Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL.M.C. 1648/2011 & Crl.M.A.No.6036/2011(Stay)
th
% Judgment reserved on: 26 March, 2012
rd
Judgment delivered on: 03 July, 2012.
FOUR SEASONS ENERGY VENTURES
PVT LTD & ORS ..... Petitioners
Through: Mr. Kailash Vasudev, Sr. Adv.
with Mr. Girish Ananthamurthy, Mr. Sanjay
K. Shandilya and Mr. Chandrase Karan,
Advs.
versus
STATE OF NCT OF DELHI & ANR ……….Respondents
Through: Ms.Rajdipa Behura, APP for
State/R1.
Mr.Tanveer Ahmed Mir, Mr.Manish Kaushik
and Mr.Vivek Singh, Advs. for R-2.
CORAM:
HON'BLE MR. JUSTICE SURESH KAIT
SURESH KAIT, J .
1. Vide the present petition, the petitioner is seeking quashing of
the complaint filed by the respondent No. 2 for the offence punishable
under Section 138 of the Negotiable Instruments Act, for the reasons
that the said compliant is not maintainable as the cheque in question,
presented and was dishonoured, was issued towards Security and not
towards any lawful outstanding debt or dues.
2. The brief facts of the case are that the petitioner No.1 and
Crl. M.C. 1648 of 2011 Page 1 of 25
respondent No. 2 entered into an agreement dated 19.02.2010, in
respect of supply of Iron-ore to one M/s Glencore International A.G., a
company in Switzerland. As per the agreed terms, the petitioners with a
covering letter, contemporaneously executed three documents in favour
of respondent No. 2, wherein, it was specifically mentioned that the
three documents were being executed by the petitioners as Security for
Mobilisation Advance. The details of the three documents executed by
the petitioners are as under:-
A Promissory Note dated 19.02.2010 for
Rs.2.50Crores;
B Cheque bearing No. 909722, dated 19.02.2010
for Rs.2.50Crores; and
C Bank Guarantee dated 19.02.2010 for
Rs.1.25Crores.
3. The respondent No. 3 on receipt of Security Documents i.e.
Cheque, Promissory Note and Bank Guarantee from the petitioners and
got released Rs.2.50Crores from its banker in favour of the petitioner
on 22.03.2010. The respondent No. 2 presented the Cheque bearing
909722 dated 19.02.2010 for a sum of Rs.2.50Crores.
4. The respondent No. 2 received a Memo dated 08.08.2010 from
its Bankers with the endorsement “Exceed Arrangements”. The
respondent No. 2, allegedly got issued Notice dated 26.08.2010 to the
petitioners, which was dispatched on 27.08.2010.
5. Mr. Kailash Vasudev, learned Sr. Advocate appearing for the
petitioners submitted that the aforementioned legal notice was duly
Crl. M.C. 1648 of 2011 Page 2 of 25
served upon the petitioners on 31.08.2010, thereafter, the respondent
filed a complaint under Section 138 Negotiable Instruments Act in the
court of learned CMM, Tis Hazari Courts, Delhi, vide CCNo.
648/RN/10. The trial court took cognizance on 16.11.2010, after
considering the Pre-summoning-evidence of the complainant/
respondent No. 2 and issued summons to the petitioners.
6. On 09.02.2011, the petitioners appeared before the trial court
through counsel, when the matter was adjourned to 06.07.2011 for
appearance of the petitioners, framing of notice and recording of plea
of defence, if any.
7. Ld. Sr. counsel submitted that the petitioners are aggrieved by
the aforesaid complaint, hence, filed the instant petition on the ground
that the aforesaid cheque was issued as a Security only and not towards
any lawful debts or dues. To strengthen his arguments, learned counsel
has relied upon a case of M.S. Narayana Menon @ Mani v. State of
Kerala and Anr. AIR 2006 SCC 3366 , wherein, the Apex court has
observed as under :-
“57. We in the facts and circumstances of
this case need not go into the question as to
whether even if the prosecution fails to
prove that a large portion of the amount
claimed to be a part of debt was not owing
and due to the complainant by the accused
and only because he has issued a cheque for
a higher amount, he would be convicted if it
is held that existence of debt in respect of
large part of the said amount has not been
proved. The Appellant clearly said that
Crl. M.C. 1648 of 2011 Page 3 of 25
nothing is due and the cheque was issued by
way of security. The said defence has been
accepted as probable. If the defence is
acceptable as probable the cheque therefore
cannot be held to have been issued in
discharge of the debt as, for example, if a
cheque is issued for security or for any other
purpose the same would not come within the
purview of Section 138 of the Act.”
8. In another case of Sudhir Kumar Bhalla v. Jagdish Chand and
Ors (2008) 7 SCC 137 , the Apex court has observed as under :-
“22. On examination of the above-stated
findings of the learned Single Judge in the
judgment impugned before us, we find that
the learned Single Judge has not addressed
himself on the legal question raised before
him by the appellant that the criminal
liability of the appellant under the
provisions of Section 138 of the Act are
attracted only on account of the dishonour
of the cheques issued in discharge of
liability or debt, but not on account of
issuance of security cheques. The learned
Single Judge has also not given cogent,
satisfactory and convincing reasons for
disbelieving and discarding the pre-charge
evidence of the appellant corroborated by
the evidence of the expert opinion in regard
to the interpolation in and fabrication of the
cheques by adding one more figure '0' to
make Rs. 30,000/- to Rs. 3,00,000/- and
similarly adding one more figure '0' to make
Rs. 40,000/- to Rs. 4,00,000/-.”
9. Learned counsel for the petitioner further refers to a judgment
passed by Bombay High Court in Joseph Vilangadan V. Phenomenal
Crl. M.C. 1648 of 2011 Page 4 of 25
Health Care Services Ltd. & Anr. in Criminal Writ Petition No. 2243
of 2009 , wherein it was recorded as under :-
“11 The issue as regards the coextensive
liability of the guarantor and the principal
debtor, in our view, is totally out of the
purview of Section 138 of the Act, neither
the same calls for any discussion therein.
The language of the statute depicts the intent
of the lawmakers to the effect that wherever
there is a default on the part of one in favour
of another and in the event a cheque is
issued in discharge of any debt or other
liability there cannot be any restriction or
embargo in the matte of application of the
provisions of Section 138 of the or embargo
in the matter of application of the provisions
of Section 138 of the Act. “Any cheque” and
“other liability” are the two key expressions
which stand as clarifying the legislative
intent so as to bring the factual context
within the ambit of the provisions of the
statute. Any contra interpretation would
defeat the intent of the legislature. The High
Court, it seems, got carried away by the
issue of guarantee and guarantor’s liability
and thus has overlooked the true intent and
purport of Section 138 of the Act. The
judgments recorded in the order of the High
Court do not have any relevant in the
contextual facts and the same thus do not
lend any assistance to the contentions raised
by the respondents.”
