Dismissed¶33

Ram Pal v. M/S Kartik Foods and Anr.

Himachal Pradesh HC11 Jul 2024CRMMO/165/2022

Case brief

AI extract

What is this about?

Section 138 NI Act; Section 482 Cr.P.C. quashing of criminal proceedings; presumption under Section 139 NI Act; legally enforceable debt or liability; stolen/lost cheque defence; FIR against complainant; insufficient funds endorsement; Cheque Return Memo; fresh evidence impermissible at quashing stage; no mini-trial under Section 482; Bhajan Lal categories; trial-stage rebuttal; HP High Court Cr. MMO 165/2022; Ram Pal versus Kartik Foods; 2024.

What did the court decide?

No relief to petitioner; petition dismissed with observations confined to disposal, parties directed to appear before the learned Trial Court on 30th July 2024, and Registry directed to transmit the records forthwith. ¶33

Ram Pal Vs M/S Kartik Foods and Anr. — Cheque Dishonour | Himachal Pradesh HC (2024)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether documents newly filed by the petitioner along with the petition and rejoinder can be gone into while adjudicating quashment under Section 482 Cr.P.C. +2 more

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Court's answer

It is not permissible for the Court examining a Section 482 petition to go into documents filed with the petition/rejoinder; it must rely on the material placed before the learned Trial Court, and the petitioner's application for placing documents on record is dismissed.

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Ratio / Principle

There is a presumption in favour of the complainant under Section 139 NI Act; she is not required to establish the liability at the quashing stage, and it is for the accused to rebut the presumption during the trial — hence the complainant's inability to disclose the accused's liability during investigation does not assist the petitioner.

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Key takeaways

Since the Court must take the complaint and accompanying documents as correct, the cheque must be treated as dishonoured due to insufficient funds where the Cheque Return Memo carries no other endorsement; consequently, judgments premised on a 'cheque reported stolen' scenario do not apply.ratio¶119
It is not permissible for this Court to quash the proceedings on the ground that the accused had complained to the police that his cheque was stolen/lost; that defence is a matter to be decided during the trial.ratio¶123

Detailed headnote1 paragraphs

Section 138 NI Act — Quashing under Section 482 Cr.P.C. refused. Ram Pal sought quashment of proceedings arising from a complaint by M/s Kartik Foods (cheque of Rs. 1,12,00,000/- drawn on Baghat Urban Cooperative Bank, dishonoured with endorsement 'insufficient funds') pending before the Additional Chief Judicial Magistrate, Court No.1, pleading that the cheque had been stolen (FIR No.253/2021, PS Haroli) and that his only transaction was the sale of his land for Rs. 25 lakh. Held: (i) fresh documents tendered with a quashing petition are impermissible — reliance is confined to material placed before the Trial Court, and the petitioner's application to place documents on record stands dismissed; (ii) the Section 139 presumption of a legally enforceable debt/liability favours the complainant, who need not establish liability at this stage — the burden of rebutting it lies on the accused at trial, so non-disclosure of liability during investigation does not assist quashing; (iii) where the Return Memo endorses insufficient funds, the cheque must be treated as so dishonoured, and judgments turning on 'stolen-cheque' endorsements (Satyender, K. Sadanand, Raj Kumar Khurana) do not apply; (iv) Section 482 adjudication involves no mini-trial or appreciation of evidence — a complaint is not quashed on the plea that its contents are false. Following Vijay Kumar and Rajeev Ranjan Sinha, and relying on A.M. Mohan, Maneesha Yadav, Rathish Babu Unnikrishnan, MCD v. Ram Kishan Rohtagi, Mahendra K.C., Supriya Jain, Iveco Magirus, Priyanka Jaiswal and allied decisions, the Court declined to exercise inherent jurisdiction and dismissed the petition, directing the parties to appear before the Trial Court on 30th July 2024.

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2024:HHC:5308

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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Cr. MMO No.165 of 2022 Reserved on 12.06.2024 Date of Decision: 11.07.2024.

