Madhya Pradesh High Court
Anil Salhotra vs Kishore Patidar on 16 January, 2025
Author: Sanjeev S Kalgaonkar
Bench: Sanjeev S Kalgaonkar
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N THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE SANJEEV S KALGAONKAR
ON THE 16th OF JANUARY, 2025
MISC. CRIMINAL CASE No. 45454 of 2022
ANIL SALHOTRA
Versus
KISHORE PATIDAR
Appearance:
Shri Sunil Kumar Jain, Senior Advocate with Shri Ashok Kumar
Verma, Advocate for the petitioner.
Shri Anshuman Shrivastava, Advocate for the respondent through
Video Conferencing.
______________________________________________________________
Reserved on : 23.10.2024
Pronounced on : 16.01.2025
__________________________________________________________
ORDER
This miscellaneous criminal case having been heard and reserved for
order, coming on for pronouncement this day, Justice Sanjeev S.
Kalgaonkar pronounced the following:
This petition under Section 482 of the Criminal Procedure Code is
filed for quashing of criminal complaint and proceeding in Special Case
N.I.A. No.0000069/2022 pending before the learned Judicial Magistrate
First Class, Mhow for the offence punishable under Section 138 of the
Negotiable Instruments Act, 1881(hereinafter referred to as “the Act of
1881”).
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2. The exposition of the facts, giving rise to the present petition, is as
under :-
(I). The respondent Kishore Patidar filed a complaint against the
petitioner Anil Salhotra for the offence punishable under Section 138 of
the Act of 1881 read and Section 420 and 406 of IPC. Learned Judicial
Magistrate First Class took cognizance for the offence punishable under
Section 138 of the Act of 1881 and the case is registered as SC. N.I.A.
No.0000069/2022.
(II). It is stated in the complaint that the complainant Kishore Patidar
is a property dealer. The accused approached him for development of
residential colony tilted as Tilak City. The complainant proposed
investing in Tilak City Colony to be developed by M/s T.R. Trehan
Construction Private Limited wherein accused Anil Salhotra is a
Director. At the request of the complainant, his family members,
relatives and acquaintances invested certain sum of money in Tilak City,
but the accused did not complete the Tilak City colony, therefore, the
complainant demanded return of invested money. The accused had
returned a part of the money advanced to him. In all, Rs.65,00,000/-
remained to be returned. After constant request by the complainant,
accused issued Cheque No.992682 of State Bank of India, Branch Dewas
for an amount of Rs.65,00,000/-. The complainant gave a notice dated
21.08.2020 to the accused informing him that he proposed to present the
Cheque on 28.08.2020. The complainant presented the Cheque on
28.08.2020 at Oriental Bank of Commerce, Branch Mhow, but the
cheque was dishonoured with the intimation of “payment stopped”. The
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complainant gave statutory notice to the accused, but the accused did not
pay the amount of cheque within the stipulated time, therefore, complaint
for offence punishable under Section 138 of the Act of 1881 was filed
against the accused.
3. Feeling aggrieved by the filing of complaint and cognizance by the
learned Judicial Magistrate First Class, this petition is filed for quashing
the proceeding in SC. N.I.A. No.0000069/2022 on following grounds:-
(1) The respondent/complainant has not paid any amount to the
petitioner for development of colony. There is no privity of contract
between them. The amount was paid by the individuals directly in the
account of “Tilak City” and not to the petitioner, therefore, there was no
occasion for the petitioner to issue cheque of Rs.65,00,000/- in favour of
the respondent.
(2) There is no pleading or evidence to the effect that there was a
legally recoverable liability against the accused, therefore, mere
dishonour of cheque does not attract offence punishable under Section
138 of the Act of 1881.
(3) The respondent had failed to demonstrate that there was any
transaction between the petitioner and respondent which had created a
right in favour of the respondent to legally recover the amount.
(4) According to the statutory notice sent by the respondent, the total
outstanding amount was Rs.62,00,000/-, therefore, there was no occasion
for the petitioner to issue cheque of Rs.65,00,000/- in favour of the
respondent.
(5) The learned Judicial Magistrate First Class committed error in
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taking cognizance against the petitioner. The proceeding pending before
the learned Judicial Magistrate First Class is an abuse of the process of
law.
4. On these grounds it is prayed that the criminal complaint in Special
Case N.I.A. No.0000069/2022 alongwith the cognizance order dated
28.02.2022 of learned Judicial Magistrate First Class, Mhow, District
Indore be quashed.
