Tis-hazari
Case BriefsDistrict Court

Tis Hazari Courts, New Delhi: While deciding a matter under Section 138 of the negotiable Instruments Act, 1881, Devanshu Sajlan, MM-05 (NI Act) reiterated the settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does not have a separate legal identity from its proprietor.

A complaint was filed under Section 138 of the Negotiable Instruments Acts, 1881.

The complaint proceeded against the accused firm, accused persons 1 and 2. Though, later the proceedings against accused 1 were abated pursuant to her death. Thereafter, the matter proceeded only against an accused firm and accused 2.

It was stated that the accused firm was a partnership firm of which accused 1 was a partner and accused 2 was an authorized signatory/attorney.

The accused partnership firm had purchased Kirana Goods from the complainant and the parties had settled their accounts and pursuant to the said settlement, the accused firm issued two cheques in favour of the complainant and the said cheques were signed by accused 2.

The said cheques were returned dishonoured with remarks ‘Funds Insufficient’. After which, the firm sent a legal demand notice, but the accused persons allegedly failed to pay the cheque amount, due to which the present complaint was filed.

The stance of accused 2 was that the accused firm was a sole proprietorship concern, and he was merely the authorized signatory of accused 1, who was the sole proprietor of the accused firm.

Analysis, Law and Decision

High Court expressed that in order to establish the offence under Section 138 NI Act, the prosecution must fulfil all the essential ingredients of the offence. In addition to this, the conditions stipulated under Section 142 NI Act have to be fulfilled.

“Liability of authorised signatory of a proprietorship concern.”

The Bench held that the accused 2’s contention that the accused firm was a sole proprietorship concern and he was merely the authorized signatory of accused 1 who was the sole proprietor of the accused firm was indeed correct.

“It is a settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does not have a separate legal identity from its proprietor and therefore, it does not fall within the ambit and scope of Section 141 NI Act.”

The above-said position of law was laid down by the Supreme Court in Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC 103.

The Court remarked that as far as a sole proprietorship was concerned, it was only the sole proprietor who could be held liable under Section 138 NI Act for dishonour of a cheque drawn on the account of the sole proprietorship.

Adding to the above, Court stated that vicarious liability cannot be fastened on the employees/authorized signatories of a sole partnership firm, by taking aid of Section 141 NI Act. Hence, if the accused firm is proved to be a sole proprietorship concern, accused 2 would have no liability.

Though, in case the accused firm will be proved to be a partnership firm, then accused 2 would be liable under Section 141 NI Act since he is the signatory of the cheques.

“It is a settled position of law that the signatory of the cheque is vicariously liable in terms of 141 of the NI Act in case the accused is a company or a partnership firm.”

  • Who has the burden of proof to establish that the accused firm is a proprietorship concern or a partnership firm?

The Court stated that it needs to be proved by the complainant that the accused firm was a proprietorship concern or a partnership firm because the legal status of a firm is the very identity of the said firm and without establishing the said legal status, the identity of the firm as a “person” cannot be verified/confirmed/established.

Hence, without the proof of the above-said fact, the statutory presumption under Section 139 NI Act cannot be raised in a casual manner. Therefore, the burden of proof to establish that the accused firm is a partnership firm lies upon the complainant.

  • Whether it has been proved that the accused firm is a partnership firm?

The complainant could not conclusively establish that the accused firm was a partnership firm.

Decision

In view of the above discussion, accused 2 was acquitted from the charge of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881.  Hence, accused 2 was directed to furnish bail bond and surety bond in terms of Section 437-A CrPC.

Note: The span of the present case was almost 21 years (beginning from the year 1999). 

[Durga Traders v. Saraswati Trading Co., 7538 of 2016, decided on 24-12-2021]


Advocates before the Court:

Sh. Vikas Aggarwal, Counsel for the complainant.

Sh. Pankaj Chawla, Counsel for the accused.

Case BriefsDistrict Court

XVIII Addl. Chief Metropolitan Magistrate, Bengaluru City: Manjunatha, XVII Addl. C.M.M., found the accused guilty for the offence under Section 138 of the Negotiable Instruments Act, on his failure to rebut the statutory presumption in favour of the holder of cheque.