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Ram Pal ...Petitioner Versus Kartik Foods & Anr. ...Respondents

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Coram

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Hon’ble Mr Justice Rakesh Kainthla , Judge. Whether approved for reporting?¹ No

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For the Petitioner : Mr. Vivek Singh Attri, Advocate. For Respondent No.1 : Mr. Kush Sharma, Advocate or Respondent No.2 : Mr. Lokender Kutlehria, Additional Advocate General.

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Rakesh Kainthla, Judge

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The petitioner has filed the present petition for quashing the proceedings in a case titled M/s Kartik Foods Versus Ram Pal registered under Section 138 of the Negotiable Instruments Act (NI Act) pending before the learned Additional Chief Judicial Magistrate, Court No.1 (Learned Trial Court). (The

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parties shall hereinafter be referred to in the same manner as

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

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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 against the accused asserting that the complainant is a proprietor of M/s Kartik Foods. The accused had friendly relations with the complainant. He approached the complainant with a proposal to invest in M/s Kartik Foods Flour Mills and promised to get her good returns. M/s Kartik Foods was owned by Sh. Sunil Kumar, who is the nephew of the accused. The accused arranged the finance money by mortgaging his property. The accused and Sunil Kumar approached the complainant with a proposal to invest in M/s Kartik Foods Flour Mills and promised that she would get the good returns in a short time. The complainant refused to do so. The accused made another proposal for the sale of a mortgaged land and the sale of M/s Kartik Foods Flour Mills. He requested to clear the loan of the Firm which had become a non-performing asset (NPA) due to the financial crisis. The negotiations regarding the mortgaged land, flour mills and NPA loan account were held between accused-Sunil Kumar and the complainant. The deal was finalized at ₹94,11,462/-. The

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liability of the accused was not clear and he needed ₹1,12,00,000/- to clear the bank liability. He and Sunil Kumar requested the complainant to pay ₹1,12,00,000/- in addition to ₹94,11,462/- to clear the bank liability. They promised to return the amount of ₹1,12,00,000/- within a few months. The complainant deposited ₹1,66,11,462/- in the loan account of the accused and Sunil Kumar in March 2020 and May 2020. The complainant also paid a sum of ₹15,00,000/- and ₹25,00,000/on the date of execution of the sale deed and in this manner, she paid a total amount of ₹2,06,11,462/-. The complainant asked for the return of her money of ₹1,12,00,000/-. The accused issued a cheque of ₹1,12,00,000/- drawn on Baghat Urban Cooperative Bank to liquidate his liability. The complainant deposited the cheque with her bank i.e. State Bank of India, Branch office Gagret, Una but it was dishonored with the remarks ‘insufficient funds’. The complainant sent a notice to the accused, asking him to pay the cheque amount within the stipulated period. However, the accused failed to do so, hence, the complaint was filed to take action against the accused.

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The learned Trial Court found sufficient reasons to summon the accused.

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When the accused appeared, the learned Trial Court put the notice of accusation to him for the commission of an offence punishable under Section 138 of the NI Act.

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Being aggrieved from the order and initiation of the proceedings, the accused filed the present petition asserting that he has no liability towards M/s Kartik Foods. The complainant made a concocted story against him. The accusedcomplainant and Sunil Singh entered into a tripartite agreement on 15.07.2019, whereby, the complainant agreed to buy machinery, vehicles and factory of M/s Kartik Foods from its earlier proprietor-Sh. Sunil Singh. She further agreed to pay a loan of ₹1.5 crores availed from Baghat Urban Cooperative Bank, Una by M/s Kartik Foods. The complainant agreed to buy the land and structure of the accused for a sum of ₹15,00,000/-. The complainant issued a cheque of ₹15,00,000/- to the accused for purchasing the land. The cheque was dishonoured due to insufficient funds. The accused refused to sell his land to the complainant and the complainant agreed to buy the land for a sum of ₹25,00,000/-. The accused sold his land for a revised consideration of ₹25,00,000/-. The statement of account of M/s Kartik Foods shows that Sh. Sunil Kumar is its sole proprietor.