10. To sum up his arguments, Ld. Sr. counsel submitted that the law
has been settled by judgments referred above that if a cheque has been
issued just for security, and on presentation, if bounced, in that
Crl. M.C. 1648 of 2011 Page 5 of 25
eventuality, the drawer of the cheque can be held liable under Section
138 read with Section 141 of Negotiable Instruments Act. Therefore,
the instant petition deserves to be allowed.
11. On the other hand, learned counsel for the respondent has
submitted that the relief sought by the petitioners is not maintainable as
the petitioners has not challenged the summoning order dated
16.11.2010.
12. The learned counsel further submitted that the cheque in
question was initially issued for a Security, since the petitioner did not
pay the enforceable debt, in that eventuality it did not remain as
Security and it became the cheque for the enforceable debt due to the
petitioners.
13. It is further submitted that as per Section 4 of the Evidence Act,
the petitioner has to dis-approve the evidence led by the respondent
No. 2, and in the absence of that, the present case is an abuse of power.
14. The petitioner issued the cheque in question because of the fact
that, if the petitioner would not be able to pay his dues, the said cheque
can be used for the enforceable debt, therefore, the respondent rightly
presented the said Cheque in the bank. On being dishounoured, he
issued legal notice and the petitioners were duty bound to settle the
amount, failing which, they are responsible for the offence punishable
under Section 138 of Negotiable Instruments Act.
15. It is further submitted that the petitioners have to prove in the
trial, that he did not owe any dues towards respondent No. 2, therefore,
Crl. M.C. 1648 of 2011 Page 6 of 25
at this stage, the instant petition is pre-matured.
16. To strengthen his arguments, learned counsel for respondent has
relied upon a case of M.S. Narayana Menon(supra) , wherein, it has
been held as under :-
“28. In view the aforementioned backdrop
of events, the questions of law which had
been raised before us will have to be
considered. Before, we advert to the said
questions, we may notice the provisions of
Sections 118(a) and 139 of the Act which
read as under:
118 . Presumptions as to negotiable
instruments - Until the contrary is proved,
the following presumptions shall be made:
(a) of consideration - that every negotiable
instrument was made or drawn for
consideration, and that every such
instrument, when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or
transferred for consideration.
139. Presumption in favour of holder - It
shall be presumed, unless the contrary is
proved, that the holder of a cheque received
the cheque of the nature referred to in
Section 138 for the discharge, in whole or in
part, of any debt or other liability”.
17. In another case of I.C.D.S. Ltd. V. Beena Shabeer and Anr.
AIR 2002 SC 3014 , it has been held as under:-
“3. It is on the basis of the provision as
above, the High Court came to a conclusion
when a cheque was issued as security, no
Crl. M.C. 1648 of 2011 Page 7 of 25
complaint will lie under Section 138 of the
Act since the cheque issued cannot be said
to be for the purpose of discharging any
debt or liability: In justification of the said
conclusion the High Court records the
following reasons:
"Reading of the above Section would make it
clear that issuance of a cheque must be for
payment of amount of money from out of the
account. In the case of a guarantor or
surety, even if a cheque is issued, that
cannot be said to be for immediate payment
of money: Section 138 of the Act further says
that issuance of cheque to another persons
is towards discharge, in whole or in part of
any debt or other liability."
5. Having, however, the support of Andhra
Pradesh High Court judgment, the Kerala
High Court in Sreenivasan (supra)
observed:
"A comparative reading of the principle laid
down by the Andhra Pradesh High Court
and the mandatory provisions laid down in
Section 138 of the Negotiable Instruments
Act is crystal clear that when a cheque has
been issued as a security, no complaint will
lie under Section 138 of the Negotiable
Instruments Act."
8. The High Court, as noticed above, did
allow the Petition upon a categorical finding
that being a cheque from the guarantor it
could not be said to have been issued for the
purpose of discharging any debt or liability
and the complaint under Section 138 of the
Negotiable Instruments Act, 1881, thus
cannot be maintained.
Crl. M.C. 1648 of 2011 Page 8 of 25
9. As noticed hereinbefore the principal
reason for quashing of the proceeding as
also the complaint by the High Court was by
reason of the fact that Section 138 of the Act
provides for issuance of a cheque to another
person towards the discharge in whole or in
part of any or liability and on the factual
context, the High Court came to a
conclusion that issuance of the cheque
cannot be co-related for the purpose of
discharging any debt or liability and as such
complaint under Section 138 cannot be
maintainable.
10. The language, however, has been rather
specific as regards the intent of the
legislature. The commencement of the
Section stands with the words "Where any
cheque" The above noted three words are of
excrement significance, in particular, by
reason of the user of the word "any"--the
first three words suggest that in fact for
whatever reason if a cheque is drawn on an
account maintained by him with a banker in
favour of another person for the discharge
of any debt or other liability, the highlighted
words if read with the first three words at
the commencement of Section 138 , leave no
manner of doubt that for whatever reason it
may be, the liability under this provision
cannot be avoided in the event the same
stands returned by the banker unpaid. The
legislature has been careful enough to
record not only discharge in whole or in
part of any debt but the same includes other
liability as well. This aspect of the matter
has not been appreciated by the High Court,
neither been dealt with or even referred to in
the impugned judgment.”
Crl. M.C. 1648 of 2011 Page 9 of 25
18. Learned counsel for respondent further refers to a case of
MMTC Ltd. and Anr. V. Medchi Chemicals & Pharma (P)
Ltd. and Anr. , wherein, it was held as under :-
8. In this case the respondents have taken
identical contentions in their petitions to
quash the complaints viz. that the
complaints filed by Mr. Lakshman Goel
were not maintainable and that the cheques
were not given for any debt or liability. It
was pointed out to the learned Judge that
between the same parties and on identical
facts, it had already been held that as case
for discharge was made our. Yet the learned
Judge chose to ignore those findings and
proceeded to hold to the contrary.
13. The learned Judge has next gone into
facts and arrived at a conclusion that the
cheques were issued as security and not for
any debt or liability existing on the date they
were issued. In so doing the learned Judge
has ignored well settled law that the power
of quashing criminal proceedings should be
exercised very stringently and with
circumspection. It is settled law that at this
stage the Court is not justified in embarking
upon an enquiry as to the reliability or
genuineness or otherwise of the allegations
made in the complaint. The inherent powers
do not confer an arbitrary jurisdiction on
the court to act according to its whim or
caprice. At this stage the court could not
have gone into .merits and or come to
conclusion that there was no existing debt or
liability.
