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.
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 471 OF 2015
HMT Watches Ltd. V M.A. Abida & Anr.
Citation:AIR 2015 SC (Supp)901
Dated:March 19, 2015
These appeals are directed against judgment and order
dated 25.2.2014 passed by the High Court of Kerala in
Criminal M.C. No 2366 of 2008 and Criminal M.C. No. 2367 of
2008, whereby the said Court has allowed the petitions and
quashed the proceedings of criminal complaint case Nos.
1790, 1791, 1792, 1793, 1794, 1795, 1796, 1824, 1825,
1826, 1827, 1828, 1829, 1830 and 1831 of 2007 pending in
the Court of Judicial First Class Magistrate (Court No. IV),
Kochi; and C.C. Nos. 1208, 1209, 1210,1211 and 1212 of
2007, pending in the Court of Judicial First Class Magistrate
(Court No. III), Kochi. All these criminal complaint cases
were pertaining to offence punishable under Section 138 of
the Negotiable Instruments Act, 1881 (hereinafter referred to
as “the N.I. Act”).
2. We have heard learned counsel for the parties and
perused the papers on record.
3. Succinctly stated, the appellant filed criminal complaint
cases against respondent – M.A. Abida stating that as many
as 57 cheques dated 28.09.2006 were issued by her in
discharge of outstanding liability towards the
complainant/appellant (HMT Watches Ltd.). When the
cheques were presented for collection the same were
received back, dishonoured by bankers with the
endorsement – “payment stopped by the drawer”. Notice of
demand dated 9.10.2006 was issued by the complainant to
the respondent no.1 but she failed to make the payment of
the amount mentioned in the cheques, i.e., total
Rs.1,79,86,357/-. Instead, she sent reply to the notice
disputing liability to pay. On this, complainant filed twenty
criminal complaints mentioned above, against the
respondent no.1 with regard to the offence punishable under
Section 138 of the N.I. Act.
4. The accused – M.A. Abida filed Criminal M.C. No. 2366
of 2008 and Criminal M.C. No. 2367 of 2008 challenging the
proceedings initiated by the complainant on the ground that
she was Re-Distribution Stockist (RDS) of watches
manufactured by the appellant. The business with the
appellant was done till September, 2003 on “cash and carry”
basis. The accused further pleaded in the petitions filed
before the High Court under Section 482 of the Code of
Criminal Procedure, that after 2003 the appellant company
used to collect cheques towards the amount covered by
distinct invoices with respect to various consignments for
securing payment of amount covered by the invoices.
5. The High Court accepted the plea of the accused
(respondent no.1) and quashed the criminal complaint cases.
Hence, these appeals through special leave.
6. On behalf of the appellant, it is argued before us that
the High Court committed a grave error of law in quashing
the proceedings of the criminal complaint cases on the
factual pleas taken by the respondent no.1. On the other
hand, learned counsel for the respondent no.1 contended
that since the cheques were given as security, as such there
was no liability to make the payment, and the ingredients of
the offence punishable under Section 138 of the N.I Act were
not made out.
7. Section 138 of the Negotiable Instruments Act, 1881
reads as under:
“138. Dishonour of cheque for insufficiency,
etc., of funds in the accounts. - Where any
cheque drawn by a person on an account
maintained by him with a banker for payment of
any amount of money to another person from out
of that account for the discharge, in whole or in
part, of any debt or other liability, is returned by
the bank unpaid, either because of the amount of
money standing to the credit of that account is
insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from that
account by an agreement made with that bank,
such person shall be deemed to have committed
an offence and shall, without prejudice to any
other provisions of this Act, be punished with
imprisonment for “a term which may extend to
two year”, or with fine which may extend to twice
the amount of the cheque, or with both:
Provided that nothing contained in this section
shall apply unless-
(a) The cheque has been presented to the bank
within a period of six months from the date on
which it is drawn or within the period of its validity,
whichever is earlier.
(b) The payee or the holder in due course of the
cheque, as the case may be, makes a demand for
the payment of the said amount of money by
giving a notice, in writing, to the drawer, of the
cheque, “within thirty days” of the receipt of
information by him from the bank regarding the
return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the
payment of the said amount of money to the
payee or, as the case may be, to the holder in due
course of the cheque, within fifteen days of the
receipt of the said notice.
Explanation: For the purpose of this section, “debt
or other liability” means a legally enforceable debt
or other liability.”
8. Section 139 of the Negotiable Instruments Act, 1881
provides that there shall be a presumption in favor of holder
of a cheque as to the debt or liability. It 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, or any debt or other liability.”
9. Section 140 of the Negotiable Instruments Act, 1881
prohibits what cannot be a defence in a prosecution in
respect of offence punishable under Section 138 of the N.I.
Act. It reads as under:
“140. Defence which may not be allowed in
any prosecution under section 138. - Defence
which may not be allowed in any prosecution
under section 138 It shall not be a defence in a
prosecution of an offence under section 138 that
the drawer had no reason to believe when he
issued the cheque that the cheque may be
dishonoured on presentment for the reasons
stated in that section.”
10. 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.
11. In Suryalakshmi Cotton Mills Limited v. Rajvir
Industries Limited and others1
, this Court has made
1
(2008) 13 SCC 678
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.
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 others2
, 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.”
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. Lastly, it is contended on behalf of the respondent no.1
that it was not a case of insufficiency of fund, as such,
ingredients of offence punishable under Section 138 of the
N.I.Act are not made out. We are not inclined to accept the
2
(2011) 13 SCC 88
contention of learned counsel for respondent no.1. In this
connection, it is sufficient to mention that in the case of
Pulsive Technologies P. Ltd. vs. State of Gujarat3
, this
Court has already held that instruction of “stop payment”
issued to the banker could be sufficient to make the accused
liable for an offence punishable under Section 138 of the N.I.
Act. Earlier also in Modi Cements Ltd. vs. Kuchil Kumar
Nandi4
, this Court has clarified that if a cheque is
dishonoured because of stop payment instruction even then
offence punishable under Section 138 of N.I. Act gets
attracted.
14. 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
offence punishable under Section 138 of the N.I. 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
3
(2014) 9 SCALE 437
4
(1998) 3 SCC 249
trial court, after recording of the evidence, can be better
appreciated.
15. Therefore, for the reasons, as discussed above, these
appeals deserve to be allowed. Accordingly, the appeals are
allowed. The impugned order dated 25.2.2004 passed by
High Court of Kerala in Criminal M.C. Nos. 2366 of 2008 and
2367 of 2008 is hereby quashed. The trial court shall
proceed with the trial in the criminal complaint cases. It is
clarified that we have not expressed our opinion as to
correctness of the defence pleas taken by the respondent
no.1. No order as to costs.
………………….....…………J.
[Dipak Misra]
.………………….……………J.
[Prafulla C. Pant]
New Delhi;
March 19, 2015
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