1. Cheque dishonour — Complaint under Section 138, Negotiable Instruments Act — Application for discharge. (Para 2 , 3 )
Back
Next 
2024 Supreme(SC) 1016
SUPREME COURT OF INDIA
SURYA KANT, UJJAL BHUYAN, JJ.
Dr. (Ms.) Arfa Khan & Anr. – Appellants
Versus
State Of U.P. & Anr. – Respondents
Criminal Appeal No.4514 of 2024 (Arising out of SLP(Crl.) No.9243 of 2021)
Decided On : 05-11-2024
Advocates appeared:
For the Petitioner(s): Ms. Azra Rehman, Adv. Ms. Lubna Naaz, AOR
For the Respondent(s): Mr. Akshay Amritanshu, AOR Ms. Drishti Saraf, Adv. Ms. Pragya Upadhyay, Adv. Ms. Swati Mishra, Adv. Mr. Jetendra Singh, Adv. Mr. Vijendra Kumar Kaushik, Adv. Ms. Priyanka Singh, Adv. Ms. Deepti Singh, Adv. Ms. Manju Jetley, AOR
For the Petitioner(s): Ms. Azra Rehman, Adv. Ms. Lubna Naaz, AOR
For the Respondent(s): Mr. Akshay Amritanshu, AOR Ms. Drishti Saraf, Adv. Ms. Pragya Upadhyay, Adv. Ms. Swati Mishra, Adv. Mr. Jetendra Singh, Adv. Mr. Vijendra Kumar Kaushik, Adv. Ms. Priyanka Singh, Adv. Ms. Deepti Singh, Adv. Ms. Manju Jetley, AOR
IMPORTANT POINT
Dishonour of cheques – Supreme Court is not the appropriate forum to resolve factual disputes – Parties may pursue their remedy before Civil Court.
Headnote:
Negotiable Instruments Act, 1881 – Section 138 – Criminal Procedure Code, 1973 – Sections 227 and 482 [Bharatiya Nagarik Suraksha Sanhita, 2023 – Sections 250 and 528] – Dishonour of cheques – Rejection of discharge application – There is nothing discernible from averments that appellants who are well-placed senior doctors in U.K., required any loan from respondent – Averments made in complaint do not inspire confidence that cheques were given for the purpose of discharging any debt liability – Initiation of complaint proceedings are nothing but abuse of process of law, and such proceedings are meant to compel appellants to come to some terms in a related civil dispute – Impugned orders passed by Additional Chief Judicial Magistrate as well as order passed by High Court set aside and all proceedings arising therefrom quashed – Parties have civil dispute emanating from agreement to sell in terms whereof appellants were required to execute sale deed(s) – Despite repeated efforts made by Supreme Court through mediation or otherwise, parties have not resolved their disputes and every time they have come with one or other inconsistent excuse before this Court – Multiple factual issues raised on their behalf on every occasion being seriously disputed between them, Supreme Court is not the appropriate forum to resolve such disputes – Parties may pursue their remedy before Civil Court – Appellants restrained from creating any encumbrance or third party rights on land/property in respect to which there is an alleged agreement to sell executed between parties – Such a restraint order shall be effective for a period of three months to enable respondent to initiate Civil Court proceedings. (Paras 4, 5, 6 and 9)
Facts of the case:
Challenge herein is to an order dated 17.09.2021, passed by High Court of Judicature at Allahabad in Criminal Revision No.2549/2017, whereby High Court declined to discharge appellants in Complaint No.451/2017, filed under Section 138 of Negotiable Instruments Act, 1881 and has upheld order dated 12.07.2017 of Additional Chief Judicial Magistrate, Hamirpur. It was that order which appellants challenged before High Court in Criminal Revision Petition.
Findings of Court:
In view of fact that proceedings under Section 138 of Negotiable Instruments Act, 1881 have been quashed, Registry is directed to refund that amount to appellants along with interest accrued thereon, within one week.
Result : Appeal disposed of with observations.