Background

The complainant had filed the instant complaint under Section 200 of Code of Criminal Procedure read with Section 138 of the Negotiable Instruments Act against the accused alleging that, she had committed the offence punishable under Section 138 NI Act.

Complainants and the accused were well known to each other as they were residing in the same locality and in 2018, the accused had approached the complainant for a loan of Rs 4,00,000 for the purpose of urgent legal and domestic necessities and promised to repay the same within 6 months.

Considering her request the complainant had paid Rs 4,00,000 to the accused by way of cash.

The accused and her husband had executed an undertaking by acknowledging the receipt of the amount, but she failed to keep up her promises. On repeated demand and request, the accused issued a cheque but the same was returned unpaid with an endorsement “Funds Insufficient” in the drawer’s account.

Further, despite the notice, the accused had not paid the cheque amount and thereby she had committed an offence punishable under Section 138 NI Act.

Court had issued summons and later, the accused was enlarged on bail.

As per the direction of the Supreme Court in Indian Bank Assn. v. Union of India, (2014) 5 SCC 590, this Court treated the sworn in statement of the complainant as complainant evidence.

Analysis, Law and Decision

Court cited the decision of Sukur Ali v. State of Assam, (2011) 4 SCC 729, in which the Supreme Court opined that even assuming that the counsel for the accused does not appear because of the counsel’s negligence or deliberately, even then the Court should not decide a criminal case against the accused in the absence of his counsel since an accused in a criminal case should not suffer for the fault of his counsel and in such a situation the Court should appoint another counsel and in such a situation the Court should appoint another counsel as amicus curiae to defend the accused.

In the decision of K.S. Panduranga v. State of Karnataka, (2013) 3 SCC 721, Supreme Court held that, “regard being had to the principles pertaining to binding precedent, there is no trace of doubt that the principle laid down in Mohd. Sukur Ali (supra) by the learned Judges that the court should not decide a criminal case in the absence of the counsel of the accused as an accused in a criminal case should not suffer for the fault of his counsel and the court should, in such a situation, must appoint another counsel as amicus curiae to defend the accused and further if the counsel does not appear deliberately, even then the court should not decide the appeal on merit is not in accord with the pronouncement by the larger Bench in Bani Singh” .

The Court further held that in view of the aforesaid annunciation of law, it can safely be concluded that the dictum in Mohd. Sukur Ali (supra) to the effect that the court cannot decide a criminal appeal in the absence of counsel for the accused and that too if the counsel does not appear deliberately or shows negligence in appearing, being contrary to the ratio laid down by the larger Bench in Bani Singh (supra), is per incuriam. Furthermore, the transaction alleged in the case is purely a commercial transaction enetered into between two private individuals and the accused is not in judicial custody and he is not fall under any of the parameter under legal services authorities Act to get free legal aid. Under such circumstance question of appointing advocate for accused at the state cost may not arise at all.”

 Question for Consideration:

Whether the complainant proves that, accused issued cheque for Rs 4,00,000 towards discharge of her liability, which was returned unpaid on presentation for the reason “Fund Insufficient” and despite of notice she had not paid the cheque amount and thereby committed an offence punishable under Section 138 of NI Act?

Analysis, Law and Decision

Court stated that, Sections 118 and 139 of NI Act raises a presumption in favour of the holder of the cheque that he had received the same for discharge in whole or in part of any debt or other liability.

Further, it was added that the accused can take probable defence on the scale of the preponderance of probability to rebut the presumption available to the complainant.

Whether the accused had successfully rebutted the said presumptions of law?

Court observed that the accused had not disputed the issuance of cheque and her signature in the cheque.

When the drawer has admitted the issuance of the cheque as well as the signature present therein, the presumptions envisaged under section 118 read with section 139 of NI Act, would operate in favour of the Complainant.

 The Bench added that the above-said provisions laid down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder the court shall presume that the instrument was endorsed for consideration.

