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2023 Supreme(Online)(KER) 30882
19.07.2023, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V TH WEDNESDAY, THE 19 DAY OF JULY 2023 / 28TH ASHADHA, 1945 CRL.MC NO. 8747 OF 2017 CC 2315/2017 OF JMFC(SPECIAL COURT) FOR TRIAL OF SEC.138, NI ACT CASES,PALLURUTHY PETITIONER/ACCUSED:
SENTHILKUMAR S/O. KALIAPPA CHETTIAR, NEHRU NAGAR, NATTUKAL POST,KOZHINJAMPARA, PALAKKAD-678554.
BY ADVS.
SRI.P.MARTIN JOSE SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA RESPONDENTS/RESPONDENTS:
1 THE STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM-682031.
2 * SRI. CHANDRAMOHAN K.
GOURISHANKARAN, K, MURALI ROAD,OPP. KUMARANASAN ROAD,KADAVANTHRA, KOCHI-682020.
* THE NAME OF THE 2ND RESPONDENT SRI.CHANDRAMOHAN K , OCCURRING IN THE CAUSE TITLE OF CRL.M.C 8747/2017 IS CORRECTED AND SUBSTITUTED AS SRI.CHANDRAMENON K, AS PER ORDER DATED 7.2.2018 IN CRL.M.A NO.1298/18 BY ADVS.
SRI.SANTHOSH MATHEW SRI.SANTHOSH MATHEW SRI.VIJAY V. PAUL SMT. NEEMA T V, SR. PUBLIC PROSECUTOR THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
19.07.2023, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V TH WEDNESDAY, THE 19 DAY OF JULY 2023 / 28TH ASHADHA, 1945 CRL.MC NO. 8747 OF 2017 CC 2315/2017 OF JMFC(SPECIAL COURT) FOR TRIAL OF SEC.138, NI ACT CASES,PALLURUTHY PETITIONER/ACCUSED:
SENTHILKUMAR S/O. KALIAPPA CHETTIAR, NEHRU NAGAR, NATTUKAL POST,KOZHINJAMPARA, PALAKKAD-678554.
BY ADVS.
SRI.P.MARTIN JOSE SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA RESPONDENTS/RESPONDENTS:
1 THE STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM-682031.
2 * SRI. CHANDRAMOHAN K.
GOURISHANKARAN, K, MURALI ROAD,OPP. KUMARANASAN ROAD,KADAVANTHRA, KOCHI-682020.
* THE NAME OF THE 2ND RESPONDENT SRI.CHANDRAMOHAN K , OCCURRING IN THE CAUSE TITLE OF CRL.M.C 8747/2017 IS CORRECTED AND SUBSTITUTED AS SRI.CHANDRAMENON K, AS PER ORDER DATED 7.2.2018 IN CRL.M.A NO.1298/18 BY ADVS.
SRI.SANTHOSH MATHEW SRI.SANTHOSH MATHEW SRI.VIJAY V. PAUL SMT. NEEMA T V, SR. PUBLIC PROSECUTOR THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
19.07.2023, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V WEDNESDAY, THE 197 pay oF JULY 2023 / 28TH ASHADHA, 1945 CRL.MC NO. 8747 OF 2017 CC 2315/2017 OF JMFC(SPECIAL COURT) FOR TRIAL OF SEC.138, NI ACT CASES , PALLURUTHY PETITIONER/ACCUSED : SENTHILKUMAR S/O. KALIAPPA CHETTIAR, NEHRU NAGAR, NATTUKAL POST, KOZHINJAMPARA, BY ADVS.
SRI.P.MARTIN JOSE SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA RESPONDENTS /RESPONDENTS : 1 THE STATE OF K REPRESENTED BY HIGH COURT OF 2 * SRI. CHANDRAI GOURISHANKARAN ROAD, KADAVANTH * THE NAME OF T ERALA PUBLIC P ERALA, E MOHAN K. , K, MURA HE 2ND RES
PALAKKAD-678554.
ROSECUTOR,
RNAKULAM-682031. LI ROAD,OPP. KUMARANASAN RA, KOCHI-682020.
PONDENT SRI.CHANDRAMOHAN K, OCCURRING IN THE CAUSE TITLE OF CRL.M.C 8747/2017 IS CORRECTED AND SUBSTITUTED AS SRI.CHANDRAMENON K, AS PER ORDER DATED 7.2.2018 IN CRL.M.A NO.1298/18
BY ADVS.
SRI.SANTHOSH MATHEW SRI.SANTHOSH MATHEW SRI.VIJAY V. PAUL SMT. NEEMA T V , SR. PUBLIC PROSECUTOR
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 19.07.2023, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
SRI.P.MARTIN JOSE, SRI.P.PRIJITH, SRI.THOMAS P.KURUVILLA, SRI.SANTHOSH MATHEW, SRI.VIJAY V. PAUL, SMT. NEEMA T V, SR. PUBLIC PROSECUTOR
Post-dated cheques lacking an existing enforceable debt do not constitute a violation under Section 138 of the NI Act, leading to the annulment of related criminal proceedings.
Headnote:
Negotiability - Cheques - Negotiable Instruments Act 1881 - Sections 138, 142 - The court held that post-dated cheques issued without an existing enforceable debt or liability do not attract penalties under the NI Act, leading to quashing of proceedings against the accused.
Fact of the Case:
The petitioner, accused in a cheque dishonor case, challenged proceedings initiated under the NI Act after issuing post-dated cheques linked to a share purchase agreement that ultimately fell through.
Finding of the Court:
The court found that the cheques did not represent any existing enforceable debt at the time they were drawn and that the continuation of the criminal proceedings constituted an abuse of process.
Issues: Whether the post-dated cheques issued under a failed share purchase agreement represented enforceable debts at the time of issuance and if criminal proceedings under the NI Act were maintainable.
Ratio Decidendi: For a cheque to be actionable under Section 138 of the NI Act, it must be issued in discharge of an existing legally enforceable debt. The absence of such enforceability at the time of the cheque's issuance undermines the complaint.
Final Decision: All further proceedings against the petitioner in C.C No.2315 of 2017 stand quashed.
“CR”
ORDER
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
