Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J. allowed a petition filed against the order of the trial Judge whereby the petitioner’s complaint filed for the commission of offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881, was dismissed for non-prosecution.

The petitioner had advanced a loan to the respondent who defaulted in repaying the same. The cheque given by the respondent for the discharge of the said liability was also dishonoured. After fulfilling the codal formalities, the petitioner filed a complaint under Section 138.

The petitioner along with his counsel was present when the Metropolitan Magistrate issued summons against the respondent. Thereafter, on the next date, counsel for the petitioner was present but Metropolitan Magistrate was not available on account of training, Thereafter, counsel for the petitioner was present and bailable warrants were issued against the respondent. When notice was required to be framed, the case was transferred to another Metropolitan Magistrate. On the subsequent date, none appeared before the Metropolitan Magistrate as the advocates were on strike. On the date of the impugned order, the complaint was dismissed on account of non-appearance on behalf of the petitioner.

The High Court was of the view that the petition ought to be allowed. It was considered that neither the complainant nor his counsel could appear due to strike as mentioned above and that the clerk of the counsel wrongly noted the next date, and therefore the complainant or his counsel could not again appear on the date of the impugned order. In such circumstances of the case, the Court thought it fit to restore petitioner’s complaint on the file of the Metropolitan Magistrate. The petition was accordingly allowed. [Rajeev Kumar v. Gagan Makhija, 2019 SCC OnLine Del 9708, decided on 07-08-2019]

Case BriefsHigh Courts

Kerala High Court: R. Narayana Pisharadi, J. dismissed a petition seeking to quash a complaint filed under Section 142 of the Negotiable Instruments Act, 1881.

The complainant and the accused were close relatives. The accused had borrowed an amount of Rs 35,00,000 from the complainant. The cheque given by the accused to repay the money was dishonored due to insufficient funds. The complainant received intimation of this on 13-02-2014 and he sent a notice regarding the same to the accused on 15-02-2015 which was received by him on 17-02-2014.

The learned counsel for the petitioner, K.B. Pradeep, submitted that no demand for payment of the amount of the cheque was made by the complainant as per the notice sent by him under clause (b) of the proviso to Section 138 of the Act and therefore, the notice was defective and the proceedings initiated against the petitioner pursuant to such notice could not be sustained.

The counsel representing the complainant, K.K. Dheerendrakrishnan, contended that the requirement under clause (b) of the proviso to Section 138 of the Act had been complied with.

The High Court observed that a demand for payment of the amount of the cheque by sending a notice in writing was an essential condition for filing such a complaint was a condition precedent for filing a complaint about an offence under Section 138 of the NI Act. The Court relied on K.R. Indira v. G. Adinarayana, (2003) 8 SCC 300 in which it was held that if no demand for payment of amount was made, the notice would fall short of its legal requirement. The Court, on a perusal of the said notice, found that demand of payment of the amount was made in the notice sent by the complainant. In view thereof, the Court held that the impugned notice was meeting the requirements as under Section 138(b) of the Act. The Court also declined the petitioner’s contention that the notice was defective as the nature of the debt or liability was not mentioned. It was held that there was no statutory mandate that the notice should narrate the nature of debt or liability. All the other pleas of the petitioners were not sustained as they were pertaining to questions of facts and the Court held that it would not express its view on disputed questions of fact in a petition under Section 482 of the Criminal Procedure Code, 1974.

In view of the above, the Court held that the impugned notice met the requirement under Clause (b) of the proviso to Section 138 of the Act and hence the petition to quash the said complaint was dismissed.[B. Surendra Das v. State of Kerala, 2019 SCC OnLine Ker 1624, decided on 20-05-2019]

Case BriefsHigh Courts

Kerala High Court: Instant appeal was contemplated against acquittal order of the accused under Section 138 of the Negotiable Instruments Act, 1881 by a Single Judge Bench of N. Anil Kumar, J.

The accused borrowed a certain amount from the complainant and also issued a cheque towards repayment in the name of the complainant. Subsequently, the cheque was dishonored and the reason cited was ‘insufficient funds’. Complainant advanced his argument on the basis of the notice which he served upon the accused earlier after the cheque was dishonored. It is further contended that the accused, however, did not reply to the notice nor did he pay the cheque amount to the complainant. The complainant filed a criminal complaint under Section 138 of the NI Act before the Court below.

