1

IN THE HIGH COURT OF KARNATAKA, BENGALURU

DATED THIS THE 6TH DAY OF JULY, 2018

BEFORE

THE HON’BLE MR.JUSTICE K. N. PHANEENDRA

CRL.P. NO.1387/2011

BETWEEN

R PARIMALA BAI

W/O B S KRISHNAN AGED ABOUT 49 YEARS

CHIEF SUPERVISOR

METHODS DEPARTMENT ARICRAFT DIVISION, HAL

BANGALORE COMPLEX BANGALORE-560 017 ... PETITIONER

(BY SRI. VINAY T. R. ADV. FOR

SRI. C. V. SUDHINDRA, ADV.)

AND

BHASKAR NARASIMHAIAH S/O LATE R SAMPATH

AGED ABOUT 62 YEARS R/AT NO.34, SHIVANADA NAGAR

5TH CROSS, BANGALORE-560 079 ... RESPONDENT

(BY SRI. PRASHANTH U. T. ADV.)

THIS CRL.P IS FILED UNDER SECTION 482 CR.P.C

PRAYING TO QUASH THE ENTIRE PROCEEDINGS IN

C.C.NO.22036/09 FOR THE OFFENCES P/U/S 138 OF N.I.

ACT ON THE FILE OF THE XVI ACMM, BENGALURU.

THIS CRL.P COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING:

®

2

ORDER

Heard the learned counsel for the petitioner as well

as the learned counsel for the respondent. Perused the

records.

2. The petitioner has sought for quashing of the

entire proceedings in CC No.22036/2009 registered

against her for the offence punishable under Section

138 of the Negotiable Instruments Act [hereinafter

referred to ‘Act’ for short].

3. The sole ground that has been taken before this

court seeking quashing of the above said proceedings is

that - a prima facie meaningful reading and

understanding of the complaint itself filed by the

respondent – complainant before the Trial Court reveals

that, there is no allegation in the complaint that there

exists a legally recoverable debt from the accused. In

the absence of such existence of the legally recoverable

debt, Section 138 of the Act itself is not attracted.

3

4. In this regard, the learned counsel for the

petitioner has drawn my attention to the entire

paragraphs in the complaint averments to demonstrate

that there was no legally recoverable debt even

according to the complaint averments. When such being

the case, there cannot be any presumption under

Negotiable Instruments Act particularly u/s.139 of the

Act. When presumption u/s.139 of Negotiable

Instruments Act cannot be raised in favour of the

complainant and if it is not shown exfacie on the face of

the complaint averments, that there exists any legally

recoverable debt, then ingredients of Section 138 of the

Negotiable Instruments Act are not attracted.

Therefore, on that ground, the complaint itself is liable

to be quashed.

5. Per contra, learned counsel for the respondent

submitted that, on meaningful reading and

understanding of the complaint averments, there creates

some doubt whether the accused has only acted as a

commission agent for the purpose of getting job for the

4

son of the complainant and in such an eventuality,

presumption u/s.139 of the Act has to be raised and it is

a matter of fact whether there exists any legally

recoverable debt or not. Therefore, on that ground, the

proceedings cannot be quashed. The parties have to

establish their case and the defence taken by the

accused during the course of trial. Therefore, that

ground is not tenable and the proceedings cannot be

quashed.

6. On the above said rival contentions of the

learned counsels, it is just and necessary for this court

to ascertain whether the ingredients of Section 138 of

the Act are available to the complainant in order to

continue the prosecution against the accused. Section

138 of the Act says that –

“Where any cheque drawn by a person on

an account maintained by him with a banker

for payment of any amount of money to

another person from out of that account for

the discharge, in whole or in part, of any

debt or other liability, is returned by the

5

bank unpaid, either because of the amount

of money standing to the credit of that

account is insufficient to honour the cheque

or that it exceeds the amount arranged to be

paid from that account by an agreement

made with that bank, such person shall be

deemed to have committed an offence and

shall, without prejudice to any other

provisions of this Act, be punished with

imprisonment for [a term which may be

extended to two years], or with fine which

may extend to twice the amount of the

cheque, or with both.”

The rest of the provision may not be necessary so far as

this case is concerned.

7. In this context, Section 139 of the Negotiable

Instruments Act also comes into play. Section 139 of

the Act says that –

“139. Presumption in favour of

holder – It shall be presumed, unless the

contrary is proved, that the holder of a cheque

received the cheque of the nature referred to

in Section 138 for the discharge, in whole or

in part, of any debt or other liability.]

