High Court

1. Heard Sri Yatharth Nath Pathak learned counsel for the applicant and Sri Vikas Sharma learned State Law Officer for the State.

2. This is an application filed under Section 528 of the B.N.S.S. for quashing the summoning order dated 23.10.2024 as well as the entire proceedings in Case No. 929 of 2024 pending in the court of Judicial Magistrate/Additional Civil Judge 4, Ghaziabad.

3. Learned counsel for the applicant has submitted that a complaint was lodged by the opposite party no.2 on 14.3.2024 against the applicant under Section 138 of the N.I. Act with an allegation that there happened to be business relationship between the applicant and the opposite party no. 2 and the opposite party no. 2 had issued a purchase order in favour of the applicant to supply certain items and advance amount of 20% of the total purchase order to the tune of Rs.4,70,000/- was given to the applicant, however, the applicant did not supply the items and a cheque bearing no. 639579 of Rs.4,40,000/- dated 28.10.2023 was drawn by the applicant in favour of the opposite party no.2 which on presentation in the bank came to be dishonoured on 24.11.2023 with the remark exceeds arrangement, again, the cheque was represented on the assurance of the applicant and the same was dishonoured on 29.12.2023 on the same ground followed by a statutory of demand notice dated 28.01.2024 and the complaint dated 14.03.2024 under Section 138 of the N.I. Act and the applicant came to be summoned under Section 138 of the N.I. Act on 23.10.2024.

4. Learned counsel for the applicant has further submitted that the summoning order cannot be sustained for the simple reason that no such cheque was drawn by the applicant in favour of the opposite party no. 2 and there was no legal subsisting debt or liability so as to invoke the provisions under Section 138 of the N.I. Act. He has also submitted that assuming without admitting that any legal debt or liability stood accrued under Section 138 of the N.I. Act, then too the cheque address can be said to be a security cheque, dishonoured whereof, even as per the case of the complainant opposite party no. 2 would not be an offence under Section 138 of the N.I. Act.

5. Learned State Officer on the other hand has submitted that once the cheque stood drawn and the same was dishonoured, then the presumption under Section 139 of the N.I. Act would be in favour of the complainant.

6. Having heard the submissions so made across the bar and after perusing the record, the sole question arises for determination is the extent of judicial intervention at this stage. Apparently, as per the complaint lodged under Section 138 of the N.I. Act on 14.03.2024 with respect to a purchase order, so issued by the opposite party no.2 in favour of the applicant, certain amount was advanced. Allegation is that the materials which were to be supplied were not supplied, a cheque of an amount Rs. 4,40,000/- came to be drawn by the applicant in favour of the opposite party no. 2, which on presentation in the bank was dishonoured on 24.11.2023 with the remark exceeds arrangement and on the assurance of the applicant again the opposite party no.2 submitted the same in the bank and it was dishonoured on 29.12.2023 followed by a statutory demand notice dated 28.01.2024 and the complaint dated 14.03.2024.

7. On a specific query being raised by the learned counsel for the applicant as to whether there is any procedural infirmity in the order in question with regard to the provisions of Section 138, read with Section 142 of the N.I. Act is concerned, nothing is forthcoming from the learned counsel for the applicant.

8. So far as the contention of the learned counsel for the applicant is that nothing was due and payable to to the opposite party no. 2 is concerned the same is not required to be gone into at this stage as the same is a subject matter of trial as it may be one of the defences which is to be adjudged at the time when the trial commences. What the court at this stage of summoning is concerned is about the drawing of the cheque and post dishonour presumption in favour of the holder of the cheque.

9. With respect to the alternate submission of the learned counsel for the applicant that in case the said cheque was with the opposite party no. 2 drawn by the applicant then it was by way of security, thus no legal debt or liability would accrue under Section 138 of the N.I. Act is concerned, the same is not convincible particularly when the same is subject matter of trial.

10. The Hon'ble Apex Court in the case of M/s Womb Laboratories Private Limited Vs. Vijay Ahuja & another (2022) 18 SCC 631 has observed as under:- "In our opinion, the High Court has muddled the entire issue. The averment in the complaint does indicate that the signed cheques were handed over by the accused to the complainant. The cheques were given by way of security, is a matter of defence. Further, it was not for the discharge of any debt or any liability is also a matter of defence. The relevant facts to countenance the defence will have to be proved - that such security could not be treated as debt or other liability of the accused. That would be a triable issue. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques."

11. In Sunil Todi and others Vs. State of Gujarat, (2022) 16 SCC 762 the Hon'ble Apex Court has reiterated the aforesaid law.

12. Accordingly, no case is made out for interference. The application stands disposed of leaving it open for the applicant to contest the trial by taking legal and factual submission which are available and permissible under law. Order Date :- 21.7.2025 piyush

1. Heard Sri Yatharth Nath Pathak learned counsel for the applicant and Sri Vikas Sharma learned State Law Officer for the State.

