HMT WATCHES LTD.versusM.A. ABIDA &ANR.

                    [2015] 3 S.C.R. 719



                                                               A
                     HMT WATCHES LTD.
                               v.
                       M.A. ABIDA &ANR.
             (Criminal Appeal No. 471 of 2015 etc.)
                       MARCH 19, 2015                          B

        [DIPAK MISRA AND PRAFULLA C. PANT, JJ.]

     Code of Criminal Procedure, 1973- s. 482- Jurisdiction
under - Scope of - Criminal proceeding u/s. 138 of C
Negotiable Instruments Act- Quashed by High Court- Held:
High court committed grave error by exceeding its jurisdiction
by quashing the proceeding accepting disputed factual
defences - Negotiable instruments Act, 1881 - s. 138.
                                                               D
     Negotiable Instruments Act, 1881 - s. 138 - Offence
under - Dishonor of cheque because of stop-payment
instruction - Held: Such instruction also would attract the
offence uls. 138.
                                                               E
       Allowing the appeals, the court

     HELO: 1. The High Court has committed grave error
of law in quashing the criminal complaints filed by the
appellant in respect of offence punishable under Section       F
138 of the Negotiable Instruments Act, in exercise of
powers under Section 482 of Cr.P.C. by accepting factual
defences of the accused which were disputed ones.
[Para 14] [727-G-H]
                                                               G
     Suryalakshmi Cotton Mills Limited v. Rajvir Industries
Limited and Ors. (2008) 13 SCC 678: 2008 (1) SCR 432;
Rallis India Limited v. Poduru Vidya Bhushan and Ors. (2011)
13 sec 88: 2011 (5) SCR 289- relied on.
                                                               H
                            719
720         SUPREME COURT REPORTS                 (2015) 3 S.C.R.


A      2. The High Court further erred in observing that
  Section 138(b) of Negotiable Instruments Act stood
  uncomplied, even though respondent No.1 (accused)
  had admitted that he replied the notice issued by the
  complainant. Also, the fact, as to whether the signatory
B of demand notice was authorized by the complainant
  company or not, could not have been examined by the
  High Court in its jurisdiction u/s. 482 Crl.P.C. when such
  plea was controverted by the complainant before it. [Para
C 10) [725-D-E]
          3. Instruction of "stop payment" issued to the
      banker could be sufficient to make the accused liable
      for an offence punishable under Section 138 of the
      Negotiable Instruments Act. [Para 13) [727-E]
0
          Pulsive Technologies P. Ltd. vs. State of Gujarat (2014)
      9 SCALE 437; Modi Cements Ltd. vs. Kuchil Kumar Nandi
      (1998) 3 sec 249: 1998 (1) SCR 1192- relied on.

E                         CASE LAW REFERENCE


          2008 (1) SCR 432       relied on            Para 11
          2011 (5) SCR 289       relied on            Para 12
F         (2014) 9 SCALE 437     relied on            Para 13
           1998 (1) SCR 1192     relied on            Para 13

          CRIMINALAPPELLATE JURISDICTION: Criminal Appeal
      No. 471 of2015.
G
          From the Judgment and Order dated 25.02.2014 of the
      High Court of Kerala at Ernakulam in CRLMC No. 2367 of
      2008.

                                   WITH
H
           H MT WATCHES LTD. v. M.A.ABIDA                       721



    Criminal Appeal No. 472 of2015                               A


      Liz Mathew, M.F. Philip, Malavika Prasad, C.V. Francis,
Arun Francis, Sindhu Mohan, Mukti Chowdhary, Swati Setia
for the Appellant.                                               B

    Basant R., Romy Chacko for the Respondents.

    The Judgment of the Court wa!ii delivered by

     PRAFULLA C. PANT, J. 1. These appeals are directed C
against judgment and order dated 25.2.2014 passed by the
High Court of Kerala in Criminal M.C. No 2366 of 2008 and
Criminal M.C. No. 2367 of 2008, whereby the said Court has
allowed the petitions and quashed the proceedings of crirltinal
                                                                0
complaint case Nos. 1790, 1791, 1792, 1793, 1794, 1795,
1796, 1824, 1825, 1826, 1827, 1828, 1829, 1830 and 1831
of 2007 pending in the Court of Judicial First Class Magistrate
(Court No. IV), Kechi; and C.C. Nos.1208, 1209, 1210,1211
and 1212 of2007, pending in the Court of Judicial First Class E
Magistrate (Court No. Ill), Kechi. All these criminal complaint
cases were pertaining to offence punishable under Section
138 of the Negotiable Instruments Act, 1881 (hereinafter
referred to as "the N. I. Act").
                                                                 F
    2. We have heard learned counsel for the parties and
perused the papers on record.

    3. Succinctly stated, the appellant filed criminal complaint
cases against respondent- M.A. Abida stating that as many G
as 57 cheques dated 28.09.2006 were issued by her in
discharge of outstanding liability towards the complainant/
appellant (HMT Watches Ltd.). When the cheques were
presented for collection the same were received back,
dishonoured by bankers with the endorsement - "payment H
722         SUPREME COURT REPORTS                  [2015] 3 S.C.R.


