Prem Lal vs State of Himachal Pradesh

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(HP) 239

RAKESH KAINTHLA
Prem Lal – Appellant
Versus
State of Himachal Pradesh – Respondent

Advocates:
Advocate Appeared:
For the Petitioner: Mr. R.L. Chaudhary, Adv.
For the Respondent: Mr. Prashant Sen, Deputy Adv. General, Mr. K.B. Khajuria, Adv.

Judgement Key Points

The complainant bank sanctioned a cash credit limit of Rs. 5,00,000/- to the petitioner's wife on 30.07.2008, with the petitioner as guarantor; the cheque for Rs. 7,57,000/- was issued to discharge liabilities but dishonoured due to insufficient funds. (!) (!)
The trial court summoned the accused upon finding prima facie commission of an offence under Section 138 of the NI Act. (!)
Petitioner sought to quash the summoning order and complaint, arguing the cheque was invalid as a non-CTS cheque per RBI communication dated 18.03.2013, presented on 28.12.2013. (!)
Respondent asserted non-CTS cheques remain valid negotiable instruments despite RBI directives to withdraw them; processing was limited, but validity persists, discontinued only w.e.f. 31.12.2018. (!)
Petitioner's counsel argued the non-CTS cheque was invalid per RBI notification (Annexure P-4), creating no legal liability. (!)
Respondent No.2's counsel submitted non-CTS cheques remain negotiable instruments, and the cheque was not dishonoured for being non-CTS. (!)
High Court power under Section 482 CrPC is to be exercised sparingly to prevent abuse of process or secure ends of justice, without conducting a mini-trial or assessing evidence reliability at quashing stage. (!) (!) (!) (!)
RBI Annexure P-4 (Clause 'c') stated residual non-CTS cheques remain valid and acceptable until 31.07.2013, subject to review. (!)
RBI clarified non-CTS cheques are valid as negotiable instruments, even after separate clearing sessions discontinued w.e.f. 31.12.2018; banks advised to withdraw them from customers. (!) (!) (!)
Cheque dishonoured for "insufficient funds" (or "exceeds arrangement"), not for being non-CTS, establishing prima facie offence under Section 138 NI Act. (!) (!) (!) (!)
Complaint discloses offence under Section 138 NI Act as petitioner was guarantor, issued cheque for liability, dishonoured for insufficient funds, and failed to pay after notice. (!)
Petition dismissed; complaint not quashed under inherent powers. (!)

JUDGMENT :

Rakesh Kainthla, J.

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 referred to in the same manner as they were referred before the learned Trial Court for convenience).

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 Pradesh and has one branch office situated at main market Tehsil Sadar, District Bilaspur, H.P. The complainant sanctioned cash credit limit facility of Rs. 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 t