High Court of KeralaSingle Judge2017-12-21Crl.M.C. stands dismissed.

K.MANOJ KUMAR v. STATE OF KERALA & P.V. AJAYAKUMAR

Case / Petition Number:Crl.MC.No.6511 of 2016

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: B. Sudheendra Kumar
Judgment Date: 2017-12-21
Court Decision / Holding: Crl.MC No. 6511 of 2016 stood dismissed. The court refused to quash the complaint under Section 138 NI Act and allowed the prosecution to continue.
Final Disposition: Crl.M.C. stands dismissed.

Parties to the Case

Appellants / Petitioners

K.MANOJ KUMAR, AGED 44 YEARS, S/O. VASUDEVAN MOOSAD, KALATHIL ILLAM, CHULOOR P.O., POOLAKKODE AMSOM AND DESOM, CHATHAMANGALAM, KOZHIKODE - 673 601

Respondents

STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682 031
P.V.AJAYAKUMAR, AGED 54 YEARS, S/O. V.R.NAIR, ANANDALAYAM HOUSE, MOUVANCHERY P.O., KANNUR - 670 613

Legal Representation & Advocates

Counsels for Petitioners

• SRI.R.SUDHISH
• SMT.M.MANJU

Counsels for Respondents

• SRI.G.SREEKUMAR (CHELUR)
• SRI.K.ASHIS

Case Synopsis & Summary

This is a criminal miscellaneous petition (Crl.MC No. 6511 of 2016) filed by the accused in S.T.C. No. 2148 of 2016 pending before the Judicial First Class Magistrate Court‑I, Kannur, challenging Annexure A3, the complaint under Section 138 of the Negotiable Instruments Act. The petitioner contends that the cheque was issued only as security and did not discharge any liability, so the offence under Section 138 cannot be established. He also points to a civil suit in which he allegedly admitted the cheque was given as security. The court undertakes a doctrinal survey of case law, starting with M/s Indian Oil Corporation v. M/s NEPC India Ltd. (AIR 2006 SC 2780), which allows quashing if the allegations, viewed generally, do not prima facie constitute an offence or amount to abuse of process, while urging caution to avoid stifling legitimate prosecution. It also notes Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. (AIR 2016 SC 4363) for the test regarding whether a cheque represents discharge of an existing debt or liability or merely an advance payment. In HMT Watches Ltd. v. M.A. Abida (2015) 11 SCC 776, the court reminds that whether cheques were given as security or whether there is an outstanding liability are questions of fact for the trial. Having examined Annexure A3, the magistrate’s prima facie case is held to disclose the ingredients of Section 138; consequently, the petition to quash is dismissed. The court also directs that the petitioner may seek exemption from personal appearance on posting dates, subject to filing a form with the trial court within 30 days.

Provisions of Law Cited

Section 138 of the Negotiable Instruments Act

Legal Doctrines & Maxims

The power to quash a complaint shall not be used to stifle or scuttle a legitimate prosecution and the power should be used sparingly and with abundant caution.
Quashing is warranted only where the complaint is bereft of even basic facts necessary to make out the offence.
Whether the cheque represents discharge of existing debt or liability or an advance payment is the crucial test for applicability of Section 138.
A cheque’s security nature or outstanding liability is a question of fact to be determined at trial.

Submissions & Arguments

Contentions of Appellants / Petitioners

The applicant contends that the subject cheque was issued only as security and not in discharge of any liability. He relies on the civil suit admission that the cheque was given as security and argues that this extinguishes any liability, rendering Section 138 NI Act unsustainable. He seeks quashing on grounds that Annexure A3 does not allege a discharge of liability and that the complaint should be deflated in light of the security context.