The counsel for the complainant, K. Babu and Johnson Gomez submitted that on service of summons by the trial Court, the accused appeared and did not plead guilty. The accused cited that he had borrowed a sum of Rs 10,000 from the father of the complainant. He further contended that the said amount was returned. That apart, he contended that the cheque leaves which he gave as security were not returned when the amount was paid back. According to him, he had no account with the said bank of which the complainant had presented the unpaid cheque. It was the father of the complainant who introduced him in the said Bank for the purpose of opening an account there. In support of his contentions, he produced his passbook and the other relevant evidences. The trial Court on the basis of the evidence and on the testimony of the witnesses accepted the contention of the accused and acquitted him, therefore.

The Court observed that in order to determine the question whether offence punishable under Section 138 of the Act was made out against the accused, it was foremost necessary to examine the Penal provision of Section 138 of the Act and the presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the Act. It further stated that in the trial under Section 138, a presumption was to be made that every negotiable instrument was made or drawn for consideration and that it was executed for the discharge of debt or liability once the execution of negotiable instrument was either proved or admitted. When the complainant discharged the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 were very much available to the complainant and the burden shifted on the accused. However, this presumption was rebuttable. Under the circumstances, it was the duty of the accused before the court by adducing that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged.

An appeal was allowed and the judgment of the trial court was set aside the Court held that, “the trial court patently erred in holding that the burden was on the complainant to prove that he had advanced the loan and the blank cheque was given to him in repayment of the same, the finding of the trial court that the case of the complainant is not proved beyond reasonable doubt is perverse.”[Manesh Varghese v. Sainulabudeen, 2019 SCC OnLine Ker 2029, decided on 25-06-2019]

Case BriefsHigh Courts

Bombay High Court: Sunil K. Kotwal, J., allowed SBI Insurance Co. (insurer) to recover, from the owner of the offending bus (insurer), the amount paid to a third party claimant) under a policy which was cancelled by the insurer on account of non-payment of the premium amount by the insured.

An accident occurred between a motorcycle and the offending bus, as a result of which the driver of the motorcycle passed away. A claim petition was filed by the claimants under which an award was passed by the Motor Accident Claims Tribunal. The insurer paid the claim amount in the discharge of its liability towards the claimant. It, however, claimed to recover the said amount from the insured. Insurer’s case was that the insured issued a cheque in his favour towards payment of the insurance premium for the policy taken on 10-11-2015. The accident occurred on 19-11-2015. Pertinently, the cheque issued by the insured towards payment of premium got dishonoured by the bank and, therefore, the insurer cancelled the policy on 14-12-2015. As such, the insurer claimed recovery of the amount paid to the third party.

After perusing the authorities cited, the High Court was of the opinion that in such type of cases, if the policy is cancelled before the accident occurs, then the insurer is not liable to pay compensation to the claimant. However, if the policy is cancelled after the accident happens, then he is so liable. But, in the latter category of cases, the insurer is entitled to recover the amount so paid to the claimant from the insured. It was observed that a contract of insurance between an insurer and an owner of the offending vehicle includes reciprocal promised by both the parties. In such view of the matter, the owner of the offending bus (insured) was directed to pay back the amount of the award to the insurer along with interest thereon. [SBI Insurance Co. v. Madhubala, 2019 SCC OnLine Bom 639, decided on 15-04-2019]

Case BriefsHigh Courts

Bombay High Court: C.V. Bhadang, J., set aside an order passed by the Magistrate whereby process was issued against the petitioner for an offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881.

The complainant gave a flat to the petitioner on leave and license basis. According to the complainant, the petitioner handed-over to her a cheque in the sum of Rs 12,000 drawn on State Bank of India, towards payment of license fee for one month. However, when presented for encashment, the cheque was returned dishonoured on account of “insufficient funds”. In such background, the complainant filed a complaint under Section 138 against the petitioner, in which the impugned order of issue of process was passed.

Galileo Francisco Teles, Advocate represented the petitioner. On the other hand, John Abreu Lobo, Advocate appeared for the complainant.

