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Bharatbhai J. Patel V/S State of Gujarat and Others.

    Special Criminal Application No. 1278 of 2012

    Decided On, 10 May 2013

    At, High Court of Gujarat At Ahmedabad

    By, THE HONORABLE JUSTICE: R.M. CHHAYA

    For Petitioner: Bharat B. Naik, Sr. Adv. and Kunan B. Naik, Adv. for Trivedi & Gupta, Advocate And For Respondents: Moxa Thakkar, Addl. P.P.



Judgment Text

1. By way of this petition under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as "the Code" for the sake of brevity), the petitioner has prayed for quashing of the impugned complaint dated 1.12.2009 filed against the petitioner as well as the proceedings of Criminal Case No. 1503 of 2009 pending before the Court of JMFC, Dakor. It appears from the record of the petition that respondent No. 2 has filed the present complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the Act"). As narrated in the complaint itself, the applicant decided to pay a sum of Rs. 6 lacs and in turn, respondent No. 2 original complainant agreed to mortgage the property belonging to respondent No. 2 being agricultural land bearing account No. 178, survey No. 117 part, admeasuring 26357 sq. mtrs. i.e. 11 Vighas. It is further narrated in the complaint that the applicant gave the following three cheques:--



It is alleged in the complaint that the three cheques were given on 27.7.2009 by the petitioner and respondent No. 2 was given assurance that all the three cheques shall be honoured and the said amount shall be received by respondent No. 2. It is further alleged that keeping trust on the petitioner, even the deed of mortgage is not given by the petitioner.

It is further averred in the complaint that the three cheques were deposited on 29.9.2009 with the banker of respondent No. 2 i.e. Baroda Gujarat Gramin Bank, Dakor Branch and the said cheques were returned on 29.9.2009 with endorsement "insufficient funds" and respondent No. 2 was informed by his banker on 30.9.2009. It is further alleged that on return of the cheques, respondent No. 2 informed the petitioner. However, no satisfactory reply was given and it is alleged that the petitioner threatened respondent No. 2 that the mortgage is created and no money will be given to respondent No. 2. It is therefore alleged that even though there was insufficient funds in the account of the petitioner, three cheques were given and a deed of mortgage was executed in favour of the petitioner and thereby, the petitioner has committed criminal breach of trust and has cheated respondent No. 2. It appears from the complaint that a notice was given by respondent No. 2 through his advocate on 21.10.2009 by RPAD and the same was served upon the petitioner on 22.10.2009. It is alleged that even though the notice was issued which was additionally sent by UPC, the petitioner did not give the money of the cheques, nor did he give any reply. It is therefore alleged that the petitioner has committed breach of trust and has cheated respondent No. 2. On this factual premises therefore, respondent No. 2 has filed the impugned complaint for alleged offence punishable under Section 138 of the Act. It appears that after recording the statement of respondent No. 2 original complainant, by order dated 1.12.2009, the JMFC, Dakor has issued summons. The impugned complaint as well as the order dated 1.12.2009 are impugned in this petition under Article 226 of the Constitution of India read with Section 482 of the Code.

2. In response to the notice issued by this Court, respondent No. 2 - original complainant has filed an affidavit in reply and has contended that in the complaint itself, it is specifically stated that the complainant has mortgaged his land with the accused for which the accused has agreed to pay Rs. 6 lacs by issuing three cheques in question. It is further contended that there are triable issues and therefore, at this stage, without recording of evidence, it would be highly unsafe to stay the criminal prosecution. It is further contended that as held by the Hon'ble Supreme Court in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan & Anr. reported in : AIR 1999 SC 3762 : 1999(4) ALL MR 452 (S.C.) : 1999 ALL MR (Cri) 1845 (S.C.) as well as decision of this Court in the case of Goaplast Pvt. Ltd. v. Shri Chico Ursula D'Souza & Anr. reported in : 2003 (2) GLH 75 : 2003(2) ALL MR 750 (S.C.), a presumption as provided under Section 139 of the Act has to be rais

