Complaint u/s 138 for Dishonoured Cheques Due to Alleged Non Receipt of Gold Can’t be Quashed as it Was a Matter of Trial | HC

Case Details: Vihan Exims Co. (P.) Ltd. v. State Govt. of NCT of Delhi - [2023] 154 taxmann.com 106 (HC-Delhi)

Judiciary and Counsel Details

• • Amit Mahajan, J.
  • Anuj Jain, Adv. for the Petitioner.
  • Ms Priyanka Dalal for the Respondent.

Facts of the Case

In the instant case, Petitioners and Respondent no. 2 allegedly entered into an MoU in terms of which Respondent no. 2 supplied 2000 gms of gold bullion to the petitioner for converting it into gold/diamond jewellery of 18K within the stipulated time.

The petitioners issued security cheques to the respondent to cover the total value of gold delivered to the petitioners. However, the petitioners failed to deliver the gold ornaments to the respondents within the stipulated time and even thereafter. Therefore, respondent no. 2 presented the cheques for encashment but they were dishonoured for insufficient funds.

Since, despite receiving a legal notice, the petitioners failed to make the necessary payments. Respondent no. 2 filed a complaint under sections 138 and 141 of the Negotiable Instruments Act, 1881. The Trial Court took cognizance under section 138, passed a summoning order and framed notice under section 251 of the Cr.PC.

The petitioner sought to quash the summoning order and notice, contending that it had not received any gold from the complainant and that the liability had not been crystalized so as to attract provisions of section 138 of the Act.

The High Court observed that the allegations made in the complaint, at the initial stage when a complaint is sought to be quashed, are to be taken as correct unless evidence of unimpeachable character has been produced.

High Court Held

The High Court held that, in the instant case considering the complaint, the possible view was that cheques were drawn as a security towards the gold supplied by respondent No. 2 and the liability accrued once the demand for the return of gold was made by the complainant and the same was not returned by the accused.

However, the issue of whether any gold was received or not would be the subject matter of the trial and could not be gone into by the Court at this stage and, therefore, the petition filed by the petitioner was to be dismissed.

List of Cases Reviewed

• • M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (P.) Ltd. [2002] 39 SCL 270 (SC) (para 46)
  • S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan 2022 SCC OnLine SC 1238 (para 49) followed.

List of Cases Referred to

• • Vivek Sapra v. Vihan Exims Co. (P.) Ltd. [CC NI Act 1768 of 2021] (para 1)
  • Indus Airways (P.) Ltd. v. Magnum Aviation (P.) Ltd. [2014] 12 SCC 539 (para 18)
  • Pine Product Industries v. R.P. Gupta & Sons 2006 SCC Online Del 1514 (para 18)
  • Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel [2022] 143 taxmann.com 144/[2023] 175 SCL 5 (SC) (para 27)
  • Sripati Singh v. State of Jharkhand [2022] 134 taxmann.com 80/169 SCL 668 (SC) (para 27)
  • Sunil Todi v. State of Gujarat 2021 SCC Online SC 1174 (para 31)
  • M.M.T.C Ltd. v. Medchl Chemicals & Pharma (P.) Ltd. [2002] 39 SCL 270 (SC) (para 32)
  • Awadh Constructions v. Amarpreet Shuttering (Crl. M.C. No. 2840 of 2021) (para 33)
  • State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335 (para 33)
  • Sumit Bhasin v. State of NCT of Delhi (Crl. M.C. No. 296 of 2021) (para 33)
  • Suresh Chandra Goyal v. Amit Singhal 2015 SCC Online Del 9459 (para 43)
  • Bir Singh v. Mukesh Kumar [2019] 103 taxmann.com 228/152 SCL 563 (SC) (para 48)
  • S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan 2022 SCC OnLine SC 1238 (para 49)
  • HMT Watches Ltd. v. MA Abida [2015] 56 taxmann.com 328/130 SCL 511 (SC) (para 52).