5. Learned Senior Counsel for the petitioner in addition to the grounds
mentioned in the petition, referring to the reply dated 27.08.2020
contends that it was specifically stated in the reply that Harinarayan
Patidar has advanced Rs.65,00,000/- to the accused, through Bank
RTGS. The accused had issued cheque in question for security of the
loan amount. The accused has returned the loan amount to Harinarayan
through RTGS, but the cheque in question was not returned to the
accused. Later, it was misused by the complainant. Learned counsel
referring to the Entry No.12 in the statutory notice dated 29.09.2020 and
para-6 of the complaint and the order of Madras High Court in the case
o f Angu Parameswari Textiles (P) Ltd. & Ors. V/s. Sri Rajam & Co.
(2001 SCC OnLine Madras 922) and the order of the High Court of
Judicature, Bombay[Nagpur Bench] in the case of M/s. Pawan
Enterprises V/s. Satish H. Verma (2003 SCC OnLine Bombay 1174),
contends that the amount of outstanding liability does not tally in the
statutory notice and the complaint, therefore, the offence punishable
under Section 138 of the Act of 1881 is not made out. Learned Senior
Counsel forcefully contends that since the money was deposited in the
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account of the Tilak City by individual investors, the complainant was
not authorized to file complaint as there was no legally recoverable debt
or liability in favour of the complainant. Learned Senior Counsel further
contends that the accused was Director of the Company and the money
was deposited in the account of Company, therefore, without arraying the
Company as accused, the Director of the Company cannot be prosecuted.
6. Per Contra, learned counsel for the respondent opposes the petition
and submits that individual investors have deposited various amounts in
the account of Tilak City at the insistence and request of complainant.
The accused issued the cheque in question to settle the outstanding
amounts of individual investors in his personal capacity, therefore, it was
not necessary to array the Company as an accused in the present
complaint. The petition is merit-less, therefore, it deserves to be
dismissed.
7. Heard learned counsel for both the parties and perused the record.
8 . The Supreme Court in case of M/s Zandu Pharmaceutical Works
Ltd.& Ors. vs Md Sharaful Haque & Anr , (2005 (1) SCC 122) has
observed as under :-
“The powers possessed by the High Court under Section 482 of the
Code are very wide and the very plenitude of the power requires great
caution in its exercise. Court must be careful to see that its decision in
exercise of this power is based on sound principles. The inherent
power should not be exercised to stifle a legitimate prosecution. The
High Court being the highest court of a State should normally refrain
from giving a prima facie decision in a case where the entire facts are
incomplete and hazy, more so when the evidence has not been
collected and produced before the Court and the issues involved,
whether factual or legal, are of magnitude and cannot be seen in their
true perspective without sufficient material. Of course, no hard-and-
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will exercise its extraordinary jurisdiction of quashing the proceeding
at any stage. (See: Janata Dal v. H. S. Chowdhary (1992 (4) SCC 305),
and Raghubir Saran (Dr.) v. State of Bihar (AIR 1964 SC 1). It would
not be proper for the High Court to analyse the case of the complainant
in the light of all probabilities in order to determine whether a
conviction would be sustainable and on such premises arrive at a
conclusion that the proceedings are to be quashed. It would be
erroneous to assess the material before it and conclude that the
complaint cannot be proceeded with. In a proceeding instituted on
complaint, exercise of the inherent powers to quash the proceedings is
called for only in a case where the complaint does not disclose any
offence or is frivolous, vexatious or oppressive. If the allegations set
out in the complaint do not constitute the offence of which cognizance
has been taken by the Magistrate, it is open to the High Court to quash
the same in exercise of the inherent powers under Section 482 of the
Code. It is not, however, necessary that there should be meticulous
analysis of the case before the trial to find out whether the case would
end in conviction or acquittal. The complaint has to be read as a whole.
If it appears that on consideration of the allegations in the light of the
statement made on oath of the complainant that the ingredients of the
offence or offences are disclosed and there is no material to show that
the complaint is mala fide, frivolous or vexatious, in that event there
would be no justification for interference by the High Court. When an
information is lodged at the police station and an offence is registered,
then the mala fides of the informant would be of secondary importance.
It is the material collected during the investigation and evidence led in
court which decides the fate of the accused person. The allegations of
mala fides against the informant are of no consequence and cannot by
themselves be the basis for quashing the
proceedings. (See: Dhanalakshmi v. R. Prasanna Kumar (1990 Supp
SCC 686), State of Bihar v. P. P. Sharma ( AIR 1996 SC 309), Rupan
Deol Bajaj v. Kanwar Pal Singh Gill (1995 (6) SCC 194), State of
Kerala v. O. C. Kuttan (AIR 1999 SC 1044), State of U.P. v. O. P.