2. This is an application filed under Section 528 of the B.N.S.S. for quashing the summoning order dated 23.10.2024 as well as the entire proceedings in Case No. 929 of 2024 pending in the court of Judicial Magistrate/Additional Civil Judge 4, Ghaziabad.

3. Learned counsel for the applicant has submitted that a complaint was lodged by the opposite party no.2 on 14.3.2024 against the applicant under Section 138 of the N.I. Act with an allegation that there happened to be business relationship between the applicant and the opposite party no. 2 and the opposite party no. 2 had issued a purchase order in favour of the applicant to supply certain items and advance amount of 20% of the total purchase order to the tune of Rs.4,70,000/- was given to the applicant, however, the applicant did not supply the items and a cheque bearing no. 639579 of Rs.4,40,000/- dated 28.10.2023 was drawn by the applicant in favour of the opposite party no.2 which on presentation in the bank came to be dishonoured on 24.11.2023 with the remark exceeds arrangement, again, the cheque was represented on the assurance of the applicant and the same was dishonoured on 29.12.2023 on the same ground followed by a statutory of demand notice dated 28.01.2024 and the complaint dated 14.03.2024 under Section 138 of the N.I. Act and the applicant came to be summoned under Section 138 of the N.I. Act on 23.10.2024.

4. Learned counsel for the applicant has further submitted that the summoning order cannot be sustained for the simple reason that no such cheque was drawn by the applicant in favour of the opposite party no. 2 and there was no legal subsisting debt or liability so as to invoke the provisions under Section 138 of the N.I. Act. He has also submitted that assuming without admitting that any legal debt or liability stood accrued under Section 138 of the N.I. Act, then too the cheque address can be said to be a security cheque, dishonoured whereof, even as per the case of the complainant opposite party no. 2 would not be an offence under Section 138 of the N.I. Act.

5. Learned State Officer on the other hand has submitted that once the cheque stood drawn and the same was dishonoured, then the presumption under Section 139 of the N.I. Act would be in favour of the complainant.

6. Having heard the submissions so made across the bar and after perusing the record, the sole question arises for determination is the extent of judicial intervention at this stage. Apparently, as per the complaint lodged under Section 138 of the N.I. Act on 14.03.2024 with respect to a purchase order, so issued by the opposite party no.2 in favour of the applicant, certain amount was advanced. Allegation is that the materials which were to be supplied were not supplied, a cheque of an amount Rs. 4,40,000/- came to be drawn by the applicant in favour of the opposite party no. 2, which on presentation in the bank was dishonoured on 24.11.2023 with the remark exceeds arrangement and on the assurance of the applicant again the opposite party no.2 submitted the same in the bank and it was dishonoured on 29.12.2023 followed by a statutory demand notice dated 28.01.2024 and the complaint dated 14.03.2024.

7. On a specific query being raised by the learned counsel for the applicant as to whether there is any procedural infirmity in the order in question with regard to the provisions of Section 138, read with Section 142 of the N.I. Act is concerned, nothing is forthcoming from the learned counsel for the applicant.

8. So far as the contention of the learned counsel for the applicant is that nothing was due and payable to to the opposite party no. 2 is concerned the same is not required to be gone into at this stage as the same is a subject matter of trial as it may be one of the defences which is to be adjudged at the time when the trial commences. What the court at this stage of summoning is concerned is about the drawing of the cheque and post dishonour presumption in favour of the holder of the cheque.

9. With respect to the alternate submission of the learned counsel for the applicant that in case the said cheque was with the opposite party no. 2 drawn by the applicant then it was by way of security, thus no legal debt or liability would accrue under Section 138 of the N.I. Act is concerned, the same is not convincible particularly when the same is subject matter of trial.

10. The Hon'ble Apex Court in the case of M/s Womb Laboratories Private Limited Vs. Vijay Ahuja & another (2022) 18 SCC 631 has observed as under:- "In our opinion, the High Court has muddled the entire issue. The averment in the complaint does indicate that the signed cheques were handed over by the accused to the complainant. The cheques were given by way of security, is a matter of defence. Further, it was not for the discharge of any debt or any liability is also a matter of defence. The relevant facts to countenance the defence will have to be proved - that such security could not be treated as debt or other liability of the accused. That would be a triable issue. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques."

11. In Sunil Todi and others Vs. State of Gujarat, (2022) 16 SCC 762 the Hon'ble Apex Court has reiterated the aforesaid law.

12. Accordingly, no case is made out for interference. The application stands disposed of leaving it open for the applicant to contest the trial by taking legal and factual submission which are available and permissible under law. Order Date :- 21.7.2025 piyush