17. There is therefore no requirement that
the Complainant must specifically allege in
Crl. M.C. 1648 of 2011 Page 10 of 25
the complaint that there was a subsisting
liability. The burden of proving that there
was no existing debtor liability was on the
respondents. This they have to discharge in
the trial. At this stage, merely on basis of
averments in the Petitions filed by them the
High Court could not have concluded that
there was no existing debt or liability.
19. Learned counsel further relies upon a case of Lok Housing &
Constructions Ltd. V. Raghupati Leasing & Finance Ltd., wherein, it
was observed as under :-
“10. Learned counsel for the petitioners
also argued that the cheque in question was
not given for discharge, in the whole or in
part of any debt or other liability. It was
given as collateral security, and on the basis
of such a dishonoured cheque, proceedings
under Section 138 of N.I. Act are not
maintainable. In support of his submission,
reliance was placed on the decision of the
Gujarat High Court in Om Prakash v.
Gurucharan Singh 1997 (3) Crimes 433.
The answer to my mind is simple. Section
139 of N.I. Act states that it shall be
presumed unless contrary is proved that the
holder of a cheque received the cheque of
the nature referred to in the Section 138 of
the discharge in whole or in part of any debt
or other liability. The Section raises
presumption that cheque was drawn for
consideration. This issue was also settled by
several authoritative pronouncements of the
Supreme Court in Maruti Udyog Ltd. v.
Narender and Ors. MANU/SC/0803/1999 :
(1999)1SCC113 , and M.M.T.C. Ltd. v.
Medchl Chemicals & Pharma (P) Ltd.,
Crl. M.C. 1648 of 2011 Page 11 of 25
MANU/SC/0728/2001 : 2002CriLJ266 ,
wherein it was held:
"15. A similar view has been taken by this
Court in the case of K.N. Beena v.
Muniyappan reported in 2001(7) Scale 331,
wherein again it has been held that under
Section 139 of the Negotiable Instruments
Act the Court has to presume, in complaint
under Section 138 , that the cheque had been
issued for a debt or liability.
16. 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 basis of
averments in the Petitions filed by them the
High Court could not have concluded that
there was no existing debt or liability."
The Apex Court rejected the similar
contention in recent case in A.V. Murthy v.
B.S. Nagabasayanna, MANU/SC/0089/2002
: 2002CriLJ1479 and it was held:
"This is not a case where the cheque was
drawn in respect of a debt or liability, which
was completely barred from being enforced
under law. If for example, the cheque was
drawn in respect of a debt or liability
payable under a wagering contract, it could
have been said that that debt or liability is
not legally enforceable as it is a claim,
which is prohibited under law. This case is
not a case of that type. But we are certain
that at this stage of the proceedings, to say
that the cheque drawn by the respondent
Crl. M.C. 1648 of 2011 Page 12 of 25
was in respect of a debt or liability, which
was not legally enforceable, was clearly
illegal and erroneous."
20. In another case of Rajesh Kumar Gulati V. National
Agricultural Co-operative Marketing Federation of India Ltd. , it was
held as under:-
“20. So, according to this reply sent by the
petitioner, execution of the cheques in
question has nowhere been disputed and as
per the reply of the petitioner, the cheques in
question were issued being a collateral
security. This question as to whether the
cheques in question were only a collateral
security or not, is a matter of evidence to be
decided later on during the course of the
trial. Moreover, petitioner has no where
taken up this plea in his reply that he was
neither in charge of or responsible to the
company for the conduct of the business of
accused company.”
21. In another case of K.S. Bakshi and Another V. State 2008 (2)
JCC (NI) 267 and Another, decided by this court, it has been observed
as under:-
“5. On 10.6.1989, a MOU was entered into
between the respondent No. 2, Rakesh Bedi
and Ansal Properties and Industries Ltd.
(hereinafter referred to as confirming
party). As per the said MOU the confirming
party was to construct a group housing
building on the said property. In pursuance
of said MOU a sum of Rs. 11.5 lacs was
received by the owners from the confirming
party. However, the aforesaid MOU was
Crl. M.C. 1648 of 2011 Page 13 of 25
cancelled by mutual agreement between the
parties to the MOU.
6. Thereafter, on 17.1.2001, a collaboration
agreement was entered into between the
respondent No. 2, Rakesh Bedi, the
confirming party and Ansal Buildwell Co.
As per the agreement, the Ansal Buildwell
Co. had to construct the multi-storeyed
residential building on the said property.
7. Clause V of the aforesaid agreement
around which controversy in the present
petition revolves stipulated that as a security
for due performance of agreement, a sum of
Rs. 138 lacs was to be deposited by the
Ansal Buildwell Co. with the respondent No.
2 and other owner of the said property.
8. Clause V reads as under:
V. Security Deposit
(a) The Builder shall deposit with the
owners a total sum of Rs. 138 lakhs towards
security for due compliance of the terms of
this Agreement by the Builder. A sum of Rs.
11.5 lakhs has already been received by the
owners from the Confirming Party, receipt
whereof the owners hereby acknowledges.
The Builder shall return the said sum of Rs.
11.5 lakhs on behalf of the owners, and the
balance sum of Rs. 126.5 lakhs shall be paid
by the Builder to the owners in 30 equal
monthly Installments as per Annexure-II
hereto.
(b) Payment of the said cheques on the due
dates is the essence of the contract. In the
event any cheque is dishonoured for any
Crl. M.C. 1648 of 2011 Page 14 of 25
reason, the Builder shall replace the cheque
with a demand draft within 7 days of the
receipt of an intimation from the owners
failing which the owners shall be entitled to
take recourse to any right or remedy
available to or accruing to the owners by
such dishonour.
(c) The said deposit shall not carry any
interest and shall be refunded by the owners
to the Builder upon the Builder delivering to
the owners the possession of their areas in
the Building.
(d) That upon failure of the owners to refund
the Security deposit the Builder shall have
full authority and power to adjust the same
by reduction of the allocation of the area of
the owners calculated on price prevalent
and mutually acceptable as on the date of
such default.
(e) That till the refund/adjustment of the
entire security deposit in the manner stated
above the Builder shall have a lien over
50% out of the owners' areas in the Building
and the owners shall not sell/transfer/lease
or deal with the same till the deposit is
refunded to the Builder or recovered by the
Builder by making adjustment out of the
owners' share. Delay in such refund will
attract compound interest @ 18% per
annum from the date the refund is due.
