Gujarat High Court
Indcon Projects & Equipment Ltd. Thro’ … vs Oswal Infrastructure Ltd on 24 June, 2025
NEUTRAL CITATION
R/SCR.A/9301/2017 ORDER DATED: 24/06/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 9301 of 2017
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INDCON PROJECTS & EQUIPMENT LTD. THRO' ARUNI MISRA & ANR.
Versus
OSWAL INFRASTRUCTURE LTD. & ANR.
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Appearance:
MR.ADITYA J PANDYA(6991) for the Applicant(s) No. 1,2
MS SAKSHI RAHEJA for MR HARDIK C DAVE(8204) for the Respondent No.
1
MR TIRTHRAJ PANDYA, APP for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 24/06/2025
ORAL ORDER
1. By way of this petition under Article 226 of the Constitution of
India r/w section 482 of the Code of Criminal Procedure, 1973, the
petitioners have prayed to quash and set aside the order of issuance
of process dated 9/8/16 passed below Exh.1 in Criminal Case No. 790
of 2016 pending before the Id. Addl. Chief Metropolitan Magistrate
(Negotiable Instruments) Court No. 36, Ahmedabad and further to
quash and set aside the Criminal Case No. 790 of 2016 pending
before the Id. Addl. Chief Metropolitan Magistrate (Negotiable
Instruments) Court No. 36, Ahmedabad.
2. Brief facts of the case are as under:-
2.1 The parties to the present petition are referred to as per their
original status i.e. petitioners as accused no. 1 and 2 respectively
while respondent no. 1 as complainant.
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2.2 As per the case of complainant, it had issued a Letter of Intent
bearing no. OIL-044/LoI/14- 15/PUR/CIL-025 showing its intention to
purchase Export Oil Skid Packages as per the specification
mentioned in the Letter of Intent. The said letter of intent also
contained various terms and conditions subject to which goods were
intended to be ordered.
2.3 The complainant has also relied upon various email
communications which shows that since few of the conditions of
Purchase Order was not acceptable to the accused, they had written
an email dated 01.10.2014 for modification of various conditions of
letter of intent.
2.4 The complainant had, vide its email dated 08.10.2014,
accepted the amendments suggested by the accused and the letter of
intent stood amended accordingly.
2.5 The complainant had, on 10.02.2015, raised VT. OF various
purchase orders which resulted in privity of contract between
parties. The purchase orders also contained various terms and
conditions governing contractual relationship between parties.
Accordingly, the accused has started working on supply of the goods
ordered.
2.6 The accused had supplied the goods through four different
invoices dated 31.03.2015 bearing invoice no. IPEL/104 to 107.
2.7 That none of the conditions of modified letter of intent as well
as purchase order provided for submission of performance bank
guarantee. Yet, complainant insisted on providing performance bank
guarantee which the accused had refused to provide, since the same
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was not falling part of contractual terms and conditions.
2.8 The complainant had started exerting pressure on accused no.
1 and 2 to provide performance bank guarantee. On refusal, the
complainant threatened to invoke the Advance Bank Guarantee
supplied by the accused to the complainant. It is submitted that the
advance bank guarantee could not be invoked as thegoods were
already supplied.
2.9 The accused were, therefore, compelled to file a Civil Suit
before the Id. Civil Court, Saket Court, New Delhi as Civil Suit No. 67
of 2015 praying for restraining the complainant from encashing the
Advance Bank Guarantee. The accused had also obtained injunction
whereby the complainant was restrained from invoking the Advance
Bank Guarantee.
2.10 Therefore, the complainant came to the accused for settlement
of dispute, pursuant to which, a meeting took place between party on
01.04.2015 wherein accused no. 1 was pressurized to give an
undated cheque for an amount of Rs. 15,60,000/- towards security
and guarantee of workmanship/ mechanical/ pump capacity. The
cheque was given despite none of the conditions of contract provided
for it, which indicates that cheque is given for security. The minutes
of meeting clearly states that the cheque was given purely for
security liability existing on the date on which the L.NO. cheque was
issued. It is submitted that no liability is in existence even till today.
2.11 The accused had supplied the machinery as per the purchase
order. The complainant had opened a letter of credit account with
Kotak Mahindra Bank which was to mature on 06.06.2015. However,
on maturity, the bank refused to make payment on false pretext of
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some discrepancy in the bills. It is submitted that there was no
discrepancy in the bills. It was done by the Bank in connivance with
the complainant company. to pressurize the accused company.
