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2020 Supreme(UK) 12
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Alok Kumar Verma, J.
Alok Verma - Appellant
Versus
Vinod Kumar - Respondent
Criminal Miscellaneous Application No. 814 of 2014
Decided On : 14-02-2020
Rakesh Thapliyal, Advocate, Neeti Rana, Advocate, Gaurav Singh, Advocate
Violation of Section 269SS of the Income Tax Act does not invalidate a loan transaction under Section 138 of the Negotiable Instruments Act.
Headnote:
Section 269SS of the Income Tax Act, 1961 prohibits taking or accepting loans or deposits in cash above a certain amount. Section 138 of the Negotiable Instruments Act, 1881 deals with the dishonor of cheques. The court examined the provisions of both acts and their interpretations.
Fact of the Case:
The respondent gave a loan of 8.75 Lakhs to the applicant, who issued a cheque in return. The cheque was returned by the bank due to the account being closed. The respondent filed a complaint under Section 138 of the Negotiable Instruments Act. The applicant challenged the summoning order on the grounds that the loan transaction violated Section 269SS of the Income Tax Act.
Finding of the Court:
The court examined the provisions of Section 269SS of the Income Tax Act and Section 138 of the Negotiable Instruments Act. It held that violation of Section 269SS does not render the loan transaction void and does not affect the culpability of the offence under Section 138. The court also noted that there is a presumption in favor of the holder of a cheque under Section 139 of the Negotiable Instruments Act.
Ratio Decidendi: Violation of Section 269SS of the Income Tax Act does not invalidate a loan transaction under Section 138 of the Negotiable Instruments Act. The statutory presumption under Section 118 and Section 139 of the Negotiable Instruments Act applies to cases of cheque dishonor.
Result: The court dismissed the application under Section 482 of the Code of Criminal Procedure, 1973, but stated that the dismissal does not prejudice the case of the applicant on merits.
JUDGMENT
Alok Kumar Verma, J. - This application under Section 482 of the Code of Criminal Procedure, 1973 has been filed to quash the entire proceeding of Complaint Case No. 1008 of 2012 (Old No.1371 of 2007) Vinod Kumar Vs. Alok Verma, pending in the court of Special Judicial Magistrate, Haridwar under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as, "the Act, 1881) as well as summoning order dated 16.01.2013 along with the order passed by the learned 1st Additional Sessions Judge, Haridwar dated 28.06.2014, passed in Criminal Revision No. 136 of 2013, preferred against the order dated 16.01.2013, whereby the revision of the present applicant had also been rejected.
2. Facts, to the limited extent necessary are that the respondent gave 8.75 Lakhs on 11.03.2007, as debt, to the present applicant on the assurance that the money shall be returned exactly after one month. The same was not returned as promised but a cheque No.144194 to the tune of 8.75 Lakhs was issued by the present applicant, which he drew from his bank account of Punjab National Bank, Jwalapur, District Haridwar. The said cheque was submitted by the respondent for collection, however, the bank had returned the same with endorsement that "account was closed". In the memo of the bank, it was also mentioned that the cheque was also returned because it exceeded the arrangement. The respondent sent a notice under Section 138(b) of the Act, 1881 on 17.04.2007, which was presumed served upon the present applicant but payment was not made to the respondent. Therefore, the respondent filed the complaint on 09.05.2007.
3. The Special Judicial Magistrate, Haridwar, in that Complaint Case No. 1371 of 2007 titled as Vinod Kumar Vs. Alok Verma, took the cognizance on 16.05.2007 for the offence punishable under Section 138 of the Act, 1881. The present applicant challenged the said cognizance order dated 16.05.2007, through Criminal Misc. Application No.669 of 2007, Alok Verma Vs. State of Uttarakhand and another, on the ground that the respondent-complainant examined his power of attorney holder under Section 200 of Cr.P.C. This High Court decided the said Criminal Misc. Application on 16.04.2012, whereby the cognizance order was set aside with the direction to the learned Magistrate to proceed with the complaint after recording the statement of the complainant and pass appropriate orders. Thereafter, the respondentcomplainant filed his affidavit under Section 200 of Cr.P.C. After considering the matter afresh, the learned Magistrate passed the order on 16.01.2013, whereby the present applicant-accused was summoned under Section 138 of the Act, 1881. Against this summoning order, the present applicant preferred a criminal revision. The learned Additional Sessions Judge decided the same on 28.06.2014, whereby the revision had been rejected. Hence, the present application has been filed.
4. Mr. Rakesh Thapliyal, the learned Senior Counsel submits that the summoning order had been passed without applying the judicial mind; the Magistrate was bound to consider the essential ingredient of Section 138 of the Act, 1881 whether there was a legally enforceable debt; in 2006, the present applicant became a member of a Committee and for becoming a member of the said Committee he had given two undated blank cheques to the respondent-complainant; the present applicant continued to become member for ten months and then he left the Committee as he was having some doubt with regard to functioning of that Committee and then he requested the complainant to return back the said two blank cheques, given to him, but he refused and told that the cheques were missing; as both the applicant and the complainant run their shops since long back in Jwalapur, the applicant was in this impression that the said cheques were missing; the applicant never made any attempt or efforts to take any legal recourse against the complainant to get back the blank cheques; but, the complai