Sharma (1996 (7) SCC 705), Rashmi Kumar v. Mahesh Kumar
Bhada (1997 (2) SCC 397), Satvinder Kaur v. State (Govt. of NCT of
Delhi) (AIR 1996 SC 2983) and Rajesh Bajaj v. State NCT of Delhi
(1999 (3) SCC 259).
9. The Supreme Court in the case of Indian Oil Corporation. v. NEPC
India Ltd., reported in (2006) 6 SCC 736 has observed as under :-
“12. The principles relating to exercise of jurisdiction under Section 482 of
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t h e Code of Criminal Procedure to quash complaints and criminal
proceedings have been stated and reiterated by this Court in several
decisions. To mention a few — Madhavrao Jiwajirao
Scindia v. Sambhajirao Chandrojirao Angre [ (1988) 1 SCC 692 : 1988
SCC (Cri) 234], State of Haryana v. Bhajan Lal [1992 Supp (1) SCC
335 : 1992 SCC (Cri) 426], Rupan Deol Bajaj v. Kanwar Pal Singh
Gill [(1995) 6 SCC 194 : 1995 SCC (Cri) 1059], Central Bureau of
Investigation v. Duncans Agro Industries Ltd. [ (1996) 5 SCC 591 : 1996
SCC (Cri) 1045], State of Bihar v. Rajendra Agrawalla [(1996) 8 SCC
164 : 1996 SCC (Cri) 628], Rajesh Bajaj v. State NCT of Delhi [(1999) 3
SCC 259 : 1999 SCC (Cri) 401], Medchl Chemicals & Pharma (P)
Ltd. v. Biological E. Ltd. [(2000) 3 SCC 269 : 2000 SCC (Cri)
615], Hridaya Ranjan Prasad Verma v. State of Bihar [(2000) 4 SCC
168 : 2000 SCC (Cri) 786], M. Krishnan v. Vijay Singh [ (2001) 8 SCC
645 : 2002 SCC (Cri) 19] and Zandu Pharmaceutical Works Ltd. v. Mohd.
Sharaful Haque [(2005) 1 SCC 122 : 2005 SCC (Cri) 283]. The principles,
relevant to our purpose are:
(i) A complaint can be quashed where the allegations made in the
complaint, even if they are taken at their face value and accepted in
their entirety, do not prima facie constitute any offence or make
out the case alleged against the accused.
For this purpose, the complaint has to be examined as a whole, but
without examining the merits of the allegations. Neither a detailed
inquiry nor a meticulous analysis of the material nor an assessment
of the reliability or genuineness of the allegations in the complaint,
is warranted while examining prayer for quashing of a complaint.
(ii) A complaint may also be quashed where it is a clear abuse of
the process of the court, as when the criminal proceeding is found
to have been initiated with mala fides /malice for wreaking
vengeance or to cause harm, or where the allegations are absurd
and inherently improbable.
(iii) The power to quash shall not, however, be used to stifle or
scuttle a legitimate prosecution. The power should be used
sparingly and with abundant caution.
(iv) The complaint is not required to verbatim reproduce the legal
ingredients of the offence alleged. If the necessary factual
foundation is laid in the complaint, merely on the ground that a
few ingredients have not been stated in detail, the proceedings
should not be quashed. Quashing of the complaint is warranted
only where the complaint is so bereft of even the basic facts which
are absolutely necessary for making out the offence.
(v.) A given set of facts may make out : ( a) purely a civil wrong; or
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(b) purely a criminal offence; or ( c) a civil wrong as also a criminal
offence. A commercial transaction or a contractual dispute, apart
from furnishing a cause of action for seeking remedy in civil law,
may also involve a criminal offence. As the nature and scope of a
civil proceeding are different from a criminal proceeding, the mere
fact that the complaint relates to a commercial transaction or
breach of contract, for which a civil remedy is available or has
been availed, is not by itself a ground to quash the criminal
proceedings. The test is whether the allegations in the complaint
disclose a criminal offence or not.
10. For reference, the presumptions under Sections 118 and 139 of the
Negotiable Instruments Act,1881 are extracted 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, endorsed, negotiated or transferred, was accepted, indorsed,
negotiated or transferred for consideration;
(b) as to date:–that every negotiable instrument bearing a date was made
or drawn on such date;
(c) as to time of acceptance:–that every accepted bill of exchange was
accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer:–that every transfer of a negotiable instrument
was made before its maturity;
(e) as to order of indorsements:–that the indorsements appearing upon a
negotiable instrument were made in the order in which they appear then
on; (f) as to stamp:– that a lost promissory note, bill of exchange or
cheque was duly stamped;
(f) as to stamp :-that a lost promissory note, bill of exchange or cheque
was duly stamped;
(g) that holder is a holder in due course:–that the holder of a negotiable
instrument is a holder in due course:
provided that, where the instrument has been obtained from its lawful
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offence or fraud, or has been obtained from the maker or acceptor thereof
by means of an offence or fraud, or for unlawful consideration, the burden
of proving that the holder is a holder in due course lies upon him.
