IN THE PUNJAB AND HARYANA HIGH COURT 

Ravinder Chopra for the petitioner. 

Sumeet Mahajan for the Respondent. 

JUDGMENT 

SMT. H. K. SANDHU J. - Banarsi Dass and his brother Raj Kumar have filed this petition under section 482 of the Criminal Procedure Code, 1973, for quashing the complaint under section 138 of the Negotiable Instruments Act, 1881 ("the Act" for short) and quashing the summoning order passed by judicial Magistrate First Class, Ludhiana, and subsequent proceedings arising therefrom. 

The brief facts of the case as gathered from the complaint annexure P-1 are that complainant Mohinder Kumar was the owner of one Maruti car with registration No. PIM-8283. Both the petitioners approached him for the purchase of the car and the deal was settled at Rs. 85,000. The petitioners paid a sum of Rs. 45,000 in cash and Raj Kumar petitioner in connivance with his brother issued a cheque for Rs. 40,000 dated April 28, 1992, drawn on New Bank of India, Jagadhri. A receipt regarding the amount was duly executed and handed over to the petitioners. The complainant had his account with the Bharat Overseas Bank Limited, Ludhiana and he presented the cheque for collection through his bankers. The New Bank of India, Jagadhri, vide memo dated May 26, 1992, returned the cheque unpaid because the amount standing to the credit of that account was insufficient to honour, the cheque. The cheque was returned with the memo "refer to drawer". The complainant received intimation regarding dishonour of the cheque on August 1, 1992, and a registered notice was sent to the petitioners on June 2, 1992, vide which a demand for Rs. 40,000 was made. The notice was duly received by the petitioners but they failed to make payment within 15 days of the receipt of the notice. Thus the complaint was filed on July 1, 1992. 

The petitioners alleged that the car was sold to Kashmiri Metal Works in the year 1990, against full and final payment of Rs. 70,000 and this car was transferred in the name of the firm at the instance of the respondent Mohinder Kumar. The respondent had sworn an affidavit that he had sold his car and had received full and final consideration. Kashmiri Metal Works further transferred that car to one Kulwant Singh on March 5, 1991. The car was not sold for Rs. 85,000 and there was no question of issuing any cheque on April 28, 1992, for the balance consideration. Moreover the cheque that was issued was a self cheque, which was issued by petitioner No. 2 for S. R. Enterprises and there was no liability against S. R. Enterprises as the respondent had no dealings with that firm. The cheque was never issued in favour of the respondent. It was further pleaded that in the present case no notice as required under the Act was ever served upon the petitioners and no demand for the payment of the amount of money was made. In the absence of notice the complaint was not competent. Moreover, the car was purchased by Kashmiri Metal Works of which they were the partners. The cheque was issued by petitioner No. 2 for S. R. Enterprises which was a separate and different concern from M/s. Kashmiri Metal Works. The cheque was taken under pressure to grab the money due to some business rivalry. It was also nowhere alleged in the complaint that the petitioners were in charge of or responsible to the company for the conduct of its business because the car was purchased by the company. 

In the return filed by the respondent it was denied that the car was sold in the year 1990, or for Rs. 70,000. It was alleged that the car was sold for Rs. 85,000 and out of this amount of Rs. 42,000 were paid on April 18, 1992, and Rs. 3,000 on April 20, 1992. The petitioners were not having ready money for the payment of the rest of the amount so a cheque for Rs. 40,000 was issued on April 28, 1992. This fact was denied that any affidavit was sworn by him for the purpose of transfer of the vehicle or to the effect that he had received full and final payment of the price of the car' 

The petitioners filed a counter-affidavit alleging that initially one Bhupinder Singh Banga was the owner of the car and certificate of registration was issued in his favour on April 25, 1989. The car was transferred in the name of the respondent by the Registering Authority, Ludhiana, on June 8, 1990, and on the same day it was transferred in the name of the petitioners. The petitioners further transferred the car in favour of Kulwant Singh on March 15, 1991, and at present he was in possession of the car. 