“…when the complainant has relied upon the statutory presumptions enshrined under section 118 read with section 139 of NI Act, it is for the accused to rebut the presumptions with cogent and convincing evidence.”

It is worth noting that, Section 106 of Indian Evidence Act postulates that, the burden is on the accused to establish the fact which was especially within his special knowledge.

Hence, the burden is on the accused to prove that the cheque in question was not issued for discharge of any liability.

With regard to proof of existence of legally enforceable debt was concerned, Court referred to the decision of Supreme Court in Rangappa v. Mohan, (2010) 11 SCC 441, wherein it was observed that,

“In the light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by section 139 of the Act does indeed include the existence of the legally enforceable debt or liability”

 In another decision in, T. Vasanthakumar v. Vijayakumari, (2015) 8 SCC 378, it was held that once the accused has admitted the issuance of Cheque, as well as signature on it, the presumption under Section 139, would be attracted.

In the present matter, despite giving sufficient time, the accused neither led defence evidence nor cross-examined PW1, therefore the evidence placed by the complainant remained unchallenged and there was no reason to disbelieve the version of the complainant.

The complainant had not produced any document regarding the lending of the amount to the accused, but in the absence of any contrary evidence, the unchallenged testimony of the complainant had to be believed. As such there was no rebuttal evidence on behalf of the accused to rebut the presumption available under Sections 118 and 139 of the NI Act.

Therefore, the complainant’s case was acceptable.

The complainant proved that, for discharge of liability accused had issued a cheque and she had intentionally not maintained a sufficient amount in her account to honour the said cheque.

In view of the above discussion, the complainant had proved the guilt of the accused punishable under Section 138 NI Act.

Supreme Court in a decision of H. Pukhraj v. D. Parasmal, (2015) 17 SCC 368, observed that having regard to the length of the trial and date of issuance of cheque, it was necessary to award reasonable interest on the cheque amount along with cost of litigation.

The Bench held that rather than imposing punitive sentence if sentence of fine is imposed with a direction to compensate the complainant for its monetary loss, by awarding compensation under Section 357 CrPC, would meet the ends of justice.

Lastly, Court opined that it was just and proper to impose fine of the amount of Rs 4,55,000 which included interest and cost of litigation. [N. Muniraju v. Manjula, Criminal Case No. 25494 of 2019, decided on 1-1-2022]


Advocates before the Court:

For the complainant: S.K

For the accused: G.V.K

Saket Court
Case BriefsDistrict Court

Saket Courts, Delhi: Swati Gupta, Metropolitan Magistrate (South) NI Act, convicted the accused for an offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881. While delivering the judgment, the Court reiterated the well-settled position of law and discarded various defence taken by the accused.

Factual Matrix

The accused approached the complainant since he needed funds to expand his business. The complainant granted a loan of Rs 76.24 lakhs to the accused and the parties executed a memorandum of understanding (MoU) in that respect. Later, in order to discharge his liability, the accused issued a cheque of Rs 5 lakhs. On presenting for encashment, the cheque was returned unpaid by the bank with the remark “funds insufficient”. Thereafter, the complainant sent a legal notice to the accused but he did not pay the amount of dishonoured cheque. Hence, the complainant moved the Court with a complaint under Section 138 of NI Act. The accused disputed his liability.

Law, Analysis and Decision

Ingredients of the offence

Before delving into the facts, the Court discussed the settled position of law applicable to the proceedings under Section 138 of NI Act. It was reiterated that to establish the offence under Section 138, the complainant must prove:

(i) the accused issued a cheque on an account maintained by him with a bank;

(ii) the said cheque has been issued in discharge, in whole or in part, of any legal debt or other liability, which is legally enforceable;

(iii) the said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its validity;

(iv) the aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured;

(v) the payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque;

(vi) the drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand.

The Court was of the opinion that the complainant discharged his initial burden and established the ingredients of the offence under Section 138 against the accused. In his statement under Section 313 CrPC, the accused admitted receiving the demand notice on his permanent address.

