made or drawn on such date. Admittedly, the cheque is dated 27.02.2012, there is not even a suggestion by the complainant that a post-dated cheque was given to him in November 2011 bearing dated 27.02.2012. Giving of a cheque on 27.02.2012, which was deposited on 01.03.2012 is not compatible with the case of the complainant when we read the complaint submitted by the complainant, especially Para 1 of the complaint, which is extracted as below:

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"1. The accused is a very good friend of the complainant. The accused requested the Complainant a hand loan to meet out the urgent and family necessary sum of 6,00,000/-(Rupees Six Lakh) and on account of long-standing friendship and knowing the difficulties, which is being faced by the accused the complainant agreed to lend hand loan to meet out the financial difficulties of the accused and accordingly the Complainant lends hand loan Rs. 6,00,000/-(Rupees Six Lakh) dated 27.02.2012 in favour of the Complainant stating that on its presentation it will be honoured. But to the surprise of the Complainant on presentation of the same for collection through his Bank, the Cheque

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was returned by the Bank with an endorsement "Funds Insufficient" on 01-03-2012."

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Thus, there is a contradiction in what was initially stated by the complainant in the complaint and in his examinationin-chief regarding the date on which the loan was given on one side and what was said in cross-examination in the other side, which has not been satisfactorily explained. The High Court was unduly influenced by the fact that the accused did not reply to the notice denying the execution of the cheque or legal liability. Even before the trial court, the appellant-accused has not denied his signature on the cheque.

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We are of the view that when evidence was led before the Court to indicate that apart from a loan of Rs. 6 lakhs given to the accused, within 02 years, an amount of Rs. 18 lakhs have been given out by the complainant and his financial capacity being questioned, it was incumbent on the complainant to have explained his financial capacity. The court cannot insist on a person to lead negative evidence. The observation of the High Court that the trial court's finding that the complainant failed to prove his financial capacity of lending money is perverse cannot be supported. We fail to see how the trial court's findings can be termed as perverse by the High Court when it was based on consideration of the evidence, which was led on behalf of the defence.”

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It was held by the Hon’ble Supreme Court in John K.

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Abraham Versus Simon C. Abraham & Another (2014) 2 SCC 236 that

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the complainant had to show that he had the requisite funds to advance the money. It was held:-

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“9. It has to be stated that in order to draw the presumption under Section 118 read along with 139 of the Negotiable Instruments Act, the burden was heavy upon the complainant to have shown that he had required funds for

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having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant.”

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Therefore, it is apparent from the judgments of the Hon’ble Supreme Court that the accused has a right to challenge the financial capacity of the complainant and to show that a complainant never had any financial capacity to advance the amount, which he claims to have advanced. Therefore, the evidence sought to be brought on record is highly relevant.

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The learned Trial Court was influenced by the fact that the application was filed belatedly without any justification. There is a force in the submission on behalf of the petitioner/accused that an application under Section 311 of Cr.PC can be filed at any stage and the ultimate test is whether the evidence is relevant or not. It was laid down by the Hon’ble Supreme Court in Varsha Garg v. State of M.P., 2022 SCC OnLine SC 986 that the power under Section 311 Cr.P.C. can be exercised at any stage. It was observed:-

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“31. Having clarified that the bar under Section 301 is inapplicable and that the appellant is well-placed to pursue this appeal, we now examine Section 311 of CrPC. Section 311 provides that the Court “may”:

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(i) Summon any person as a witness or to examine any person in attendance, though not summoned as a witness; and

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(ii) Recall and re-examine any person who has already been examined.

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32. This power can be exercised at any stage of any inquiry, trial or other proceeding under the CrPC. The latter part of Section 311 states that the Court “shall” summon and examine or recall and re-examine any such person “if his evidence appears to the Court to be essential to the just decision of the case”. Section 311 contains a power upon the Court in broad terms. The statutory provision must be read purposively, to achieve the intent of the statute to aid in the discovery of truth.

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33. The first part of the statutory provision which uses the expression “may” postulates that the power can be exercised at any stage of an inquiry, trial or other proceeding. The latter part of the provision mandates the recall of a witness by the Court as it uses the expression “shall summon and examine or recall and reexamine any such person if his evidence appears to it to be essential to the just decision of the case”. The essentiality of the evidence of the person who is to be examined coupled with the need for a just decision of the case constitutes the touchstone which must guide the decision of the Court. The first part of the statutory provision is discretionary while the latter part is obligatory.

