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VIVEK SINGH THAKUR, J. –

Petitioner Ravi Kumar has approached this Court for quashing Criminal Complaint No.163/2 of 2016, titled as Prem Singh v. Ravi Kumar, filed by complainant-respondent No.2 Prem Singh (hereinafter referred to as complainant), pending in the Court of Additional Chief Judicial Magistrate, Nalagarh, District Solan, Himachal Pradesh (hereinafter referred to as Magistrate), including summoning order dated 18.2.2017, passed by the Magistrate on the basis of complaint filed by complainant and material placed on record therewith.

2. Respondent No.1 is State of Himachal Pradesh, which has not been arrayed as a party by the complainant in the complaint filed under Section 138 of the Negotiable Instruments Act (hereinafter referred to as NI Act), but has been arrayed as respondent No.1 in the present petition. There is no role of the State in the matter and no relief has been sought against respondent No.1. Petitioner and complainant are the contesting parties.

3. From the material on record, certain admitted facts have emerged, according to which an Agreement dated 8.9.2015 was entered upon between the petitioner and complainant, whereby petitioner had agreed to provide 51 quintals of extracted material from Khair Wood at a rate Rs.300/- less than the prevailing market rate at relevant point of time and as per agreement the aforesaid material was to be supplied by the petitioner to the complainant on or before 15.4.2016. As per agreement, Rs.15,00,000/- had been paid by complainant in advance to petitioner and Rs.20,00,000/- was to be paid on or before 18.10.2015 and the remaining amount of Rs.10,00,000/- was to be paid at the time of felling of trees. For default in supplying material, complainant was given right to take action, in accordance with law, to recover double of the amount paid in advance and in case of failure of complainant to receive delivery of the material, petitioner was given right to forfeit the advance money; and the petitioner had also issued a Cheque No.325699, drawn at Oriental Bank of Commerce Chandigarh, in favour of complainant, as a Security Cheque, enabling the complainant to recover the advance money in case of default on the part of petitioner.

4. Execution of Agreement and issuance and supply of Cheque as Security Cheque, referred supra, are admitted facts.

5. Complainant filed a complaint before the Magistrate, under Section 138 of NI Act, on 1.7.2016 and after recording preliminary evidence of the complainant, vide order dated 18.2.2017, the Magistrate, after arriving a conclusion that there were sufficient grounds to proceed against the accused (petitioner) for commission of offence under Section 138 of NI Act, issued summons to the petitioner returnable for 22.4.2017. However, petitioner could not be served despite issuance of Non-bailable Warrants against him. Summons/ warrants issued for his service were received back, sometimes none was found at his home, sometimes only his wife was available at home.

6. In aforesaid circumstances, proceedings under Section 82 of the Code of Criminal Procedure were initiated against the petitioner. In the meanwhile, petitioner had approached this Court by filing present petitioner and he also appeared before the Magistrate on 3.4.2019. However, on that date case was adjourned by the Magistrate for 27.4.2019, on which date, on having been informed about stay granted by this High Court, case was adjourned by the Magistrate for further order.

7. In the present petition, petitioner has admitted issuance of Security Cheque as incorporated in the Agreement, with further submission that prior to filing of the complaint a compromise was entered between the parties on 7.3.2016, wherein supply of 2950 quintals of prepared wood by the petitioner to the complainant had been admitted. It has been further stated that petitioner had received Rs.1,64,00,000/- from the complainant but not Rs.47,00,000/- as claimed by the complainant and as the petitioner has already supplied 2950 quintals wood extracted from the Khair tree, having valuation of Rs.1,87,00,000/-, and, therefore, it has been contended that nothing has to be paid by the petitioner to the complainant. Claim of the petitioner is that he has already supplied material extracted from Khair tree of value more than the amount paid by the complainant to the petitioner, and, therefore, complainant was not having any entitlement to present the Cheque for encashment, as there was no default on the part of petitioner in for supplying the extracted wood. Copies of compromise, alleged to be arrived at between the parties and some other person, have also been placed on record by the petitioner.

