M/S M B Engineerng Industries PVT LTD vs. M/S G K Ispat Private LTD

Facts

M/s M.B. Engineering Industries Pvt. Ltd. and its directors (petitioners) filed a petition under Section 482 of the Cr.P.C. seeking to quash criminal proceedings initiated against them in C.C.No.53977/2022 before the XXXIV Additional Chief Metropolitan Magistrate, Bengaluru. The proceedings were initiated by M/s G.K. Ispat Private Ltd. (respondent) for an offense punishable under Section 138 of the Negotiable Instruments Act, 1881. The respondent had filed a private complaint alleging that the petitioners owed a total amount of Rs. 20 lakhs with interest. The petitioners had issued a cheque for Rs. 10 lakhs, which was presented and dishonored. The trial court took cognizance and issued summons. The petitioners challenged these proceedings.

Held

The Court held that the petitioners' contention that they are not due to pay any amount to the complainant and have repaid the entire dues, despite which a false complaint has been filed, constitutes a defense that the accused are required to establish or probablize before the Trial Court. The Court noted that the cheque in question was drawn on the account maintained by the first petitioner company, and the accused petitioners had not disputed the signature on the cheque. Therefore, there is a presumption under Section 139 of the Negotiable Instruments Act against the accused. The Court found no good ground to quash the proceedings for the offense punishable under Section 138 of the N.I. Act based on these contentions at this stage. Accordingly, the petition was dismissed.

Key Issues

1. Whether the criminal proceedings initiated under Section 138 of the Negotiable Instruments Act, 1881, are liable to be quashed on the grounds that the petitioners dispute the amount due and claim to have already paid the entire outstanding amount, despite issuing a cheque for a lesser sum than the total alleged debt? Petitioner's arguments: The petitioners contended that they are not liable to pay any amount to the respondent. They argued that while the complaint alleges a due amount of Rs. 20 lakhs, the cheque in question was only for Rs. 10 lakhs, raising doubt about the allegations. They claimed to possess documents, including bank statements, to prove they have paid the entire outstanding amount and that the complaint is false. Respondent's arguments: The respondent argued that although the total outstanding amount was Rs. 20 lakhs, only a part payment was made via the cheque. They asserted that the cheque was drawn on the first petitioner company's account, and the signatures were not disputed, thus creating a presumption against the accused under Section 139 of the N.I. Act. They prayed for the dismissal of the petition.