TMI Blog2022 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... SUPREME COURT] the Apex Court has held that the intention of the appellants in obtaining the hire-purchase and the allied agreement was to secure the return of loans advanced to their customers, and no real sale of the vehicle was intended by the customer to the appellants. The transactions were merely financing transactions. The mortgagee certainly recover for remaining amount also other then the compensation amount. Therefore, merely because compensation withdrawn and challenge has not made to refer the matter to the Land Acquisition Tribunal, it cannot be said that the entire proceeding has been discharged. The substantive provision of Transfer of Property Act as the mortgage has already executed, though its validity is questioned before this Court, this Court cannot make a roving enquiry. Therefore, this Court cannot go into the merits whether there is legally enforceable debt or not, it has to be discharged only by the accused before the trial Court - petition dismissed. - Crl. O.P. Nos. 16445, 19526, 21288 of 2017, Crl. M.P. Nos. 10122, 10123, 11795, 11796, 12545 and 12546 of 2017 - - - Dated:- 21-12-2021 - THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR For the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s acquired and the compensation was paid to the Secured Creditor, there cannot be criminal prosecution u/s. 138 of the N.I. Act. Though the Petitioners have raised objections for withdrawal of the compensation, since the Respondent sought to discharge of entire loan outstanding in the Section 138 N.I. Act proceedings in CC No. 3769 of 2015 and the same came to be dismissed for want of jurisdiction. The Respondent claimed compensation with respect to said property secured in November 2018 by releasing the title deed and other original documents pertaining to the property. Hence it is his contention that as the compensation has been paid, there is no legally enforceable debt. It is his further contention that pursuant to the notification under Section 4(1) of the Land Acquisition Act, any transaction after the notification is void ab initio. The Collector ought to have made reference to the concerned court under Section 18 of the L.A. Act. However, the 1st and 2nd petitioners permitted to withdrawal of compensation by the Respondent in good faith without objections. Whereas the Respondent did not seek further enhancement of the compensation as contemplated under Section 18 of L.A. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raise any objection to the same. Hence it is the contention that as against the sanctioned loan amount of ₹ 2,00,95,000/- the compensation received is only ₹ 56,14,840/-. Since there is a shortfall and it has to necessarily be discharged/collected only from the borrowers/Petitioners. Therefore, it is his contention that the debt and liability of the Petitioners/Accused does not get discharged on receipt of the compensation amount and the shortfall of the amount the mortgagee is entitled to proceed for recovery against the borrowers. Therefore, he submitted that there exist a legally enforceable debt as there is a shortfall and the debt had not been discharged fully from the compensation amount. 9. Learned counsel further submitted that the proceedings under Section 138 of N.I. Act is a penal provision, at this stage the same cannot be quashed. The alleged plea of legally enforceable debt or not though is untenable and unsustainable in the above case, it at all to be considered can only be a defence before the trial court. Hence opposed the quashing of the proceedings. 10. In support of his contention he has also relied upon the following judgments: 1. M.M.T.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title to the property. Further he cannot question proceedings of taking possession. In the above judgment it is also held that after notification, acquisition cannot be challenged by the purchaser. 14. This Court also in Prakash Finance vs. R. Babu [ 2018-2-L.W.(Crl.) 419] has held that once the vehicle is repossessed there cannot be any prosecution under Section 138 of the Negotiable Instruments Act. Similar views also taken by Madurai Bench of this Court in N. Rajangan v. Centurion Bank Ltd., [2010-1-LW (Crl) 831]. 15. The Apex Court in Krishna Prasad and Others vs. Gouri Kumari Devi [AIR 1964 SC 1464] has held that the provision under section 24(5) of the Land Acquisition Act is some what similar to the provision of section 73(2) of the Transfer of Property Act which provides, inter alia that where the mortgaged property is acquired under the Land Acquisition Act, or any other enactment for the time being in force providing for the compulsory acquisition of immoveable property, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation. In a sense, the compensation amount payable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation. 19. A careful perusal of the above provision makes it clear that the above merely enacts the principle of substituted security, that is to say, not taking for the purpose of the security entitled not only to proceed against the mortgage property but anything that is substituted for it. The mortgagee certainly recover for remaining amount also other then the compensation amount. Therefore, merely because compensation withdrawn and challenge has not made to refer the matter to the Land Acquisition Tribunal, it cannot be said that the entire proceeding has been discharged. 20. Be that as it may. The main contention of the learned counsel for the Respondent is that as the compensation amount has been received which is lesser than the advance originally made to the tune of ₹ 2 Crores, such receipt of lesser amount itself amounts to discharge of entire mortgage amount. Therefore, whether the receipt of the entire compensation towards the part of the loan will amount to clear the entire mortgage loan cannot be gone into at this stage. The Negotiable Instruments Act itself complete cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould prima facie indicate that there was a transaction between the parties towards which a legally recoverable debt was claimed by the appellant and the cheque issued by the respondent No. 2 was presented. On such cheque being dishonoured, cause of action had arisen for issuing a notice and presenting the criminal complaint under Section 138 of N.I. Act on the payment not being made. The further defence as to whether the loan had been discharged as agreed by respondent No. 2 and in that circumstance the cheque which had been issued as security had not remained live for payment subsequent thereto etc. at best can be a defence for the respondent No. 2 to be put forth and to be established in the trial. In any event, it was not a case for the Court to either refuse to take cognizance or to discharge the respondent No. 2 in the manner it has been done by the High Court. Therefore, though a criminal complaint under Section 420 IPC was not sustainable in the facts and circumstances of the instant case, the complaint under section 138 of the N.I. Act was maintainable and all contentions and the defence were to be considered during the course of the trial. 22. In M.M.T.C. Ltd. Anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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