8. It has been contended on behalf of the petitioner that the Magistrate has failed to follow the procedure while accepting the complaint against the petitioner without verifying the facts and, therefore, taking of cognizance by the Magistrate and issuance of summons, vide order dated 22.7.2016, without conducting inquiry, is not tenable in the eye of law. It has been further contended that complaint has not been filed within time and it has been filed with ulterior motive and bad intention to settle score with the petitioner. Learned counsel for the petitioner has referred to a pronouncement of the Supreme Court in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, wherein Clause (7) of Para 102, it has been held as under:

“102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) to (6) …… …… …… …… ……

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding 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. Learned counsel for the complainant has submitted that in view of pronouncement of Supreme Court in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited, (2016) 10 SCC 458 = 2016(3) L.A.R. 660 = (2016) Law Today Live Doc. Id. 11017, Security Cheque can be made basis for filing a complaint under Section 138 of NI Act for presence of ingredients required for filing a complaint under the said provision. Referring Paras 9, 10, 11 and 12 of the aforesaid pronouncement, learned counsel has contended that in present case liability or debt exists as the amount had become legally recoverable from the petitioner, in terms of Agreement dated 8.9.2015 and, therefore, complainant was having right to tender the Cheque for payment and dishonour thereof definitely entitled him to prefer complaint under Section 138 of NI Act. It has been contended by learned counsel for the complainant that issuance of Cheque has been duly admitted by the petitioner and, therefore, presumption is against him and unless the same is rebutted by him, as provided under law, prima face case is against him making him liable to face the trial. Paras 9, 10, 11 and 12 of Sampelly’s case supra read as under:

“9. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (P) Ltd. V. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 with reference to the explanation to Section 138 of the Act and the expression “for discharge of any debt or other liability” occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise.

10. Reference to the facts of the present case clearly shows that though the word “security” is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28th February, 2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.

11. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract under Section 138, which arises on account of dishonour of cheque issued was not by itself at par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of cheque issued for discharge of later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque there was a debt/liability in presenti in terms of the loan agreement, as against the case of Indus Airways (supra) where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan installment which had fallen due though such deposit of cheques towards repayment of installments was also described as “security” in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque.

12. The crucial question to determine applicability of Section 138 of the Act is whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the underlying Page 8 principle as can be discerned from discussion of the said cases in the judgment of this Court.”

10. Complainant has also referred to pronouncement of Supreme Court in Sripati Singh (Since Deceased) Through His Son Gaurav Singh v. State of Jharkhand and Another, 2021 SCC OnLine SC 1002 : AIR 2021 SC 5732 = 2022(1) L.A.R. 565 = (2021) Law Today Live Doc. Id. 16829, wherein it has been reiterated that a complaint under Section 138 of NI Act is maintainable even for dishonour of a Cheque issued as Security.

11. Learned counsel for the complainant, referring HMT Watches Limited v. M.A. Abida and another, (2015) 11 SCC 776; and S. Krishnamoorthy v. Chellammal, (2015) 14 SCC 559, has contended that inherent power of High Court under Section 482 of the Code of Criminal Procedure should not be exercised in cases where disputed questions of fact are involved, as only trial Court can determine the disputed questions of fact.

12. In M.A. Abida’s case, the Supreme Court has observed as under:

10. Having heard 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 N.I. Act stood uncomplied, even though Respondent 1 (accused) had admitted that he replied the notice issued by the complainant. Also, the fact, as to whether the signatory of demand notice was authorized 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 Limited v. Rajvir Industries Limited and others, (2008) 13 SCC 678, this Court has made following observations explaining the parameters of jurisdiction of the High Court in exercising its jurisdiction under Section 482 of the Code of Criminal Procedure: -

“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.

xxx xxx xxx

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 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 Limited v. Poduru Vidya Bhushan and others, (2011) 13 SCC 88, this Court expressed its views on this point as under:-

“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.”

13. In view of the law laid down by this Court as above, in the present case High Court exceeded its jurisdiction by giving its opinion on disputed questions of fact, before the trial court.”

13. In S. Krishnamoorthy’s case, the Supreme Court has observed as under:

“5. The above defence of the Respondent (accused) before the High Court, in the petition filed Under Section 482 of the Code, is nothing but absolutely factual in nature, which is neither admitted by the complainant, nor apparent on the face of the record. Such type of disputed factual defences could have been appreciated only by the trial court, after the parties led their evidence. In our opinion, the High Court committed grave error of law in examining the allegations and counter allegations which are disputed and factual in nature in a proceeding Under Section 482 of the Code.