Contentions of Respondents

The respondents argue that Annexure A3 discloses the essential ingredients of an offence under Section 138 NI Act. They contend that the question whether the cheque was issued as security or to discharge a liability, or whether there was an existing liability, is a matter for evidence at trial and cannot be determined in a quashing petition. They urge that the petition to quash should be rejected to allow the legitimate prosecution to proceed.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
M/s Indian Oil Corporation v. M/s NEPC India Ltd. and Others	AIR 2006 SC 2780	Positive	Held that a complaint can be quashed where the allegations, taken at face value, do not prima facie constitute an offence or make out the case; the court should examine the complaint as a whole and not delve into merits.
Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd.	AIR 2016 SC 4363	Mentioned Only	Cited to define the crucial issue for Section 138 applicability (whether the cheque represents discharge of debt/liability or an advance); used as contextual guidance rather than as a direct holding.
HMT Watches Ltd. v. M.A. Abida and Another	(2015) 11 SCC 776	Positive	Held that whether cheques were given as security or whether there was outstanding liability is a question of fact to be determined at trial; the High Court should not decide such questions in a petition under Section 482 Cr.P.C.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE B.SUDHEENDRA KUMAR** ## **THURSDAY, THE 21ST DAY OF DECEMBER 2017/30TH AGRAHAYANA, 1939** ## **Crl.MC.No. 6511 of 2016 ---------------------------** ## **S.T.C.NO.2148/2016 of JUDICIAL FIRST CLASS MAGISTRATE COURT-1, KANNUR** ## **PETITIONER/ACCUSED:** **-----------------------------------** **K.MANOJ KUMAR, AGED 44 YEARS, S/O. VASUDEVAN MOOSAD, KALATHIL ILLAM, CHULOOR P.O., POOLAKKODE AMSOM AND DESOM, CHATHAMANGALAM, KOZHIKODE - 673 601.** **BY ADVS.SRI.R.SUDHISH SMT.M.MANJU** ## **RESPONDENTS/STATE & COMPLAINANT:** **-----------------------------------------------------------** - **STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682 031.** - **P.V.AJAYAKUMAR, AGED 54 YEARS, S/O. V.R.NAIR, ANANDALAYAM HOUSE, MOUVANCHERY P.O., KANNUR - 670 613.** ## **R1 BY PUBLIC PROSECUTOR SRI.T.R.RENJITH R2 BY ADVS. SRI.G.SREEKUMAR (CHELUR) SRI.K.ASHIS** ## **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 21-12-2017, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **Crl.MC.No. 6511 of 2016 () ----------------------------------** ## **APPENDIX** ## **PETITIONER(S)' ANNEXURES** |**PETITIONER(S)' ANNEXURES**|| |---|---| |**------------------------------------------**|| |**ANNEXURE A1 :**|**COPY OF THE AGREEMENT EXECUTED BETWEEN THE**| ||**PETITIONER AND THE 2ND RESPONDENT DATED 10.11.2015.**| |**ANNEXURE A2 :**|**COPY OF THE PLAINT O.S.NO. 213 OF 2016 DATED 15.3.2016**| ||**FILED BEFORE THE MUNSIFF'S COURT - II, KOZHIKODE.**| |**ANNEXURE A3 :**|**COPY OF THE COMPLAINT IN S.T.C.NO. 2148 OF 2016 FILED**| ||**BEFORE THE JUDICIAL FIRST CLASS MAGISTRATE COURT - I,**| ||**KANNUR DATED 9.5.2016.**| |**ANNEXURE A4 :**|**COPY OF THE SUMMONS ISSUED BY THE JUDICIAL FIRST**| ||**CLASS MAGISTRATE COURT - I, KANNUR DATED 2.6.2016 IN**| ||**S.T.C. NO.2148 OF 2016 TO THE PETITIONER.**| |**RESPONDENT(S)' ANNEXURES**|| |**--------------------------------------------**|| ## **NIL** ## **//True Copy//** ## **P.A. To Judge** **Bb** **B.SUDHEENDRA KUMAR, J. ----------------------------------------Crl.M.C.No.6511 of 2016 ------------------------------------------Dated this the 21[st] day of December, 2017** ## **O R D E R** The petitioner is the accused in S.T.C.No.2148/2016 on the files of the court below. 2. The second respondent herein filed Annexure - A3 complaint before the court below against the petitioner alleging offence under Section 138 of the Negotiable Instruments Act. 3. The prayer in this Crl.M.C. is to quash Annexure - A3 complaint and further proceedings in the above case. 4. Heard. 