Penal Provisions U/S 138 NI Act Attack Person Who Issued Cheque, Shifting Of Liability No Ground To Quash Complaint: Kerala High Court

The Kerala High Court has held that mere shifting of liability after a cheque has been issued would have no significance since penal provisions under the Negotiable Instruments Act would attack the person who issued the cheque, particularly when a prima facie case has already been made out.

In this case, the drawer of the cheque sought to quash the criminal case against him which was instituted after the instrument was dishonoured, on the ground that all previous liability would be undertaken by one Montu Saikia as per a registered agreement.

Justice A. Badharudeen held that a mere shifting of liability could not lead to the case being quashed under Section 482 of CrPC. 

While holding so, the Court perused a plethora of precedents in order to analyze what cases could be quashed under Section 482 Cr.P.C., and observed that, 

"...the law is no more res integra on the point that a complaint can be quashed only when it falls under the category of cases as per the principles set out by the Apex Court". 

As per the factual background, V-Guard Industries, Vennala, Kochi (the 2nd respondent herein) had launched prosecution against the petitioner accused, for dishonour of cheque for Rs.  5,10,186/-, for goods purchased from the former. The respondent sought to initiate prosecution against the petitioner accused under Section 138 read with Section 142 of the Negotiable Instruments Act. Thus, the instant Criminal Miscellaneous petition was filed for the purposes of quashing the complaint and consequent proceedings on the files of the Judicial First Class Magistrate Court (N.I Act Cases), Ernakulam.

It was submitted by the counsels appearing for the petitioner, Advocates Millu Dandapani and Rameez Nooh, that the petitioner could not be held liable since the petitioner had already informed the respondent that due to some changes in the management from 4th July 2015, all previous liability would thenceforth be undertaken by one Montu Saikia as per a registered agreement. The counsels thus, prayed that the case was liable to be quashed. 

The Court in this case, proceeded to analyze the principles to be followed while quashing a complaint under Section 482 Cr.P.C., and deduced the following by relying upon the observations and holdings in Smt.Nagawwa v. Veeranna Shivalingappa Konjalgi (1976), Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre (1992), State of Haryana v. Bhajan Lal (1995), and other such cases, and observed as follows:

1. A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused. It was added in this light that the complaint would have to be examined as a whole.

2. A complaint may also be quashed where it is a clear abuse of the process of the Court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable; 

3. The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution, but be used sparingly and with caution; 

4. The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence; 

5. A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not.

While noting that the law was no longer no res integra that a complaint could be quashed only if it fell within the ambit of any of the aforementioned category of cases, however, the Court observed in the instant case, a prima facie case had indeed been made out to proceed with the trial to canvass penal consequences against the petitioner. It was in this light the Court found that the shifting of liability would not be of much significance. 

It was added by the Court if the petitioner accused had any contentions regarding proceeding with the case, the same could be raised during trial, and that the quashment of the entire proceedings could not be justified. 

The Court ordered the petitioner accused to appear before the trial court, and further directed the trial court to expedite the trial, and dispose of the same within a period of 3 months from the date of receipt of the order. 

The instant petition was thus, dismissed. 

Senior Public Prosecutor T.R. Renjith appeared on behalf of the respondents in the instant case. 

Case Title: Asha Bawri v. State of Kerala & Anr. 

Citation: 2022 LiveLaw (Ker) 556

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