Himachal Pradesh High Court
Prem Lal vs Of on 12 January, 2024
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.MMO No. 65 of 2023 Reserved on: 12.12.2023 .
Date of Decision: 12.01.2024
Prem Lal ...Petitioner
Versus
of
State of Himachal Pradesh & Anr. ...Respondents
Coram rt
Hon'ble Mr. Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes For the Petitioner : Mr. R.L. Chaudhary, Advocate. For Respondent No.1 : Mr. Prashant Sen, Deputy Advocate General.
For Respondent No.2 : Mr. K.B. Khajuria, Advocate.
Rakesh Kainthla, Judge Respondent No.2 (complainant before learned Trial Court) filed a complaint (Annexure P-2) against the petitioner (accused before learned Trial Court) for the commission of an offence punishable under Sections 138 of the Negotiable Instruments Act (in short 'NI Act'). (Parties shall hereinafter be 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 12/01/2024 20:36:57 :::CIS 2referred to in the same manner as they were referred before the learned Trial Court for convenience).
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2. It was asserted that the complainant bank is a Corporate Body constituted under the Regional Rural Bank Act, 1976 having its Head Office at Jawahar Nagar, District Mandi, H.P. It carries out banking business throughout Himachal of Pradesh and has one branch office situated at main market Tehsil Sadar, District Bilaspur, H.P. The complainant sanctioned cash rt credit limit facility of ₹ 5,00,000/- for running the business of Auto Bulb on 30.07.2008 in favour of Achharlata Rao, wife of the accused. The accused stood as guarantor for the repayment of the loan. The borrower and the accused executed documents in favour of the bank on 30.07.2008. The amount was to be paid annually with interest @14.5% per annum subject to variation as per the RBI guidelines from time to time. The borrower defaulted on the repayment of the loan. The borrower and guarantor issued a cheque for ₹ 7,57,000/-for discharging their liabilities. The cheque was presented before the bank but it was returned with the remarks 'insufficient funds'. The bank sent a notice demanding the payment of the money; however, the money was ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 3 not paid. Hence, the complaint was filed to take action against the accused.
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3. Learned Trial Court found sufficient reasons to summon the accused.
4. Being aggrieved from the order passed by the learned Trial Court for summoning the accused, the petitioner has of approached this Court to quash the order passed by the learned Trial Court for summoning the accused as well as the complaint rt pending before the learned Trial Court. It was asserted that the Reserve Bank of India has issued a communication dated 18.03.2013 for standardization and enhancement of security features in cheque forms/migrating to CTS 2010 standards. As per the notification, the old cheques are not acceptable in any of the nationalized banks and only the CTS cheques are acceptable.
The complainant presented the old cheque on 28.12.2013. Such cheque was withdrawn by the Reserve Bank of India on 18.03.2013. The complaint is not maintainable and is liable to be quashed; hence, it was prayed that the present petition be allowed and the summoning order and complaint be quashed.
::: Downloaded on - 12/01/2024 20:36:57 :::CIS 45. A reply was filed making preliminary submissions regarding the lack of maintainability. The contents of the .
petition were denied on merits. It was asserted that the cheque was not made invalid but only the processing of CTS cheques was limited to particular days. RBI directed all the banks to withdraw non-CTS cheques in circulation to replace them with CTS 2010 of standard cheques on 03.09.2012. RBI issued a notification dated 18.03.2013, stating that all residual non-CTS cheques with rt customers would continue to be valid and accepted for some more period. Non-CTS cheques have not become invalid and the number of days were reduced for their processing. The non-CTS cheques were discontinued w.e.f. December 31, 2018. The banks have been advised to withdraw all non-CTS cheques from customers; however, they remain valid as negotiable instruments. The plea that a valid cheque was not presented is not acceptable; thus, it was prayed that the present petition be dismissed.
6. A rejoinder denying the contents of the reply and affirming those of the petition was filed.
::: Downloaded on - 12/01/2024 20:36:57 :::CIS 57. I have heard Mr. R.L. Chaudhary, learned counsel for the petitioner, Mr. Prashant Sen, learned Deputy Advocate .
General, for respondent No.1 and Mr. K.B. Khajuria, learned counsel for respondent No.2.