5. The learned counsel for the petitioner has argued that the cheque in question was issued only as a security and not in discharge of the liability of the petitioner to the second respondent and in the said Crl.M.C.No.6511 of 2016 : 2 : circumstances, the offence under Section 138 of the Negotiable Instruments Act cannot be maintained. The learned counsel has further argued that in the written statement filed by the petitioner in the civil suit, which was filed prior to the filing of the above complaint, the petitioner herein admitted that the cheque in question was issued as a security and in the said circumstances, no purpose will be served even if the prosecution is permitted to be continued. 6. I have gone through Annexure - A3 complaint. The second respondent herein did not state in Annexure - A3 that the cheque in question was issued only as a security and not in discharge of the liability of the petitioner to him. Therefore, whether the cheque in question was issued towards the discharge of the liability or not is a matter for evidence. 7. Before going through the aforesaid submission of the learned counsel for the petitioner, it will be profitable to go through the authorities on the subject. Referring to various decisions of the Apex Court, the Crl.M.C.No.6511 of 2016 : 3 : Apex Court in M/s Indian Oil Corporation v. M/s NEPC India Ltd. and Others [AIR 2006 SC 2780] held that a complaint can be quashed where the allegations made in the complaint, even if taken at their face value and accepted in entirety, do not prima facie constitute any offence or make out the case alleged against the accused. For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint, is warranted while examining the prayer for quashing of a complaint. The Apex Court further held in M/s Indian Oil Corporation (supra) that a complaint may also be quashed where it is a clear abuse of process of the court, as when the criminal proceeding is found to have been initiated with malafides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable. It was further held by the Apex Court that the power to quash a complaint shall Crl.M.C.No.6511 of 2016 : 4 : not, however, be used to stifle or scuttle a legitimate prosecution and the power should be used sparingly and with abundant caution. It was further held by the Apex Court in M/s Indian Oil Corporation (supra) that the complaint is not required to verbatim reproduce the legal ingredients of the offence alleged and 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. The 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. The Apex Court in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. (AIR 2016 SC 4363) held that the crucial question to determine the applicability of S.138 of the Act is whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability. In HMT Watches Ltd. v. M.A. Abida and Another [(2015) 11 SCC Crl.M.C.No.6511 of 2016 : 5 : 776], the Apex Court held that whether the cheques were given as security or not or whether there was outstanding liability or not is a question of fact which could be determined only by the trial court after recording evidence of the parties. The Apex Court further held in HMT Watches Ltd. (supra) that the High Court should not have expressed its view on the disputed question of fact in a petition under Section 482 of Cr.P.C., to come to a conclusion that the offence is not made out. Therefore, the High Court will not be justified in quashing the complaint on the basis of factual defences. Having gone through Annexure - A3 complaint, I am satisfied that Annexure - A3 complaint prima facie discloses all the ingredients to constitute the offence under Section 138 of the Negotiable Instruments Act. In the said circumstances, I do not find any reason to quash the complaint, as sought for. In the result, this Crl.M.C. stands dismissed. However, the learned counsel for the petitioner has requested for granting permanent exemption to the Crl.M.C.No.6511 of 2016 : 6 : petitioner from personal appearance before the court below. In view of the above submission of the learned counsel for the petitioner, the court below is directed to grant exemption to the petitioner from personal appearance before the court below on all posting dates except when his presence is necessary for the progress of the case, if the petitioner files application in this regard before the court below after his appearance in person before the court within 30 days from today. Sd/- **B.SUDHEENDRA KUMAR JUDGE.** Bb/22/12/2017 _[True copy]_ _P.A to Judge_