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2022 (4) TMI 1434 - SUPREME COURTDishonor of Cheque - insufficiency of funds - legally enforceable debt or liability - rebuttal of presumption u/s 118 of the N.I. Act - whether summons and trial notice should have been quashed on the basis of factual defences? - what should be the responsibility of the quashing Court? - whether it must weigh the evidence presented by the parties, at a pre-trial stage? - HELD THAT:- The transactional arrangement between the complainant and the accused reveals the nature of obligations that both had undertaken. The cheques in question were accepted by the complainant for an agreed price consideration, for the shares in the appellant’s company. According to the complainant, the appellant is to first pay and then as per the usual practice in the trade, the shares would be transferred to the appellant in due course within the time permitted by law. A bare perusal of Section 56(1) of the Companies Act, 2013 indicates that a transfer of securities of a company can take place only when a proper instrument of transfer is effectuated - in shares transactions, there is a time lag between money going out from the buyer and shares reaching to the seller. In earlier days the time gap was longer. It has now become speedier but the gap still remains. The share transactions in India generally follows this pattern. It is also relevant to bear in mind that the burden of proving that there is no existing debt or liability, is to be discharged in the trial. 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. 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 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 - 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. The High Court rightly declined relief to the accused, in the quashing proceeding. Having said this, to rebut the legal presumption against him, the appellant must also get a fair opportunity to adduce his evidence in an open trial by an impartial judge who can dispassionately weigh the material to reach the truth of the matter - Appeal dismissed.
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