Himachal Pradesh High Court
Reserved On: 18.06.2025 vs Glide Chem Pvt. Ltd. And Another on 11 July, 2025
2025:HHC:22351 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. MMO No. 31 of 2024 .
Reserved on: 18.06.2025 Date of Decision: 11.07.2025.
Elder ICIC Health Pvt. Ltd. and others ...Petitioners Versus Glide Chem Pvt. Ltd. and another ...Respondents Coram Hon'ble Mr. Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
For the Petitioners : Mr. Romesh Verma, Senior
Advocate, with M/s Tarun Sharma
and Sumit Sharma, Advocates.
For the Respondents : Mr. Karan Singh Kanwar,
Advocate, for respondent No.1
Respondent No.2 proceeded
ex-parte, vide order dated
30.8.2024.
Rakesh Kainthla, Judge
The petitioners have filed the present petition for quashing of the complaint under Section 138 of the Negotiable Instruments Act (in short NI Act) and consequential proceedings arising out of the same pending before the learned Additional 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 11/07/2025 21:28:52 :::CIS 22025:HHC:22351 Chief Judicial Magistrate, Court No.1, Paonta Sahib, District Sirmour, H.P. (learned Trial Court). (Parties shall hereinafter be .
referred to in the same manner as they are arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant is a Private Limited Company, which is engaged in the business of manufacturing, importing, exporting and trading of pharmaceutical formulations, diagnostics and speciality chemicals. Accused No.1 is a private limited company, accused No.2 to 4 are the Directors and accused No.5 is the Ex-Director of accused No.1. IND Swift Ltd.
purchased the goods from the complainant in terms of tripartite supply agreement dated 14.7.2017 executed between the complainant, IND Swift Ltd. and accused No. 1. Accused No.1 agreed to pay the money to the complainant for the goods supplied by it to IND Swift Ltd. In this manner, the accused stood guarantor for the payment of the goods. IND Swift Ltd.
and accused No.1 failed to pay money to the complainant, and ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 3 2025:HHC:22351 the complainant issued a demand notice to accused No.1 asking it to repay the amount of ₹81,52,103.48 along with interest.
.
LYKA Exports Limited also failed to pay the outstanding amount, and the complainant issued a demand notice. Accused Nos. 2 and 5, being Directors of accused No.1, induced the complainant to enter into an MoU to clear all old debts. An MoU dated 1.9.2019 was executed in which old debts were settled, and it was agreed that accused No.1 would make the payment of ₹72,08,831/- to the complainant against full and final payment of the dues. Accused No.1 failed to pay the settled amount and paid an amount of ₹15.00 lacs to the complainant. Thus, an amount of ₹66,52,103.48 remained payable on 1.4.2021 towards the goods supplied to IND Swift Limited. An amount of ₹13,43,630/- also remained payable towards the liability of LYKA Exports Ltd. Two security cheques for ₹58,65,201- and ₹13,43,630/- were delivered to the complainant at the time of the execution of the MoU. It was agreed that dates in the cheques would be kept blank, and if the amount was not paid, the complainant would have the right to fill in the amount and present the cheque. When the accused failed to pay the amount as per the MoU, the complainant filled the dates in the cheques ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 4 2025:HHC:22351 and presented them before the Bank. The cheques were dishonoured with an endorsement 'accounts closed'. The .
complainant served notice upon the accused asking them to pay the amount; however, they failed to do so. Hence, a complaint was filed before the learned Trial Court to take action against the accused as per the law.
3. The learned Trial Court found sufficient reasons to summon the accused.
4. Being aggrieved by the order of summoning the accused and filing of the complaint, the accused filed the present petition for quashing the complaint and the consequential proceedings arising out of the complaint. It was asserted that the complaint does not disclose the commission of any offence. The dispute between the parties is civil, and the complaint is not maintainable. The accused has paid substantial amounts as per the MoU, and the cheques were issued for security purposes. IND Swift Ltd. was not arrayed as a party respondent, and the present complaint is not maintainable. The cheques were initially presented at Paonta Sahib and subsequently at Janpath, New Delhi. The demand notice was ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 5 2025:HHC:22351 issued after the dishonour of the cheques presented at Delhi.
