All HC reiterates scope of inherent powers to quash a S. 138 NI Act complaint. Imposes exemplary costs for filing petition as an after thought

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., refused to exercise and inherent powers under Section 482 CrPC to quash a complaint filed under Section 138 of the Negotiable Instruments Act for dishonour of cheque.

Instant application was filed to quash the proceeding of a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881.

In the present matter, a proposal for OTS was submitted by Chairperson with an application to the Chief Manager, Bank of India. The said proposal was accepted by the applicants.

Further, it was stated that a resolution was passed giving 4 Cheques. Letter for renewal of OTS by giving 4 new Cheques were submitted before Zonal Manager for Rs 100 lacs was allegedly given.

Union Bank of India issued a return memo with the remark ‘Funds Insufficient’. Legal notice due to dishonor of cheque was issued.

A complaint under Section 138 NI At was also filed by the Bank of India and Chief Manager’s statement was recorded under Section 200 CrPC.

Court opined that it is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein.

In, State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, it was held that an F.I.R. or a complaint may be quashed if the allegations made therein are so absurd and inherently improbable that no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused, but the High Court has not recorded such a finding, obviously because on the allegation in the F.I.R. it was not possible to do so. Therefore, it must be held that the High Court has committed a gross error of law in quashing the F.I.R. and the complaint.

Bench stated that it is only an afterthought that non-bailable warrants were issued that the applicants approached this Court, they did not appear before the lower court nor challenge the summoning order.

High Court held that prima facie ingredients of the offence were made out.

High Court should be loath in exercise of jurisdiction under Section 482 of Code to enter into the process of determining the veracity of complaint.

Powers vested in High Court under Section 482 CrPC have far-reaching consequences, most important being the consequence that it would negate the prosecution’s/complainant’s case without allowing the prosecution/complainant to lead evidence and therefore, the exercise of the said powers should be with the utmost caution, care and circumspection.

In Court’s view, the present matter is one which cannot be said to be one where extraordinary power is required to be exercised.

“…application is devoid of merits and is dismissed with exemplary costs of Rs. 50,000/- to be deposited with the Legal Service Authority which can be utilized for the patients of Covid-19 as officers of such institutions after falling to appear before the Court below have come up with this challenge which is a belated challenge.”

Bench added that two proceedings cannot simultaneously be proceeded. Further, the Court stated that the liabilities were prima facie there and hence cannot be said that the issuance of summons was bad.

Hence, the amount of cheque and contours of Section 138 of N.I. Act, cannot be said to have been prima facie not made out.

Accused may appear before the lower court and the Court may consider the applications for cancellation of non-bailable warrants.

In view of the above discussion, application was dismissed with exemplary costs of Rs 50,000.[Shiksha Educational Trust v. State of U.P., 2021 SCC OnLine All 450, decided on 2-07-2021] 

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