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ed and it is to be presumed to have received for discharge of liability and the burden is upon the accused to rebut the said presumption. It is contended that as decided by this Court in the case of Rohit Chunubhai Mehta v. Gujarat State Fertilizer Co. Ltd., reported in : 2004 (2) GLH 29, that a cheque is a genuine currency and has further contended relying upon the Hon'ble Apex Court judgment reported in : (1999) 3 SCC 259 that it is not necessary to mention in the complaint that all the ingredients of Section 138 of the Act are present in order to implicate a person. It is contended that the petitioner-accused is creating concocted and false stories regarding no deed of mortgage being executed. It is further contended that if no such mortgage deed was executed, it is not necessary to part with the three cheques. It is further contended that the power of attorney as well as the agreement to sale has been executed. However, the petitioner-accused has not parted with the copy of the same. It is further averred by the respondent No. 2 that the written application was also given to Naranpura Police Station on 9.9.2010, wherein it has been specifically averred that on 15.9.2009, respondent No. 2 - original complainant was called at the hospital of the petitioner-accused and signatures were obtained on stamp paper and in the register of the notary, however, a copy was not given. It is further contended that again on 26.12.2011, advocate of respondent No. 2 original complainant gave one more application to Naranpura Police Station under the Right to Information Act inquiring as to what actions have been taken pursuant to the complaint dated 9.9.2010. It is further averred that in reply to the said application that the police authorities have given reply to the advocate of the complainant stating that on 1.6.2011, Ashram Police Choki, Naranpura Police Station has recorded the statement of the accused, wherein it is mentioned that he has given three cheques of Rs. 2 lacs each, totalling to Rs. 6 lacs as a loan advance. It is, therefore, contended that the petitioner is trying to mislead the Court and has changed the stand which he took in the reply to the notice issued by the complainant. It is, therefore, contended that the petition deserves to be dismissed.

3. The petitioner has also filed an affidavit in rejoinder denying the allegations made in the reply, wherein it is averred that bare perusal of the impugned complaint shows that there is no existing debt for which any complaint could be filed. It is further averred that the loan advance was given to the respondent No. 2 original complainant. It is further contended that the complaint is not maintainable on the count that the cheques undisputedly have not been issued against any debt or liability. It is denied that the mortgage deed has been executed on 15.9.2009. It is further contended that such mortgage deed could never have been executed by the deponent, inasmuch as, the deponent is not the owner of the land admeasuring 26357 sq. mtrs. bearing survey No. 117 paiki Khata No. 178. It is contended that only in order to pressurize and harass the petitioner and to extract money under the guise of pendency of criminal proceedings, the impugned complaint has been lodged and that too, without serving any notice in compliance with Section 138 of the Act. It is contended by the petitioner that no notice is received as alleged by respondent No. 2 in the complaint and it is contended that the present complaint is not maintainable and deserves to be quashed and set aside as prayed for. It is further contended that the impugned complaint has been filed only with a malafide intention to extract money by deceiving the petitioner, though respondent No. 2 was aware of the fact that he is not a sole owner of the land and hence, not entitled to enter into any mortgage deed for the whole area admeasuring 26357 sq. mtrs. of the land. It is contended that after receiving the cheques, respondent No. 2 did not execute any mortgage deed and even though he was informed that the cheques should not be deposited, the same came to be deposited. It is contended that the Trial Court has failed to verify whether the conditions mentioned in proviso to Section 138 of the Act are satisfied before registering the case against the petitioner and has therefore submitted that the petition deserves to be allowed as prayed for. It is further contended that in the so called notice dated 21.10.2009 as well as in the complaint, there is no whisper about power of attorney or agreement to sale. However, such averments are made in the affidavit before this Court only in order to misguide, misdirect and mislead the Court and without there being any basis. It is contended that the contention raised by respondent No. 2 to the effect that the petitioner has taken a stand that the cheques were never issued is completely misleading, misdirecting and misguiding the Court. It is, therefore, submitted that the impugned complaint is clear misuse and abuse of process of law and Court and the same is filed with a malafide intention to harass the petitioner and extract money.

