A Complaint for Dishonour of Cheque [S.138 NI Act] cannot be quashed on the ground that ‘Cheque was issued as Security’; SC [Read the Judgment]
A two Judge Bench of the Supreme Court in HMT Watches Ltd. Vs. Abida [Crl. Appeal No;472 of 2015] it is held that a complaint filed U/S 138 of Negotiable Instrument Act for ‘dis-honour of Cheque’ cannot be quashed by High Court on the ground that ‘Cheque was issued as Security’, invoking the power U/S 482 of Criminal Procedure Code .
While reversing a Judgment from High Court of Kerala the Bench comprising of Justice DIpak Mishra and Justice Prafulla C. Pant had held as follows;
“Having heard learned counsel for the parties, we are of the view that the accused (respondent no.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 the respondent no.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.”
The Bench relied on the following observation of Supreme Court in Suryalakshmi Cotton Mills Limited v. Rajvir Industries Limited and Others[.....................] “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 [pic]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.'
The Bench allowed the Appeal by holding that the High Court exceeded its jurisdiction by giving its opinion on disputed questions of fact, before the trial court.
Read the Judgment here.