6

Therefore, here, the debt or other liability has to be

understood as existence of legally recoverable debt or

liability so far as the accused is concerned.

8. In this context, the learned counsel for the

petitioner has relied upon various provisions under the

Indian Contract Act. The first one is Section 23 of the

Indian Contract Act, which reads thus:

“23. What consideration and objects

are lawful, and what not - The

consideration or object of an agreement is

lawful, unless – it is forbidden by law; or is of

such a nature that, if permitted, it would

defeat the provisions of any law; or is

fraudulent; or involves or implies, injury to the

person or property of another; or the Court

regards it as immoral, or opposed to public

policy. In each of these cases, the

consideration or object of an agreement is said

to be unlawful. Every agreement of which the

object or consideration is unlawful is void.”

The illustration given at Item (f) in fact, is almost similar

to the factual aspects of this case, which says that –

7

“A promises to obtain for B an

employment in the public service and B

promises to pay 1,000/- rupees to A. The

agreement is void, as the consideration for it

is unlawful.”

9. The learned counsel for the petitioner in this

regard also relied upon the decision reported in AIR

1979 Madras 42, between N.V.P. Pandian, and M.M.

Roy, wherein, the Madras High Court has held thus –

“Section 23 - Public Policy - Amount

paid for the purpose of securing seat in

Medical College and not as loan –

Agreement, if against public policy –

Amount, if refundable.”

The Madras High Court also stress on the maxim in pari

delicto potior est condition possidentis is founded on the

principles of public policy, which will not assist a plaintiff

who has paid over money or handed over property in

pursuance of an illegal or immoral contract, to recover it

back, for the Courts will not assist an illegal transaction

in any respect.

8

10. In another ruling reported in 2007 CRL.LJ

2262, in a case between Virender Singh and Laxmi

Narain another, wherein the Delhi High Court

considering Section 23 of the Indian Contract Act, 1872,

with reference to Section 138 of the Negotiable

Instruments Act, at Head Note C Held as under:

“Section 138 of the Negotiable

Instruments Act, 1881, - Dishonor of cheque

- Legally enforceable debt or liability -

Complainant paid sum of Rs.80,000/- to

accused for purpose of securing job for his

nephew - As job was not made available to

complainant’s nephew, he requested accused

to return said amount – Dishonour of cheque

issued by petitioner towards said amount –

Agreement between petitioner and

complainant for securing job is void,

consideration therein being unlawful – Parties

being in pari delicto, therefore, said sum of

Rs.80,000/- cannot be recovered – Thus,

there did not exist any legally enforceable

debt or liability for discharge of which it could

be said that cheque in question was issued –

Consequently, S. 138 would not be

attracted.”

9

11. In another ruling of the Hon'ble Apex Court

reported in AIR 1974 SC 1892 between Kuju

Collieries Ltd., Vs. Jharkhand Mines Ltd., and

others wherein the Hon'ble Apex Court referring to

Section 65 of the Indian Contract Act, 1872, held that -

Agreement void ab initio – Mining lease contrary to

mineral regulations and void – Parties in pari delicto –

Section 65 does not apply – Nor does Section 70 or 72.

12. Looking to the above said legal aspect, the

court has to consider whether in this particular case, on

facts, any legally recoverable debt was in existence or

not.

13. In this context, the learned counsel for the

respondent also equally refuting the argument of the

learned counsel for the petitioner has relied upon some

of the decisions which are necessary to be considered by

this court.

14. In a decision reported in (2002) 2 SCC 642

between A.V. Murthy and. B.S. Nagabasavanna

10

wherein the Hon'ble Apex Court has observed that –

“Dishonour of cheque – Revisional court, held, erred in

quashing the complaint proceedings on the ground that

the debt or liability was barred by limitation and

therefore, there was no legally enforceable debt or

liability as against the drawer – The plea of non-

existence of such a debt or liability could be agitated as

a defence before the trial Court.” Therefore,

quashment is not proper.

15. In another ruling reported in 2012 (2) DCR

93 of Calcutta High Court between Bejoy Prayers

and State of West Bengal & Others, Calcutta High

Court has held that - The complaint for dishonor of

cheque - Sought quashing of, Legality – Held – whether

there is any legally recoverable debt or not, that is a

pure question of facts and non existence of legally

enforceable debt or not, that is a pure question of facts

and essentially the defence of the accused which cannot

be gone into while exercising the revisional jurisdiction.