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Another bank account of M/s Kartik Foods shows the complainant and Sunil Singh as partners. The amount was transferred from one account to another. The accused is not an account holder. Sh. Sunil Singh was the sole proprietor of M/s Kartik Foods before the execution of the partnership between him and the complainant. The accused was only concerned with the sale of his land for a consideration of ₹25 lakh. The accused had no liability and the complainant could not have cleared the same. The accused only stood as guarantor for the loan and his liability would only arise in case of non-payment of loan by the principal. The cheque was stolen by the complainant and an FIR was lodged regarding the same. The presumption under Section 139 of the NI Act will have no effect on the FIR and the investigation by the police. Therefore, it was prayed that the present petition be allowed and the complaint filed before the learned Trial Court be quashed.

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The complainant opposed the petition by filing a reply taking preliminary objections regarding lack of maintainability and the petition being premature. The contents of the petition were denied on merits. It was asserted that the accused admitted his signatures on the cheque. His plea that the

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cheque was stolen is false. The probative value of the entry, the daily diary and the FIR have to be assessed by the learned Trial Court and this Court cannot quash the proceedings simply because an FIR has been lodged. Kartik Foods was in the name of Sunil Jaswal, who is the nephew of the accused. The accused arranged the finance for M/s Kartik Foods by mortgaging his property. He approached the complainant with the proposal to invest in M/s Kartik Foods and assured her of good returns in a short time. The accused admitted in the agreement that he had received the entire sale consideration. He settled the dispute and agreed to pay the remaining amount. He issued the cheque in discharge of his legal liability which was dishonoured; hence, it was prayed that the present petition be dismissed.

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Respondent No.2-State also filed a reply asserting that the accused made a complaint based on which FIR No.253/2021 was registered at Police Station Haroli against the complainant. The police are investigating the same. The complainant could not give any satisfactory reply regarding the liability of the accused to pay the amount of ₹1.12 crore. The handwriting is to be taken and sent to the expert for

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comparison. Therefore, it was prayed that the present petition be dismissed.

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A rejoinder denying the contents of the reply and afFirming those of the petition was filed.

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I have heard Mr Vivek Singh Attri, learned counsel for the petitioner/accused, Mr Kush Sharma, learned counsel for respondent No.1/complainant and Mr Lokinder Kuthlaria, learned Additional Advocate General for respondent No.2-State.

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Mr. Vivek Singh Attri, learned counsel for the petitioner submitted that the complaint was filed on false facts which is evident from various documents placed on record. The accused had only sold his land to the complainant for ₹25 lakh and he is not liable to pay any money to the complainant. His cheque was stolen and misused by the complainant which fact is evident from the reply filed by the State. Hence, he prayed that the present petition be allowed and the complaint be quashed, He relied upon the judgments of Satyendra Versus State of UP & Anr 2024 AHC 31469 , K. Sadanandan Versus V.S. Satheesh Kumar Criminal Revision Petition 2016 of 2003 decided on 9^th June 2015 , Raj Kumar Khurana Versus State (NCT of Delhi) and Anr. 2009 6

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SCC 72 , and Rajeev Ranjan Sinha Versus State Sushil Kumar Saxena CRL.MC 2073/2022 decided on 26^th May 2022 in support of his submission.

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Mr. Kush Sharma, learned counsel for the complainant submitted that the Court had only summoned the accused. This Court cannot go into the disputed facts raised by the accused in his petition. They are to be adjudicated by the competent Court of Law. He relied upon the judgments of Rathish Babu Unnikrishnan Versus State (Govt. of NCT of Delhi) & Anr., Criminal Appeal No.694 and 695 of 2022 decided on May 26 , 2022, Northern India Paint Colour and Varnish Company LLP Versus Sushil Chaudhary CRL. MC 2480/2023 decided on 10^th November 2023 and Bhim Singh Versus Tikmi Devi CRMPM No.176 of 2021 decided on 11.03.2022 .