The High Court noted that the petitioner simply handed over the cheque in question to the complainant, allegedly towards payment of one month’s license fee. It was not a case that the cheque was issued by the petitioner, much less on his account with SBI. There was letter produced from SBI stating that the account number on which the cheque was issued did not stand in name of the petitioner. The Court observed, “It is trite that a complaint under Section 138 of the Act, lies only against the drawer of the cheque, when the cheque issued by the drawer, on his account is dishonoured for want of funds. It was not seriously disputed during the course of the arguments at bar that the petitioner is neither a drawer nor the cheque is issued on his account. It is thus difficult to see as to how, process can be issued against the petitioner in the absence of the basic requirements of the offence under Section 138 of the Act being satisfied.” Stating thus, it was held that the impugned order was not sustainable and was therefore set aside. [Hiralal Govekar v. Sheela Surlakar, 2019 SCC OnLine Bom 507, dated 20-03-2019]

Case BriefsHigh Courts

Delhi High Court: R.K. Gauba, J. allowed a petition filed against the order of Sessions Court whereby proceedings in a case filed under Section 138 of Negotiable Instruments Act, 1881 were stayed.

Petitioner had filed a case against respondents alleging commission of an offence under Section 138. It was alleged that he had advanced a loan to the respondents, for the repayment of which, the respondents had issued a cheque in his favour drawn on Axis Bank Ltd. However, on presenting the cheque, it was returned unpaid with remarks “payment stopped by drawer.” After a preliminary enquiry, Metropolitan Magistrate issued summons to respondents. Thereafter the respondents reached the Sessions Court which granted a stay on summons order till final decision in another case arising out of an FIR filed by respondents against the petitioner. Aggrieved thereby, petitioner filed the present petition under Section 482 CrPC.

The High Court noted that in the FIR filed, respondents alleged that the cheque in question was stolen and misappropriated by the petitioner. It was also noted that revisional court stayed the proceedings under Section 138 on the ground that the same would unnecessarily prejudice the trial in the case arising out of the FIR. The High Court held this to be totally unjust and unfair. It was stated “Though questions would arise in the criminal case under Section 138 NI Act as to whether cheque in question had come in the hands of the petitioner legitimately or not, the contentions of the respondents are a matter of defence which will have to be raised by them, the burden of proof of the requisite facts in such regard being placed on them. There is no reason why the case arising out of above-mentioned FIR should have primacy or priority over the case of the petitioner against the opposite party.” The petition was thus allowed and the impugned stay order was allowed. [Mukesh Aggarwal v. State (NCT of Delhi), 2019 SCC OnLine Del 6843, decided on 28-01-2019]

Case BriefsHigh Courts

Madras High Court: The Bench of M. Nimal Kumar, J. refused to quash proceedings pending on the file of Judicial Magistrate (III), Coimbatore.

The complainant filed a case against the petitioner for an offence punishable under Section 138 NI Act, 1881 (dishonour of cheque). Petitioner took a hand loan of Rs 6 lakhs from the complainant. The amount was agreed to be repaid within 6 months along with an interest at 18% per annum for which petitioner issued a cheque. However, petitioner defaulted in paying either the amount or the interest. Consequently, complainant presented the cheque on the bank but it was dishonoured. Hence, he instituted the case.

M. Prabhakaran, counsel for the petitioner submitted that the subject cheque was issued for collateral security for the loan secured by Sri Venkateswara Educational and Charitable Trust. It was contended that the case which was preferred against the petitioner in his individual capacity was not maintainable.

However, the High Court held the said contention to be not acceptable for the reason that the cheque was issued in the name of the petitioner for the loan availed. Further, the petitioner neither repaid the money nor replied to the statutory notice sent by the complainant. It was also held that the claim of “security cheque” was a matter of fact which had to be decided only in the trial. Resultantly, the present petition was dismissed.[K. Velu v. P. Damodharan, 2019 SCC OnLine Mad 315, dated 07-01-2019]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Valmiki Mehta, J. dismissed an appeal filed under Section 96 CPC against the order of the trial court whereby appellant’s leave of defend application was dismissed.

