In a Section 138 NI Act matter arising from a failed land transaction, the High Court of Jammu & Kashmir & Ladakh at Srinagar Bench dismissed the accused’s quashing petitions holding that disputed factual questions, including the nature of cheques, existence of a legally enforceable debt, and effect of any settlement, must be left for the trial court to decide in light of the statutory presumption under Section 139 of the NI Act.
The Court held that where a prima facie case under Section 138 of the NI Act is made out and the trial has reached an advanced stage with defence evidence having commenced, the High Court should not exercise its inherent jurisdiction under Section 482 CrPC to quash the proceedings, as disputed questions of fact must be left for the trial court to determine in light of the statutory presumption under Section 139 of the NI Act.
The Court also cautioned that the maintainability of complaints under Section 138 is not affected by the non-reflection of the underlying transaction in the complainant’s Income Tax returns, since any violation of Section 269SS of the Income Tax Act attracts only a penalty under Section 271D and does not rebut the presumptions under Sections 118 and 139 of the NI Act.
A Single Judge Bench of Justice Shahzad Azeem observed that when a prima facie case under Section 138 of the NI Act is disclosed and the trial has reached an advanced stage, the High Court cannot embark upon a mini trial or a roving enquiry into disputed questions of fact, and interference under Section 482 CrPC is ordinarily uncalled for. Thus, the Court upheld the maintainability of two separate complaints arising from ten dishonoured cheques issued towards repayment of the same land transaction amount, where two demand notices had been issued, observing that a single complaint covering more than three cheques is also maintainable if a consolidated notice of demand is served.
The Court squarely rejected the argument that the absence of reflection of the ₹45.50 lacs transaction in the complainant’s Income Tax returns rebuts the statutory presumption under Section 139 of the NI Act, holding that any breach of Section 269SS of the Income Tax Act attracts only a penalty under Section 271D and does not render the underlying transaction unenforceable under Section 138 of the NI Act. The Court clarified that Section 269-B deals only with the appointment of a competent authority for acquisition of immovable property transferred for undervalued consideration and has nothing to do with loans, deposits, or cash transactions, terming the petitioner’s reliance on the provision as self-defeating and misconceived.
The Court also deprecated the petitioner’s conduct of repeatedly invoking Section 482 CrPC and stalling proceedings even after an earlier direction for speedy disposal, and directed the trial court to conclude examination of remaining witnesses on a day-to-day basis and dispose of both complaints preferably within one month.
Briefly, the case arises from a land transaction between the petitioner, Manzoor Ahmad Khan, and the respondent, Javaid Ahmad Malik, in which the respondent paid Rs. 45.50 lacs to the petitioner for the purchase of land at Srinagar, with the petitioner required to execute a Sale Deed in favour of the respondent’s wife. Although revenue extracts of the land were obtained, the petitioner failed to execute the sale deed, leading to a dispute and the issuance of ten cheques by the petitioner towards repayment of the amount received. When these cheques were presented for encashment, they were dishonoured, prompting the respondent to issue two demand notices and file two separate complaints, for the total amount of Rs. 45.50 lacs.
The Trial Magistrate took cognizance and issued process and a warrant for production was issued while the petitioner was lodged in Kotbalwal Jail under the Public Safety Act. The petitioner was later released, after which the parties entered into a compromise which did not materialise. The petitioner had earlier approached the High Court, which set aside the trial court’s order directing deposit of 20% of the cheque amount.
The present petitions were at one point dismissed due to the petitioner’s continuous absence but were later restored, and the Trial Magistrate recalled the non-bailable warrants of arrest in view of the pendency of these proceedings. Significantly, the trial had reached an advanced stage where the respondent’s evidence stood complete and the petitioner-accused had already examined two defence witnesses, with the trial being at the verge of completion but for the stay order passed by the High Court.