4. Heard Mr. Bharat B. Naik, learned Senior Advocate with Mr. Kunan B. Naik for M/s. Trivedi and Gupta for the petitioner, Ms. Moxa Thakkar, learned APP for respondent No. 1 State and Mr. Bhunesh C. Rupera, learned advocate for respondent No. 2 original complainant. All the learned counsel were heard and were also permitted to tender written submissions.

5. Mr. Bharat B. Naik, learned Senior Advocate for the petitioner has taken this Court through the contents of the impugned complaint and has submitted that the main ingredients of Section 138 of the Act namely to the effect that it has to be a debt is not at all satisfied in the instant Case. It is submitted that as provided under Section 58 of the Transfer of Property Act, 1882, mortgage is defined as a loan transaction, whereby the mortgagor transfers an interest in specific immovable property for securing payment of money, advance or to be advanced by way of loan as an existing or future debt. It is therefore submitted that in light of the provisions of Section 58 of the Transfer of Property Act, mortgagor is a debtor and mortgagee is a creditor. It is submitted that as per the allegations made in the complaint, even if it is taken at its face value, it does not constitute any existing debt or liability against the petitioner, inasmuch as, as per the bare reading of the impugned complaint, the only allegation is that the cheques had been issued pursuant to the so called alleged mortgage deed dated 15.9.2009. It is contended that in fact no such mortgage deed has ever been executed and even if it is presumed that the mortgage deed has been executed, the same would not create any debt or any liability as the said cheques had in fact been given as a loan/advance and not towards any debt or liability. It is contended that in view of the provisions of Section 58 of the Transfer of Property Act, non-payment of portion of loan by mortgage would not constitute a debt enforceable against the mortgagee. Mr. Naik further relying upon the ratio laid down by Allahabad High Court in the cases reported in (1908) ILR 30 Allahabad 252,: AIR 1934 Allahabad 954 and : AIR 1934 Allahabad 449, submitted that in the instant case, the three cheques of Rs. 2 lacs, which is subject matter of the impugned complaint, were given as a loan/advance to respondent No. 2 and as such, the same would not constitute any enforceable debt as per the provisions of Section 58 of the Transfer of Property Act. It is further submitted that in the complaint itself, respondent No. 2 original complainant has clearly averred that in lieu of the mortgage of his immovable property i.e. the agricultural land bearing survey No. 117 part, three cheques amounting to Rs. 2 lacs were issued by the petitioner. It is therefore contended that the petitioner is not a debtor, but a creditor and therefore, the debt is not enforceable.

5.1 It is therefore submitted that in the instant case, as there is neither any debt nor any other liability, the return of cheques is not a legal enforceable debt or other liability and submitted that the ingredients of Section 138 of the Act are not satisfied. Relying upon the judgment of the Hon'ble Supreme Court in the case of Jugesh Sehgal v. Shamsher Singh Gogi reported in : (2009) 14 SCC 683 : 2009 ALL SCR 2793, Mr. Naik contended that in absence of ingredients of Section 138 of the Act having been satisfied, the complaint is not maintainable and the same deserves to be quashed. Mr. Naik further relying upon the provisions of Section 138 of the Act contended that the following ingredients are required to be fulfilled.

"(i) A person must have drawn a cheque on account maintained by him in a bank for payment of a certain amount of money to another person out of that account.

(ii) The cheque should have been issued for the discharge in whole or in part, of any debt or other liability.

(iii) The cheque has been presented with the bank within a period of six month from the date on which it is drawn or within the period of its validity whichever is earlier.

(iv) The cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is unsufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by agreement made with the bank.

(v) The payee or the holder in due course of the cheque makes a demand of the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.

(vi) The drawer of the such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice."