8. Mr. R.L. Chaudhary, learned counsel for the petitioner submitted that the Reserve Bank of India has withdrawn all the of non-CTS cheques vide notification (Annexure P-4), therefore, an invalid cheque was presented by the complainant. No legal rt liability exists and learned Trial Court erred in summoning the accused. The continuation of the proceedings before the learned Trial Court will be an abuse of the process of the Court as no conviction can be recorded because of the notification of the Reserve Bank of India. Therefore, he prayed that the present petition be allowed and the summoning order and the complaint be quashed.
9. Mr Prashant Sen, learned Deputy Advocate General, for respondent No. 1 submitted that the dispute is between the private parties and the State has nothing to do with the same.
Hence, he prayed that appropriate orders be passed.
::: Downloaded on - 12/01/2024 20:36:57 :::CIS 610. Mr. K.B. Khajuria, learned counsel for respondent No. 2 submitted that the non-CTS cheque remains a negotiable .
instrument and that the days for its processing have been reduced by the Reserve Bank of India. The plea taken by the petitioner that an invalid cheque was presented is incorrect.
Hence, he prayed that the present petition be dismissed.
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11. I have given considerable thought to the submissions at the bar and have gone through the records carefully.
12. rt The principles of exercising the jurisdiction under Section 482 of Cr.P.C. were laid down by the Hon'ble Supreme Court in Supriya Jain v. State of Haryana, (2023) 7 SCC 711: 2023 SCC OnLine SC 765 wherein it was observed at page 716:-
"17. The principles to be borne in mind with regard to the quashing of a charge/proceedings either in the exercise of jurisdiction under Section 397CrPC or Section 482CrPC or together, as the case may be, has engaged the attention of this Court many a time. Reference to each and every precedent is unnecessary. However, we may profitably refer to only one decision of this Court where upon a survey of almost all the precedents on the point, the principles have been summarised by this Court succinctly. In Amit Kapoor v. Ramesh Chander [Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460 : (2012) 4 SCC (Civ) 687 : (2013) 1 SCC (Cri) 986], this Court laid down the following guiding principles : (SCC pp. 482-84, para 27) "27. ...27.1. Though there are no limits to the powers of the Court under Section 482 of the Code but the more the ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 7 power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly .
and with circumspection and that too in the rarest of rare cases.
27.2. The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no of prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere. 27.3. The High Court should not unduly interfere. No rt meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.
27.4. Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loath to interfere, at the threshold, to throttle the prosecution in the exercise of its inherent powers.
27.5. Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused.
27.6. The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender. 27.7. The process of the court cannot be permitted to be used for an oblique or ultimate/ulterior purpose.::: Downloaded on - 12/01/2024 20:36:57 :::CIS 8
27.8. Where the allegations made and as they appeared from the record and documents annexed therewith predominantly give rise to and constitute a "civil wrong"
with no "element of criminality" and does not satisfy the .
basic ingredients of a criminal offence, the court may be justified in quashing the charge. Even in such cases, the court would not embark upon the critical analysis of the evidence.
27.9. Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is of sufficient material on the basis of which the case would end in a conviction; the court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court rt leading to injustice.
27.10. It is neither necessary nor is the court called upon to hold a full-fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction. 27.11. Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.
27.12. In the exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was the possibility of his acquittal. The Court has to consider the record and documents annexed therewith by the prosecution.
27.13. Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit a continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to deciding the admissibility and ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 9 reliability of the documents or records but is an opinion formed prima facie.
27.14. Where the chargesheet, reported under Section 173(2) of the Code, suffers from fundamental legal defects, the .
Court may be well within its jurisdiction to frame a charge.
27.15. Coupled with any or all of the above, where the Court finds that it would amount to an abuse of process of the Code or that the interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debitojustitiae i.e. to do real and substantial justice for administration of which alone, the courts exist.
of *** 27.16. These are the principles which individually and preferably cumulatively (one or more) be taken into rt consideration as precepts to exercise extraordinary and wide plenitude and jurisdiction under Section 482 of the Code by the High Court. Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance with the requirements of the offence."
13. Similar is the judgment in Gulam Mustafa v. State of Karnataka, 2023 SCC OnLine SC 603 wherein it was observed:-
"26. Although we are not for verbosity in our judgments, a slightly detailed survey of the judicial precedents is in order. In State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, this Court held:
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 10 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to .
secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(1) Where the allegations made in the first information report or the complaint, even if they are taken of at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.
rt (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-
cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
::: Downloaded on - 12/01/2024 20:36:57 :::CIS 11(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings .
and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view of to spite him due to private and personal grudge.
