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DEEPAK GUPTA
Chlorophyl – Appellant
Versus
Cotton County Retail Limited – Respondent
JUDGMENT
Deepak Gupta, J.
Prayer in this petition filed under Section 482 Cr.P.C. is to quash criminal complaint No.5086/2 dated 06.07.2010 titled "Cotton County Retail Ltd. v. M/s Chlorophyl & Others", under section 138 of the Negotiable Instruments Act, 1881 [for short 'the NI Act'] (Annexure P-8) pending before in the court of ld. JMIC, Ludhiana, with all subsequent proceedings arising therefrom.
2. Complaint (Annexure P8) was filed by Cotton County Retail Limited (now respondent) seeking prosecution of accused - a partnership firm M/s Chlorophyl and its two partners Sajal Kumar Basu and Soma Basu (now petitioners), submitting that accused had been purchasing garments/accessories from the complainant-company on credit basis. After adjusting all the payments made by the accused, there was a debit balance of Rs.14,47,606.69 as on 16.02.2010. In order to discharge their part liability, accused issued a cheque No.339181 dated 04.05.2010 for Rs.5 lakh drawn on Punjab National Bank, Mecheda, Maidnapur (W.B.). The cheque was handed over to the complainant at their Ludhiana office with assurance that it shall be encashed on presentation. However, when the complainant presented the cheque
The court clarified that for criminal liability under Section 138, a cheque must be presented to the drawee bank within six months from its date.
The court's decision emphasized the strict conditions for prosecuting under Section 138 of the Negotiable Instruments Act, 1881, based on the definition of 'payee' and 'holder in due course'.
The dishonour of cheques and the existence of a legally enforceable debt must be proved, and the presumption under section 139 of the NI Act can only be rebutted with strong evidence.
Presumption against the drawer of the cheque, dishonour of cheques due to closure of the account, and the petitioner's failure to rebut the presumption.
The main legal point established is that the issuance of blank cheques as security for a loan attracts penal provisions of Section 138 NI Act, and the burden of proving the absence of a legally enfor....
A person who is not a signatory to the cheque cannot be prosecuted under Section 138 of the Negotiable Instruments Act, 1881, for the offence of dishonour of cheque for insufficiency of funds.
The court held that a cheque issued as security does not invalidate a complaint under Section 138 of the Negotiable Instruments Act, and factual disputes must be settled at trial.
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