A     stopped by the drawer". Notice of demand dated 9.10.2006
      was issued by the complainant to the respondent no.1 but she
      failed to make the payment of the amount mentioned in the
      cheques, i.e., total Rs.1,79,86,357/-. Instead, she sent reply
      to the notice disputing liability to pay. On this, complainant
B     filed twenty criminal complaints mentioned above, against the
      respondent no.1 with regard to the offence punishable under
      Section 138 of the N. I. Act.

       4. The accused-M.A.Abida filed Criminal M.C. No. 2366
C of 2008 and Criminal M.C. No. 2367 of 2008 challenging the
  proceedings initiated by the complainant on the ground that
  she was Re-Distribution Stockist (RDS) of watches
  manufactured by the appellant. The business with the appellant
D was done till September, 2003 on "cash and carry" basis. The
  accused further pleaded in the petitions filed before the High
  Court under Section 482 of the Code of Criminal Procedure,
  that after 2003 the appellant company used to collect cheques
  towards the amount covered by distinct invoices with respect
E to various consignments for securing payment of amount
  covered by the invoices.

          5. The High Court accepted the plea of the accused
      (respondent no.1) and quashed the criminal complaint cases.
F     Hence, these appeals through special leave.

       6. On behalf of the appellant, it is argued before us that
  the High Court committed a grave error of law in quashing the
  proceedings of the criminal complaint cases on the factual
G pleas taken by the respondent no.1. On the other hand, learned
  counsel for the respondent no.1 contended that since the
  cheques were given as security, as such there was no liability
  to make the payment, and the ingredients of the offence
  punishable under Section 138 of the N.I Act were not made
H out.
           H MT WATCHES LTD. v. M.A.ABIDA                         723
                [PRAFULLAC. PANT, J.]

    7. Section 138 of the Negotiable Instruments Act, 1881         A
reads as under:

     "138. Dishonour of cheque for insufficiency, etc.,
     of funds in the accounts. - Where any cheque
     drawn by a person on an account maintained by him             B
     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 bank unpaid, either
     because of the amount of money standing to the                c
     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
                                                                   D
     committed an offence and shall, without prejudice to
     any other provisions of this Act, be punished with
     imprisonment for "a term which may extend to two
     year", or with fine which may extend to twice the
     amount of the cheque, or with both:                           E
     Provided that nothing contained in this section shall
     apply unless-

     (a) The cheque has been presented to the bank within
     a period of six months from the date on which it is           F
     drawn or within the period of its validity, whichever is
     earlier.

     (b) The payee or the holder in due course of the
     cheque, as the case may be, makes a demand for               G
     the payment of the said amount of money by giving a
     notice, in writing, to the drawer, of the cheque, ''within
     thirty days" of the receipt of information by him from
     the bank regarding the return of the cheques as
                                                                  H
724         SUPREME COURT REPORTS                    [2015) 3 S.C.R.


A           unpaid, and

           (c) The drawer of such cheque fails to make the
           payment of the said amount of money to the payee
           or, as the case may be, to the holder in due course of
B          the cheque, within fifteen days of the receipt of the
           said notice.

           Explanation: For the purpose of this section, "debt or
           other liability" means a legally enforceable debt or
c          other liability."

          8. Section 139 of the Negotiable Instruments Act, 1881
      provides that there shall be a presumption in favor of holder of
      a cheque as to the debt or liability. It reads as under:
D
           "139. Presumption in favour of holder. - It shall
           be presumed, unless the Contrary is proved, thatthe
           holder of a cheque received the cheque of the nature
           referred to in section 138 for the discharge, in whole
E          or in part, or any debt or other liability."

          9. Section 140 of the Negotiable Instruments Act, 1881
      prohibits what cannot be a defence in a prosecution in respect
      of offence punishable under Section 138 of the N.l.Act. It reads
F     as Linder:

           "140. Defence which may not be allowed in any
           prosecution under section 138. - Defence which
           may not be allowed in any prosecution under section
           138 It shall not be a defence in a prosecution of an
G
           offence under section 138 that the drawer had no
           reason to believe when he issued the cheque that the
           cheque may be dishonoured on presentment for the
           reasons stated in that section."
H
           HM TWATCHES LTD. v. M.A.ABIDA                         725
               [PRAFULLAC. PANT, J.]

