Mandating production of income tax returns in Section 138 proceedings requires establishing specific relevance to the debt.

The petitioner (complainant) advanced a loan of ₹2,50,000 to Respondent No. 2 (accused) in 2010 for a vehicle purchase.

Following a default in installments, a cheque for ₹2,05,000 was issued on 02.04.2013, which was dishonored for "insufficient funds," leading to the filing of Criminal Case No. 3098 of 2013 under the Negotiable Instruments (NI) Act.

During the trial, the accused filed an application (Exh. 68) seeking the production of the complainant’s income tax returns and other loan-related documents.

On 27.10.2016, the Trial Court partly allowed the application, directing the complainant to produce income tax returns for the years 2010-11, 2011-12, and 2012-13, reasoning that it would allow parties to "put their respective stand".

A subsequent review application (Exh. 80) by the complainant was rejected on 29.05.2017.

The petitioner challenged these orders before the High Court.

1. Whether the Trial Court was legally justified in invoking Section 91 of the Cr.P.C. to compel the production of personal income tax returns of the complainant in a Section 138 NI Act proceeding.

2. Whether income tax returns are relevant or "desirable" for adjudicating the existence of a legally enforceable debt when other documentary evidence (loan agreement and ledger) is available.

The court primarily considered Section 138 of the Negotiable Instruments Act, 1881.

Section 91 of the Code of Criminal Procedure, 1973, which empowers a court to summon documents "necessary or desirable" for trial.

The precedent of Hiten Parekh Proprietor-Parekh Enterprises v. State of Gujarat (2009), which established that if a complainant produces cogent proof such as debit entries and ledger copies, the non-production or absence of income tax returns does not invalidate the claim of a legally enforceable debt.

The High Court found that the Trial Court’s order lacked logical reasoning regarding the relevance of the income tax returns to the specific dispute.

The court observed that while documents pertaining to the authority to charge interest and ledger accounts are germane to the case, income tax returns are irrelevant for proving the specific aggregate outstanding due from the accused, as they contain consolidated financial data involving multiple third parties.

Applying the ratio from Hiten Parekh, the court held that since the loan agreement and disbursement details were already on record, compelling the production of tax returns was de hors any logic or necessity for the adjudication of the complaint.

The court emphasized that Section 91 Cr.P.C. should not be invoked as a matter of right by a party unless the document is shown to be desirable for the justice of the case.

It quashed and set aside the orders dated 27.10.2016 (Exh. 68) and 29.05.2017 (Exh. 80) specifically to the extent that they directed the production of the complainant’s certified copies of income tax returns.

The court maintained that other directions regarding documents related to the authority to charge interest or account maintenance remained valid as they were germane to the dispute.

The interim relief was vacated, and the rule was made absolute accordingly.