The case pertains to a recovery suit filed by the respondent against the appellant. It was an admitted fact that the appellant had taken a loan of Rs 15 lakhs from the respondent. For repayment of the same, the appellant had issued 3 cheques. However, on presentation, the cheques were dishonoured with a remark fund insufficient. Consequently, the respondent filed the subject recovery suit. Thereafter, an application for leave to defend was filed by the appellant which was dismissed by the trial court. Aggrieved thus, the appellant filed the instant petition.

On perusal of the record, the High Court did not find any illegality, whatsoever, in the order of the trial court. In the Court’s opinion, case of the appellant was completely false besides being disjointed. The averments made by the appellant were totally unrelated to the instant matter. The evidence presented was irrelevant. The Court observed that the entire defence of the appellant in the leave to defend application was confusing, to say the least. Its objective was to create confusion and false defence. The Court held that the trial court rightly declined the application of the appellant. Holding thus, the appeal was dismissed. [Ashwani Kumar v. Kalimuddin, 2018 SCC OnLine Del 11003, dated 04-09-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Valmiki Mehta, J. dismissed a regular first appeal filed under Section 96 CPC against the judgment of the trial court whereby the appellant’s application for leave to defend was dismissed.

Brief facts of the case are that the appellant-defendant took a loan of Rs 20 lakhs from the plaintiff and issued two cheques for the part-payment thereof. However, on presentation, the said cheques were dishonoured with remarks funds insufficient. After serving the legal notice, the petitioner filed a suit. The defendant filed an application for leave to defend. His basic defence was that the cheques in question were stolen from his car while he was driving from Rohtak to Delhi. However, the trial court dismissed the defendant’s application for leave to defend. Aggrieved thus, the defendant filed the instant appeal.

The High Court was of the view that judgment of the trial court did not warrant any interference. It was noted that indeed an FIR was filed by the defendant in regard to the said robbery. However, there was no mention of the said cheques being stolen. The defendant was using such fact to create a completely false defence to the suit. Referring to the Supreme Court decision in IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568, the High Court observed that once the defence is clearly frivolous and vexatious and there is no triable issue, leave to defend should not be granted. In the present case too, the Court completely disbelieved the story put forth by the defendant, and concluded that the defence was frivolous and vexatious. Thus, the trial court was right in dismissing the defendant’s application for leave to defend. The appeal was dismissed sans merit. [Mange Ram v. Raj Kumar Yadav,2018 SCC OnLine Del 10316, dated 03-08-2018]

Case BriefsHigh Courts

Orissa High Court: A petition under Section 482 of CrPC was decided by a Single Judge Bench comprising of S.K. Sahoo, J., wherein it was held that in order to provide a better opportunity to the accused to prove his case, it was necessary to send the documents concerned to handwriting expert for his opinion as prayed for by the petitioners-accused before the Trial Magistrate.

The matter related to Section 138 of Negotiable Instruments Act, 1881. The petitioners were prosecuted under the said section. They filed a petition before the Trial Magistrate to send the cheques in question to a hand writing expert. They denied the filling of details in the cheque although they did not deny their signatures on the same. Petitioners’ case was that they gave the blank cheques in question to the complainant to keep them in safe custody and use them as and when required and directed by the petitioners. However, the complainant misused the said cheques by filling up the blank entries in the cheques. In the said factual scenario as claimed by them, the petitioners prayed to send the cheques to a handwriting expert for comparison of the handwriting on the cheques with the one admitted by the petitioners. However, such prayer of the petitioners was rejected by the Trial Magistrate. Hence, the instant petition was filed.

The High Court perused the record and held that in view of the specific stand taken by the accused during trial, it was necessary in the interest of justice that there should have been a direction for examination of the entries other than the signatures appearing in the cheques with the admitted handwritings of the accused persons as well as the complainant in order to ascertain the truth. The Court also observed that the observation of the learned Magistrate that sending of the exhibits to the handwriting expert would in no way be helpful to the Court for proper adjudication of the dispute was a pre-determination of the issues involved.

Accordingly the order of the Trial Magistrate mentioned above was set aside and he was directed to send the cheques in question for opinion of handwriting expert and proceed with the case in accordance with law after receiving such report. [Survika Distributors (P) Ltd. v. S.R. Retail Zone (P) Ltd., 2018 SCC OnLine Ori 92, dated 05-02-2018]