5.2 It is therefore contended by the learned Senior Advocate for the petitioner that bare perusal of the complaint undisputedly shows that there was no existence of debt or liability at the time of presentation of the cheque and therefore, the complaint under Section 138 of the Act would be unsustainable. It is further contended that there is no enforceable debt or other liability. Mr. Naik has relied upon the cases of--(i) Jugesh Sehgal, : 2009 ALL SCR 2793 (supra), (ii) Bharatbhai K. Patel v. C.L. Verma (since deceased) Thro POA Surjit Singh Macker & Anr., reported in : (2002) Criminal Law Journal 3469, (iii) unreported judgment of Uttarakhand High Court in the case of Anurag Sharma v. S. Nishan Singh rendered in Criminal Misc. Application No. 572 of 2008, (iv) unreported judgment of Delhi High Court in the case of Ravi Kumar D. v. State of Delhi & Anr. rendered in Cri.M.C. No. 4378 of 2009 & Ors., and (v) unreported judgment of Delhi High Court in the case of Veena Ahuja v. Central Excise in Cri.M.C. No. 1430 of 2010, and contended that as there is no enforceable liability and on the contrary, as the three cheques were given as an advance/loan to respondent No. 2, the same cannot be termed as enforceable debt and hence, submitted that the provisions of Section 138 of the Act are not attracted in the present case, even on reading the complaint as it is. It is further submitted that even the presumption as provided under Section 139 of the Act would arise only when there is existence of a debt or a liability. It is further submitted that it bornes out from the bare reading of the impugned complaint that the cheques in question were issued by the petitioner towards mortgage and as the petitioner is a mortgagee, there cannot be any existing or enforceable debt or liability against the petitioner. Relying upon the judgment of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde, reported in : (2008) 4 SCC 54 : 2008 ALL MR (Cri) 1164 (S.C.) as well as in the case of Raj Kumar Khurana v. State of (NCT of Delhi) & Anr., reported in : (2009) 6 SCC 72 : 2009 ALL MR (Cri) 1881 (S.C.), it is contended by the learned Senior Advocate for the petitioner that in the instant case, the relationship of the petitioner and respondent No. 2 - original complainant is that of a mortgagee and mortgagor and the petitioner being a mortgagee, there cannot be any presumption in favour of the holder of the cheque i.e. respondent No. 2 - original complainant and even in the complaint, respondent No. 2 has averred that the transaction of mortgage has taken place and the three cheques were given to the petitioner as loan/advance to respondent No. 2 being a mortgagor. Mr. Naik relying upon the judgment of the Hon'ble Supreme Court in the case of State of Haryana v. Ch. Bhajanlal, reported in : AIR 1992 SC 604 submitted that even though the powers under Section 482 of the Code are to be sparingly used, considering the facts and circumstances of this case, even if the complaint is taken at its face value and accepted in its entirety, no prima facie offence is constituted against the petitioner as the cheques which were issued would not fall within the purview of Section 138 of the Act. It is therefore submitted that the present complaint is nothing but a malafide attempt on the part of respondent No. 2 and the proceedings are initiated maliciously with an ulterior motive of private grudge as the petitioner came to know about malafide intention of respondent No. 2 and did not execute the mortgage deed as desired by respondent No. 2 because after the cheques were given, it came to the knowledge of the petitioner that the land in question which is sought to be mortgaged by respondent No. 2 does not exclusively belong to respondent No. 2 and it was found by the petitioner that respondent No. 2 did not have exclusive right to transfer his interest in the immovable property i.e. the agricultural land bearing survey No. 117 part, of which respondent No. 2 has agreed to mortgage in favour of the petitioner in lieu of advance/loan of Rs. 6 lacs. Mr. Naik further relying upon the judgment of the Hon'ble Supreme Court in the case of Madhavrao Jiwajirao Scindia & Ors. v. Sambhajirao Chandrojirao Angre & Ors., reported in : (1988) 1 SCC 692 : 2014 ALL SCR (O.C.C.) 132 and in the case of Shiji alias Pappu & Ors. v. Radhika & Anr., reported in (2011) 10 SCC 705 : 2011 ALL MR (Cri) 3915 (S.C.). It is therefore submitted that this is a fit case wherein this Court would be pleased to exercise its inherent jurisdiction as the present complaint does not specify the basic ingredients of Section 138 of the Act and the same is abuse of process of Court and law and therefore, to secure the ends of justice, the petition deserves to be allowed.