2.12 After much follow up and communications, a Sum of Rs.
1,27,75,923/- came to be released by the Bank of complainant by
deducting unilaterally an amount of Rs. 15,76,077/- without any
proper justification. The accused had written various letters for
releasing the balance amount but the same was of no avail.
2.13 The accused no. 1, therefore, instituted a Civil Suit before the
Id. Saket Court, Delhi against the complainant for recovery of an
amount of Rs. 15,76,077/-.
2.14 As a counterblast to this, the complainant had deposited the
cheque given for security purpose and the same came to be
dishonoured. The complainant had therefore lodged a complaint
under section 138 of the Negotiable Instruments Act. The said
complaint came to be registered as Criminal Complaint No. 790 of
2016.
2.15 The Id. Addl. Chief Metropolitan Magistrate (Negotiable
Instruments), Court No. 36 was pleased to issue process against the
accused no. 1 and 2 i.e. present petitioners vide its order dated
3/8/16. The said order was passed despite the fact that no complaint
under section 138 is maintainable in the present facts and
circumstances of the case.
2.16 Hence, present petition.
3. Learned advocate Mr. Aditya Pandya for the petitioners in his
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submission argued that the cheque in question is not handed over to
the complainant for any subsisting or legally enforceable liability,
which subsists on the date of the cheque. He would further submit
that the documents on record produced by the complainant itself
indicates that the cheque in question was given towards guarantee
as per the payment terms. Therefore, he would submit that it could
be treated that the cheque in question was granted towards security
for liability which may arose on subsequent date. He would further
submit that the learned trial Court committed serious error in issuing
process without referring any documents on record.
3.1 Highlighting facts of the case, learned advocate Mr. Pandya
would submit that the complainant has awarded work for detailed
engineering, procurement, manufacturing, inspection, testing and
supply and providing service for installation and commissioning of
export oil transfer pump skid package for quick production facility to
the accused at Barmer, State of Rajasthan as per the terms and
conditions of LOI (Letter of Intent). He would further submit that the
accused has accepted the purchase order for export oil transfer
pump skid package and executed the purchase order along with
terms and conditions. The terms and conditions indicate that 10%
against approval of design and engineering document and
submission of ABG and 90% after dispatch of material and through
60 days Letter of Credit (LOC). He would further submit that as per
para 5 of the complaint, the cheque in question was tendered
towards guarantee instead of giving performance guarantee under
the LOI and therefore, it can be visualized that the cheque in
question was not given for any subsisting or existing liability, which
is legally enforceable liability. Learned advocate for the petitioners
drew the attention of the Court towards page 27 i.e. LOI being part
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of the document of the complainant and also purchase order (page
33) and subsequent minutes drawn between the parties placed on
record at page 40 to strengthen his argument that the cheque in
question is issued towards the security or performance guarantee.
He would further submit that if there is any breach of contract or any
act of the accused breaching the contract, civil proceedings u/s 74 of
the Contract Act is maintainable to recover the compensation, but
the cheque, which was given towards value as a guarantee for
workmanship/mechanical/pump capacity cannot be said that it was
given for the purpose of discharging subsisting liability or debt. He
would further submit that until issue of violation in
workmanship/mechanical/pump capacity arises, the issue of violation
of guarantee for which the cheque in question was given would not
arise.
3.2 In nutshell, learned advocate for the petitioners submits that
since the essential ingredients of offence u/s 138 of the NI Act are
not satisfied, issuance of process against the petitioners by the
learned trial Court is gross error.
3.3 To buttress of his submission, learned advocate Mr. Pandya
referred to the judgments in cases of (1) Sampelly Satyanarayana
Rao v. Indian Renewable Energy Development Agency Ltd, (2016) 10
SCC 458 (2) Nikhil Gandhi Vs. State of Gujarat and others, 57(4) GLR
2838 and (3) Shanku Vs. State of Gujarat, 2000 (2) GLR 753.
3.4 Upon above submissions, learned advocate Mr. Pandya submits
to allow the petition and to quash and set aside order of issuance of
process in criminal case as well as to quash and set aside
proceedings of criminal case.