Not filling details in the cheque

The accused had admitted his signatures on the cheque but disputed filling any details of the cheque. The Court was of the opinion that such plea, even if true, had no bearing on the presumption against him. Reliance was placed on the Supreme Court decision in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, wherein it was held that filling of persons by any person other than the accused would not invalidate the cheque and shall attract the presumption under Section 139 of NI Act.

Rebutting the presumption

On rebuttal of mandatory presumption, the Court noted that the presumption under Section 139 cannot be rebutted upon a mere denial. It can be rebutted by the accused only be leading cogent evidence. Reliance was placed on K.N. Beena v. Muniyappan, (2001) 8 SCC 458. It was observed:

“the presumptions may be rebutted by the accused either by leading direct evidence and in exceptional cases, from the case set out by the complainant himself i.e. from the averments in his complaint, in the statutory notice and even the evidence adduced by the complainant during the trial.”

The Court also noted that the burden of proof is to be discharged by the accused on preponderance of probabilities.

Cheque given as ‘security’

In his defence, the accused claimed that the cheque was given as security and whatever amount was invested by the complainant, he took away assets of the business of the accused against the same and as such there was no liability towards the complainant.

The Court observed it to be a settled law that:

“handing over of cheques by way of security per se does not extricate the accused from the discharge of liability arising from such cheques.”

Even otherwise, the Court found that the accused did not led any cogent evidence to prove such plea.

Contradictions in complainant’s testimony

The accused averred that the complainant’s case was not believable as there were contradictions in his testimony. He contended that during cross-examination, the complainant stated that the loan was given for the purpose of business while in his affidavit, he termed the loan as a friendly loan.

The Court found that the complainant consistently stated that the loan was given for the purpose of investment in business of the accused. It was considered opinion of the Court that mere terming of the loan as friendly in one sentence of his testimony was not a contradiction so material as to discredit the entire case of the complainant.

Loan amount disputed

The accused disputed the loan amount claiming that it was not Rs 76.24 lakhs but much less. The Court was of the opinion that the accused was not able to prove this plea. He admitted the execution of MoU which specified the loan amount as Rs 76.24 lakhs. Thus, there being a written document to that effect, the accused could not be allowed to verbally contradict or vary the terms of the same in light of Section 92 of the Evidence Act, 1872.

Non-filing of ITR by the complainant

The accused contended that the complainant did not file his Income Tax Return along with the complaint which rendered the fact of alleged loan transaction improbable.

The Court found that during complainant’s cross-examination, no suggestion was put to him on the aspect of non-filing of ITR or to question if the loan was disclosed in the ITR or not or to challenge the transaction of loan on the basis of the same. The complainant duly placed on record the MoU executed between the parties, which was admitted by the accused. Thus, the Court held that non-filing of ITR by the complainant was of no consequence.

Financial capacity of the complainant

The accused contended that the statement of account of complainant’s business during the relevant period when the loan was allegedly given, showed a balance of about Rs 6800, which showed that the complainant had no financial capacity to extend a loan of Rs 76.24 lakhs.

On this, the Court found that the complainant was running two businesses and the financial capacity of the complainant could not be held to be questionable only because balance in one of his business accounts was less. Further, during cross-examination of the complainant, the accused never questioned his source of funds or financial capacity. Thus, a mere allegation that financial capacity of the complainant was not adequate as one of his business accounts had low balance did not hold water.

The remaining defence taken by the accused was also discarded by the Court as either not proved or not relevant.

In such a view of the matter, the Court concluded that the accused miserably failed to rebut the mandatory presumptions under Section 118(a) and Section 139 of NI Act even on a preponderance of probabilities, while the complainant succeeded in proving his case beyond a reasonable doubt. Accordingly, the accused was held guilty and was convicted for the offence under Section 138 of the Negotiable Instruments Act. [Zikrur Rahman Khan v. Anwar Ahmad, Complaint Case No. 470901 of 2016, dated 11-11-2021]

Case BriefsHigh Courts

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] 

Case BriefsHigh Courts

Allahabad High Court: Vivek Varma, J., held that factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done by the trial court.