13. During hearing of the instant petition,
the learned Counsel for the petitioners
submitted that the sine qua non for an action
under Section 138 of the N.I. Act is that the
dishonoured cheque has been issued
towards discharge of a "debt or other
Crl. M.C. 1648 of 2011 Page 15 of 25
liability". That the expression "other
liability" envisaged under Section 138 is
akin to a debt or money owed. Learned
Counsel elaborated that the Section 118(a)
and 139 of the N.I. Act raise a statutory
presumption that the dishonoured cheque
must have been drawn/made for a
consideration, meaning thereby, that there
must be some money due to the drawee from
the drawer in lieu of which cheque was
drawn. That the cheques in question cannot
be taken to be issued in lieu of any money
due to the complainant for the reason
amount covered by the cheques was to be
returned by the complainant to the accused
company on the due performance of the
agreement.
14. That the Clause V of the agreement
evidences that the cheques in question were
issued as security for the due performance
of the agreement. That from the fact that the
amount covered by cheques in question was
to be returned by the
complainant/respondent No. 2 to the
accused company on the due performance of
the agreement, it is clear that cheques in
question were neither issued towards
discharge of a debt nor because accused
company owed any money to the
complainant. Counsel further relied upon
judgment of the Supreme Court in the
decision reported as Narayana Menon v.
State of Kerala MANU/SC/2881/2006 :
2006CriLJ4607 in support of his contention
that where a cheque is given only as a
security, the provisions of Section 138 of the
N.I. Act are not at all attracted.
Crl. M.C. 1648 of 2011 Page 16 of 25
17. At the outset, I note that the expression
"other liability" cannot be construed as akin
to the preceding word "debt". The
expression "other liability" can take its
meaning and colour from the preceding
word "debt" only if the rule of ejusdem
generis is held to be applicable.
18. The rule of ejusdem generis is applicable
when words pertaining to a class, category
or genus are followed by general words. In
such a case, the general words take their
meaning from the preceding particular
words because the legislature by using the
particular words of a distinct genus has
shown its intention to that effect. Thus,
before the rule of ejusdem generis is applied
it is a pre-requisite that there must be a
distinct genus, which must comprise of more
than one species. Consequently, if a general
word follows only one particular word, that
single particular word does not constitute a
distinct genus and Therefore rule of ejusdem
generis cannot be applied in such a case.
+ CRL.M.C. 1648/2011 & Crl.M.A.No.6036/2011(Stay)
th
% Judgment reserved on: 26 March, 2012
rd
Judgment delivered on: 03 July, 2012.
FOUR SEASONS ENERGY VENTURES
PVT LTD & ORS ..... Petitioners
Through: Mr. Kailash Vasudev, Sr. Adv.
with Mr. Girish Ananthamurthy, Mr. Sanjay
K. Shandilya and Mr. Chandrase Karan,
Advs.
versus
STATE OF NCT OF DELHI & ANR ……….Respondents
Through: Ms.Rajdipa Behura, APP for
State/R1.
Mr.Tanveer Ahmed Mir, Mr.Manish Kaushik
and Mr.Vivek Singh, Advs. for R-2.
CORAM:
HON'BLE MR. JUSTICE SURESH KAIT
SURESH KAIT, J .
1. Vide the present petition, the petitioner is seeking quashing of
the complaint filed by the respondent No. 2 for the offence punishable
under Section 138 of the Negotiable Instruments Act, for the reasons
that the said compliant is not maintainable as the cheque in question,
presented and was dishonoured, was issued towards Security and not
towards any lawful outstanding debt or dues.
2. The brief facts of the case are that the petitioner No.1 and
Crl. M.C. 1648 of 2011 Page 1 of 25
respondent No. 2 entered into an agreement dated 19.02.2010, in
respect of supply of Iron-ore to one M/s Glencore International A.G., a
company in Switzerland. As per the agreed terms, the petitioners with a
covering letter, contemporaneously executed three documents in favour
of respondent No. 2, wherein, it was specifically mentioned that the
three documents were being executed by the petitioners as Security for
Mobilisation Advance. The details of the three documents executed by
the petitioners are as under:-
A Promissory Note dated 19.02.2010 for
Rs.2.50Crores;
B Cheque bearing No. 909722, dated 19.02.2010
for Rs.2.50Crores; and
C Bank Guarantee dated 19.02.2010 for
Rs.1.25Crores.
3. The respondent No. 3 on receipt of Security Documents i.e.
Cheque, Promissory Note and Bank Guarantee from the petitioners and
got released Rs.2.50Crores from its banker in favour of the petitioner
on 22.03.2010. The respondent No. 2 presented the Cheque bearing
909722 dated 19.02.2010 for a sum of Rs.2.50Crores.
4. The respondent No. 2 received a Memo dated 08.08.2010 from
its Bankers with the endorsement “Exceed Arrangements”. The
respondent No. 2, allegedly got issued Notice dated 26.08.2010 to the
petitioners, which was dispatched on 27.08.2010.
5. Mr. Kailash Vasudev, learned Sr. Advocate appearing for the
petitioners submitted that the aforementioned legal notice was duly
Crl. M.C. 1648 of 2011 Page 2 of 25
served upon the petitioners on 31.08.2010, thereafter, the respondent
filed a complaint under Section 138 Negotiable Instruments Act in the
court of learned CMM, Tis Hazari Courts, Delhi, vide CCNo.
648/RN/10. The trial court took cognizance on 16.11.2010, after
considering the Pre-summoning-evidence of the complainant/
respondent No. 2 and issued summons to the petitioners.
6. On 09.02.2011, the petitioners appeared before the trial court
through counsel, when the matter was adjourned to 06.07.2011 for
appearance of the petitioners, framing of notice and recording of plea
of defence, if any.
7. Ld. Sr. counsel submitted that the petitioners are aggrieved by
the aforesaid complaint, hence, filed the instant petition on the ground
that the aforesaid cheque was issued as a Security only and not towards
any lawful debts or dues. To strengthen his arguments, learned counsel
has relied upon a case of M.S. Narayana Menon @ Mani v. State of
Kerala and Anr. AIR 2006 SCC 3366 , wherein, the Apex court has
observed as under :-
“57. We in the facts and circumstances of
this case need not go into the question as to
whether even if the prosecution fails to
prove that a large portion of the amount
claimed to be a part of debt was not owing
and due to the complainant by the accused
and only because he has issued a cheque for
a higher amount, he would be convicted if it
is held that existence of debt in respect of
large part of the said amount has not been
proved. The Appellant clearly said that
Crl. M.C. 1648 of 2011 Page 3 of 25
nothing is due and the cheque was issued by
way of security. The said defence has been
accepted as probable. If the defence is
acceptable as probable the cheque therefore
cannot be held to have been issued in
discharge of the debt as, for example, if a
cheque is issued for security or for any other
purpose the same would not come within the
purview of Section 138 of the Act.”