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.
11. Dealing with aforestated presumptions, in the case of Rathish Babu
Unnikrishnan v. State (NCT of Delhi), reported in 2022 SCC OnLine SC
513, the Supreme Court held as under :-
10. It is also relevant to bear in mind that the burden of proving that
there is no existing debt or liability, is to be discharged in the trial. For a
two judges Bench in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma
(P) Ltd 2002 (1) SCC 234, Justice S.N. Variava made the following
pertinent observation on this aspect:–
“17. There is therefore no requirement that the complainant must
specifically allege in the complaint that there was a subsisting
liability. The burden of proving that there was no existing debt or
liability was on the respondents. This they have to discharge in the
trial. At this stage, merely on the basis of averments in the petitions
filed by them the High Court could not have concluded that there
was no existing debt or liability.”
11. The legal presumption of the cheque having been issued in the
discharge of liability must also receive due weightage. In a situation
where the accused moves Court for quashing even before trial has
commenced, the Court’s approach should be careful enough to not to
prematurely extinguish the case by disregarding the legal presumption
which supports the complaint. The opinion of Justice K.G. Balakrishnan
for a three judges Bench in Rangappa v. Sri Mohan (AIR 2010 SC
1898), would at this stage, deserve our attention:–
“26. … we are in agreement with the respondent claimant that the
presumption mandated by Section 139 of the Act does indeed include
the existence of a legally enforceable debt or liability. As noted in the
citations, this is of course in the nature of a rebuttable presumption
and it is open to the accused to raise a defence wherein the existence
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there can be no doubt that there is an initial presumption which
favours the complainant.”
12. At any rate, whenever facts are disputed the truth should be allowed
to emerge by weighing the evidence. On this aspect, we may benefit by
referring to the ratio in Rajeshbhai Muljibhai Patel v. State of
Gujarat (AIR 2020 SC 818) , where the following pertinent opinion was
given by Justice R. Banumathi:–
“22. ………….. When disputed questions of facts are involved which
need to be adjudicated after the parties adduce evidence, the
complaint under Section 138 of the NI Act ought not to have been
quashed by the High Court by taking recourse to Section 482 CrPC.
Though, the Court has the power to quash the criminal complaint filed
under Section 138 of the NI Act on the legal issues like limitation,
etc. criminal complaint filed under Section 138 of the NI Act against
Yogeshbhai ought not to have been quashed merely on the ground
that there are inter se disputes between Appellant 3 and Respondent 2.
Without keeping in view the statutory presumption raised under
Section 139 of the NI Act, the High Court, in our view, committed a
serious error in quashing the criminal complaint in CC No. 367 of
2016 filed under Section 138 of the NI Act.”
13. Bearing in mind the principles for exercise of jurisdiction in a
proceeding for quashing, let us now turn to the materials in this case. On
careful reading of the complaint and the order passed by the Magistrate,
what is discernible is that a possible view is taken that the cheques drawn
were, in discharge of a debt for purchase of shares. In any case, when
there is legal presumption, it would not be judicious for the quashing
Court to carry out a detailed enquiry on the facts alleged, without first
permitting the trial Court to evaluate the evidence of the parties. The
quashing Court should not take upon itself, the burden of separating the
wheat from the chaff where facts are contested. To say it differently, the
quashing proceedings must not become an expedition into the merits of
factual dispute, so as to conclusively vindicate either the complainant or
the defence.
16. The proposition of law as set out above makes it abundantly clear
that the Court should be slow to grant the relief of quashing a complaint
at a pre-trial stage, when the factual controversy is in the realm of
possibility particularly because of the legal presumption, as in this
matter. What is also of note is that the factual defence without having to
adduce any evidence need to be of an unimpeachable quality, so as to
altogether disprove the allegations made in the complaint.
17. The consequences of scuttling the criminal process at a pre-trial stage
can be grave and irreparable. Quashing proceedings at preliminary stages
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will result in finality without the parties having had an opportunity to
adduce evidence and the consequence then is that the proper forum i.e.,
the trial Court is ousted from weighing the material evidence. If this is
allowed, the accused may be given an un-merited advantage in the
criminal process. Also because of the legal presumption, when the
cheque and the signature are not disputed by the appellant, the balance of
convenience at this stage is in favour of the complainant/prosecution, as
the accused will have due opportunity to adduce defence evidence during
the trial, to rebut the presumption.