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34. A two-judge Bench of this Court in Mohanlal Shamji Soni (supra) while dealing with pari materia provisions of Section 540 of the Criminal Code of Procedure 1898 observed:

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“16. The second part of Section 540 as pointed out albeit imposes upon the court an obligation of summoning or recalling and re-examining any witness and the only condition prescribed is that the evidence sought to be obtained must be essential to the just decision of the case. When any party to the proceedings points out the desirability of some

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evidence being taken, then the court has to exercise its power under this provision — either discretionary or mandatory — depending on the facts and circumstances of each case, having in view that the most paramount principle underlying this provision is to discover or to obtain proper proof of relevant facts in order to meet the requirements of justice.”

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35. Justice S Ratnavel Pandian, speaking for the two-judge Bench, noted that the power is couched in the widest possible terms and calls for no limitation, either with regard to the stage at which it can be exercised or the manner of its exercise. It is only circumscribed by the principle that the “evidence to be obtained should appear to the court essential to a just decision of the case by getting at the truth by all lawful means.” In that context the Court observed:

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“18 …Therefore, it should be borne in mind that the aid of the section should be invoked only with the object of discovering relevant facts or obtaining proper proof of such facts for a just decision of the case and it must be used judicially and not capriciously or arbitrarily because any improper or capricious exercise of the power may lead to undesirable results. Further, it is incumbent that due care should be taken by the court while exercising the power under this section and it should not be used for filling up the lacuna left by the prosecution or by the defence or to the disadvantage of the accused or to cause serious prejudice to the defence of the accused or to give an unfair advantage to the rival side and further the additional evidence should not be received as a disguise for a retrial or to change the nature of the case against either of the parties.”

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36. Summing up the position as it obtained from various decisions of this Court, namely Rameshwar Dayal v. State of U.P. , State of W.B. v. Tulsidas Mundhra , Jamatraj Kewalji Govani v. State of Maharashtra , Masalti v. State of U.P. , Rajeswar Prosad Misra v. State of W.B . and R.B. Mithani v. State of Maharashtra , the Court held:

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“27. The principle of law that emerges from the views expressed by this Court in the above decisions is that the criminal court has ample power to summon any person as a witness or recall and re-examine any such person even if the evidence on both sides is closed and the jurisdiction of the court must obviously be dictated by exigency of the situation, and fair play and good sense appear to be the only safe guides and that only the requirements of justice command the examination of any person which would depend on the facts and circumstances of each case.”

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37. The power of the court is not constrained by the closure of evidence. Therefore, it is amply clear from the above discussion that the broad powers under Section 311 are to be governed by the requirement of justice. The power must be exercised wherever the court finds that any evidence is essential for the just decision of the case. The statutory provision goes to emphasise that the court is not a hapless bystander in the derailment of justice. Quite to the contrary, the court has a vital role to discharge in ensuring that the cause of discovering truth as an aid in the realization of justice is manifest.” (Emphasis supplied)

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A perusal of the order passed by the learned Trial Court

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shows that the applicant/accused had closed the evidence on 06.04.2021 and thereafter on 23.09.2021. His statement under Section 313 Cr.P.C. was recorded on 21.12.2020. He filed an application under Section 311 of Cr.P.C. on 30.12.2023 without assigning any reason as to why the application could not be filed earlier. Therefore, the applicant/accused is liable to pay the cost to the complainant/respondent for the delay in the disposal of the complaint. Hence, the present application is allowed and the

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petitioner/accused is permitted to summon the record of the Income Tax Department along with the Sundry Debtor/creditor list for the financial year 2011-2012, 2012-2013 & 2013-2014 subject to payment of costs of ₹ 10,000/- which shall be a condition precedent for leading the additional evidence. The parties through their respective counsel are directed to appear before the learned Trial Court on 25.09.2024 .

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The observations made herein before shall remain confined to the disposal of the petition and will have no bearing, whatsoever, on the merits of the case.

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09^th September, 2024 (Nikita)

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( Rakesh Kainthla) Judge

Mohinder Singh Dudharta v. Bal Krishan Rawat

Case brief

What is this about?

What did the court decide?

Mohinder Singh Dudharta v. Bal Krishan Rawat

Case brief

What is this about?

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