6. Ms. Moxa Thakkar, learned APP for respondent No. 1 State has candidly submitted that the present complaint is filed under Section 138 of the Act and it being a private complaint, this Court may pass an appropriate order considering the facts and circumstances arising out of this petition.

7. Mr. Bhunesh C. Rupera, learned advocate for respondent No. 2 - original complainant has contended that notice is duly served as provided under Section 138 of the Act and further contended that the petitioner never informed the Bank about stop payment of the cheques. It is contended that the deponent has not denied his signature in the cheques and it is also not denied by him that the cheques were written by him. It is further submitted that as provided under Section 139 of the Act, the presumption is to be held in favour of the holder and unless and until contrary is proved, such an instrument would be presumed to be drawn for consideration. It is further contended that the petitioner is a Doctor and well qualified person and therefore, it is not believable that the cheques were not issued for any legal debt or a liability. It is further pointed out that as such after the summons was issued, the petitioner had approached the Trial Court by way of an application as provided under Section 245(2) of the Code. However, the same came to be rejected by the learned Magistrate vide order dated 19.4.2011, against which, a revision is pending before the Sessions Court and therefore, the present petition under Section 482 of the Code should not be entertained as the petitioner cannot prefer this petition with similar prayers. Mr. Rupera has relied upon the following judgments:--

"(i) 2012 (1) GLH 218

(ii) III(2011) BC 508 (SC)

(iii) 2009(3) GLH 742

(iv) II(2010) BC 693 (SC)

(v) 2004(2) GLH 29

(vi) AIR 1999 SC 3762 : (1999(4) ALL MR 452 (S.C.) : 1999 ALL MR (Cri) 1845 (S.C.)J

(vii) 2003(2) GLH 75 : 2003(2) ALL MR 750 (S.C.)"

8. Considering the submissions made by the learned counsel appearing for the parties and on bare perusal of the impugned complaint, it appears that in para 1 of the complaint itself, the complainant has mentioned that the three cheques in question were issued by the petitioner in lieu of the mortgage of the land bearing survey No. 117 part admeasuring 26357 sq. mtrs. on 15.9.2009. The very version in the complaint, therefore, establishes the fact that the three cheques came to be issued by the petitioner in lieu of loan transaction. Section 58 of the Transfer of Property Act, 1882 defines the mortgage as transfer of an interest in specific immovable property for the purpose of securing the payment of money, advance or to be advanced by way of loan.....It is further provided that the transferor is a mortgagor and transferee is a mortgagee. Therefore, considering the version of Para 1 of the impugned complaint, it establishes the fact that the three cheques in question were given by way of a loan transaction and therefore, it cannot be termed as debt or liability. Section 138 of the Act reads as under:--

" Section 138 : Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation.- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.]"

9. A bare reading of the aforesaid provision therefore stipulates that where any cheque is drawn by a person on account maintained by him With a banker for payment of any amount of money to another person from out of that account "for discharge", in whole or in part, of any debt or other liability. It may further be noted that the explanation to Section 138 of the Act provides that the words "debt or other liability" occurring in Section 138 of the Act would mean a legally enforceable debt or other liability. It, therefore, pre-supposes that it has to be a legally enforceable debt. The Hon'ble Supreme Court in the case of Krishna Janardhan Bhat, : 2008 ALL MR (Cri) 1164 (S.C.) (supra) has observed thus:--

"28. Indisputably, a mandatory presumption is required to be raised in terms of Sec. 118(b) and Sec. 139 of the Act. Section 13(1) of the Act defines negotiable instrument to mean a promissory note, bill of exchange or cheque payable either to order or to bearer."