1 2 . In the case of HMT Watches Ltd. v. M.A. Abida , (2015) 11 SCC
776 it has been observed that :-
10. Having heard the learned counsel for the parties, we are of the view
that the accused (Respondent 1) challenged the proceedings of criminal
complaint cases before the High Court, taking factual defences. Whether
the cheques were given as security or not, or whether there was
outstanding liability or not is a question of fact which could have been
determined only by the trial court after recording evidence of the parties.
In our opinion, the High Court should not have expressed its view on the
disputed questions of fact in a petition under Section 482 of the Code of
Criminal Procedure, to come to a conclusion that the offence is not made
out. The High Court has erred in law in going into the factual aspects of
the matter which were not admitted between the parties. The High Court
further erred in observing that Section 138(b) of the NI Act stood
uncomplied with, even though Respondent 1 (accused) had admitted that
he replied to the notice issued by the complainant. Also, the fact, as to
whether the signatory of demand notice was authorised by the
complainant company or not, could not have been examined by the High
Court in its jurisdiction under Section 482 of the Code of Criminal
Procedure when such plea was controverted by the complainant before it.
15. For the reasons as discussed above, we find that the High Court has
committed grave error of law in quashing the criminal complaints filed
by the appellant in respect of the offence punishable under Section 138
of the NI Act, in exercise of powers under Section 482 of the Code of
Criminal Procedure by accepting factual defences of the accused which
were disputed ones. Such defences, if taken before the trial court, after
recording of the evidence, can be better appreciated.
13. There is no averment in complaint that the cheque in question dated
28.08.2020 was issued by the accused on behalf of M/s. T.R. Trehan
Construction Private Limited or Tilak City Colony in the capacity of its
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Director. Rather, the copy of cheque filed alongwith the petition shows
that the cheque in question was issued by Anil Salhotra (petitioner)
payable at his account in State Bank of India, PBB, Dewas. In view of
this fact, the contention that the complaint is not maintainable, without
impleading the Company as an accused under Section 141 of the Act
1881, has no substance.
14. The complainant has stated that his relatives, family members and
acquaintances have invested money in Tilak City at his request and
insistence. He demanded return of invested money from the accused on
behalf of these investors. The accused gave him the cheque in question
towards settlement of afore-stated invested money. Thus, the
complainant has led the foundation for legally recoverable debt or
liability in the complaint. The veracity and truth of these averments
would be determined on the merits of the evidence in the trial. There is
no dispute with regard to the signature of the petitioner on the cheque in
question and the complainant being the holder of cheque, therefore, in
view of statutory presumption, the complaint cannot be dismissed in
limine on defense of the accused that there was no privity of transaction
between the complainant and the accused.
15. As far as the discrepancy in the amount stated in the statutory
notice and the Cheque is concerned, the Para 6 and 7 of the complaint
state the amounts of transaction between the parties. There is no
averment to the effect that the outstanding liability against the
petitioner/accused was only Rs.62 Lacs against which the cheque for an
amount of Rs.65 lacs was issued. The necessary factual foundation is laid
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in the complaint, the proceedings cannot be quashed on minor
discrepancy of details. The objection raised by the petitioner regarding
the exact liability is subject-matter of the evidence which cannot be
determined at the present stage.
16. The contentions about collateral transaction with Harinarayan
Patidar as stated in reply to statutory notice dated 27.08.2020 relates to
defense of the accused, which cannot be accepted without prima facie
evidence sufficient to rebut the presumption in favour of the holder of the
cheque.
17. The averments in the complaint, the documents filed in support of
the averments and the statutory persuasive presumption contained in
Sections 118 and 139 of the Negotiable Instruments Act prima facie
make out the offence punishable under Section 138 of the Negotiable
Instruments Act against the petitioner. The petitioner/accused shall be
presumed to have issued the cheque for the liability as stated in the
complaint until the contrary is proved. The petitioner/accused has to
prove the contrary, atleast, on the preponderance of probability, to rebut
the statutory presumption. The rebuttal of presumption can be considered
at the end of the trial on merits of the evidence. Thus, in view of the
afore-stated factual and legal aspects, no case is made out for invoking
inherent jurisdiction for quashing the complaint at preliminary stage.
Consequently, the petition is dismissed.
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(SANJEEV S KALGAONKAR)
JUDGE
pn
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