     10. Having heard learned counsel for the parties, we are A
of the view that the accused (respondent no.1) challenged the
proceedings of criminal complaint cases before the High Court,
taking factual defences. Whether the cheques were given as
security or not, or whether there was outstanding liability or not
is a question of fact which could have been determined only B
by the trial court after recording evidence of the parties. In our
opinion, the High Court should not have expressed its view on
the disputed questions of fact in a petition under Section 482
of the Code of Criminal Procedure, to come to a conclusion C
that the offence is not made out. The High Court has erred in
law in going into the factual aspects of the matter which were
not admitted between the parties. The High Court further erred
in observing that Section 138(b) of N. I. Act stood uncomplied,
even though the respondent no.1 (accused) had admitted that       o
he replied the notice issued by the complainant. Also, the fact,
as to whether the signatory of demand notice was authorized
by the complainant company or not, could not have been
examined by the High Court in its jurisdiction under Section
482 of the Code of Criminal Procedure when such plea was E
controverted by the complainant before it.

     11. In Surya/akshmi Cotton Mills Limited v. Rajvir
Industries Limited and others', this Court has made
following observations explaining the parameters of jurisdiction F
of the High Court in exercising its jurisdiction under Section
482 of the Code of Criminal Procedure: -

     "17. The parameters of jurisdiction of the High Court
     in exercising its jurisdiction under Section 482 of the      G
     Code of Criminal Procedure is now well settled.
     Although it is of wide amplitude, a great deal of caution
     is also required in its exercise. What is required is
     application of the well-known legal principles involved
                                                                  H
726       SUPREME COURT REPORTS                    [2015) 3 S.C.R.


A       in the matter.

          xxx                    xxx                    xxx
        22. Ordinarily, a defence of an accused although
        appears to be plausible should not be taken into
B
        consideration for exercise of the said jurisdiction. Yet
        again, the High Court atthat stage would not ordinarily
        enter into a disputed question of fact. It, however, does
        not mean that documents of unimpeachable character
c       should not be taken into consideration at any cost for
        the purpose of finding out as to whether continuance
        of the criminal .proceedings would amount to an
        abuse of process of court or that the complaint petition
        is filed for causing mere harassmen! to the accused.
D       While we are not oblivious of the fact that although a
        large number of disputes should ordinarily be
        determined only by the civil courts, but criminal cases
        are filed only for achieving the ultimate goal, namely,
        to force the accused to pay the amount due to the
E
        complainant immediately. The courts on the one hand
        should not encourage such a practice; but, on the
        other, cannot also travel beyond its jurisdiction to
        interfere with the proceeding which is otherwise
F       genuine. The courts cannot also lose sight of the fact
        that in certain matters, both civil proceedings and
        criminal proceedings would be maintainable.'

      12. In Rallis India Limitedv. Poduru Vidya Bhushan
G and others2, this Court expressed its views on this point as
  under:-

        "12.Atthe threshold, the High Court should not have
        interfered with the cognizance of the complaints
        having been taken by the trial court. The High Court
H
           H MT WATCHES LTD. v. M.A.ABIDA                         727
                [PRAFULLAC. PANT, J.]

     could not have discharged the respondents of.the said         A
     liability at the threshold. Unl~ss the parties are given
     opportunity to lead evidence, it is not possible to come
     to a definite conclusion as to what was the date when
     the earlier partnership was dissolved and since what
     date the respondents ceased to be the partners of             B
     the firm."

    In view of the law laid down by this Court as above, in the
present case High Court exceeded its jurisdiction by giving its
opinion on disputed questions of fact, before the trial co_urt.    C

     13. Lastly, it is contended on behalf of the respondent no.1
that it was not a case of insufficiency of fund, as such,
ingredients of offence punishable under Section 138 of the ·
N.l.Act are not made out. We are not inclined to accept the D
contention of learned counsel for respondent no.1. In this
connection, it is sufficient to mention that in the case of Pulsive
Technologies P. Ltd. vs. State of Gujarat3, this Court has
already held that instruction of "stop payment" issued to the E
banker could be sufficient to make the accused liable for an
offence punishable under Section 138 of the N. I. Act. Earlier
also in Modi Cements Ltd. vs. Kuchil Kumar Nandi4 , this
Court has clarified that if a cheque is dishonoured because of
stop payment instruction even then offence punishable under F
Section.138 of N. I. Act gets attracted.

     14. For the reasons as discussed above, we find thatthe
High Court has committed grave error of law in quashing the
criminal complaints filed by the appellant in respect of offence G
punishable under Section 138 of the N.I. Act, in exercise of
powers under Section 482 of the Code of Criminal Procedure
by accepting factual defences of the accused which were
disputed ones. Such defences, if taken before trial court, after
recording of the evidence, can be better appreciated.            H
728          SUPREME COURT REPORTS                     [2015) 3 S.C.R.



A          15. Therefore, for the reasons, as discussed above, these
      appeals deserve to be allowed. Accordingly, the appeals are
      allowed. The impugned order dated 25.2.2004 passed by
      High Court of Kerala in Criminal M.C. Nos. 2366 of 2008 and
      2367 of 2008 is hereby quashed. The trial court shall proceed
B     with the trial in the criminal complaint cases. It is clarified that
      we have not expressed our opinion as to correctness of the
      defence pleas taken by the respondent no. 1. No order as to
      costs.

C     Kalpana K. Tripathy                                 Appeals allowed.