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4. Per contra, learned advocate Ms. Sakshi Raheja appearing for
the respondent No.1 referring to judgment in case of Sunil Todi and
others Vs. State of Gujarat, 2022(16) SCC 762, more particularly,
page 30 to 34 and in case of Rathish Babu Unnikrishnan v. State
(Govt. of NCT of Delhi) and Another, 2022 SCC OnLine SC 513, more
particularly, para 8.13 and 16 to 19 would submit that whether the
cheque in question is issued towards security, whether there is
subsisting liability and the cheque in question was issued towards
subsisting liability, whether there is any violation of the terms and
conditions of the purchase order, all are the questions of fact and
cannot be a reason to quash criminal complaint without weighing
them in evidence. She would further submit that the Court should
slow in quashing the complaint where disputed questions of facts are
to be weighed under the scale of the Evidence Act. She would
further submit that section 139 of the NI Act operates presumption
against accused that the cheque in question has been given towards
legally enforceable liability. The accused however got chance to
repeat the same presumption by leading evidence, but not by
adjudicating the case u/s 482 of the Code of Criminal Procedure,
1973. Therefore, she would submit that since the signature of the
petitioners is admitted on the disputed cheque and the petitioners
has also accepted that the cheque is returned unpaid, prima facie,
ingredients of section 138 of the NI Act are attracted and therefore,
the learned trial Court has rightly issued process to the petitioners.
4.1 Upon such submissions, learned advocate Ms. Raheja prays to
dismiss the petition.
5. Regard being had to the rival submissions of learned advocates
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for both the sides and giving anxious thoughts and consideration in
contrast to the pleadings and documents on record, at the outset, let
refer judgment of the Hon’ble Apex Court in case of State Of Orissa
Versus Pratima Mohanty Etc.,2022 (16) SCC 706 observed as under:-
“9. While quashing the criminal proceedings the High Court
has not at all adverted to itself the aforesaid aspects and
has embarked upon an enquiry as to the reliability and
genuineness of the evidence collected during the
investigation as if the High Court was conducting the
minitrial. Therefore, as such the impugned judgment and
order passed by the High Court quashing the criminal
proceedings against the respondents herein – original
accused Nos. 4, 5 and 3 – Smt. Pratima Mohanty, Shri
Prakash Chandra Patra and Shri Rajendra Kumar Samal is
unsustainable, both, in law and/or facts and the same
deserves to be quashed and set aside.”
6. At initial stage, where cognizable offence is disclosed in FIR,
whether investigation can be thwart by exercising inherent power
under section 482 of Cr.P.C., the Hon’ble Apex Court in the case of
Skoda Auto Volkswagen India Private Ltd. v/ s. State of Uttar
Pradesh [2020 SCC Online SC 958], in para 41 has held as
under :-
“41. It is needless to point out that ever since the decision
of the Privy Council in King Emperor v. Khwaja Nazir
Ahmed AIR 1945 PC 18, the law is well settled that Courts
would not thwart any investigation. It is only in cases where
no cognizable offence or offence of any kind is disclosed in
the first information report that the Court will not permit an
investigation to go on. As cautioned by this Court in State
of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335, the power
of quashing should be exercised very sparingly and with
circumspection and that too in the rarest of rare cases.
While examining a complaint, the quashing of which isPage 8 of 21
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sought, the Court cannot embark upon an enquiry as to the
reliability or genuineness or otherwise of the allegations
made in the FIR or in the complaint. In S.M. Datta v. State
of Gujarat (2001) 7 SCC 659 this Court again cautioned
that criminal proceedings ought not to be scuttled at the
initial stage. Quashing of a complaint should rather be an
exception and a rarity than an ordinary rule. In S.M. Datta
(supra), this Court held that if a perusal of the first
information report leads to disclosure of an offence even
broadly, law courts are barred from usurping the
jurisdiction of the police, since the two organs of the State
operate in two specific spheres of activities and one ought
not to tread over the other sphere.”
7. In the case of State of Haryana Vs. Bhajanlal & ors., AIR 1992
SC 604, the Hon’ble Apex Court has opined that power of quashing
can be exercised very sparingly and that too in rarest of rare case.
Relevant observations reads as under:-
“103. We also give a note of caution to the effect that the
power of quashing a criminal proceeding should be
exercised very sparingly and with circumspection and that
too in the rarest of rare cases; that the court will not be
justified in embarking upon an enquiry as to the reliability
or genuineness or otherwise of the allegations made in the
FIR or the complaint and that the extraordinary or inherent
powers do not confer an arbitrary jurisdiction on the court
to act according to its whims or caprice.”
