Gujarat High Court Refuses To Quash Case Against Contractor For Dishonoring Cheque Drawn By His Brother's Firm With Similar Name

The Gujarat High Court has dismissed a petition seeking to quash a case under Section 138 of the Negotiable Instruments Act holding that whether the cheque was issued by the petitioner or his brother who had the same initials was a question to be considered at the stage of trial and prima facie the intention of the petitioner was to avoid paying back the huge sum to the complainant.Justice Nirzar Desai dismissed a petition wherein the petitioner, a proprietor of AK Construction claimed that his brother's firm, AK Road Constructor was a separate entity and that the complaint against a cheque issued by AK Road Contractor did not have any connection with him. "Whether the cheque has been issued by the petitioner or his brother and whether he was competent to issue the cheque or not, are the matter of evidence at the stage of trial. However, prima facie, this Court is of the view that considering the huge amount involved, which is Rs.37,24,631/-, out of which Rs.20,00,000/- was sought to be paid by the petitioner by way of the cheque in question, which was returned by the bank with the endorsement `funds insufficient', the intention of the petitioner was to avoid the payment or to dupe the complainant." The Court noted that both brothers ran entities engaging in the construction business and that the complainant has been supplying concrete, grit, mettle to the petitioner since 2016. The petitioner had issued a cheque to the complainant towards the payment of transportation charges in the name of AK Road Constructor, but this was returned citing insufficient funds. Thereafter, the complainant served a notice u/s 138 to the petitioner, but there was no reply. As such, a complaint was filed u/s 138. The petitioner opposed this citing that AK Road Contractor did not belong to him and since he was not the drawer of the cheque, the proceedings against him were misconceived. However, the complainant insisted that both brothers were doing business jointly and the cheque issued by the petitioner was given with the assurance that the same will be cleared. But the petitioner had deliberately issued the cheque in the name of his brother's firm to cheat and avoid the payment. Additionally, it was pointed out that since the trial had commenced, and the court had entered a crucial stage of evidence, the complaint could not be quashed. Justice Desai primarily noted that there was no evidence on record to show that the transportation services were availed by the petitioner's brother and not him. Additionally, the trial was ongoing and the petitioner had cross-examined the Complainant. He had also failed to respond to the notice issued by the complainant. It was also found that it is difficult for a businessman who has limited business interaction with the person to know the internal arrangement between the two brothers. Since the petitioner did not clarify the arrangement between the brothers despite notice, it was held that the intention of the petitioner was to dupe the complainant. Accordingly, the Bench held that the trial should not be interfered with and there was 'no point in staying the trial or quashing the complaint.' Case Title: AYYUBKHAN KALEKHAN PATHAN v/s STATE OF GUJARAT Case No.: R/SCR.A/891/2020Citation: 2022 LiveLaw (Guj) 215Click Here To Read/Download Order(Edited by Hannah M Varghese)

Gujarat High Court Refuses To Quash Case Against Contractor For Dishonoring Cheque Drawn By His Brother's Firm With Similar Name

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