6. In Padal Venkata Rama Reddy alias Ramu v. Kovvuri Satyanarayana Reddy and Ors., (2011) 12 SCC 437, this Court, explaining the law on the scope of Section 482 of the Code, has observed, in paragraph 32, as under:

32. It would not be proper for the High Court to analyse the case of the complainant in the light of all the probabilities in order to determine whether conviction would be sustainable and on such premise arriving at a conclusion that the proceedings are to be quashed. In a proceeding instituted on a complaint, exercise of inherent powers to quash the proceedings is called for only in a case in which the complaint does not disclose any offence or is frivolous, vexatious or oppressive. There is no need to analyse each and every aspect meticulously before the trial to find out whether the case would end in conviction or acquittal.

7. In view of the above position of law, we have no option but to set aside the order passed by the High Court as it has entered into highly disputed questions of fact and concluded that the material before it was sufficient to cause reasonable suspicion in the case of the complainant. That is not the ground on which powers Under Section 482 of the Code can be exercised by the High Court.

8. Therefore, the appeal is allowed. The impugned order dated 5.8.2009 passed by the High Court of Judicature of Madras in Chellammal v. S. Krishnamoorthy, 2009 SCC OnLine Mad 1343, is hereby set aside. The Criminal complaint (CC No. 120 of 2007) pending before the Judicial Magistrate, Dharapuram, shall stand revived. The trial court shall proceed in accordance with law.”

14. In Gunmala Sales Private Limited v. Anu Mehta and others, (2015) 1 SCC 103 = 2014(3) L.A.R. 380 = (2014) Law Today Live Doc. Id. 11666, the Supreme Court has observed as under:

“34.4 No restriction can be placed on the High Court’s powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.”

15. Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197 : 2019(1) CCC 580(SC) = 2019(1) L.A.R. 74 = (2019) Law Today Live Doc. Id. 10039, has been referred on behalf of the complainant to advance the argument that even issuance of post-dated Cheque does not absolve the drawer of a Cheque of penal consequences under Section 138 of NI Act, wherein it has been observed as under:

“32. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.

33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.

34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

35. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.

36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

16. Learned counsel for the petitioner has also referred Paras No.9.2, 9.3 and 12 of pronouncement of Supreme Court in Kaptan Singh v. State of Uttar Pradesh and others, (2021) 9 SCC 35, which read as under:

“9.2 In the case of Dhruvaram Murlidhar Sonar v. State of Maharashtra, (2019) 18 SCC 191, after considering the decisions of this Court in Bhajan Lal (Supra), it is held by this Court that exercise of powers under Section 482 Cr.P.C. to quash the proceedings is an exception and not a rule. It is further observed that inherent jurisdiction under Section 482 Cr.P.C. though wide is to be exercised sparingly, carefully and with caution, only when such exercise is justified by tests specifically laid down in section itself. It is further observed that appreciation of evidence is not permissible at the stage of quashing of proceedings in exercise of powers under Section 482 Cr.P.C. Similar view has been expressed by this Court in the case of CBI v. Arvind Khanna, (2019) 10 SCC 686; State if Telangana v. Managipet, (2019) 19 SCC 87, and in the case of XYZ v. State of Gujarat, (2019) 10 SCC 337, referred to hereinabove.

9.3 Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that the High Court has exceeded its jurisdiction in quashing the criminal proceedings in exercise of powers under Section 482 Cr.P.C.

… … … … … …

12. Even the High Court has erred in observing that original complaint has no locus. The aforesaid observation is made on the premise that the complainant has not placed on record the power of attorney along with the counter filed before the High Court. However, when it is specifically stated in the FIR that Munni Devi has executed the power of attorney and thereafter the Investigating Officer has conducted the investigation and has recorded the statement of the complainant, accused and the independent witnesses, thereafter whether the complainant is having the power of attorney or not is to be considered during trial.”