8. After considering ratio laid down as aforesaid, let examine
pleadings of the petition. In para 4.5, 4.7 and 4.10 of the petition,
the petitioners asseverate as under:-
“4.5. The complainant had, on 10.02.2015, raised various
purchase orders which resulted in privity of contract
between parties. The purchase orders also contained
various terms and conditions governing contractual
relationship between parties. Accordingly, the accused hasPage 9 of 21
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started working on supply of the goods ordered.
4.7. It is submitted that none of the conditions of modified
letter of intent as well as purchase order provided for
submission of performance bank guarantee. However,
complainant insisted on providing performance bank
guarantee which the accused had refused to provide, since
the same was not falling part of contractual terms and
conditions. For Indcon Projects & Equipment Ltd.
4.10 Therefore, the complainant came to the accused for
settlement of dispute and meeting took place between party
on 01.04.2015 wherein accused no. 1 was pressurized to
give an undated cheque for an amount of Rs. 15,60,000/-
towards security and guarantee of workmanship/
mechanical/ pump capacity. The cheque was given despite
none of the conditions of contract provided for it. The
minutes of meeting clearly states that the cheque was given
purely for security purpose. It is submitted that there
liability existing on the date on cheque was issued. It is
submitted that liability is in existence even till today.”
9. The above pleadings are indicative of the fact that the
petitioners, who is accused in the trial under the NI Act did not deny
issuance of the cheque nor signature thereof or the complainant
being holder in due course. It is also undeniable aspect that the
cheque was deposited by the complainant. The cheque in question
was presented by the complainant for clearance on 15.9.2015 and it
was returned unpaid with the endorsement “exceeding arrangement”
on 16.9.2015. The statutory notice issued on 5.10.2015 demanding
cheque amount of Rs.15,60,000/- being unpaid, which admittedly was
not paid within the stipulated time period, leading to the complainant
to file complaint u/s 138 of the NI Act before the jurisdictional Court.
It is equally indubitable that learned Chief Judicial Magistrate, NI
Court, after considering the averments made in the complaint and
also documents annexed with it and after applying its mind, issuedPage 10 of 21
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process to the petitioners. In background of above aspects, the
contention of the petitioners if noticed it is that the cheque in
question was not given towards discharging existing or subsisting
liability, but it is given towards security for performance guarantee
of workmanship / mechanical/pump capacity and hence, the cheque
in question does not fall within the purview to call the criminal
proceedings u/s 138 of the NI Act.
10. At this juncture, let refer section 139 of the NI Act, which
reads as under:-
“”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. In Lakshmi Dyechem v State of Gujarat 2012(12) JT 65, the
Hon Apex Court has held that presumption under Section 139 of the
Act is a rebuttal presumption and the accused issuing the cheque is
at liberty to prove to the contrary.
12. In Mandvi Cooperative Bank Vs. Nimesh B. Thakore reported
in 2010(3) SCC 83, it is held by the Hon Apex Court that a rebuttal
presumption is created under Section 139 of the NI Act that cheque
was issued by the drawer in discharge of any debt or liability owned
by him or its holder. Therefore, the presumption available under
Section 139 of the NI Act in favour of the holder in cheque can be
rebutted by the accused by adducing evidence. The burden of proof
is on the accused and the evidence which is available on record will
have to be tested bearing in mind the facts regarding the burden of
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proof. The rebuttal burden envisaged under Section 139 of the NI Act
can be discharged by placing a photocopy of the account maintained
by the petitioners accused in a proceedings under Section 482 of the
Criminal Procedural Code.
13. This Court in case of M/s Jalaram Jyot Sales Agency & Anr. Vs.
State of Gujarat, Special Criminal Application No.2125 of 2018, in
para 6.5 held as under:-
“6.5. A plain reading of Section 139 of the Negotiable
Instruments Act, 1881 establishes a statutory presumption
in favour of the holder of the cheque, to the effect that the
cheque was received for the discharge, in whole or in part,
of any debt or other legally enforceable liability, unless the
contrary is proved. In other words, the burden of proof
shifts upon accused to rebut the presumption and to
demonstrate that the cheque was not issued in discharge of
any debt or liability. Though the presumption under Section
139 is a rebuttable one, it continues to operate in favour of
the holder of the cheque until it is successfully rebutted by
the accused by leading cogent evidence.”