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

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The law regarding the exercise of jurisdiction under Section 482 of Cr.P.C. was considered by the Hon’ble Supreme Court in A.M. Mohan v. State, 2024 SCC OnLine SC 339, wherein it was observed: -

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9. The law with regard to the exercise of jurisdiction under Section 482 of Cr. P.C. to quash complaints and criminal proceedings has been succinctly summarized by this Court in the case of Indian Oil Corporation v. NEPC India Limited (2006) 6 SCC 736: 2006 INSC 452 after considering the earlier precedents. It will be apposite to refer to the following observations of this Court in the said case, which read thus:

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“ 12. The principles relating to the exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by this Court in several decisions. To mention a few— Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre [(1988) 1 SCC 692: 1988 SCC (Cri) 234], State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335: 1992 SCC (Cri) 426], Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194: 1995 SCC (Cri) 1059], Central Bureau of Investigation v. Duncans Agro Industries Ltd. [(1996) 5 SCC 591: 1996 SCC (Cri) 1045], State of Bihar v. Rajendra Agrawalla [(1996) 8 SCC 164: 1996 SCC (Cri) 628], Rajesh Bajaj v. State NCT of Delhi [(1999) 3 SCC 259: 1999 SCC (Cri) 401], Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd. [(2000) 3 SCC 269: 2000 SCC (Cri) 615], Hridaya Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC 168: 2000 SCC (Cri) 786], M. Krishnan v. Vijay Singh [(2001) 8 SCC 645: 2002 SCC (Cri) 19] and Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque [(2005) 1 SCC 122: 2005 SCC (Cri) 283]. The principles, relevant to our purpose are:

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( i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused.

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For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the

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complaint is warranted while examining prayer for quashing a complaint.

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( ii ) A complaint may also be quashed where it is a clear abuse of the process of the court, as when the criminal proceeding is found to have been initiated with mala fides /malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.

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( iii ) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution.

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( iv ) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are necessary for making out the offence.

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( v. ) A given set of facts may make out: ( a ) purely a civil wrong; or ( b ) purely a criminal offence; or ( c ) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.

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Similar is the judgment Maneesha Yadav v. State of

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U.P., 2024 SCC OnLine SC 643 , wherein it was held: -

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12. We may gainfully refer to the following observations of this Court in the case of State of Haryana v. Bhajan Lal1992 Supp (1) SCC 335: 1990 INSC 363 :

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“ 102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

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(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

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(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

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(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

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(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a noncognizable offence, no investigation is permitted by a

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police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

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(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

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(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

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(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

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We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.”

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The present petition has to be considered as per the parameters laid down by the Hon’ble Supreme Court.

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Mr. Vivek Singh Attri, learned counsel for the petitioner has referred to various documents filed by him along

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with the petition and the rejoinder as well as with the petition filed under Section 482 of Cr.PC to place on record documents necessary for adjudication.

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It was laid down by the Hon’ble Supreme Court in MCD v. Ram Kishan Rohtagi, (1983) 1 SCC 1: 1983 SCC (Cri) 115 , that the proceedings can be quashed if on the face of the complaint and the papers accompanying the same no offence is constituted. It is not permissible to add or subtract anything. It was observed:

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“10. It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under Section 482 of the present Code.”

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Madras High Court also held in Ganga Bai v. Shriram,

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1990 SCC OnLine MP 213: ILR 1992 MP 964: 1991 Cri LJ 2018 , that the fresh evidence is not permissible or desirable in the proceedings under Section 482 of Cr.P.C. It was observed:

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“Proceedings under Section 482, Cr.P.C. cannot be allowed to be converted into a full-dressed trial. Shri Maheshwari filed a photostat copy of an order dated 28.7.1983, passed in Criminal Case No. 1005 of 1977, to

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which the present petitioner was not a party. Fresh evidence at this stage is neither permissible nor desirable. The respondent by filing this document is virtually introducing additional evidence, which is not the object of Section 482, Cr.P.C .”

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Andhra Pradesh High Court also took a similar view

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in Bharat Metal Box Company Limited, Hyderabad and Others vs. G.

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K. Strips Private Limited and another, 2004 STPL 43 AP , and held:

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“9. This Court can only look into the complaint and the documents filed along with it and the sworn statements of the witnesses if any recorded. While judging the correctness of the proceedings, it cannot look into the documents, which are not filed before the lower Court. Section 482 Cr.PC debars the Court to look into fresh documents, in view of the principles laid down by the Supreme Court in State of Karnataka v. M. Devendrappa and another, 2002 (1) Supreme 192 . The relevant portion of the said judgment reads as follows:

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"The complaint has to be read as a whole. If it appears that on consideration of the allegations, in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. When information is lodged at the Police Station and an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material collected during the investigation and evidence led in Court, which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by itself be the basis for quashing the proceedings".