Legal Category Hierarchy
Table of Contents
2. Challenge to the refusal of discharge in a complaint under Section 138, Negotiable Instruments Act. (Para 2 , 3 )
3. Lack of evidence for debt liability — Cheques issued for business assistance — Proceedings deemed an abuse of process to settle civil disputes. (Para 4 )
4. Criminal proceedings under Section 138, Negotiable Instruments Act are an abuse of process if initiated without plausible debt liability to compel civil settlements. (Para 4 )
5. Appeal allowed — Impugned orders set aside — Complaint quashed — Deposit refunded — Temporary restraint on property alienation. (Para 5 , 8 , 9 )
6. When is a complaint under Section 138 of the Negotiable Instruments Act considered an abuse of the process of law?
A complaint is an abuse of process when the averments do not inspire confidence that the cheques were issued for discharging a debt liability and are instead used to compel the accused to settle a related civil dispute. (Para 4 )
7. Does the quashing of a Section 138 proceeding affect the merits of a related civil suit?
No, the quashing of criminal proceedings does not preclude parties from pursuing remedies in Civil Court, and observations made during the criminal proceedings have no bearing on the merits of the civil suit. (Para 6 , 7 )
8. Can a court restrain the alienation of property while disposing of an appeal regarding a Section 138 complaint?
Yes, the court may restrain the creation of third-party rights or encumbrances on disputed property for a limited period to enable the complainant to initiate appropriate civil proceedings. (Para 9 )
ORDER
1. Leave granted.
2. The challenge herein is to an order dated 17.09.2021, passed by the High Court of Judicature at Allahabad in Criminal Revision No.2549/2017, whereby the High Court declined to discharge the appellants in Complaint No.451/2017, filed under Section 138 of the Negotiable Instruments Act, 1881, and, thus, has upheld the order dated 12.07.2017 of the Additional Chief Judicial Magistrate, Hamirpur. It was that order which the appellants challenged before the High Court in the above-mentioned Criminal Revision Petition.
3. The appellants are doctors by profession. They are practicing in London (U.K.). They are persons of Indian origin though British citizens. Respondent No.2 is the complainant, who is a close relative of the appellants. Two cheques were statedly given by the appellants to respondent No.2 on 11.01.2016 and 16.01.2016, which were presented allegedly after interpolating the dates and changing the month from January to September. The cheques were dishonoured and consequently, respondent No.2 filed a complaint under Section 138 of the Negotiable Instruments Act, 1881. The appellants, as noticed earlier, moved an application for their discharge but the said application was declined by the Trial Magistrate and that order has been upheld by the High Court.
4. We have heard learned counsel for the parties and minutely gone through the contents of the complaint filed by respondent No.2. It seems that the cheques were given to respondent No.2 on account of close relationship between the parties for the purpose of assisting him to start a business. There is nothing discernible from the averments that the appellants, who are wellplaced senior doctors in U.K., required any loan from respondent No.2. The averments made in the complaint do not inspire confidence that the cheques were given for the purpose of discharging any debt liability. That being so, we are satisfied that initiation of complaint proceedings are nothing but an abuse of the process of law, and such proceedings are meant to compel the appellants to come to some terms in a related civil dispute.
5. Consequently, the appeal is allowed; the impugned orders dated 12.07.2017, passed by the Additional Chief Judicial Magistrate, Hamirpur, as well as the order dated 17.09.2021, passed by the High Court, are hereby set aside. As a necessary corollary, Complaint No.451/2017, filed by respondent No.2, and which is pending before the Additional Chief Judicial Magistrate, Hamirpur, and all the proceedings arising therefrom are hereby quashed.
6. Having held so, we may hasten to add that the parties have apparently a civil dispute emanating from an agreement to sell, in terms whereof the appellants were required to execute sale deed(s). Despite repeated efforts made by this Court through mediation or otherwise, the parties have not resolved their disputes and every time they have come with one or the other inconsistent excuse before this Court. All that we will observe is that the multiple factual issues raised on their behalf on every occasion being seriously disputed between them, this Court is not the appropriate forum to resolve such disputes. The parties, if so advised, may pursue their remedy before the Civil Court, if so permissible in law.
7. It is clarified that the observations made hereinabove shall have no bearing on the merits of the Civil Suit, if filed, which shall be decided by the Courts as per its own merit.
8. Vide order dated 11.12.2021, the appellants were directed to show their bona fide and deposit a sum of Rs.28,00,000/- (Rupees Twenty Eight Lakhs) with the Registry of this Court which they did. In view of the fact that the proceedings under Section 138 of the Negotiable Instruments Act, 1881 have been quashed, the Registry is directed to refund that amount to the appellants along with interest, if any, accrued thereon, within one week.
9. The appellants are, however, restrained from creating any encumbrance or third party rights on the
