High Courts Should Be Slow To Grant Relief Of Quashing Complaint U/Sec 138 NI Act At A Pre Trial Stage: Supreme Court

The Supreme Court observed that a High Courts should be slow to grant the relief of quashing a complaint under Section 138 of Negotiable Instruments Act at a pre-trial stage.

In a situation where the accused moves Court for quashing even before trial has commenced, the Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint, the bench comprising Justices KM Joseph and Hrishikesh Roy said.

The court added that the burden of proving that there is no existing debt or liability, is to be discharged in the trial.

Background

In this case, the Delhi High Court dismissed the application under Section 482 of the Code of Criminal Procedure, 1973 for quashing of the summoning order issued against the appellant under Section 138 of the Negotiable Instruments Act, 1881. Before the Apex Court, the appellant contended that without satisfying the essential ingredients for the offence under Section 138 of the N.I. Act to the effect that the dishonoured cheque received by the complainant is against "legally enforceable debt or liability", the criminal process could not have been issued. On the other hand, the respondents , who supported the impugned judgment, contended that when the cheque are issued and the signatures thereon are admitted, the presumption of a legally enforceable debt will arise in favour of the holder of the cheque.

The issue raised in appeal before the Apex Court was whether summons and trial notice should have been quashed on the basis of factual defences.?

The court noted that, in this case, the magistrate has taken a possible view that the cheques drawn were, in discharge of a debt for purchase of shares.

Answering this issue against the appellant,the bench made the following observation 

Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint.

The legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. In a situation where the accused moves Court for quashing even before trial has commenced, the Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint.

Quashing proceedings must not become an expedition into the merits of factual dispute

"In any case, when there is legal presumption, it would not be judicious for the quashing Court to carry out a detailed enquiry on the facts alleged, without first permitting the trial Court to evaluate the evidence of the parties. The quashing Court should not take upon itself, the burden of separating the wheat from the chaff where facts are contested. To say it differently, the quashing proceedings must not become an expedition into the merits of factual dispute, so as to conclusively vindicate either the complainant or the defence."

Consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable

The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable.  Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial Court is ousted from weighing the material evidence. If this is allowed, the accused may be given an unmerited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption.

The court observed that, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not be judicious.

Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited.

While concluding the judgment, the bench also quoted Harry Brown, the American author and investment advisor : - "A fair trial is one in which the rules of evidence are honored, the accused has competent counsel, and the judge enforce the proper court room procedure – a trial in which every assumption can be challenged."

Case details

Rathish Babu Unnikrishnan vs State (Govt Of NCT Of Delhi) | 2022 LiveLaw (SC) 413 | CrA 694-695 OF 2022 | 26 April 2022 | 

Coram: Justices K M Joseph and Hrishikesh Roy

Counsel: Adv Krishnamohan K. for appellant,  ASG K.M. Nataraj,  Adv Rebecca M. John for respondent

Headnotes

Code of Criminal Procedure, 1973 ; Section 482 -  Negotiable Instruments Act, 1881 ; Section 138,139 -  The Court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption - In a situation where the accused moves Court for quashing even before trial has commenced, the Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint - Quashing proceedings must not become an expedition into the merits of factual dispute, so as to conclusively vindicate either the complainant or the defence. (Para 16, 11, 13)

Code of Criminal Procedure, 1973 ; Section 482 - The parameters for invoking the inherent jurisdiction of the Court to quash the criminal proceedings under S.482 CrPC discussed -To non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court [Referred to State of Haryana v. Bhajan Lal AIR 1992 SC 604 and Rajiv Thapar & Ors. vs. Madan Lal Kapoor (2013) 3 SCC 330 ] (Para 14-15)

Click here to Read/Download Judgment