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A similar view was taken in Mahendra K.C. v. State of Karnataka, (2022) 2 SCC 129: (2022) 1 SCC (Cri) 401 wherein it was observed on page 142:

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“ 16 . … the test to be applied is whether the allegations in the complaint as they stand, without adding or detracting from the complaint, prima facie establish the ingredients of the offence alleged. At this stage, the High Court cannot test the veracity of the allegations nor for that matter can it proceed in the manner that a judge conducting a trial would, on the basis of the evidence collected during the course of the trial.”

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This position was reiterated in Supriya Jain v. State of Haryana, (2023) 7 SCC 711: 2023 SCC OnLine SC 765 wherein it was

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held:

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13. All these documents which the petitioner seeks to rely on, if genuine, could be helpful for her defence at the trial but the same are not material at the stage of deciding whether quashing as prayed for by her before the High Court was warranted or not. We, therefore, see no reason to place any reliance on these three documents.

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A similar view was taken in Iveco Magirus

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Brandschutztechnik GMBH v. Nirmal Kishore Bhartiya, (2024) 2 SCC 86: 2023 SCC OnLine SC 1258 wherein it was observed:

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“63. Adverting to the aspect of the exercise of jurisdiction by the High Courts under Section 482CrPC, in a case where the offence of defamation is claimed by the accused to have not been committed based on any of the Exceptions and a prayer for quashing is made, law seems to be well settled that the High Courts can go no further and enlarge the scope of inquiry if the accused seeks to rely on

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materials which were not there before the Magistrate. This is based on the simple proposition that what the Magistrate could not do, the High Courts may not do. We may not be understood to undermine the High Courts' powers saved by Section 482CrPC; such powers are always available to be exercised ex debito justitiae i.e. to do real and substantial justice for the administration of which alone the High Courts exist. However, the tests laid down for quashing an FIR or criminal proceedings arising from a police report by the High Courts in the exercise of jurisdiction under Section 482CrPC not being substantially different from the tests laid down for quashing a process issued under Section 204 read with Section 200, the High Courts on recording due satisfaction are empowered to interfere if on a reading of the complaint, the substance of statements on oath of the complainant and the witness, if any, and documentary evidence as produced, no offence is made out and that proceedings, if allowed to continue, would amount to an abuse of the legal process. This too, would be impermissible if the justice of a given case does not overwhelmingly so demand.” (Emphasis supplied)

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Therefore, it is not permissible for the Court to go

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into the documents filed with the petition and the Court has to rely upon the material placed before the learned Trial Court to find out if the complaint and the documents disclosed the commission of an offence punishable under Section 138 of NI Act, or not. Thus, the application for placing on record the documents cannot be allowed and the same is dismissed.

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It was submitted by referring to the reply filed by the State that the complainant could not disclose the liability of the accused to pay ₹1.2 crore to her during the investigation. This

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will not assist the petitioner. It was laid down by the Hon’ble Supreme Court in Rathish Babu Unnikrishnan (supra) that there is a presumption under Section 139 of the NI Act in favour of the complainant and the burden lies upon the accused to rebut the same by leading satisfactory evidence. It was observed:

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“10. It is also relevant to bear in mind that the burden of proving that there is no existing debt or liability, is to be discharged in the trial. For a two judges Bench in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. (2002) 1 SCC 234 , Justice S.N. Variava made the following pertinent observation on this aspect: —

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“17. There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability.”

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11. The legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. In a situation where the accused moves the Court for quashing even before the trial has commenced, the Court's approach should be careful enough not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint. The opinion of Justice K.G. Balakrishnan for a three-judge Bench in Rangappa v. Sri Mohan (2010) 11 SCC 441 would at this stage, deserve our attention:—

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“ 26. … we are in agreement with the respondent claimant that the presumption mandated by Section

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139 of the Act does indeed include the existence of a legally enforceable debt or liability. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.”