103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised rt very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice." (emphasis supplied)
14. It was laid down in CBI v. Aryan Singh, 2023 SCC OnLine SC 379, that the High Court cannot conduct a mini-trial while exercising jurisdiction under Section 482 Cr.P.C. The allegations are required to be proved during the trial based on evidence led before the Court. It was observed:
"10. From the impugned common judgment and order passed by the High Court, it appears that the High Court has dealt with the proceedings before it, as if, the High Court was conducting a mini-trial and/or the High Court was considering the applications against the judgment and order passed by the learned Trial Court on conclusion of the trial. As per the cardinal principle of law, at the stage of ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 12 discharge and/or quashing of the criminal proceedings, while exercising the powers under Section 482 Cr. P.C., the Court is not required to conduct the mini-trial. The High Court in the common impugned judgment and order has .
observed that the charges against the accused are not proved. This is not the stage where the prosecution/investigating agency is/are required to prove the charges. The charges are required to be proved during the trial on the basis of the evidence led by the prosecution/investigating agency. Therefore, the High Court has materially erred in going in detail in the of allegations and the material collected during the course of the investigation against the accused, at this stage. At the stage of discharge and/or while exercising the powers under Section 482 Cr. P.C., the Court has very limited rt jurisdiction and is required to consider "whether any sufficient material is available to proceed further against the accused for which the accused is required to be tried or not".
11. One other reason pointed by the High Court is that the initiation of the criminal proceedings/proceedings is malicious. At this stage, it is required to be noted that the investigation was handed over to the CBI pursuant to the directions issued by the High Court. That thereafter, on conclusion of the investigation, the accused persons have been charge-sheeted. Therefore, the High Court has erred in observing at this stage that the initiation of the criminal proceedings/proceedings is malicious. Whether the criminal proceedings was/were malicious or not, is not required to be considered at this stage. The same is required to be considered at the conclusion of the trial. In any case, at this stage, what is required to be considered is a prima facie case and the material collected during the course of the investigation, which warranted the accused to be tried."
15. It is apparent from these judgments that power under Section 482 of Cr.P.C. can be exercised to prevent the abuse of ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 13 the process or secure the ends of justice. The Court can quash the F.I.R. if the allegations do not constitute an offence or make out a .
case against the accused. However, it is not permissible for it to conduct a mini-trial to arrive at such findings.
16. Annexure P-4 Clause 'c' specifically mentions that all residual non-CTS 2010 cheques with the customer will continue of to be valid and accepted in all clearing houses for another four months up to July 31st, 2013 subject to a review in June 2013.
rt Directions were issued to withdraw non-CTS cheques. No further notification was placed on record and it is not known what was decided by the Reserve Bank of India in June 2013.
17. It was held in Rohith vs. Anil Kumar 2023:KHC:24782 that a non-CTS cheque is valid and a complaint can be filed for its dishonour. It was observed:
8. The issue lies in a narrow compass. The transaction between the parties is not in dispute. What is issued by the petitioner is a non-CTS cheque. The cheque truncated scheme was introduced by the Reserve Bank of India in the year 2011 and the scheme was still in operation up to 31.12.2018. Therefore, on and from 01.01.2019, the non-
CTS cheque would lose its validity. The Reserve Bank of India further clarifies that though the non-CTS cheque loses its value from 01.01.2019, it would still be valid as a 'Negotiable Instrument'.
::: Downloaded on - 12/01/2024 20:36:57 :::CIS 149. In the teeth of the aforesaid facts, the proceedings instituted by the complainant before the concerned Court cannot be seen to be tumbling down.
10. It would be useful to refer to the Circular of the Reserve .
Bank of India, which holds that non-CTS cheques are valid as a Negotiable Instrument and clarification by the Reserve Bank of India is as follows:
"4. Are non-CTS cheques invalid?
Banks have been advised to issue only CTS 2010 standard-compliant cheques from September 30, 2012.
of Earlier, there were separate clearing sessions for non- CTS cheques. However, they were discontinued with effect from December 31, 2018. As of now, non-CTS rtcheques cannot be presented in CTS. Banks have been advised to withdraw the non-CTS cheques from the customers. However, non-CTS cheques remain to be valid as a negotiable instrument."