The Courts at Paonta Sahib do not have the jurisdiction. The .
complaint is beyond the period of limitation. The parties had agreed to arbitration, and the complainant filed the present complaint instead of resorting to the arbitration. Therefore, it was prayed that the present petition be allowed and the complaint and the summoning order passed by the learned Trial Court be set aside.
5. I have heard Mr. Romesh Verma, learned Senior Counsel, assisted by Mr. Tarun Sharma and Sunil Sharma, learned counsel for the petitioners/accused and Mr. Karan Singh Kanwar, learned counsel for the respondent/complainant.
6. Mr. Romesh Verma, learned Senior Counsel for the petitioners/accused, submitted that the complaint is not maintainable. IND Swift Ltd. was not arrayed as a party respondent. The proceedings are not maintainable in the absence of IND Swift Ltd. The money was to be paid towards the articles taken by IND Swift Ltd. Therefore, its presence was necessary before the Court. The dispute between the parties is civil, and a criminal flavour is being given to it by filing the ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 6 2025:HHC:22351 complaint. The cheques were initially presented before the Bank at Paonta Sahib, and subsequently, at Delhi. Therefore, the .
Courts at Delhi will have the jurisdiction to hear and entertain the present complaint. The proceedings before the learned Trial Court are without jurisdiction. Remedy of arbitration is available to the parties as per the tripartite agreement. The complainant did not resort to the remedy of arbitration and filed a false complaint before the learned Trial Court. Therefore, he prayed that the present petition be allowed and the complaint and summoning order passed by the learned Trial Court be quashed.
7. Mr. Karan Singh Kanwar, learned counsel for respondent No.1/complainant, submitted that there is a presumption that a cheque was issued in discharge of the legal liability for valid consideration. The burden is upon the accused to rebut this presumption. The accused has to lead evidence or cross-examine the witnesses to discharge the presumption. The availability of alternative remedies is not sufficient to quash the criminal proceedings. He relied upon the judgment of this Court in M/s Saphnix Life Sciences and Anr. Vs. Asif Ali 2024:HHC:9961 in support of his submission.
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8. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
.
9. The law relating to quashing of FIR was explained by the Hon'ble Supreme Court in B.N. John v. State of U.P., 2025 SCC OnLine SC 7 as under: -
"7. As far as the quashing of criminal cases is concerned, it is now more or less well settled as regards the principles to be applied by the court. In this regard, one may refer to the decision of this Court in State of Haryana v. Ch. Bhajan Lal, 1992 Supp (1) SCC 335, wherein this Court has summarised some of the principles under which FIR/complaints/criminal cases could be quashed in the following words:
"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 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 at their face value and accepted in their ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 8 2025:HHC:22351 entirety, do not prima facie constitute any offence or make out a case against the accused. (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 based on which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(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 ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 9 2025:HHC:22351 ulterior motive for wreaking vengeance on the accused and with a view to spite him due to a private and personal grudge." (emphasis added) .
8. Of the aforesaid criteria, clause no. (1), (4) and (6) would be of relevance to us in this case.
In clause (1) it has been mentioned that where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused, then the FIR or the complaint can be quashed.
As per clause (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 dated by the Magistrate as contemplated under Section 155 (2) of the CrPC, and in such a situation, the FIR can be quashed. Similarly, as provided under clause (6), if there is an express legal bar engrafted in any of the provisions of the CrPC or the concerned Act under which the criminal proceedings are instituted, such proceedings can be quashed."
10. This position was reiterated in Ajay Malik v. State of Uttarakhand, 2025 SCC OnLine SC 185, wherein it was observed:
"8. It is well established that a High Court, in exercising its extraordinary powers under Section 482 of the CrPC, may issue orders to prevent the abuse of court processes or to secure the ends of justice. These inherent powers are neither controlled nor limited by any other statutory provision. However, given the broad and profound nature of this authority, the High Court must exercise it sparingly. The conditions for invoking such powers are embedded within Section 482 of the CrPC itself, allowing the High Court to act only in cases of clear ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 10 2025:HHC:22351 abuse of process or where intervention is essential to uphold the ends of justice.