I have heard learned counsel for the parties and have perused the records. 

A perusal of the complaint annexure P-1 will show that the simple case of the respondent was that he was the owner of a Maruti car and he sold the same to the petitioners for Rs. 85,000. Since the petitioners were short of ready cash, petitioner No. 2 in connivance with his brother issued a cheque for Rs. 40,000 on April 28, 1992, which was handed over to the respondent at Ludhiana. The cheque was delivered to Bharat Overseas Bank Limited, Ludhiana, for collection, but as the amount standing to the credit of petitioner No. 2 was not sufficient to honour the cheque, the cheque was returned with the memo 'refer to drawer" and this intimation was received by the respondent on June 1, 1992. On the very next day a registered notice was sent to the petitioners through the counsel asking them to make payment of the amount within 15 days of the receipt of the notice. The notice was duly received by the petitioners but payment was not made so the. complaint was filed for taking action against the petitioners under section 138 of the Act. After preliminary evidence was recorded the trial 'court found that a prima facie case was made out against the petitioners and they were summoned to face trial for the offence under section 138 of the Act. The contention of the petitioners is that the car was purchased by Kashmiri Metal Works and they were the partners of that firm. The consideration for the car was Rs. 70,000 and the whole of the amount was paid at the time when the car was purchased in the year 1990. The respondent had sworn an affidavit and on the basis. of that affidavit the car was transferred in their names in the year 1990. All these contentions have been denied by the respondent. The questions whether the car was purchased by Kashmiri Metal Works for Rs. 70,000 in the year 1990, and an affidavit was sworn by the respondent ccepting the receipt of the whole of the sale consideration and declaring that he had no objection to the transfer of the car in the name of the firm can be decided, only after evidence is led. At this stage only the allegations made in the complaint are to be looked into and if those alleged facts prima facie show the commission of an offence then there is no justification to interfere at this interlocutory stage. When a prosecution at the initial stage is asked to be quashed the test to be applied by the court is as to whether the uncontroverted allegations as made, prima facie establish the offence. The power of quashing any criminal proceeding is to be exercised very sparingly and with circumspection and that too in the rarest of rare cases. No enquiry is to be held at this stage regarding the actual amount of sale consideration settled by the parties and whether any affidavit was sworn by the respondent acknowledging receipt of full consideration for the car. 

It was next urged on behalf of the petitioners that the cheque alleged to have been issued by petitioner No. 2 was issued in favour of self, so the respondent could not be said to be the "holder in due course" of the cheque and the provisions of section 138 of the Act were not applicable. This contention of learned counsel is also without merit. Annexure P-3 shows that the cheque was in favour of self or bearer. The word "self' qualified the bearer, i.e., Mohinder Kumar, respondent, whose name was alleged to appear on the back of the cheque when it was presented in the bank for encashment. The cheque being bearer and in the possession of the respondent, it is to be presumed that it was issued in favour of the respondent. The presumption under the Negotiable Instruments Act is that the cheque if issued is for an existing liability and the onus is on the petitioners to prove that there was no liability existing for which cheque for Rs. 40,000 was issued. Under section 9 of the Act "holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if (payable to, order) before the amount mentioned in it became payable and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. The averment in the complaint is that the cheque was issued as part payment of consideration for the sale of car which was a bearer cheque and the respondent was in possession of the same. He presented it for encashment, but the cheque was dishonoured for want of sufficient funds in the account of the petitioners. 

So far as the question whether the car was purchased by the petitioners or it was purchased by a firm is concerned, that too is to be decided after evidence is led. At present the allegations made in the complaint are that the petitioners approached the respondent for, the purchase of the car and the car was sold to them. Simply because one of the purchasers who issued a cheque, was holding an account in the name of S. R. Enterprises is no ground to quash the complaint. Taking all the allegations in the complaint to be true without adding or subtracting anything at this stage it can very well be said that a prima facie case for trial of the petitioners under section 138 of the Act is made out. I find no merit in this petition and dismiss the same.