11. The solitary submission of the petitioner is thus unacceptable.
18. It was held by Madras High Court in R. Mathiyalagan v.
Jayamani, 2016 SCC OnLine Mad 24818, that where the cheque was not returned by the banker stating that it was a non-CTS cheque but on the ground exceed arrangement, an offence punishable under Section 138 of the NI Act is made out. It was observed:-
"2. The learned counsel for the petitioner would mainly contend that the trial Court failed to appreciate the fact that the Payment and Settlement Systems Act, 2007 and the consequential notification issued by the Reserve Bank of India. The cheque filed by the respondent is a non- CTS cheque, the cheque presented by the respondent ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 15 cannot be accepted for payment, in view of the bar imposed by the Reserve Bank of India which had issued specific directions that the customer is directed to return the non-CTS cheque and replace with the CTS cheque. The .
cheque was issued to the petitioner in the year 2002 and the same was presented and returned in the year 2015 and all other cheques prior to and after this cheque in issue was en-cashed in the year 2002 itself. Since the cheque is a non-CTS cheque, the present application filed by the petitioner is liable to be allowed, the trial Court erroneously dismissed the application, and the learned of counsel prays to set aside the order of the trial Court and to allow the criminal revision.
3. The learned counsel for the respondent would mainly contend, that even though it is not a CTS cheque, it is rt presented for payment and the cheque was returned as dishonoured. It is a cheque as per Section 138 of the Negotiable Instruments Act. The trial Court after appreciating the entire facts and circumstances of the case, dismissed the application and there is no illegality or infirmity in the order of the trial Court and the learned counsel prays for dismissal of the revision petition.
4. On reading the order passed by the trial Court, it is clearly seen that the petition for discharge was filed only after the commencement of trial, the complainant before the trial Court was examined and marked Exs.A1 to A5. In this petition Branch Manager, Lakshmi Villas Bank Mr. Loganathan was examined as PW 1 and Exs. 1 to 3 documents were marked. It is revealed that the present cheque in question was presented for collection before the Lakshmi Vilas Bank, Mettur Brach and the cheque was returned with an endorsement "Exceeds Arrangements".
The complainant issued a notice demanding the amount, but after the issuance of the notice, no amount was paid. Hence, the complaint was lodged under Section 138 of the Negotiable Instruments Act. In this case, the cheque in question was issued to the complainant and it was presented for payment the cheque was dishonoured as it ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 16 exceeds arrangements and the cheque was not returned by the banker stating that the cheque was not a CTS cheque, further the cheque was not returned on the above said ground or not, but returned as per RBI guidelines. There is .
no restriction by the RBI restricting the use of old cheques/non-CTS issued to the customer.
5. In view of the above circumstances, the cheque in question was returned only on the ground exceeds arrangements and the cheque was not returned by the Banker on the ground, it is not a CTS cheque and it should not be used by the customer.
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6. This Court is of the considered view that dishonour of cheque by the banker stating as it exceeds arrangements for the said offence comes within the purview of the Negotiable Instruments Act. The trial Court has to decide rt whether the respondent has committed the offence under Section 138 of the Negotiable Instruments Act.
7. Hence, the arguments of the learned counsel for the petitioner is liable to discharge is untenable and the arguments of the learned counsel for the petitioner are liable to be rejected. This Court finds there is no illegality or infirmity in the order passed by the learned Judicial Magistrate No. I, Mettur and the same does not warrant any interference by this Court."
19. Hence, the plea that the complaint is based on an invalid cheque, which could not have been presented is not acceptable because the cheque was not dishonoured on the ground that it was a non-CTS cheque and could not have been honoured in violation of the guidelines of the Reserve Bank of India. It was dishonoured with the endorsement 'funds ::: Downloaded on - 12/01/2024 20:36:57 :::CIS 17 insufficient' as per Para 3 of the complaint. Therefore, the complaint cannot be quashed at this stage.
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20. It was specifically stated in the complaint that the petitioner/accused had stood as guarantor for his wife and he had issued the cheque for clearing the liability of his wife. The cheque was dishonoured due to insufficient funds and the accused failed of to pay the amount despite the receipt of the valid notice on demand. Therefore, the complaint prima facie discloses the rt commission of an offence punishable under Section 138 of the NI Act; hence, the present complaint is not liable to be quashed in the exercise of the inherent powers of the Court.
21. Consequently, the present petition fails and the same is dismissed.
22. The observation made herein before shall remain confined to the disposal of the petition and will have no bearing, whatsoever, on the merits of the case.
(Rakesh Kainthla) Judge 12th January, 2024 (Saurav Pathania) ::: Downloaded on - 12/01/2024 20:36:57 :::CIS