29. Section 138 of the Act has three ingredients, viz.:

(i) that there is a legally enforceable debt;

(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre-supposes a legally enforceable debt; and

(iii)that the cheque so issued had been returned due to insufficiency of funds.

30. The proviso appended to the said section provides for compliance of legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption u/s. 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.

31. The courts below, as noticed hereinbefore, proceeded on the basis that Sec. 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.

32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different."

10. Therefore, in view of the aforesaid decision of the Hon'ble Supreme Court, the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act and therefore, even if the impugned complaint is read at its face value, the same clearly establishes the fact that the cheques were issued as a loan transaction and therefore, issuance of cheques would neither create any debt or any liability as the said cheques, in fact, have been given as a loan advance and not towards any debt or liability.

11. The Hon'ble Supreme Court in the case of Raj Kumar Khurana, : 2009 ALL MR (Cri) 1881 (S.C.) (supra) has observed thus:--

"11. Section 138 of the Act moreover provides for a penal provision. A penal provision created by reason of a legal fiction must receive strict construction. [See R. Kalyani v. Janak C. Mehta and Ors. : (2009) 1 SCC 516 and DCM Financial Services Ltd. v. J.N. Sareen and Anr. : (2008) 8 SCC 1]. Such a penal provision, enacted in terms of the legal fiction drawn would be attracted when a cheque is returned by the bank unpaid. Such nonpayment may either be:

"(i) because of the amount of money standing to the credit of that account is insufficient to honour the cheque, or

(ii) it exceeds the amount arranged to be paid from that account by an agreement made with that bank. Before a proceeding thereunder is initiated, all the legal requirements therefor must be complied with. The court must be satisfied that all the ingredients of commission of an offence under the said provision have been complied with."

12. The parameters for invoking the provisions of Section 138 of the Act, thus, being limited, we are of the opinion that refusal on the part of the bank to honour the cheque would not bring the matter within the mischief of the provisions of Section 138 of the Act.

13. The court while exercising its jurisdiction for taking cognizance of an offence under Section 138 of the Act was required to consider only the allegations made in the complaint petition and the evidence of the complainant and his witnesses, if any. It could not have taken into consideration the result of the complaint petition filed by the respondent No. 2 or the closer report filed by the Superintendent of Police in the First Information Report lodged by the appellant against him."

12. Mr. Naik, learned Senior Advocate for the petitioner has rightly relied upon the case of Bharatbhai K. Patel (supra), wherein this Court (Coram: C.K. Buch, J. as he then was) has observed thus:--

"8. With respect, ratio of above judgments would not help the complainant on available set of facts. Though, Section 139 of the N.I. Act provides for presumption, the Court while dealing with petition under Section 482 of CrPC, is supposed to see and appreciate whether [i] 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 a case against the accused, [ii] 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 and [iii] Where a criminal proceeding is manifestly attended with malafide and/or where the proceedings 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.

9. An attempt to rebut legal presumption at initial stage of proceedings is not and cannot be barred but if such an attempt, if made, must be very well founded and above the convincing standard of preponderance of probabilities. The reply to statutory notice is a stage from where it can be shown that the allegations made are absurd, improbable malafide and no prudent person can ever reach a just conclusion that there is sufficient ground to proceed against the accused. In the present case, the petitioner has satisfactorily established the basic infirmity in the complaint and its maintainability. It is obligatory on the part of the accused to rebut the legal presumption but perusal of statement of Mr. C.L. Verma and the stand taken by the associates of Bharat Vijay Mills/Continental Textile Mills in civil litigation including Mr. C.L. Verma referred hereinabove, provides sufficient rebuttal at this stage. Normally, this Court is supposed to read the averments made in the complaint and at the initial stage of the proceedings, the High Court is not justified in entertaining and accepting the plea that there was no debt or liability. Defence plea cannot be entertained in quashing proceedings. But in the cases where the petitioner is able to show to the Court that there was no existing debt or liability at the time of presentation of the cheque for encashment on the basis of the conduct of the complainant or admissions made by the complainant that may be in other legal proceedings, then in such cases, the proceedings can be terminated and the accused should not be asked to face the trial till it concluded. So, this Court inclined to allow this petition as the petitioner has successfully rebutted the presumption at initial stage and has pointed out the basic infirmity as to maintainability of the proceedings."