9. It is in this backdrop that this Court, over the .
course of several decades, has laid down the principles and guidelines that High Courts must follow before quashing criminal proceedings at the threshold, thereby pre-empting the Prosecution from building its case before the Trial Court. The grounds for quashing, inter alia, contemplate the following situations : (i) the criminal complaint has been filed with mala fides; (ii) the FIR represents an abuse of the legal process; (iii) no prima facie offence is made out; (iv) the dispute is civil in nature; (v.) the complaint contains vague and omnibus allegations; and (vi) the parties are willing to settle and compound the dispute amicably (State of Haryana v.
Bhajan Lal, 1992 Supp (1) SCC 335)
11. The present petition is to be decided as per the parameters laid down by the Hon'ble Supreme Court.
12. It was submitted that the tripartite agreement provides for the arbitration between the parties, and the complainant should have resorted to the arbitration instead of filing the complaint. This submission is not acceptable. It was laid down by the Hon'ble Supreme Court in Trisuns Chemical Industry v. Rajesh Agarwal, (1999) 8 SCC 686: 2000 SCC (Cri) 47 that the availability of the remedy of arbitration is no ground to quash the criminal proceedings. It was observed at page 690:
"9. We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 11 2025:HHC:22351 criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording relief to the party affected by a breach of the agreement, but the arbitrator cannot conduct a trial of any act which amounted to an .
offence, albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself. The investigating agency should have had the freedom to go into the whole gamut of the allegations and to reach a conclusion of its own. Pre-emption of such investigation would be justified only in very extreme cases as indicated in State of Haryana v. Bhajan Lal [State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335: 1992 SCC (Cri) 426]."
13. Therefore, the submission that the complainant should have initiated the arbitration proceedings and not the criminal complaint cannot be accepted.
14. It was submitted that the cheque was given as security as per the tripartite agreement, and the civil proceedings should have been initiated for the recovery of the amount. This submission is not acceptable. It was laid down by Hon'ble Supreme Court in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732 that a party has an option of initiating the civil proceedings or criminal proceedings for punishment, and it is not for the drawer of the cheque to dictate the terms with regard to the nature of litigation. It was observed:-
::: Downloaded on - 11/07/2025 21:28:52 :::CIS 122025:HHC:22351 "18. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security cannot be presented .
prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form, and in that manner, if the amount of the loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be an understanding between the parties is a sine qua non to not present the cheque which was issued as security.
These are only the defences that would be available to the drawer of the cheque in proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque, which is issued as security, can never be presented by the drawee of the cheque. If such is the understanding, a cheque would also be reduced to an 'on-demand promissory note' and in all circumstances, it would only be civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation." (Emphasis supplied)
15. The tripartite agreement (Annexure P2) reads that ICI Healthcare would pay ₹72,08,831/- to Glide Camp Pvt. Ltd.
against full and final payment of their dues. It was agreed that ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 13 2025:HHC:22351 Cheque No.95065, amounting to ₹58,65,201/- and Cheque No. 950606, amounting to ₹13,43,630/- were handed over to the .
complainant. The dates on both the cheques were blank. A schedule of the payment was agreed upon. Therefore, it is apparent from the tripartite agreement that the cheques were handed over as security, and the accused had agreed to make the payment by RTGS as per the schedule. The petition is silent that the payment was made by the accused. Therefore, the complainant was justified in presenting the cheque to the Bank after filling the date.
16. In any case, the issuance of the cheque as a security will not absolve the accused of the commission of the crime. It was laid down by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that even if the cheque was issued towards the security, the accused will be liable. It was observed:
"9. Submission of learned Advocate appearing on behalf of the revisionist that the cheque in question was issued to the complainant as security and on this ground, criminal revision petition be accepted is rejected being devoid of any force for the reasons hereinafter mentioned. As per Section 138 of the Negotiable Instruments Act 1881, if any cheque is issued on account of other liability, then the provisions of Section 138 of the Negotiable Instruments Act 1881 would be attracted. The court has perused the original cheque, Ext. C-1 dated ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 14 2025:HHC:22351 30.10.2008, placed on record. There is no recital in the cheque Ext. C-1, that cheque was issued as a security cheque. It is well-settled law that a cheque issued as security would also come under the provision of Section .
