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TMI Blog2024 (7) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar, rice and spices etc. The applicants-accused are exporter of whole wheat, sugar, rice etc. By written agreement dated 11.11.2020, the parties have entered into business transaction and agreed to do business as per the terms and conditions of the contract. During the period from 09.07.2020 to 31.03.2021, the private respondent sold the goods worth Rs.6,25,21,462/- to the applicants-accused. Against the total sale, the accused-company paid Rs.4,16,78,837/-. The total outstanding amount due after deducting TCS was Rs.2,08,68,924/-. It is the case of private respondent that, against the aforesaid due amount, the applicant-accused issued three cheques amounting Rs.19,78,110/-, Rs.14,28,840/- and Rs.6,62,904/-, allegedly signed by the accused nos.2 and 3. The cheques were presented for clearing before the bank and due to insufficient funds, same returned unpaid. The demand notice dated 02.06.2021 was served upon the applicant-accused. In the reply of the notice dated 10.06.2021, it was stated that, the cheques were given as a security for payment and not issued to discharge the outstanding debt and/or liability. It was further stated in the reply that, the amount mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustainable in law. Thus, the criminal proceedings under such circumstances would amount to sheer misuse of the process of law and court and same deserves to be quashed and set aside. 8. On the other hand, learned counsel Mr. Apurva Vakil appearing for and on behalf of private respondent company vehemently opposed the application and contended that, the disputed cheques retained by the company under instructions of the applicants-accused towards the outstanding dues and therefore, the plea raised by the applicants-accused that, for the security of payment, the cheques were issued cannot be accepted. That, the blank security cheques given by the accused which are annexed with the documentary list and same are still in custody of the complainant and till date, it has not been utilized which fact substantiate that the questioned cheques were not given for security of the payment, but, issued for outstanding dues. In such set of circumstances, it was submitted that, where there are disputed questions of fact leading to triable issue and considering the provision of Section 138/142 of the N.I. Act, wherein the burden is caste on the accused to prove that the holder of cheque received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase order. Thereafter, within stipulated time, the accused would make the payment through RTGS mode. It is further say of the complainant that, for so many times, the accused instructed the complainant company to retain the cheques against the other purchase transactions. Thus, it is clarified that, the impugned cheques are such cheques which were being retained as per the instructions of the accused for discharge of outstanding amount. In support of this contention, the ledger accounts maintained by the company and other documents have been produced. In such set of circumstances, it is the say of the complainant that, though the cheques were enclosed with the purchase order and despite payment being made through RTGS, the disputed cheques retained by the company for outstanding amount of Rs.2,08,68,924/-. On this factual aspect, it is stated that the last payment through bank was made on 17.04.2021 and thereafter, the accused stopped the payment through RTGS and the outstanding amount of the transaction as per books of account was Rs.2,08,68,924/-. It is stated taht before filing the complaint, the notice as contemplated under the N.I. Act was served, wherein it was specifically s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of advance payment indicates that at the time of drawal of cheque there was no existing liability. (ii) In Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited (2016 10 SCC 458), the Supreme Court, on the issue of security cheque, after considering the decision in Indus Airways (supra), held that, if on the date of cheque a liability or debt exists or the amount has become enforceable, section 138 would stand attracted and not otherwise. On the factual aspect, the case before the Supreme Court was that the case was for repayment of loan instalment which had fallen due. (iii) In Sripati Singh vs. State of Jharkhand (2012 SCC Online SC 1002), the issue was whether cheque issued towards discharge of loan and presented for recovery could be construed as a security for transaction or not. The High Court while allowing the quashing petition held that, since under the loan agreement, the cheques were given by way of security, the complaint could not be maintained. The matter was carried to the Supreme Court. The Apex Court after considering its earlier judgments, as referred above, held that, where in case of loan transaction, the borrower agrees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of liability arising from such cheques. (iii) Recently, in Rathishbabu Unnikrisnan vs. State (Government of NCT of Delhi) (2022 SCC Online SC 513), after referring the judgments (MMTC Limited vs. Medchal Chemicals and Pharma...., Rangappa vs. Shri Mohan, Rajeshbhai Muljibhai Patel vs. State of Gujarat) held that, the burden of proving that there was on existing debt or liability is to be discharged by the accused in the trial and in a petition filed under Section 482, the High Court merely on the basis of averments in the petition could not have concluded that there was no existing debt or liability. The reason behind is that, the legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. Thus, where the accused moves court for quashing even before the trial has commenced, the approach of the High Court should be careful enough not to prematurely extinguish the case by disregarding the legal presumption which supports the complainant. It was further held that, when disputed questions of facts are involved which need to be adjudicated after the parties adduced evidence, the complaint under Section 138 of the N.I. Act ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid through bank transfer and therefore, the cheques which were given as a security could not have been encashed against the outstanding amount. Thus, the entire dispute is based on the books of accounts. It needs to be noted that, at the time of filing the complaint, the complainant submitted 128 documents which are in the form of invoices, ledger accounts, agreement etc. In the affidavit-in-reply, it has been specifically contended that, upon the instructions, the cheques were retained so as to enable the complainant to recover the outstanding. The complainant has placed on record five blank cheques, drawn by the accused, in favour of complainant company to substantiate the stand taken by the accused that the questioned cheques were not given as a security. The said blank cheques were given as a security against the payment and same still in the custody of the complainat and they are not presented for encashment. In such set of circumstances, this Court is of primafacie opinion that, at this stage, it is difficult to examine the disputed question of facts which are in the form of defences, cannot be examined and therefore, the issue as to whether the cheques which were sent a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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