Del HC | Import of S. 9 NI Act defining ‘holder in due course’ cannot be pre-judged; petition for quashing cheque dishonour complaint dismissed

Delhi High Court: Sunil Gaur, J. dismissed a petition seeking quashing of a complaint filed under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881, with a liberty to the petitioner to raise his pea before the trial court.

The petitioner sought quashing of the complaint by recourse to Section 142(1)(a). Rakesh Taneja, Advocate for the petitioner submitted that the subject cheques were issued in the name of one Raj Pal Kapoor, but the complaint was filed by Kapoor Jewel mines (P) Ltd. It was pointed out that there were no averments in the complaint as to how Kapoor Jewel Mines became a holder in due course of the subject cheques. Per contra, Harjinder Singh and Ravinder Singh, Advocates for Kapoor Jewel Mines contended that the present petition deserved dismissal.

The High Court held that ascertaining how the holder of the subject cheques became a holder in due course is an aspect which cannot be pre-judged at the initial stage, and is required to be considered after the evidence is recorded. It was said: “Section 9 of the Negotiable Instruments Act, 1881 defines the ‘holder in due course’ and its import cannot be pre-judged.”

The Supreme Court in Laxmin Dychem v. State of Gujarat, (2012) 13 SCC 375, has reiterated that unless the contrary is proved, the presumption shall be made that the holder of a negotiable instrument is the holder in due course. Applying the dictum to the present facts, the High Court did not find it to be a fit case to quash the complaint as the plea raised by the petitioner was required to be tested at the trial. Thus the petition was dismissed. The petitioner was however given liberty to raise his plea before the trial court at the appropriate stage. [Jagdish Chander v. Kapoor Jewel Mines (P) Ltd., 2019 SCC OnLine Del 8292, decided on 24-04-2019]

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