14. It is apposite to refer to the judgment of the Hon’ble Supreme
Court in Rohitbhai Jivanlal Patel v. State of Gujarat, AIR 2019
SC 1876, wherein the Hon’ble Court, in paragraph 7 and 7.1,
extracted and examined the findings of the High Court as under:
“7. Against the aforementioned judgment and orders of
acquittal, the complainant preferred appeals before the High
Court of Gujarat, which have been considered and decided
together by the impugned common judgment and order dated
08.01.2018. The High Court observed that the presumption
under Sections 118 and 139 of the NI Act was required to be
drawn that the cheques were issued for consideration and until
contrary was proved, such presumption would hold good; that
the complainant had proved legally enforceable debt in the oral
as also documentary evidence, including the writtenPage 12 of 21
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acknowledgment by the accused on stamp paper; and that
except bare denial, nothing was brought on record by the
accused to dislodge the proof adduced by the complainant.
7.1. The High Court observed that if the transaction in question
was not reflected in the accounts and income-tax returns, that
would at best hold the assesse or lender liable for action under
the income-tax laws but, if the complainant succeeds in
showing the lending of amount, the existence of legally
enforceable debt cannot be denied. The High Court also
observed that the issue regarding washing away of the cheques
in rain water was of no significance when the accused had
accepted his liability in clear terms. The High Court found that
the defence plea of the accused that the money was given as
hand loan by his friend Shri Jagdishbhai got falsified by the
version of the said Shri Jagdishbhai, who was examined as a
witness on behalf of the complainant. The High Court,
therefore, set aside the impugned orders and, while convicting
the accused-appellant for the offence under Section 138 of the
NI Act, sentenced him in the manner noticed hereinbefore. The
High Court, inter alia, observed and held as under:
“24. It is necessary at this stage also to refer to the emphasis
laid by the learned counsel appearing for the respondent No.2
on the source of the fund which has been lent by the appellant.
It has emerged from the detailed examination of the record, as
also detailed examination-in-chief as well as cross-examination,
that the complainant runs the business. He also maintains the
books of account and he has his own factory in the name and
style of ‘Ashirwad Enterprise’ and manufactures plastic. The
said factory is situated at Jambusar. Ordinarily, any prudent
business person would prefer to transact by cheque while
lending money, but it is quite often noticed that the cash
transactions in the business would allow huge sum of money as
cash, which sometimes are shown in the books of account as
cash on hands or otherwise as amount available on books.
Assuming that cheque transaction of lending of amount is
absent and income-tax returns also do not reflect such amount,
that at the best would hold the assessee or lender liable for
action under the Income-tax laws. However, otherwise, if he
succeeds in showing lending of such amount, both by oral
evidence of himself and his friend, on whom even respondent
No.2 relies upon and from the writing of the respondent No.2Page 13 of 21
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given separately along with seven cheques signed by him, what
possible reasons could weigh with the Court to deny the
existence of legally enforceable debt in such glaring
circumstances.
25. Considering the fact that the complainant maintains his
books of account, coupled with the fact that the respondent
No.2 had merely refuted on flimsy ground of his having
transacted with witness Jagdishbhai and not with the
complainant, has failed to discharge the burden which had
shifted upon him. It is to be noted that the respondent No.2 has
admitted his signature on the impugned cheque. At no point of
time, the cheque has been disputed……Once this fact is
acknowledged that the signature on the cheque is that of the
respondent No. 2-accused, section 139 of the Negotiable
Instruments Act would mandate the presumption that the
cheque concerns a legally enforceable debt or liability.
Of course, this presumption is in the nature of rebuttal and
onus is on the accused thereafter to raise a probable defence.
25.1 As can be noted from the chronology of events and the
material that has been placed before this Court that the
defence raised by the accused is not at all probable. The
respondent No.2-accused states that the money was given as a
hand loan by his friend Jagdishbhai and not the appellant, also
gets falsified completely by the version of Jagdishbhai. It
appears that in case of all the seven cheques when notices
were given prior to the filing of the complaint, he has chosen
not to reply to four of the notices. Either on account of
insufficiency of the funds or because he has closed account
that the cheques could not be realized. All these circumstances
cumulatively lead this Court to conclude that the appellant
succeeded in proving the legally enforceable debt and no
probable defence for rebutting the statutory presumption is
raised by the respondent No.2. 25.2 Initial presumption as
contemplated under section 139 of the Negotiable Instruments
Act, when the proof of lending of the money and acceptance of
the signatures on the cheques, shall need to be raised by the
Court in favour of the appellant.