138 of the Negotiable Instruments Act 1881. See 2016 (3) SCC page 1 titled Don Ayengia v. State of Assam & another. It is well-settled law that where there is a conflict between former law and subsequent law, then subsequent law always prevails."
17. It was laid down by the Hon'ble Supreme Court in Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited 2016(10) SCC 458 that issuing a cheque toward security will also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. It was observed: -
"10. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways Private Limited versus Magnum Aviation Private Limited (2014) 12 SCC 53 with reference to the explanation to Section 138 of the Act and the expression "for the discharge of any debt or other liability" occurring in Section 138 of the Act. We are of the view that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise.
11. Reference to the facts of the present case clearly shows that though the word "security" is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of instalments. The repayment becomes due under the agreement, the ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 15 2025:HHC:22351 moment the loan is advanced and the instalment falls due. It is undisputed that the loan was duly disbursed on 28th February 2002, which was prior to the date of the cheques. Once the loan was disbursed and instalments .
have fallen due on the date of the cheque as per the agreement, the dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.
12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of a claim for breach of contract under Section 138, which arises on account of dishonour of a cheque issued, was not by itself at par with a criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of a cheque issued for discharge of a later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque, there was a debt/liability in praesenti in terms of the loan agreement, as against the case of Indus Airways (supra), where the purchase order had been cancelled and a cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as an advance for the purchase order, which was cancelled. Keeping in mind this fine, but the real distinction, the said judgment cannot be applied to a case of the present nature where the cheque was for repayment of a loan instalment which had fallen due, though such deposit of cheques towards repayment of instalments was also described as "security" in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of the purchase order which is cancelled and that of a loan transaction where the loan has actually been advanced and its repayment is due on the date of the cheque.
13. The crucial question to determine the applicability of Section 138 of the Act is whether the cheque represents ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 16 2025:HHC:22351 the discharge of existing enforceable debt or liability, or whether it represents an advance payment without there being a subsisting debt or liability. While approving the views of different High Courts noted earlier, this is the .
underlying principle as can be discerned from the discussion of the said cases in the judgment of this Court." (Emphasis supplied)
18. This position was reiterated in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was held that a cheque issued as security is not waste paper and a complaint under Section 138 of the NI Act can be filed on its dishonour. It was observed:
"17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe, and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of the amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow."::: Downloaded on - 11/07/2025 21:28:52 :::CIS 17
2025:HHC:22351
19. The petitioners have stated in the petition that the petitioners had paid ₹15.00 lacs by cheque, and a credit note of .
₹20.00 lacs was issued by the complainant. As such, ₹35.00 lacs was paid by the petitioners. ₹44.00 lacs had already been paid, as stated in the MoU. Hence, only an amount of ₹28,08,831/- was due. This is not correct. The MoU (Annexure P-2) states that an amount of ₹13,43,630/- and ₹58,65,201/- was to be paid by accused No.1 to the complainant within the stipulated schedule.
This was in supersession of the earlier payments. Therefore, the accused cannot take any advantage of the payment made before the execution of the MoU.
20. In any case, the defence of the accused/petitioners regarding the payment is a matter of trial. It was laid down by the Hon'ble Supreme Court in Rathish Babu Unnikrishnan v. State (NCT of Delhi), 2022 SCC OnLine SC 513 that the cheque carries with it a presumption of consideration which is to be rebutted by leading evidence, and any factual dispute is to be resolved by weighing evidence. It was observed:
"10. It is also relevant to bear in mind that the burden of proving that there is no existing debt or liability is to be discharged in the trial. For a two-judge Bench in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. (2002) 1 SCC ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 18 2025:HHC:22351 234, Justice S.N. Variava made the following pertinent observation on this aspect: --
"17. There is therefore no requirement that the .
complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them, the High Court could not have concluded that there was no existing debt or liability."
