HC rightly rejected the plea for quashing of criminal proceedings u/s 138 of NI Act: SC

Case Details: Rathish Babu Unnikrishnan v. State (Govt. of NCT of Delhi) - [2022] 140 taxmann.com 26 (SC)[26-04-2022]

Judiciary and Counsel Details

• • K.M Joseph & Hrishikesh Roy, JJ.
  • Krishnamohan K., AOR & Dania Nayyar, Adv. for the Petitioner.

Facts of the Case

In the instant case, the complainant invested a substantial sum in the appellant’s company ‘AAT’ in which appellants were directors. At a later stage, a dispute arose amongst them but they resolved that the invested money would be returned to the complainant and the shares allotted to the complainant would be proportionately transferred to the appellant. With such understanding, the four cheques forming the part of the criminal complaint were handed over by the appellant.

Thereafter, he filed the complaint under section 138 which led to the summons and process against the appellant. Appellant filed an application under section 482 of the Code of Criminal Procedure, 1973 for quashing of the summoning order and the order framing notice.

The appellant’s basic contention was that the cheque in question was not issued in discharge of legally recoverable debt but as ‘security’ for buy back of shares of company ‘AAT’.

The High Court opined that the grounds agitated by the appellant were ‘factual defenses’ which should not be considered within the parameters of limited enquiry permissible in a petition under section 482 Cr.P.C. Accordingly, the petition was dismissed but the accused’s liberty to raise his defense in the Competent Court was safeguarded in the impugned order.

Thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy was 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 subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, the scuttling of the criminal process was not merited.

Supreme Court Held

It was held that High Court rightly declined relief to the accused, in the quashing proceeding. Therefore, the supreme court dismissed the appeal.

List of Cases Reviewed

• • Rathish Babu Unnikrishnan v. State in Crl. M.C. 414/2019 and Crl M.A. 1754/2019, dated 2-8-2019 (para 20) affirmed.

List of Cases Referred to

• • HMT Watches Ltd. v. M.A. Abida [2015] 56 taxmann.com 328/130 SCL 511 (SC) (para 7)
  • Rajiv Thapar v. Madan Lal Kapoor [2013] 3 SCC 330 (para 7)
  • M.M. T.C. Ltd. v. Medchl Chemicals & Pharma (P.) Ltd. [2002] 39 SCL 270 (SC) (para 10)
  • Rangappa v. Sri Mohan [2010] 100 SCL 389 (SC) (para 11)
  • Rajeshbhai Muljibhai Patel v. State of Gujarat [2020] 116 taxmann.com 357 (SC) (para 12)
  • State of Haryana v. Bhajan Lal AIR 1992 SC 604 (para 14).