28. ………. Reasonably, when the appellant had proved the
legally enforceable debt, not only through his own evidence,
but also through the evidence of his friend Jagdishbhai and
also other contemporaneous record, more particularly, thePage 14 of 21
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document at Exhibit 24, which is a writing by which the
respondent No.2 clearly indicates and accepts his liability to
the tune of Rs. 22.50 lakh. Thus, the burden had shifted upon
the respondent No. 2. The presumption which was needed to
be drawn by the Court under section 118 of the Negotiable
Instruments Act would oblige the Court to presume that the
cheque had been issued for consideration and until contrary is
proved, such presumption would hold the ground. Except the
bare denial, nothing has been found to come on record to
dislodge the positive proof that has been adduced by the
appellant.
29. In the opinion of this Court, the entire argument that the
rainy water could not have washed away the cheques, pales
into insignificance and is not argument worth consideration,
more particularly, when the respondent-accused in no unclear
terms had accepted his liability of his having accepted the
amount of Rs. 22.50 lakh from the complainant and it also
declared the issuance of seven cheques of particular dates
towards such legally enforceable debt. If it was
an understanding between the parties qua issuance of fresh
cheques, with an ostensible reason of old cheques having
washed away, those are the non-issues. This Court cannot be
oblivious of the fact that section 138 of the Negotiable
Instruments Act has been made a penal provision not only for
the cheques to give acceptability in the transaction, but it is
the economic blood-line of the country and, therefore, the law
makers have made the special rules of evidence by
introducing sections 118 and 139 of the Negotiable
Instruments Act.
30. The trial Court has committed a serious error by not
discharging its obligation of recognizing the evidentiary value
and not appreciating the positive evidence which led to the
reasonable proof of legally enforceable debt existing on the
side of the original complainant.”
15. Therefore, applying the ratio laid down in the aforesaid
judgments to the facts of the present case, the petitioners accused
cannot contend at this juncture that the cheque in question is issued
towards security and hence, the case u/s 138 of the NI Act is not
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made out or cannot contend that the cheque in question is not issued
towards discharge of any legally enforceable or subsisting liability.
These contentions are disputed facts and can be addressed and
weighed during trial. To be noted that once the process is issued,
presumption u/s 139 of the NI Act starts operating in favour of the
complainant and as such, the accused is required to discharge
burden by leading evidence. The complaint cannot be quashed until
the accused discharges burden envisaged upon.
16. In case of Sampelly Satyanarayana Rao (supra), Paras 14,
13, and 16 reads as under:-
“13. In Balaji Seafoods (supra), the High Court noted that the
cheque was not handed over with the intention of discharging
the subsisting liability or debt. There is, thus, no similarity in the
facts of that case simply because in that case also loan was
advanced. It was noticed specifically therein – as was the
admitted case of the parties – that the cheque was issued as
“security” for the advance and was not intended to be in
discharge of the liability, as in the present case.
14. In HMT Watches Ltd. versus M.A. Abida[8], relied upon
on behalf of the respondent, this Court dealt with the contention
that the proceedings under Section 138 were liable to be
quashed as the cheques were given as “security” as per defence
of the accused. Negativing the contention, this Court held :-
“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 aPage 16 of 21
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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.
11. In Suryalakshmi Cotton Mills Ltd. v. Rajvir Industries
Ltd.[(2008) 13 SCC 678], this Court has made the
following observations explaining the parameters of
jurisdiction of the High Court in exercising its jurisdiction
under Section 482 of the Code of Criminal Procedure:
(SCC pp. 685-87, paras 17 & 22)
“17. The parameters of jurisdiction of the High Court
in exercising its jurisdiction under Section 482 of the
Code of Criminal Procedure is now well settled.
Although it is of wide amplitude, a great deal of
caution is also required in its exercise. What is
required is application of the well-known legal
principles involved in the matter.
22. Ordinarily, a defence of an accused although appears
to be plausible should not be taken into consideration for
exercise of the said jurisdiction. Yet again, the High Court
at that stage would not ordinarily enter into a disputed
question of fact. It, however, does not mean that
documents of unimpeachable character should not be
taken into consideration at any cost for the purpose of
finding out as to whether continuance of the criminal
proceedings would amount to an abuse of process of
court or that the complaint petition is filed for causing
mere harassment to the accused. While we are not
oblivious of the fact that although a large number of
disputes should ordinarily be determined only by the civil
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courts, but criminal cases are filed only for achieving the
ultimate goal, namely, to force the accused to pay the
amount due to the complainant immediately. The courts
on the one hand should not encourage such a practice;
but, on the other, cannot also travel beyond its
jurisdiction to interfere with the proceeding which is
otherwise genuine. The courts cannot also lose sight of
the fact that in certain matters, both civil proceedings
and criminal proceedings would be maintainable.”