13. From bare reading of the impugned complaint, the petitioner has been able to establish that there is no existing debt or liability at the time of presentation of the cheques as the complaint itself discloses the fact that it was by way of a loan transaction which has not materialized. In view of the aforesaid factual background therefore, it clearly transpires that Section 138 of the Act would be attracted only if the dishonoured cheques were issued for discharge, in whole or in part of any existing debt or liability. The provisions of Section 138 of the Act would not apply in case of a loan advance. It may further be noted that even if it is considered that the return or dishonour of cheque would amount to unpaid portion of the loan, the same would not constitute a debt due by the mortgagee to the mortgagor. Similarly, the Hon'ble Supreme Court in the case of Jugesh Sehgal, : 2009 ALL SCR 2793] (supra) has held thus:--

"13. It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:

(i) a person must have drawn a cheque on account maintained by him in a bank for payment of a certain amount of money to another person out of that account;

(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;

(iii) that cheque has been presented to the bank within a period of six month from the date on which it is drawn or within the period of its validity whichever is earlier.

(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;

(v) The payee or the holder in due course of the cheque makes a demand of the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(vi) The drawer of the such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act."

14. In light of the facts arising out of the present petition, the ingredients which are mentioned in sub-clause (ii) of Para 13 of the aforesaid decision namely to the effect that the cheques should have been issued for the discharge, in whole or in part, of any debt or liability, is not satisfied in the present case.

15. Mr. Bhunesh C. Rupera, learned advocate for respondent No. 2 - original complainant has relied upon the following judgments:--

"(i) In the case of Machine Product Tradelink Pvt. Ltd. & Anr. v. Utpal Bhupendra Raiji & Anr., reported in : 2012 (1) GLH 218, this Court has considered the case, wherein the cheques were given by way of a security pursuant to an MOU between the parties for settlement of account, whereas in the instant case, the petitioner has issued cheques as a loan advance to respondent No. 2. It is not the case of respondent No. 2 that anything was due and payable by the petitioner or that there was any debt or any liability. Therefore, the said judgment would not be applicable in the facts and circumstances arising out of this case.

(ii) Reliance is placed upon the case of Hitenbhai Parekh Proprietor-Parekh Enterprises v. State of Gujarat & Anr. reported in : 2009 (3) GLH 742 to contend that under Section 139 of the Act, the presumption is that the cheques in question were issued for discharge of debt or liability and that such a presumption is mandatory but rebuttable by proof of facts contrary to the receipt of cheque for discharge of any debt or any liability. In the said case, as noted in Para 11 thereof, the complainant, in appeal, had proved by oral and documentary evidence that there was sale of goods and on the basis of such a business transaction, considering the facts of the said case, this Court came to the conclusion that the legal presumptions in favour of the complainant and proof of legal liability of the accused were not rebutted or disproved by any credible preponderance of probabilities. However, in the instant case, as noted hereinabove, the complainant himself has stated in the complaint itself that the cheques were given as an advance to respondent No. 2 - original complainant.

(iii) Relying upon the decision of this Court in the case of Rohit Chunubhai Mehta (supra) and more particularly Para 8 thereof, respondent No. 2 has contended that it is not necessary that the complainant should state in so many words that the intention of the accused was dishonest or fraudulent. It is further contended that splitting up of the definition into different components of the offence to make a meticulous scrutiny, whether all the ingredients have been precisely spelled out in the complaint is not needed. It is further contended that if factual foundation for the offence has been laid down in the complaint, the Court should not hasten to quash criminal proceedings during investigation stage. In the instant case, the relationship of the petitioner and respondent No. 2 -original complainant is that of a debtor and a creditor as the three cheques, according to the complainant, have been issued by way of a loan transaction and therefore, the said judgment would not apply to the facts arising out of the present petition.