Therefore, the petition was dismissed.

11

16. The learned counsel also relied upon another

ruling reported in 2014(9) SCALE 3 between S.

Natarajan and Sama Dharman, wherein the Hon'ble

Apex Court has also laid down certain principles where

issuance of cheque itself is a promise to pay time barred

debt and referred to Sections 4 and 6 of the NI Act – For

the purpose of invoking Section 138 read with 142 of

the Negotiable Instruments Act, the cheque in question

must be issued in respect of legally enforceable debt or

other liability – Court observed that the presumption

mandated by Section 139 of the Negotiable Instruments

Act includes a presumption that there exists a legally

enforceable debt or other liability. The Court has further

observed that Section 139 of the Negotiable Instruments

Act is an example of a reverse onus clause that has

been included in furtherance of the legislative objective

of improving the credibility of negotiable instruments.

This Court clarified that the reverse onus clauses usually

impose an evidentiary burden and not a persuasive

burden.

12

17. On the basis of the above said rulings, the

learned counsel for the respondent contended that the

existence or non existence of a legally recoverable debt

is a matter of fact that has to be established during the

course of the trial. Therefore, he tried to convince this

court that petition is not maintainable and the same is

liable to be dismissed.

18. On careful perusal of the above said decisions,

it is crystal clear that in order to attract Section 138 of

the Negotiable Instruments Act, the ingredients of

Section 138 have to be established primarily by the

complainant by pleading in the complaint with regard to

the existence of any legally recoverable debt or liability

on the part of the accused. Even a semblance of doubt

is raised with regard to the existence or non existence of

legally recoverable debt, then also it should be

established during the course of trial by means of

pleading the facts and leading evidence. It is the

defence taken up by the accused that there was no

legally enforceable debt, and further that, it is not only

13

the defence, but also the court has to examine whether

on complete reading of the complaint itself whether any

offence u/s.138 of the Negotiable Instruments Act is

constituted or not. It is a very well recognized principle

of criminal jurisprudence that, if on plain and meaningful

reading of the complaint or the FIR, the allegations

made in the complaint or in the FIR do not constitute

any offence or under any penal law for the time being in

force, the continuation of such prosecution amounts to

abuse of process of law. Therefore, the court has to

examine without reference to the defence of the accused

on the basis of the complaint itself whether there existed

ingredients of Section 138 of the Negotiable Instruments

Act. Even in order to take cognizance and issuance of

process against the accused, such exercise has to be

done, to nip the case at the bud to avoid un-necessarily

accused facing the trial.

19. Now, coming to the factual aspects of this case.

It is clear from the complaint averments that it is the

case of the complainant that, the complainant has a son

14

by name B. Sharath, the accused and complainant were

known to each other since long. The complainant met

the accused and in fact the accused had assured to

provide a job to his son in HAL factory. In this context,

the accused had requested the complainant to pay an

amount of Rs.10 lakhs and he demanded the same for

the purpose of providing a job to the son of the

complainant. In this context, it is stated that, on

various occasions, the complainant has paid some

amounts to him. As the accused could not get the job to

the son of the complainant, the complainant approached

the accused. Then the accused again demanded for

further amount for making payment to the Officers. As

per the demand, the complainant paid amount to him.

In total, lot of amount has been paid to the accused for

the purpose of securing job to the son of the

complainant. As the accused was not able to secure the

job in HAL to the complainant’s son, the complainant

demanded for repayment of the money. In that context,

it is said that on 1.5.2009, the accused issued a cheque

bearing No.262871 for a sum of Rs.10 lakhs and on

15

presentation of the said cheque it came to be

dishonoured on the ground of ‘funds insufficient’.

After complying the other provisions of Section 138 of

the Negotiable Instruments, it appears the complaint

came to be lodged.

20. It is seen that, there are absolutely no

allegations whatsoever that the accused has taken this

money as a loan or a debt or as a liability at any point of

time. It is clear cut case of the complainant that, he

has paid money for the purpose of securing job for his

son, even without examining whether the accused has

got any authority to provide job to his son or not and

what is the procedure that is required to be followed by

the HAL factory for the purpose of selecting any

candidate for the purpose of providing any job.

Therefore, without examining anything, the complainant

himself has entered into a void contract with the

accused and paid money as against the public policy for

illegal purpose.

