Issuance of summons in criminal cases must reflect a Magistrate's application of mind to the complaint’s allegations and the supporting evidence, ensuring valid grounds for proceeding under section 138 of the NI Act.

JUDGMENT :

ANUP JAIRAM BHAMBHANI J.

By way of the present petition filed under section 482 of the Code of Criminal Procedure 1973 ('Cr.P.C'), the petitioners (accused persons) inter-alia seek quashing of summoning order dated 29.04.2023 passed by the learned Metropolitan Magistrate, Digital Court-01, Patiala House Courts, New Delhi in criminal complaint bearing CC NI Act No. 9670/2022 in proceedings under section 138 of the Negotiable Instruments Act, 1881 ('NI Act').

2. Notice on this petition was issued vidé order dated 12.07.2024, whereby upon a first blush reading of the impugned order, this court was constrained to stay proceedings pending before the learned Magistrate, since the summoning order appeared to be in the nature of a template order and failed to reflect any application of mind to the facts of the case, as would be necessary prior to issuance of summons to the accused persons.

3. Vidé order dated 12.07.2024 the State was deleted as party-respondent in the matter. Counter-affidavit dated 11.08.2024 has subsequently been filed on behalf the sole respondent (complainant) in the case. Written submissions have also been filed by the parties. The court has heard Mr. Mrinal Kumar Sharma, learned counsel appearing on behalf of the petitioners; and Mr. Gauhar Mirza, learned counsel appearing on behalf of the respondent.

FACTUAL MATRIX

4. Briefly, the dispute between the parties arises from an Agreement dated 01.04.2019 signed between the respondent and the petitioners, under which the parties inter-alia had agreed upon various timelines for completion of certain construction projects and payments were to be made by the petitioners to the respondent in that regard.

5. Thereafter, owing to certain disputes as to the timelines and payments made, the parties signed a Security Bond dated 09.04.2021 under which the respondent released the balance sum of Rs. 2,24,71,917/- to the petitioners. Thereupon, the petitioners issued to the respondent a cheque bearing No. 003503, which was later replaced by another cheque bearing No. 003504, as 'security' against the payment so made. Since the respondent alleged that further defaults had been committed by the petitioners in completing the work, the respondent presented the 'security' cheque bearing No. 003504 for encashment, which cheque was returned by the petitioners' bank unpaid vidé a cheque return memo dated 01.07.2020 citing “Funds Insufficient” as the reason.

6. Consequently, the respondent issued a Legal Notice dated 29.07.2022 to the petitioners, following which a complaint dated 12.09.2022 came to be filed under section 138 of the NI Act bearing CC NI Act No. 9670/2022, in which complaint summons were issued vidé impugned order dated 29.04.2023; and notice under section 251 Cr.P.C. was also framed against the petitioners on 31.08.2023. The matter before the learned Magistrate is stated to be at the stage of complainant's evidence.

SUBMISSIONS ON BEHALF OF THE PETITIONERS

7. Mr. Sharma submits, that the cheque for Rs.2,24,71,917/- was issued merely as a 'security' instrument under the Security Bond dated 09.04.2021, and was not meant to be presented for immediate encashment. It is argued that clause 5 of the bond specifically stipulated that the cheque could be presented only upon written intimation of default to the petitioners, and after allowing a 45-day cure period. The petitioners' contention is that no such intimation was issued before encashment, which made