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12. At any rate, whenever facts are disputed the truth should be allowed to emerge by weighing the evidence. On this aspect, we may benefit by referring to the ratio in Rajeshbhai Muljibhai Patel v. State of Gujarat (2020) 3 SCC 794 where the following pertinent opinion was given by Justice R. Banumathi: —

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“ 22. ………….. When disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of the NI Act ought not to have been quashed by the High Court by taking recourse to Section 482 CrPC. Though, the Court has the power to quash the criminal complaint filed under Section 138 of the NI Act on legal issues like limitation, etc. criminal complaint filed under Section 138 of the NI Act against Yogeshbhai ought not to have been quashed merely on the ground that there are inter se disputes between Appellant 3 and Respondent 2. Without keeping in view the statutory presumption raised under Section 139 of the NI Act, the High Court, in our view, committed a serious error in quashing the criminal complaint in CC No. 367 of 2016 filed under Section 138 of the NI Act.”

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13. Bearing in mind the principles for the exercise of jurisdiction in a proceeding for quashing, let us now turn to the materials in this case. 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

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cheques drawn were, in the discharge of a debt for the purchase of shares. In any case, when there is a 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, to conclusively vindicate either the complainant or the defence.

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14. The parameters for invoking the inherent jurisdiction of the Court to quash the criminal proceedings under S.482 CrPC, have been spelt out by Justice S. Ratnavel Pandian for the two judges' bench in State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335: AIR 1992 SC 604 , and the suggested precautionary principles serve as good law even today, for invocation of power under Section 482 of the Cr.P.C.

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“ 103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.”

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15. In the impugned judgment, the learned Judge had rightly relied upon the opinion of Justice J.S. Khehar for a Division Bench in Rajiv Thapar (supra), which succinctly expresses the following relevant parameters to be considered by the quashing Court, at the stage of issuing process, committal, or framing of charges,

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“ 28. The High Court, in the exercise of its jurisdiction under Section 482 CrPC, must make a just and rightful choice. This is not a stage of evaluating the truthfulness or otherwise of the allegations levelled by the prosecution/complainant against the accused. Likewise, it is not a stage for determining how weighty the defences raised on behalf of the accused are. Even if the accused is successful in showing some suspicion or doubt, in the allegations levelled by the prosecution/complainant, it would be impermissible to discharge the accused before trial. This is so because it would result in giving finality to the accusations levelled by the prosecution/complainant, without allowing the prosecution or the complainant to adduce evidence to substantiate the same.”

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16. 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 needs to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint.

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17. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the Trial Court is ousted from weighing the material evidence. If this is allowed, the accused may be given an un-merited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the

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complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.

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18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the Trial Court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the Trial Court. Therefore, when the proceedings are at a nascent stage, the scuttling of the criminal process is not merited.”

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Thus, there is a presumption in favour of the complainant and she is not to establish the liability. It is for the accused to rebut the presumption during the trial.

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It was submitted that the accused had written to Yes Bank that the cheque was lost; however, the bank had issued a Cheque Returning Memo with the endorsement “funds insufficient.” Since the report to the police was made before the presentation of the cheque and this fact was also intimated to the bank; therefore, the proper endorsement should have been “cheque reported to be stolen” and such an endorsement will not attract the provisions of Section 138 of the NI Act. This submission is only stated to be rejected. As already stated, the Court cannot look into the documents filed by the complainant along with the petition and has to take the allegation in the

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complaint and the documents as correct. Hence, it has to be treated that the cheque was dishonoured due to insufficient funds and any other inference cannot be drawn when it was not mentioned in the Cheque Return Memo. Hence, the judgment of Allahabad High Court in Satyender (Supra), K. Sadanand (Supra), and Raj Kumar Khurana (Supra) will not apply to the present case.

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It was held by Allahabad High Court in Vijay Kumar Versus State of UP 2024 AHC 93840 , that the contention of the complainant that the cheque was lost and he had filed a police report is to be adjudicated during the trial and when the cheque was returned with the endorsement ‘Account closed’, the complaint under Section 138 of NI Act cannot be quashed.

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Similarly, it was held by the Delhi High Court in Rajeev Ranjan Sinha Versus State Sushil Kumar Saxena CRL.MC 2073/2022 decided on 26^th May 2022 , that the defence that the cheque was stolen has to be adjudicated by the learned Trial Court and the petition cannot be quashed based on the ground that the accused had made a complaint to the police that his cheque was stolen.