In the instant matter, OP had filed a complaint under Section 138 of the Negotiable Instruments Act against the applicant as the cheques issued by the applicant was returned by the bank with the remark “fund insufficient”.

A legal notice in view of the above-stated circumstances was sent. There is a presumption of service of the said notice and despite service of notice, the applicant did not make any payment nor sent any reply.

Analysis, Law and Decision

Bench stated that Section 138 NI Act was considered by the Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555, wherein the presumption under Section 114 of the Evidence Act and Section 27 of the General Clauses Act was enunciated.

The above-stated case was followed by the Supreme Court in Ajeet Seeds Limited v. K. Gopala Krishnaiah, (2014) 12 SCC 685 and held that absence of averments in the complaint about service of notice upon the accused’s is the matter of evidence.

Noting the settled legal position in the above cases, Bench expressed that the complaint cannot be thrown at the threshold even if it does not make a specific averment with regard to service of notice on the drawer on a given date. Complaint, however, must contain basic facts regarding the mode and manner of issuance of notice to the drawer of the cheque.

Supreme Court’s decision in Subodh S. Salaskar v. Jayprakash M. Shah, (2008) 13 SCC 689, was relevant to the present matter.

High Court elaborated that, notice being sent on 19-09-2012, if the presumption of service of notice within a reasonable time is raised, shall be deemed to have been served, at the best within a period of 30 days from the date of issuance. Applicant was required to make payment in terms of the said notice within 15 days thereafter.

The factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court and not by this Court under the jurisdiction conferred by Section 482 CrPC.

However, since the complaint case was pending since the year 2014, as per the mandate of the Act the proceedings under Section 138 NI Act ought to be concluded within 6 months.

Hence, the Court below was directed to expedite the hearing of the complaint case. [Anil Kumar Goel v. State of U.P., 2021 SCC OnLine All 410, decided on 7-06-2021]


Advocates before the Court:

Counsel for Applicant:- Anand Prakash Dubey, Pradeep Kumar Rai, Saurabh Trivedi

Counsel for Opposite Party:- Govt. Advocate Vikrant Rana

Case BriefsHigh Courts

Delhi High Court: Manoj Kumar Ohri, J., while allowed the present petition and quashed the impugned order summoning the petitioners under Section 138 Negotiable Instruments Act, 1881.

Petitioners in the present case were summoned for the offence punishable under Section 138 NI Act.

Respondent filed a complaint stating that the accused were regular purchasers of goods from the complainant on a credit basis and made regular payment towards sale consideration from time to time in the past. There was an outstanding balance payable by the accused against which 4 account payee cheques were issued. However, the same were returned unpaid to the complainant vide bank’s return with remarks “Funds Insufficient”.

Complainant issued a legal notice of demand calling upon the accused to make payment within 15 days from the date of receipt. Since no payment was made within the statutory period of 15 days, a complaint under Section 138 read with Sections 141/142 of NI Act was filed.

Counsel for the petitioner contended that, petitioners were the independent non-executive Additional Directors and were never involved in the day to day affairs of the company at any point of time. Further, he referred to the complaint where the present petitioners were wrongly described as Directors.

It is an admitted case of the respondent that the petitioners were neither the Managing Directors nor the signatories to the cheques in question.

Further, the Counsel for the respondent submitted that the petitioners were named as Directors in the complaint on the basis of the information which was downloaded from the official website of ROC.

Decision

While concluding its decision, Court stated that, Vicarious liability of a person arises in terms of Section 141 of NI Act, and referred to S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89.

Another Supreme Court’s decision that the bench referred was a recent one,

Chintalapati Srinivasa Raju v. Securities and Exchange Board of India, (2018) 7 SCC 443, wherein it was held that

Non-Executive Directors are, therefore, persons who are not involved in the day-to-day affairs of the running of the company and are not in charge of and not responsible for the conduct of the business of the company.

Thus, in view of the above, Court stated that the petitioners were neither the Managing Directors nor the authorized signatories of the accused company.