8. In another case of Sudhir Kumar Bhalla v. Jagdish Chand and
Ors (2008) 7 SCC 137 , the Apex court has observed as under :-
“22. On examination of the above-stated
findings of the learned Single Judge in the
judgment impugned before us, we find that
the learned Single Judge has not addressed
himself on the legal question raised before
him by the appellant that the criminal
liability of the appellant under the
provisions of Section 138 of the Act are
attracted only on account of the dishonour
of the cheques issued in discharge of
liability or debt, but not on account of
issuance of security cheques. The learned
Single Judge has also not given cogent,
satisfactory and convincing reasons for
disbelieving and discarding the pre-charge
evidence of the appellant corroborated by
the evidence of the expert opinion in regard
to the interpolation in and fabrication of the
cheques by adding one more figure '0' to
make Rs. 30,000/- to Rs. 3,00,000/- and
similarly adding one more figure '0' to make
Rs. 40,000/- to Rs. 4,00,000/-.”
9. Learned counsel for the petitioner further refers to a judgment
passed by Bombay High Court in Joseph Vilangadan V. Phenomenal
Crl. M.C. 1648 of 2011 Page 4 of 25
Health Care Services Ltd. & Anr. in Criminal Writ Petition No. 2243
of 2009 , wherein it was recorded as under :-
“11 The issue as regards the coextensive
liability of the guarantor and the principal
debtor, in our view, is totally out of the
purview of Section 138 of the Act, neither
the same calls for any discussion therein.
The language of the statute depicts the intent
of the lawmakers to the effect that wherever
there is a default on the part of one in favour
of another and in the event a cheque is
issued in discharge of any debt or other
liability there cannot be any restriction or
embargo in the matte of application of the
provisions of Section 138 of the or embargo
in the matter of application of the provisions
of Section 138 of the Act. “Any cheque” and
“other liability” are the two key expressions
which stand as clarifying the legislative
intent so as to bring the factual context
within the ambit of the provisions of the
statute. Any contra interpretation would
defeat the intent of the legislature. The High
Court, it seems, got carried away by the
issue of guarantee and guarantor’s liability
and thus has overlooked the true intent and
purport of Section 138 of the Act. The
judgments recorded in the order of the High
Court do not have any relevant in the
contextual facts and the same thus do not
lend any assistance to the contentions raised
by the respondents.”
10. To sum up his arguments, Ld. Sr. counsel submitted that the law
has been settled by judgments referred above that if a cheque has been
issued just for security, and on presentation, if bounced, in that
Crl. M.C. 1648 of 2011 Page 5 of 25
eventuality, the drawer of the cheque can be held liable under Section
138 read with Section 141 of Negotiable Instruments Act. Therefore,
the instant petition deserves to be allowed.
11. On the other hand, learned counsel for the respondent has
submitted that the relief sought by the petitioners is not maintainable as
the petitioners has not challenged the summoning order dated
16.11.2010.
12. The learned counsel further submitted that the cheque in
question was initially issued for a Security, since the petitioner did not
pay the enforceable debt, in that eventuality it did not remain as
Security and it became the cheque for the enforceable debt due to the
petitioners.
13. It is further submitted that as per Section 4 of the Evidence Act,
the petitioner has to dis-approve the evidence led by the respondent
No. 2, and in the absence of that, the present case is an abuse of power.
14. The petitioner issued the cheque in question because of the fact
that, if the petitioner would not be able to pay his dues, the said cheque
can be used for the enforceable debt, therefore, the respondent rightly
presented the said Cheque in the bank. On being dishounoured, he
issued legal notice and the petitioners were duty bound to settle the
amount, failing which, they are responsible for the offence punishable
under Section 138 of Negotiable Instruments Act.
15. It is further submitted that the petitioners have to prove in the
trial, that he did not owe any dues towards respondent No. 2, therefore,
Crl. M.C. 1648 of 2011 Page 6 of 25
at this stage, the instant petition is pre-matured.
16. To strengthen his arguments, learned counsel for respondent has
relied upon a case of M.S. Narayana Menon(supra) , wherein, it has
been held as under :-
“28. In view the aforementioned backdrop
of events, the questions of law which had
been raised before us will have to be
considered. Before, we advert to the said
questions, we may notice the provisions of
Sections 118(a) and 139 of the Act which
read as under:
118 . Presumptions as to negotiable
instruments - Until the contrary is proved,
the following presumptions shall be made:
(a) of consideration - that every negotiable
instrument was made or drawn for
consideration, and that every such
instrument, when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or
transferred for consideration.
139. Presumption in favour of holder - It
shall be presumed, unless the contrary is
proved, that the holder of a cheque received
the cheque of the nature referred to in
Section 138 for the discharge, in whole or in
part, of any debt or other liability”.
17. In another case of I.C.D.S. Ltd. V. Beena Shabeer and Anr.
AIR 2002 SC 3014 , it has been held as under:-
“3. It is on the basis of the provision as
above, the High Court came to a conclusion
when a cheque was issued as security, no
Crl. M.C. 1648 of 2011 Page 7 of 25
complaint will lie under Section 138 of the
Act since the cheque issued cannot be said
to be for the purpose of discharging any
debt or liability: In justification of the said
conclusion the High Court records the
following reasons:
"Reading of the above Section would make it
clear that issuance of a cheque must be for
payment of amount of money from out of the
account. In the case of a guarantor or
surety, even if a cheque is issued, that
cannot be said to be for immediate payment
of money: Section 138 of the Act further says
that issuance of cheque to another persons
is towards discharge, in whole or in part of
any debt or other liability."
5. Having, however, the support of Andhra
Pradesh High Court judgment, the Kerala
High Court in Sreenivasan (supra)
observed:
"A comparative reading of the principle laid
down by the Andhra Pradesh High Court
and the mandatory provisions laid down in
Section 138 of the Negotiable Instruments
Act is crystal clear that when a cheque has
been issued as a security, no complaint will
lie under Section 138 of the Negotiable
Instruments Act."
8. The High Court, as noticed above, did
allow the Petition upon a categorical finding
that being a cheque from the guarantor it
could not be said to have been issued for the
purpose of discharging any debt or liability
and the complaint under Section 138 of the
Negotiable Instruments Act, 1881, thus
cannot be maintained.
Crl. M.C. 1648 of 2011 Page 8 of 25
9. As noticed hereinbefore the principal
reason for quashing of the proceeding as
also the complaint by the High Court was by
reason of the fact that Section 138 of the Act
provides for issuance of a cheque to another
person towards the discharge in whole or in
part of any or liability and on the factual
context, the High Court came to a
conclusion that issuance of the cheque
cannot be co-related for the purpose of
discharging any debt or liability and as such
complaint under Section 138 cannot be
maintainable.