12. In Rallis India Ltd. v. Poduru Vidya Bhushan [(2011) 13 SCC
88], this Court expressed its views on this point as under: (SCC
p. 93, para 12)
“12. At the threshold, the High Court should not have
interfered with the cognizance of the complaints having
been taken by the trial court. The High Court could not have
discharged the respondents of the said liability at the
threshold. Unless the parties are given opportunity to lead
evidence, it is not possible to come to a definite conclusion
as to what was the date when the earlier partnership was
dissolved and since what date the respondents ceased to be
the partners of the firm.”
17. In the recent judgment rendered in the case of Rathish Babu
Unnikrishnan (supra), the Hon’ble Supreme Court, while referring
to the ratio laid down in Rajeshbhai Muljibhai Patel v. State of
Gujarat, (2020) 3 SCC 794, has categorically held that disputed
questions of fact are not required to be adjudicated at the threshold
stage. Instead, such issues ought to be considered and decided only
after the parties have had the opportunity to lead evidence. The
relevant paragraphs of the judgment are reproduced hereinbelow:-
“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 vs. State of Gujarat5 where the following pertinent opinion
was given by Justice R. Banumathi: –
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“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 (2010) 11 SCC 441 5 (2020) 3 SCC 794 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.
14. The parameters for invoking the inherent jurisdiction of the
Court to quash the criminal proceedings under S.482 CrPC,
have been spelled out by Justice S. Ratnavel Pandian for the two
judges’ bench in State of Haryana v. Bhajan Lal6, and the
suggested precautionary principles serve as good law even
today, for invocation of power under Section 482 of the Cr.P.C.
“103. We also give a note of caution to the effect that the
power of quashing a criminal proceeding should be exercised
very sparingly and with circumspection and that too in the
rarest of rare cases; that the court will not be justified inPage 19 of 21
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embarking upon an enquiry as to the reliability or
genuineness or otherwise of the allegations made in the FIR
or the complaint and that the extraordinary or inherent
powers do not confer an arbitrary jurisdiction on the court to
act according to its whim or caprice.”
15. In the impugned judgment, the learned Judge had rightly
relied upon the opinion of Justice J.S.Khehar for a Division
Bench in Rajiv Thapar (supra), which succinctly express the
following relevant parameters to be considered by the
quashing Court, at the stage of issuing process, committal, or
framing of charges,
“28. The High Court, in exercise of its jurisdiction under
Section 482 CrPC, must make a just and rightful choice. This
is not a stage of evaluating the truthfulness or otherwise of the
allegations levelled by the prosecution/ complainant against
the accused. Likewise, it is not a stage for determining how
weighty the defences raised on behalf of the accused are. Even
if the accused is successful in showing some suspicion or
doubt, in the allegations levelled by the prosecution/
complainant, it would be impermissible to discharge the
accused before trial. This is so because it would result in
giving finality to the accusations levelled by the
prosecution/complainant, without allowing the prosecution or
the complainant to adduce evidence to substantiate the same.”
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 will result in finality
without the parties having had an opportunity to adduce
evidence and the consequence then is that the proper forum
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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.
18. Situated thus, to non-suit the complainant, at the stage of
the summoning order, when the factual controversy is yet to
be canvassed and considered by the trial court will not in our
opinion be judicious. Based upon a prima facie impression, an
element of criminality cannot entirely be ruled out here
subject to the determination by the trial Court. Therefore,
when the proceedings are at a nascent stage, scuttling of the
criminal process is not merited.”
18. Considering the application of ratio of above judgments, the
judgment cited by learned advocate for the petitioners renders no
help to his case.
19. In view of above and for the foregoing reasons, the contention
of the petitioners to quash the complaint does not hold the field and
the same can at the most be a good defence and can be raised during
trial, but upon such finding, the Court cannot quash the complaint.
20. Resultantly, the petition fails and stands dismissed. Notice
discharged. Interim relief granted earlier stands vacated.
(J. C. DOSHI,J)
SHEKHAR P. BARVE
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