Further, the Court noted that, a perusal of the complaint filed by the respondent shows that except for general allegation stating that petitioners were responsible for control and management and day to day affairs of the accused company, no specific role had been attributed to petitioners.

To fasten the criminal liability under The Negotiable Instruments Act, 1881, the above generalised averment without any specific details as to how and in what manner, the petitioners were responsible for the control and management of affairs of the company, is not enough.

Hence the impugned order summoning the petitioners under Section 138 NI Act is quashed. [Sunita Palta v. Kit Marketing (P) Ltd., Crl. MC No. 1410 of 2018, decided on 03-03-2020]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Valmiki Mehta, J. dismissed a regular first appeal filed under Section 96 CPC against the judgment of the trial court whereby the appellant’s application for leave to defend was dismissed.

Brief facts of the case are that the appellant-defendant took a loan of Rs 20 lakhs from the plaintiff and issued two cheques for the part-payment thereof. However, on presentation, the said cheques were dishonoured with remarks funds insufficient. After serving the legal notice, the petitioner filed a suit. The defendant filed an application for leave to defend. His basic defence was that the cheques in question were stolen from his car while he was driving from Rohtak to Delhi. However, the trial court dismissed the defendant’s application for leave to defend. Aggrieved thus, the defendant filed the instant appeal.

The High Court was of the view that judgment of the trial court did not warrant any interference. It was noted that indeed an FIR was filed by the defendant in regard to the said robbery. However, there was no mention of the said cheques being stolen. The defendant was using such fact to create a completely false defence to the suit. Referring to the Supreme Court decision in IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568, the High Court observed that once the defence is clearly frivolous and vexatious and there is no triable issue, leave to defend should not be granted. In the present case too, the Court completely disbelieved the story put forth by the defendant, and concluded that the defence was frivolous and vexatious. Thus, the trial court was right in dismissing the defendant’s application for leave to defend. The appeal was dismissed sans merit. [Mange Ram v. Raj Kumar Yadav,2018 SCC OnLine Del 10316, dated 03-08-2018]

Case BriefsHigh Courts

Himachal Pradesh High Court: A Single Judge Bench comprising of Chander Bhushan Barowalia, J. allowed a criminal appeal filed under Section 378 CrPC against the order of the trial court whereby complaint filed by the appellant was dismissed for non-appearance of the complainant-appellant.

The appellant filed a complaint under Section 138 of Negotiable Instruments Act 1881, alleging that the respondent had to pay a legally liable debt to the appellant. The respondent issued a cheque in favour of the appellant for the same. The appellant presented the said cheque before the respondent’s bank for payment. However, the cheque was returned with the endorsement ‘Funds Insufficient’. The appellant issued a demand notice to the respondent in compliance with the provisions of NI Act, but even then the respondent did not discharge his debt. Consequently, the appellant filed a complaint under Section 138 of the Act. The trial court issued notice for the service on the accused-respondent on 23-12-2015. On that date, the appellant did not appear before the court as he was under the impression that it was a formal hearing and it would be attended to by his counsel. However, appellant’s counsel was busy in conducting a criminal trial before the first Appellate Court and even he could not appear before the trial court on the given date. Resultantly, the trial court, under Section 256 CrPC, dismissed the complaint and acquitted the respondent. Aggrieved by the same, the appellant was in appeal before the High Court.

The High Court perused the record and was of the view that the trial court was not right in dismissing appellant’s complaint. The Court noted that non-appearance of the appellant, as well as his counsel, was not due to inadvertence. The appellant was relying on his counsel to appear before the trial court as it was a formal hearing, and the counsel was busy in conducting the criminal trial as stated hereinabove. The Court was of the opinion that such non-appearance was due to unavoidable circumstances. The Court concluded that the non-appearance of the appellant as well his counsel was neither intentional nor willful, but was beyond their control. Therefore, the High Court allowed the appeal and set aside the impugned judgment of the trial court dismissing the complaint of the appellant herein. [Padam Singh Saini v. Megh Singh,2018 SCC OnLine HP 784, dated 18-6-2018]