10. The language, however, has been rather
specific as regards the intent of the
legislature. The commencement of the
Section stands with the words "Where any
cheque" The above noted three words are of
excrement significance, in particular, by
reason of the user of the word "any"--the
first three words suggest that in fact for
whatever reason if a cheque is drawn on an
account maintained by him with a banker in
favour of another person for the discharge
of any debt or other liability, the highlighted
words if read with the first three words at
the commencement of Section 138 , leave no
manner of doubt that for whatever reason it
may be, the liability under this provision
cannot be avoided in the event the same
stands returned by the banker unpaid. The
legislature has been careful enough to
record not only discharge in whole or in
part of any debt but the same includes other
liability as well. This aspect of the matter
has not been appreciated by the High Court,
neither been dealt with or even referred to in
the impugned judgment.”
Crl. M.C. 1648 of 2011 Page 9 of 25
18. Learned counsel for respondent further refers to a case of
MMTC Ltd. and Anr. V. Medchi Chemicals & Pharma (P)
Ltd. and Anr. , wherein, it was held as under :-
8. In this case the respondents have taken
identical contentions in their petitions to
quash the complaints viz. that the
complaints filed by Mr. Lakshman Goel
were not maintainable and that the cheques
were not given for any debt or liability. It
was pointed out to the learned Judge that
between the same parties and on identical
facts, it had already been held that as case
for discharge was made our. Yet the learned
Judge chose to ignore those findings and
proceeded to hold to the contrary.
13. The learned Judge has next gone into
facts and arrived at a conclusion that the
cheques were issued as security and not for
any debt or liability existing on the date they
were issued. In so doing the learned Judge
has ignored well settled law that the power
of quashing criminal proceedings should be
exercised very stringently and with
circumspection. It is settled law that at this
stage the Court is not justified in embarking
upon an enquiry as to the reliability or
genuineness or otherwise of the allegations
made in the complaint. The inherent powers
do not confer an arbitrary jurisdiction on
the court to act according to its whim or
caprice. At this stage the court could not
have gone into .merits and or come to
conclusion that there was no existing debt or
liability.
17. There is therefore no requirement that
the Complainant must specifically allege in
Crl. M.C. 1648 of 2011 Page 10 of 25
the complaint that there was a subsisting
liability. The burden of proving that there
was no existing debtor liability was on the
respondents. This they have to discharge in
the trial. At this stage, merely on basis of
averments in the Petitions filed by them the
High Court could not have concluded that
there was no existing debt or liability.
19. Learned counsel further relies upon a case of Lok Housing &
Constructions Ltd. V. Raghupati Leasing & Finance Ltd., wherein, it
was observed as under :-
“10. Learned counsel for the petitioners
also argued that the cheque in question was
not given for discharge, in the whole or in
part of any debt or other liability. It was
given as collateral security, and on the basis
of such a dishonoured cheque, proceedings
under Section 138 of N.I. Act are not
maintainable. In support of his submission,
reliance was placed on the decision of the
Gujarat High Court in Om Prakash v.
Gurucharan Singh 1997 (3) Crimes 433.
The answer to my mind is simple. Section
139 of N.I. Act states that it shall be
presumed unless contrary is proved that the
holder of a cheque received the cheque of
the nature referred to in the Section 138 of
the discharge in whole or in part of any debt
or other liability. The Section raises
presumption that cheque was drawn for
consideration. This issue was also settled by
several authoritative pronouncements of the
Supreme Court in Maruti Udyog Ltd. v.
Narender and Ors. MANU/SC/0803/1999 :
(1999)1SCC113 , and M.M.T.C. Ltd. v.
Medchl Chemicals & Pharma (P) Ltd.,
Crl. M.C. 1648 of 2011 Page 11 of 25
MANU/SC/0728/2001 : 2002CriLJ266 ,
wherein it was held:
"15. A similar view has been taken by this
Court in the case of K.N. Beena v.
Muniyappan reported in 2001(7) Scale 331,
wherein again it has been held that under
Section 139 of the Negotiable Instruments
Act the Court has to presume, in complaint
under Section 138 , that the cheque had been
issued for a debt or liability.
16. 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 basis of
averments in the Petitions filed by them the
High Court could not have concluded that
there was no existing debt or liability."
The Apex Court rejected the similar
contention in recent case in A.V. Murthy v.
B.S. Nagabasayanna, MANU/SC/0089/2002
: 2002CriLJ1479 and it was held:
"This is not a case where the cheque was
drawn in respect of a debt or liability, which
was completely barred from being enforced
under law. If for example, the cheque was
drawn in respect of a debt or liability
payable under a wagering contract, it could
have been said that that debt or liability is
not legally enforceable as it is a claim,
which is prohibited under law. This case is
not a case of that type. But we are certain
that at this stage of the proceedings, to say
that the cheque drawn by the respondent
Crl. M.C. 1648 of 2011 Page 12 of 25
was in respect of a debt or liability, which
was not legally enforceable, was clearly
illegal and erroneous."
20. In another case of Rajesh Kumar Gulati V. National
Agricultural Co-operative Marketing Federation of India Ltd. , it was
held as under:-
“20. So, according to this reply sent by the
petitioner, execution of the cheques in
question has nowhere been disputed and as
per the reply of the petitioner, the cheques in
question were issued being a collateral
security. This question as to whether the
cheques in question were only a collateral
security or not, is a matter of evidence to be
decided later on during the course of the
trial. Moreover, petitioner has no where
taken up this plea in his reply that he was
neither in charge of or responsible to the
company for the conduct of the business of
accused company.”
21. In another case of K.S. Bakshi and Another V. State 2008 (2)
JCC (NI) 267 and Another, decided by this court, it has been observed
as under:-
“5. On 10.6.1989, a MOU was entered into
between the respondent No. 2, Rakesh Bedi
and Ansal Properties and Industries Ltd.
(hereinafter referred to as confirming
party). As per the said MOU the confirming
party was to construct a group housing
building on the said property. In pursuance
of said MOU a sum of Rs. 11.5 lacs was
received by the owners from the confirming
party. However, the aforesaid MOU was
Crl. M.C. 1648 of 2011 Page 13 of 25
cancelled by mutual agreement between the
parties to the MOU.
6. Thereafter, on 17.1.2001, a collaboration
agreement was entered into between the
respondent No. 2, Rakesh Bedi, the
confirming party and Ansal Buildwell Co.
As per the agreement, the Ansal Buildwell
Co. had to construct the multi-storeyed
residential building on the said property.
7. Clause V of the aforesaid agreement
around which controversy in the present
petition revolves stipulated that as a security
for due performance of agreement, a sum of
Rs. 138 lacs was to be deposited by the
Ansal Buildwell Co. with the respondent No.
2 and other owner of the said property.