17. In pronouncement of the Supreme Court in Sonu Gupta v. Deepak Gupta and others, (2015) 3 SCC 424, it has been held that at the stage of cognizance and summoning, the Magistrate is required to apply his judicial mind only with a view to take cognizance of the offence or, in other words, to find out whether prima facie case has been made out for summoning the accused person or not, and the Magistrate is not required to consider the defence version or material or arguments nor is he required to evaluate the merits of the material or evidence of the complainant, because the Magistrate must not undertake the exercise to find out at this stage whether the material will lead to conviction or not, as the cognizance is taken of the offence and not the offender, and an accused may seek discharge at the stage of framing of charge if he or she can show that materials are absolutely insufficient for framing of charge against the said accused, but such exercise will be required only at a later stage not at the state of taking cognizance for summoning the accused on the basis of prima facie case.

18. The Supreme Court in Rajeshbhai Muljibhai Patel and another v. State of Gujarat and another, (2020) 3 SCC 794 = 2021(1) L.A.R. 422 = (2020) Law Today Live Doc. Id. 15950, has held that once the issuance of cheque is established, presumption would arise under Section 139 of NI Act in favour of holder of cheque, and the presumptions under Section 139 of NI Act and Section 118(a) of the Evidence Act are rebuttable but burden lies on the accused to rebut the presumption by leading evidence, and until the accused discharges the burden, presumption under Section 139 of NI Act will continue to remain. Therefore, apart from raising defence, based on disputed question of fact, including that there is no legally enforceable debt, accused has also to adduce evidence to rebut the statutory presumption and prove the disputed questions of fact and, therefore, complaint under Section 138 of NI Act ought not to have been quashed by the High Court by taking recourse to Section 482 Cr.P.C., though the Court has the power to quash such Criminal Complaint on the legal issues like limitation, etc.

19. In present case, Agreement between the parties, payment of advance money for supply of extract of Khair Wood and issuance of a Cheque as security are admitted facts. Complainant is claiming non-supply of material against advance payment of Rs.47,00,000/- made by him, whereas petitioner is claiming receipt of Rs.1,64,00,000/- in total and supply of material, i.e. 2950 quintals material having value of Rs.1,87,00,000/-. As per admitted Agreement, 5100 quintals of material was to be supplied by the petitioner on or before 15.4.2016 and Cheque was issued as a security in terms of Agreement, entitling the complainant to recover the advance payment. It is claim of the petitioner that he has supplied material of value of more than the advance money received by him. All these questions and issues involve disputed questions of fact which are required to be adjudicated by the Trial Court.

20. There is a difference between an ‘ordinary criminal case’ and a ‘complaint under Section 138 of NI Act’. In ordinary criminal case, presumption of innocence is in favour of accused, whereas in a case in complaint under NI Act, presumption is in favour of complainant with reverse onus upon the accused.

21. In case ingredients for filing complaint under Section 138 of NI Act are in existence, then presumption is there, as provided under law, and to rebut the same, definitely, evidence would be required, which would be possible only in the trial Court, but in case essential ingredients are lacking, then the trial Court, at the time of framing of charge/putting notice of accusation, can quash the criminal proceedings as also explained by this Court in CRMMO No.165 of 2018, titled as Siemens Enterprise Communications Pvt. Ltd. Now known as Progility Technologies Pvt. Ltd. v. Central Bureau of Investigation, decided on 30.8.2019, reported in 2019(4) Him L.R.(HC) 2491.

22. Keeping in view the admitted fact of issuance of Security Cheque and provisions of presumption attached therewith in favour of the complainant and against the petitioner, coupled with pronouncements of the Court, referred supra, I do not find any illegality or perversity in the order passed by the Magistrate for summoning the petitioner and, therefore, petition deserves to be dismissed being devoid of merit. Needless to say that petitioner shall have every right to rebut the presumption as permissible under law and explained in the pronouncements referred supra, referred supra, by placing on record relevant material before the Trial Court at appropriate stage during trial.

23. In view of above discussion and ratio of law laid down in the pronouncements referred supra, petition is dismissed and disposed of.

24. Interim protection granted to the petitioner stands vacated. Parties are directed to appear before the Trial Court on 29.5.2023.

Pending application, if any, also stands disposed of. A copy of this order be sent to the Trial Court.

Petition dismissed.

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