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I respectfully agree with these judgments and hold that it is not permissible for this Court to quash the FIR on the ground that the accused had filed a complaint that his cheque was stolen/lost. This is a matter to be decided during the trial and cannot be adjudicated at this stage.

¶124

It was submitted that the contents of the complaint are false and the payments were made from one account to the other. This submission will not help the accused. It was laid down by the Hon’ble Supreme Court in Priyanka Jaiswal vs. State of Jharkhand, 2024 SCC OnLine SC 685 that the Court exercises extra-ordinary jurisdiction under Section 482 of Cr.P.C. and cannot conduct a mini-trial or enter into an appreciation of evidence of a particular case. It was observed:-

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“13. We say so for reasons more than one. This Court in catena of Judgments has consistently held that at the time of examining the prayer for quashing of the criminal proceedings, the court exercising extraordinary jurisdiction can neither undertake to conduct a mini-trial nor enter into appreciation of evidence of a particular case. The correctness or otherwise of the allegations made in the complaint cannot be examined on the touchstone of the probable defence that the accused may raise to stave off the prosecution and any such misadventure by the Courts resulting in proceedings being quashed would be set aside. This Court in the case of Akhil Sharda 2022 SCC OnLine SC 820 held to the following effect:

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“28. Having gone through the impugned judgment and order passed by the High Court by which the High Court has set aside the criminal proceedings in the exercise of powers under Section 482 Cr. P.C., it appears that the High Court has virtually conducted a mini-trial, which as such is not permissible at this stage and while deciding the application under Section 482 Cr. P.C. As observed and held by this Court in a catena of decisions no mini-trial can be conducted by the High Court in the exercise of powers under Section 482 Cr. P.C. jurisdiction and at the stage of deciding the application under Section 482 Cr. P.C., the High Court cannot get into appreciation of evidence of the particular case being considered.”

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A similar view was taken in Maneesha Yadav’s case

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(supra), wherein it was held that: -

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“13. As has already been observed hereinabove, the Court would not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint at the stage of quashing of the proceedings under Section 482 Cr. P.C. However, the allegations made in the FIR/complaint, if taken at its face value, must disclose the commission of an offence and make out a case against the accused. At the cost of repetition, in the present case, the allegations made in the FIR/complaint even if taken at its face value, do not disclose the commission of an offence or make out a case against the accused. We are of the considered view that the present case would fall under Category-3 of the categories enumerated by this Court in the case of Bhajan Lal (supra) .

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14. We may gainfully refer to the observations of this Court in the case of Anand Kumar Mohatta v. State (NCT of Delhi), Department of Home (2019) 11 SCC 706: 2018 INSC 1060 :

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“ 14. First, we would like to deal with the submission of the learned Senior Counsel for Respondent 2 that once the charge sheet is filed, the petition for quashing of FIR is untenable. We do not see any merit in this submission, keeping in mind the position of this Court in Joseph Salvaraj A. v. State of Gujarat [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23] . In Joseph Salvaraj A. [Joseph Salvaraj A. v. State of Gujarat, (2011) 7 SCC 59 : (2011) 3 SCC (Cri) 23], this Court while deciding the question of whether the High Court could entertain the Section 482 petition for quashing of FIR when the charge-sheet was filed by the police during the pendency of the Section 482 petition, observed : (SCC p. 63, para 16)

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“ 16. Thus, the general conspectus of the various sections under which the appellant is being charged and is to be prosecuted would show that the same are not made out even prima facie from the complainant's FIR. Even if the charge sheet had been filed, the learned Single Judge [ Joesph Saivaraj A. v. State of Gujarat, 2007 SCC OnLine Guj 365 ] could have still examined whether the offences alleged to have been committed by the appellant were prima facie made out from the complainant's FIR, chargesheet, documents, etc. or not.”

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Thus, the complaint cannot be quashed because its

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contents are false.

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Hence, there is no reason to exercise the extraordinary jurisdiction vested in this Court under Section 482 of Cr. PC. Consequently, the present petition fails and the same is dismissed. The observation made hereinafter shall remain

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confined to the disposal of the petition and will have no bearings whatsoever with the merits of the case.

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