8. Clause V reads as under:
V. Security Deposit
(a) The Builder shall deposit with the
owners a total sum of Rs. 138 lakhs towards
security for due compliance of the terms of
this Agreement by the Builder. A sum of Rs.
11.5 lakhs has already been received by the
owners from the Confirming Party, receipt
whereof the owners hereby acknowledges.
The Builder shall return the said sum of Rs.
11.5 lakhs on behalf of the owners, and the
balance sum of Rs. 126.5 lakhs shall be paid
by the Builder to the owners in 30 equal
monthly Installments as per Annexure-II
hereto.
(b) Payment of the said cheques on the due
dates is the essence of the contract. In the
event any cheque is dishonoured for any
Crl. M.C. 1648 of 2011 Page 14 of 25
reason, the Builder shall replace the cheque
with a demand draft within 7 days of the
receipt of an intimation from the owners
failing which the owners shall be entitled to
take recourse to any right or remedy
available to or accruing to the owners by
such dishonour.
(c) The said deposit shall not carry any
interest and shall be refunded by the owners
to the Builder upon the Builder delivering to
the owners the possession of their areas in
the Building.
(d) That upon failure of the owners to refund
the Security deposit the Builder shall have
full authority and power to adjust the same
by reduction of the allocation of the area of
the owners calculated on price prevalent
and mutually acceptable as on the date of
such default.
(e) That till the refund/adjustment of the
entire security deposit in the manner stated
above the Builder shall have a lien over
50% out of the owners' areas in the Building
and the owners shall not sell/transfer/lease
or deal with the same till the deposit is
refunded to the Builder or recovered by the
Builder by making adjustment out of the
owners' share. Delay in such refund will
attract compound interest @ 18% per
annum from the date the refund is due.
13. During hearing of the instant petition,
the learned Counsel for the petitioners
submitted that the sine qua non for an action
under Section 138 of the N.I. Act is that the
dishonoured cheque has been issued
towards discharge of a "debt or other
Crl. M.C. 1648 of 2011 Page 15 of 25
liability". That the expression "other
liability" envisaged under Section 138 is
akin to a debt or money owed. Learned
Counsel elaborated that the Section 118(a)
and 139 of the N.I. Act raise a statutory
presumption that the dishonoured cheque
must have been drawn/made for a
consideration, meaning thereby, that there
must be some money due to the drawee from
the drawer in lieu of which cheque was
drawn. That the cheques in question cannot
be taken to be issued in lieu of any money
due to the complainant for the reason
amount covered by the cheques was to be
returned by the complainant to the accused
company on the due performance of the
agreement.
14. That the Clause V of the agreement
evidences that the cheques in question were
issued as security for the due performance
of the agreement. That from the fact that the
amount covered by cheques in question was
to be returned by the
complainant/respondent No. 2 to the
accused company on the due performance of
the agreement, it is clear that cheques in
question were neither issued towards
discharge of a debt nor because accused
company owed any money to the
complainant. Counsel further relied upon
judgment of the Supreme Court in the
decision reported as Narayana Menon v.
State of Kerala MANU/SC/2881/2006 :
2006CriLJ4607 in support of his contention
that where a cheque is given only as a
security, the provisions of Section 138 of the
N.I. Act are not at all attracted.
Crl. M.C. 1648 of 2011 Page 16 of 25
17. At the outset, I note that the expression
"other liability" cannot be construed as akin
to the preceding word "debt". The
expression "other liability" can take its
meaning and colour from the preceding
word "debt" only if the rule of ejusdem
generis is held to be applicable.
18. The rule of ejusdem generis is applicable
when words pertaining to a class, category
or genus are followed by general words. In
such a case, the general words take their
meaning from the preceding particular
words because the legislature by using the
particular words of a distinct genus has
shown its intention to that effect. Thus,
before the rule of ejusdem generis is applied
it is a pre-requisite that there must be a
distinct genus, which must comprise of more
than one species. Consequently, if a general
word follows only one particular word, that
single particular word does not constitute a
distinct genus and Therefore rule of ejusdem
generis cannot be applied in such a case.
| Beemna Shabeer and | Anr |
|---|
10. The language, however, has been rather
specific as regards the intent of the
Crl. M.C. 1648 of 2011 Page 17 of 25
legislature. The commencement of the
Section stands with the words "Where any
cheque" The above noted three words are of
excrement significance, in particular, by
reason of the user of the word "any"--the
first three words suggest that in fact for
whatever reason if a cheque is drawn on an
account maintained by him with a banker in
favor of another person for the discharge of
any debt or other liability, the highlighted
words if read with the first three words at
the commencement of Section 138 , leave no
manner of doubt that for whatever reason it
may be, the liability under this provision
cannot be avoided in the event the same
stands returned by the banker unpaid. The
legislature has been careful enough to
record not only discharge in whole or in
part of any debt but the same includes other
liability as well. This aspect of the matter
has not been appreciated by the High Court,
neither been dealt with or even referred to in
the impugned judgment.
11. The issue as regards the co-extensive
liability of the guarantor and the principle
debtor, in our view, is totally out of the
purview of Section 138 of the Act, neither
the same calls for any discussion therein.
The language of the Statute depicts the
intent of the law-makers to the effect that
wherever there is a default on the part of
one in favor of another and in the event a
cheque is issued in discharge of any debt or
other liability there cannot be any
restriction or embargo in the matter of
application of the provisions of Section 138
of the Act: 'Any cheque' and 'other liability'
are the two key expressions which stands as
Crl. M.C. 1648 of 2011 Page 18 of 25
clarifying the legislative intent so as to bring
the factual context within the ambit of the
provisions of the Statute. Any contra
interpretation would defeat the intent of the
legislature. The High Court, it seems, got
carried away by the issue of grantee and
guarantor's liability and thus has
overlooked the true intent and purport of
Section 138 of the Act. The judgments
recorded in the order of the High Court do
not have any relevance in the contextual
facts and the same thus does not lend any
assistance to the contentions raised by the
respondents.
23. Thus, if given its full meaning, the
expression "other liability" within its broad
sweep would include any "liability to pay".
25. The doctrine of fundamental terms of a
contract as enunciated in the decision
reported as Suisse Atlantique Societe
D'Armement Maritime S.A. v. N.V.
Rotterdamche Kolen Centrale (1967) 1 AC
361 is as under:
A fundamental term of a contract is a
stipulation which the parties have agreed
either expressly or by necessary implication
or which the general law regards as a
condition which goes to the root of the
contract so that any breach of that term may
at once and without reference to the facts
and circumstances be regarded by the
innocent party as a fundamental breach and
thus is conferred on him the alternative
remedies at his option.