16

21. As could be seen from the rulings cited by the

learned counsel for the petitioner and the provision of

Section 23 of the Indian Contract Act, it is crystal clear

that if on the basis of a void contract and particularly if

the consideration is illegal, and consideration is for

immoral or illegal purposes or which is against the public

policy, then the whole transaction becomes void, the

consideration paid in such contract becomes an illegal

consideration and when it is said it is legal or unlawful

consideration, it can not be at any stretch of imagination

called as a legally recoverable debt.

22. Now, coming to the submission made by the

learned counsel for the respondent with the help of the

above said decisions cited, the cases have been

considered with regard to the averments made in the

complaint and the complainant has specifically stated

with regard to the existence of the legally recoverable

debt in the complaint. On the other hand, it is only the

defence taken up by the accused that there exists no

legally recoverable debt. Therefore, in that context, the

17

courts have held that it requires evidence and the

defence taken by the accused has to be established

during the course of full dressed trial.

23. Another point which has been raised in those

decisions is with regard to the debt which is barred by

limitation. If the debt is barred by limitation but if it

cannot be outrightly said that it is an illegal transaction

or it is an illegal consideration, then even if the debt is

time barred, if the accused is willing to pay that amount,

there is no bar for the complainant to receive that

amount. Therefore, the illegal consideration or time

barred debt stands on a different footing and illegal

consideration is only barred from recovery. Therefore,

the said ruling cited by the learned counsel is not

presently helpful to the complainant herein.

24. So far as Section 139 of the Negotiable

Instruments Act is concerned, of course there is a

presumption under law. Initially the court has to draw

presumption in favour of the complainant if on plain

reading of the complaint, the court is of the opinion that

18

the complainant has pleaded that there existed a legally

recoverable debt and in support of that contention. The

presumption has to be raised in favour of the

complainant regarding existence of legally recoverable

debt. But, if an illegal consideration is relied upon by

the complainant himself, then such presumption u/s.139

of the Negotiable Instruments Act, cannot be raised at

the initial stages also. It all depends upon the facts and

circumstances of each case on the basis of the pleadings

of the parties.

25. Section 138 of the Negotiable Instruments Act

mandates that, there should be an existence of legally

recoverable debt and in order to attract Section 138 of

the Negotiable Instruments Act, the party has to plead

with regard to the existence of legally recoverable debt.

If he pleads with regard to the existence of the legally

recoverable debt u/s.138 of the Act, then only

presumption u/s.139 of the Act can be raised in favour

of the complainant. If the complainant himself does not

plead the existence of legally recoverable debt, then

19

there is no question of raising any initial presumption in

favour of the complainant. Therefore, even considering

the provisions of Section 139 of the Negotiable

Instruments Act, there is no question of accused

rebutting the presumption unless the presumption is

raised in favour of the complainant. If the court for any

reason comes to the conclusion that the ingredients of

Section 138 of the Negotiable Instruments Act, are not

made out, the court cannot take cognizance of such

matter, and for the purpose of calling the accused to

appear before the court and contest the proceedings.

26. Under the above said facts and circumstances

of the case and also the decisions relied upon by the

parties, in my opinion, it is a fit case based on the

factual aspects and legal aspects, to quash the

complaint.

27. The learned Magistrate in fact at the time of

taking cognizance of the private complaint has to

examine meticulously the contents of the complaint. It

is more than several times made clear that when ever a

20

complaint is filed, the learned Magistrate has to look into

the complaint, he should not mechanically take

cognizance or refer the matter to the police for

investigation. The learned Magistrate has to look into

the complaint averments for the purpose of ascertaining

whether the court has got jurisdiction to try that matter.

Secondly, the contents of the complaint even

meaningfully understood allegations made therein

constitute any offence. Only for those offences, where

the allegations constitute offence the Magistrate is

entitled to take cognizance and proceed with the matter.

Otherwise, the issuance of summons to the accused

virtually violates the constitutional right of liberty, which

is guaranteed to the citizens of the country. Therefore,

under the facts and circumstances of the case, and the

legal aspects as discussed above, I am of the opinion

the Petition deserves to be allowed and the proceedings

before the court below deserves to be quashed. Hence,

the following:

21

ORDER

The Petition is allowed. Consequently, all further

proceedings in CC No.22036/2009 for the offence

punishable under Section 138 of the Negotiable

Instruments Act pending on the file of the 16th ACMM,

Bengaluru are hereby quashed.

Sd/- JUDGE

PL*