(iv) Relying upon the judgment of the Hon'ble Supreme Court in the case of K. Bhaskaran, : 1999(4) ALL MR 452 (S.C.) : 1999 ALL MR (Cri) 1845 (S.C.) (supra), it is contended that as the signature in the cheque is admitted, the presumption envisaged under Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears and as per Section 139 of the Act, therefore, the presumption is that the cheques were received by the holder for discharge of any debt or liability. However, in the facts of this case, as noted hereinabove, even the complainant has admitted that it was by way of loan advance that the three cheques in question were issued by the petitioner.

(v) Relying upon the judgment of the Hon'ble Supreme Court in the case of Goaplast Pvt. Ltd., : 2003(2) ALL MR 750 (S.C.) (supra), it is contended that under Section 139 of the Act, a presumption is created in favour of the holder of the cheque and that the petitioner has not been able to rebut the facts. The facts considered by the Hon'ble Supreme Court are totally different than that arising out of the present petition as noted hereinabove. In the instant case, the complaint itself discloses clearly that three cheques were given by the petitioner towards advance/loan to the complainant and it was not towards any debt or liability and from the initial stage itself, in opinion of this Court, the petitioner has been able to rebut the presumption."

16. Considering the submissions made by the learned counsel for the parties as well as considering the ratio of the judgments which are cited by both the sides, it clearly stipulates that in order to attract Section 138 of the Act, there has to be a legally enforceable debt or other liability. In the facts and circumstances of the case, though there is a presumption as provided under Section 139 of the Act that unless the contrary is proved, it has to be presumed that the holder of the cheque received the cheque for discharge, in whole or in part, of any debt or other liability. It may, however, be noted that the presumption available under Section 139 of the Act is rebuttable and in the present case, the complaint itself discloses that respondent No. 2-original complainant mortgaged his land to the petitioner in lieu of advance given by the petitioner. In this background of facts, therefore, it cannot be inferred that the cheques were issued by the petitioner for any legally enforceable debt. Even considering the provisions of Section 58 of the Transfer of Property Act, it cannot be held that the cheques in question were issued by the petitioner for any legal debt or any liability and non-payment of an amount promised to be advanced cannot be termed as a debt or a liability much less any legal debt or liability and therefore, in the facts and circumstances of the case, the ingredients of Section 138 of the Act are not satisfied. On reading the impugned complaint at its face value and the very version in the complaint and pleadings which are placed on record of this petition, it clearly establishes that the petitioner - accused has rebutted a presumption as provided under Section 139 of the Act. It is no doubt true that an offence under Section 138 of the Act is a legal fiction being an offence, however, at the same time, it is essential that the ingredients are required to be fulfilled and in the present case, when there was no debt or liability, the petitioner cannot be fastened to undergo the rigmarole of a criminal trial. Respondent No. 2 has not been able to point out that the cheques were advanced because of any due, debt or liability, but on the contrary has clearly mentioned in the complaint that three cheques in question were given as loan in lieu of mortgage of land.

17. In these set of circumstances, no prima facie offence under Section 138 of the Act is culled out even if the impugned complaint is taken at its face value. Therefore, this Court is of the opinion that any further continuance of the proceedings pursuant to the impugned complaint would amount to abuse of process of law and Court and hence, this is a fit case for exercise of inherent powers under Section 482 of the Code to secure the ends of justice. A person cannot be compelled to advance money if he is not willing to do so and even at the cost of repetition, it is stated that as it is not a debt or a liability, provisions of Section 138 of the Act are not attracted in the instant case. Resultantly, this petition is allowed. The impugned complaint dated 1.12.2009 bearing Criminal Case No. 1503 of 2009 pending before the JMFC, Dakor and the proceedings arising out of the aforesaid complaint are hereby quashed and set aside. Rule is made absolute
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