29. Under the agreement, the accused
company had a liability to pay Rs. 138 lakhs
Crl. M.C. 1648 of 2011 Page 19 of 25
to the complainant and other owner of the
said property and discharge of this liability
was treated fundamental to the agreement,
non-performance thereof would entitle the
complainant and the other owner to rescind
the contract.
30. In the instant case, money in sum of Rs.
126.5 lakhs was to be paid by the accused
company to the complainant and other
owner. It is irrelevant whether such money
was to be retained and returned in future on
due performance of the agreement. What is
relevant for purposes of Section 138 of the
NI Act is the fact that at the time of issuance
of cheques the accused company had a
liability to pay money to the complainant
and other owner of the said property.
31. A distinction has to be drawn between a
cheque issued as security and a cheque
issued towards discharge of a liability to
pay notwithstanding that the money is by
way of security for due performance of the
contract. A cheque given as security is not to
be encased in presenti. It becomes
enforceable if an obligation is future is not
enforced. It is not tendered in discharge of a
liability which has accrued.
32. Thus where a cheque forms part of a
consideration under a contract it is paid
towards a liability.
33. Section 2(d) of the Indian Contract Act,
1972 defines consideration as under:
When at the desire of the promisor, the
promise or any other person has done or
abstained from doing, or does or abstains
Crl. M.C. 1648 of 2011 Page 20 of 25
from doing, or promises to do or abstain
from doing, something, such act or
abstinence or promise is called a
consideration for the promise.
34. Jural concept of consideration is as:
A valuable consideration in the sense of the
law, may consist either in some right,
interest, profit or benefit accruing to one
party, or some forbearance, detriment, loss
or responsibility given, suffered, or
undertaken by the other.
35. The jural concept of the consideration
requires that something of value must be
given, and that this can either be a benefit to
the promisor or some detriment to the
promisee. In the decisions reported as
Chidambara Iyer v. Renga Iyer
MANU/SC/0279/1965 : [1966]1SCR168 and
Sonia Bhatia v. State of U.P. AIR 1981 SC
1271, the Supreme Court compared the jural
concept of the consideration and Section
2(d) of the Contract Act and held the two as
being practically the same. It was held that
the word 'valuable' in civil law could be
negative or positive.
36. Thus, "consideration" is a very wide
term and is not restricted to monetary
benefit. Consideration does not necessarily
means money in return of money or money
in lieu of goods or service. Any benefit or
detriment of some value can be a
consideration.
37. In the instant case, the complainant and
the other owner of the said property blocked
their asset (property) till the period of
Crl. M.C. 1648 of 2011 Page 21 of 25
completion of construction as provided in
the agreement. The promise/act of the
complainant and other owner of the said
property of blocking their asset for a
considerable period can very well be held to
be a consideration within the meaning of
Section 2(d) of the Indian Contract Act.
Thus all reciprocal obligations of the
builder would also be a consideration for
the contract.
38. In the decision reported as Narayana
Menon v. State of Kerala MANU/SC/2881/
2006 : 2006CriLJ4607 relied upon by the
counsel for the petitioners, the Supreme
Court was considering the nature and extent
of statutory presumption provided under
Section 118(a) and 139 of the N.I. Act. The
observations relied upon the counsel reads
as under:
57. We in the facts and circumstances of this
case need not go into the question as to
whether even if the prosecution fails to
prove that a large portion of the amount
claimed to be part of debt was not owing
and due to the complainant by the accused
and only because he has issued a cheque for
a higher amount, he would be convicted if it
is held that existence of debt in respect of
large part of the said amount has not been
proved. The Appellant clearly said that
nothing is due and the cheque was issued by
way of security. The said defense has been
accepted as probable. If the defense is
acceptable as probable the cheque
Therefore cannot be held to have been
issued on discharge of the debt as, for
example, if a cheque is issued for security or
Crl. M.C. 1648 of 2011 Page 22 of 25
any other purpose the same would not come
within the purview of Section 138 of the Act.
39. The afore-noted observations are
emphasised are clarificatory in nature.”
22. I have heard learned counsels for the parties.
23. On perusal of Section 118(a) and Section 139 of the Act
provides that every negotiable instrument was made or drawn for
consideration, and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred, was accepted, indorsed,
negotiated or transferred for consideration shall be presumed, unless
the contrary is proved that the holder of a cheque received the cheque
of the nature referred to in Section 138 for the discharge, in whole or in
part, of any debt or other liability.
24. On reading of the Section 138 of the Act, it would make it clear
that issuance of a cheque must be for payment of amount of money
from out of the account. In the case of a guarantor or surety, even if a
cheque is issued, that cannot be said to be for immediate payment of
money: Section 138 of the Act further says that issuance of cheque to
another persons is towards discharge, in whole or in part of any debt or
other liability."
25. The language, however, has been rather specific as regards the
intent of the legislature. The commencement of the Section stands with
the words "Where any cheque," the above noted three words are of
excrement significance, in particular, by reason of the user of the word
"any"--the first three words suggest that in fact for whatever reason if a
Crl. M.C. 1648 of 2011 Page 23 of 25
cheque is drawn on an account maintained by him with a banker in
favour of another person for the discharge of any debt or other
liability , the highlighted words if read with the first three words at the
commencement of Section 138, leave no manner of doubt that for
whatever reason it may be, the liability under this provision cannot be
avoided in the event the same stands returned by the banker unpaid.
26. It is settled law that at this stage the Court is not justified in
embarking upon an enquiry as to the reliability or genuineness or
otherwise of the allegations made in the complaint. The inherent
powers do not confer an arbitrary jurisdiction on the court to act
according to its whim or caprice. At this stage the court should not go
into merits and or come to conclusion that there was no existing debt or
liability.
27. In view of the above discussion, my opinion matched with the
law as has been settled in a judgment delivered by Gujarat High Court
in the case of Om Prakash v. Gurucharan Singh (supra) wherein, it
has been held that it shall be presumed, unless the contrary is proved,
that the holder of a cheque received the cheque of the nature referred to
in Section 138 for the discharge, in whole or in part, of any debt or
other liability.
28. The case of the petitioner is not that they have no debts against
the respondent and the cheque in question was issued only for security;
the case is otherwise, they failed to discharge their enforceable debt.
Crl. M.C. 1648 of 2011 Page 24 of 25
The respondent presented the same and on dishonor of the said cheque,
he filed the complaint under Section 138 of NI Act,
29. Therefore, in view of the legal position discussed above and on
consideration of the submissions of the learned counsels for the parties,
I do not find any merits in the instant petition.
30. Accordingly, the instant petition is dismissed with no orders as
to costs.
31. Consequently interim order passed vide Crl. M.A. 6036/2011 is
vacated and dismissed accordingly.
SURESH KAIT, J
rd
03 JULY, 2012
j
Crl. M.C. 1648 of 2011 Page 25 of 25