Point of law: Question whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the transaction.

ORDER :

1. The petitioner herein is the accused in C.C.No.2315/2017 on the file of the Judicial First Class Magistrate (NI Court), Palluruthy. The aforesaid case has arisen from a complaint lodged under Sections 138 and 142 of the Negotiable Instruments Act, 1881 (the “NI Act” for the sake of brevity) by the party respondent herein. This petition is filed seeking to quash all further proceedings in the above case, for which purpose, the powers of this Court under Section 482 of the Code of Criminal Procedure have been invoked.

2. Short facts to be noticed for deciding the issues involved are as under:

a. The complainant held shares in the Company by the name Elnocs Health Care Private Ltd. (“the Company” for the sake of brevity). An agreement was entered into between the complainant and the accused, as per which the complainant agreed to transfer 833 shares held by the complainant in favor of the accused for a total consideration of Rs.87,43,812/- within 12 months from the date of the share purchase agreement. In furtherance thereto, the accused is alleged to have issued three post-dated cheques drawn on the HDFC Bank bearing numbers ‘000069’, ‘000070’, and ‘000071’ dated 12.03.2017 towards consideration due under the share purchase agreement. It is stated that when the cheque bearing Nos.000069 and 000070 were presented for collection, the same was dishonored for the reason ‘‘payment stopped by drawer’. Thereafter, statutory notice was issued to which the accused had issued a reply dated 4.5.2017 stating incorrect facts. Thereafter, the complaint was lodged within the statutory period.

3. Sri. Martin Jose, the learned counsel for the petitioner, submitted that the petitioner herein was also a Director of the Company Elnocs Health Care Private Ltd, and this fact would be evident from the shareholding pattern shown in the agreement. While so, the complainant and other Directors approached the petitioner and offered to sell their shares to the petitioner and one Biju Radhakrishnan. Consequently, Annexure-I agreement was entered into for the transfer of the shares. It was at that juncture that the post-dated cheques in question were handed over to the complainant. However, the understanding as per the agreement was to hand over the management of the company with the power to operate the bank accounts to the petitioner and Sri.Biju Radhakrishnan. However, the said exercise was not carried out. The business of the Company nosedived due to the inefficient management by the complainant. Under the above circumstances, the petitioner resigned from the post of Director of the Company on 13.6.2016 and issued Annexure-II letter informing of his intention to cancel Annexure-I agreement. The request made by the petitioner was accepted by the complainant, as is evident from the return mail. Thereafter, the petitioner sent Annexure-III notice to the Directors requesting the return of the cheques which were handed over as part of the agreement. It was pointed out in the said notice that the cheques were not supported by any consideration, and the consideration, if any, had failed owing to the breach of agreement committed by the complainant. It was also asserted that the cheques were unenforceable, and there is no obligation on the part of the petitioner to effect any payment as the share transfer did not go through. It was thereafter that statutory notice was issued, and after ignoring the reply filed by the petitioner, the complaint was filed. It is submitted that the facts would reveal that the cheques in question did not represent the discharge of existing enforceable debt or liability, but the cheques were post-dated and issued without there being any subsisting debt or liability. According to the learned counsel, the continuance of criminal proceedings on the cover of the complaint is a clear abuse of process.

4. The learned counsel appearing for the party respondent submitted that it was owing to the lapses of the petitioner that the agreeme