11. The legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. In a situation where the accused moves the Court for quashing even before the trial has commenced, the Court's approach should be careful enough not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint. The opinion of Justice K.G. Balakrishnan for a three-judge Bench in Rangappa v. Sri Mohan (2010) 11 SCC 441 would, at this stage, deserve our attention: --
"26. ... we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. As noted in the citations, this is, of course, in the nature of a rebuttable presumption, and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant."
12. At any rate, whenever facts are disputed, the truth should be allowed to emerge by weighing the evidence. On this aspect, we may benefit by referring to the ratio in Rajeshbhai Muljibhai Patel v. State of Gujarat (2020) 3 SCC 794, where the following pertinent opinion was given by Justice R. Banumathi: --
::: Downloaded on - 11/07/2025 21:28:52 :::CIS 192025:HHC:22351 "22. .............. When disputed questions of fact are involved, which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of the NI Act ought not to have been quashed by .
the High Court by taking recourse to Section 482 CrPC. Though, the Court has the power to quash the criminal complaint filed under Section 138 of the NI Act on legal issues like limitation, etc. criminal complaint filed under Section 138 of the NI Act against Yogeshbhai ought not to have been quashed merely on the ground that there are inter se disputes between Appellant 3 and Respondent 2. Without keeping in view the statutory presumption raised under Section 139 of the NI Act, the High Court, in our view, committed a serious error in quashing the criminal complaint in CC No. 367 of 2016 filed under Section 138 of the NI Act."
13. Bearing in mind the principles for the exercise of jurisdiction in a proceeding for quashing, let us now turn to the materials in this case. On careful reading of the complaint and the order passed by the Magistrate, what is discernible is that a possible view is taken that the cheques drawn were, in the discharge of a debt for the purchase of shares. In any case, when there is a legal presumption, it would not be judicious for the quashing Court to carry out a detailed enquiry on the facts alleged, without first permitting the trial Court to evaluate the evidence of the parties. The quashing Court should not take upon itself the burden of separating the wheat from the chaff where facts are contested. To say it differently, the quashing proceedings must not become an expedition into the merits of a factual dispute, so as to conclusively vindicate either the complainant or the defence."
21. It was further held that the Courts should be slow in scuttling the complaint at a pre-trial stage. It was observed:
"14. The parameters for invoking the inherent jurisdiction of the Court to quash the criminal ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 20 2025:HHC:22351 proceedings under S.482 CrPC, have been spelt out by Justice S. Ratnavel Pandian for the two judges' bench in State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335: AIR .
1992 SC 604, and the suggested precautionary principles serve as good law even today, for invocation of power under Section 482 of the Cr.P.C.
"103. We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised 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."
15. In the impugned judgment, the learned Judge had rightly relied upon the opinion of Justice J.S. Khehar for a Division Bench in Rajiv Thapar (supra), which succinctly expresses the following relevant parameters to be considered by the quashing Court, at the stage of issuing process, committal, or framing of charges, "28. The High Court, in the exercise of its jurisdiction under Section 482 CrPC, must make a just and rightful choice. This is not a stage of evaluating the truthfulness or otherwise of the allegations levelled by the prosecution/complainant against the accused. Likewise, it is not a stage for determining how weighty the defences raised on behalf of the accused are. Even if the accused is successful in showing some suspicion or doubt, in the allegations levelled by the prosecution/complainant, it would be impermissible to discharge the accused before trial. This is so because it would result in giving finality to the accusations levelled by the ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 21 2025:HHC:22351 prosecution/complainant, without allowing the prosecution or the complainant to adduce evidence to substantiate the same."
.
16. The proposition of law as set out above makes it abundantly clear that the Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility, particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence needs to be of an unimpeachable quality, to altogether disprove the allegations made in the complaint.
17. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence, and the consequence then is that the proper forum, i.e., the trial Court, is ousted from weighing the material evidence. If this is allowed, the accused may be given an un-merited advantage in the criminal process. Also, because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.
18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court, will not, in our opinion, be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here, subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, the scuttling of the criminal process is not merited."
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22. Therefore, the Court cannot hold that the cheque was issued without any legal liability and quash the complaint .
without allowing the complainant to prove its case before the learned Trial Court.
23. It was submitted that Ind Swift Ltd. was not arrayed as an accused, and the complaint is not maintainable. This submission cannot be accepted. The complaint has been filed for the dishonour of the cheque; therefore, only a person who had issued the cheque could have been arrayed as a party. Further, the tripartite agreement shows that the petitioner/accused stood as a guarantor. It was laid down by the Hon'ble Supreme Court in BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd., (2025) 1 SCC 456: 2024 SCC OnLine SC 1767 that the liability of the guarantor and the principal is co-extensive and the creditor can sue both or either of them. It was observed at page 471:
"Liability of guarantor/surety
16. As far as the guarantee is concerned, the law is very well-settled. The liability of the surety and the principal debtor is coextensive. The creditor has remedies available to recover the amount payable by the principal borrower by proceeding against both or any of them. The creditor can proceed against the guarantor first without exhaust- ing its remedies against the principal borrower."::: Downloaded on - 11/07/2025 21:28:52 :::CIS 23
2025:HHC:22351
24. Therefore, the presence of IND Swift Ltd. or LYKA Exports was not necessary before the Court.
.
25. It was submitted that the cheques were presented at Paonta Sahib first, and thereafter at Delhi. The notice was issued after the dishonour of the cheque by the Banks in Delhi. Hence, the Courts at Delhi had jurisdiction and not the Courts at Paonta Sahib. It was also submitted that the complaint was barred by limitation. These submissions are not acceptable. The Hon'ble Supreme Court excluded the period of limitation w.e.f. 15.4.2021 till 28.2.2022, including that prescribed under Section 138 of the proviso (b) and (c) of the Act in Cognizance for Extension of Limitation, in re, (2022) 3 SCC 117: 2022 SCC OnLine SC 27, wherein it was observed at page 119: -
"5. Taking into consideration the arguments advanced by the learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of MA No. 21 of 2022 with the following directions:
5.1. The order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] is restored and in continuation of the subsequent orders dated 8-3-2021 [Cognizance for Extension of Limitation, In re, (2021) 5 SCC 452 : (2021) 3 SCC (Civ) 40 :
(2021) 2 SCC (Cri) 615 : (2021) 2 SCC (L&S) 50], 27-4-2021 [Cognizance for Extension of Limitation, In re, (2021) 17 SCC ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 24 2025:HHC:22351 231: 2021 SCC OnLine SC 373] and 23-9-2021 [Cognizance for Extension of Limitation, In re, 2021 SCC OnLine SC 947], it is directed that the period from 15-3-2020 till 28-2-
2022 shall stand excluded for the purposes of limitation .
as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. 5.2. Consequently, the balance period of limitation remaining as on 3-10-2021, if any, shall become available with effect from 1-3-2022.
5.3. In cases where the limitation would have expired during the period between 15-3-2020 till 28-2-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 1-3-2022. In the event the actual balance period of limitation remaining, with effect from 1.3.2022, is greater than 90 days, that longer period shall apply.
5.4. It is further clarified that the period from 15-3-2020 till 28-2-2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29-A of the Arbitration and Conciliation Act, 1996, Section 12-A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."
26. In the present case, the complaint was filed on 9.11.2021 regarding the cheques which were presented in July 2021; therefore, the period of limitation would not have barred the issuance of the notice and presentation of the complaint before the Court. The complainant specifically stated that the benefit of the judgment of the Hon'ble Supreme Court was being taken, which shows that it was taking the benefit of the cheque ::: Downloaded on - 11/07/2025 21:28:52 :::CIS 25 2025:HHC:22351 presented at Paonta Sahib. Therefore, the plea that the complaint was barred by limitation or that the Courts at Delhi .
and not at Paonta have jurisdiction is not acceptable.
27. No other point was urged.
28. Therefore, there is no reason to quash the complaint by taking recourse to the inherent jurisdiction of the Court.
29.
dismissed. to Hence, the present petition fails, and the same is (Rakesh Kainthla) Judge 11th July, 2025 (Chander) ::: Downloaded on - 11/07/2025 21:28:52 :::CIS