AI Structured Summary
Not yet generated for this judgment
Judgment
Alok Kumar Verma, J
This application under Section 482 of the Code of Criminal Procedure, 1973 has been filed to quash the entire proceeding of Complaint Case No.
1008 of 2012 (Old No.1371 of 2007) Vinod Kumar Vs. Alok Verma, pending in the court of Special Judicial Magistrate, Haridwar under Section 138
of the Negotiable Instruments Act, 1881 (hereinafter referred as, “the Act, 1881) as well as summoning order dated 16.01.2013 along with the
order passed by the learned 1st Additional Sessions Judge, Haridwar dated 28.06.2014, passed in Criminal Revision No. 136 of 2013, preferred against
the order dated 16.01.2013, whereby the revision of the present applicant had also been rejected.
Facts, to the limited extent necessary are that the respondent gave Rs.8.75 Lakhs on 11.03.2007, as debt, to the present applicant on the assurance
that the money shall be returned exactly after one month. The same was not returned as promised but a cheque No.144194 to the tune of Rs.8.75
Lakhs was issued by the present applicant, which he drew from his bank account of Punjab National Bank, Jwalapur, District Haridwar. The said
cheque was submitted by the respondent for collection, however, the bank had returned the same with endorsement that “account was closedâ€. In
the memo of the bank, it was also mentioned that the cheque was also returned because it exceeded the arrangement. The respondent sent a notice
under Section 138(b) of the Act, 1881 on 17.04.2007, which was presumed served upon the present applicant but payment was not made to the
respondent. Therefore, the respondent filed the complaint on 09.05.2007.
The Special Judicial Magistrate, Haridwar, in that Complaint Case No. 1371 of 2007 titled as Vinod Kumar Vs. Alok Verma, took the cognizance
on 16.05.2007 for the offence punishable under Section 138 of the Act, 1881. The present applicant challenged the said cognizance order dated
16.05.2007, through Criminal Misc. Application No.669 of 2007, Alok Verma Vs. State of Uttarakhand and another, on the ground that the
respondent-complainant examined his power of attorney holder under Section 200 of Cr.P.C. This High Court decided the said Criminal Misc.
Application on 16.04.2012, whereby the cognizance order was set aside with the direction to the learned Magistrate to proceed with the complaint
after recording the statement of the complainant and pass appropriate orders. Thereafter, the respondent-complainant filed his affidavit under Section
200 of Cr.P.C. After considering the matter afresh, the learned Magistrate passed the order on 16.01.2013, whereby the present applicant-accused
was summoned under Section 138 of the Act, 1881. Against this summoning order, the present applicant preferred a criminal revision. The learned
Additional Sessions Judge decided the same on 28.06.2014, whereby the revision had been rejected. Hence, the present application has been filed.
Mr. Rakesh Thapliyal, the learned Senior Counsel submits that the summoning order had been passed without applying the judicial mind; the
Magistrate was bound to consider the essential ingredient of Section 138 of the Act, 1881 whether there was a legally enforceable debt; in 2006, the
present applicant became a member of a Committee and for becoming a member of the said Committee he had given two undated blank cheques to
the respondent-complainant; the present applicant continued to become member for ten months and then he left the Committee as he was having
some doubt with regard to functioning of that Committee and then he requested the complainant to return back the said two blank cheques, given to
him, but he refused and told that the cheques were missing; as both the applicant and the complainant run their shops since long back in Jwalapur, the
applicant was in this impression that the said cheques were missing; the applicant never made any attempt or efforts to take any legal recourse against
the complainant to get back the blank cheques; but, the complainant sent a notice to the applicant with the statement that on 11.03.2007, a sum of
Rs.8.75 Lakhs were paid in cash to the present applicant as loan with this assurance that he will refund the amount within a period of one month but
instead of paying that amount on 11.04.2007, cheque of an amount of Rs.8.75 Lakhs of Punjab National Bank, Jwalapur, District Haridwar, bearing
cheque No.144194, was given and the said cheque was presented in the concerned bank, but the bank intimated that the account was closed;
thereafter, the respondent-complainant filed the said complaint; since the said amount of Rs.8.75 Lakhs was given in cash as alleged by the
respondent-complainant in the complaint, therefore, in the light of the provisions of Section 269SS of the Income Tax Act, 1961 (hereinafter referred
as, “the Act, 1961â€), the impugned summoning order dated 16.01.2013 is bad in law.
The learned counsel appearing for the respondent submits that a loan transaction which is in violation of Section 269SS of the Act, 1961 would not
be void, however, the penalty is provided under Section 271D of the Act, 1961 against the breach of Section 269SS of the Act, 1961.
Heard Mr. Rakesh Thapliyal, learned Senior Counsel assisted by Ms. Neeti Rana, learned counsel for the applicant and Mr. Gaurav Singh, learned
counsel for the respondent, perused and gone through the record.
Mr. Rakesh Thapliyal, learned Senior Counsel submits that since the amount of Rs.8.75 Lakhs was given in cash as alleged by the respondent in the
complaint, therefore, in the light of the provisions of Section 269SS of the Act, 1961, the impugned summoning order dated 16.01.2013 is bad in law.
However, the said plea was not taken by the applicant in the earlier criminal misc. application filed by him and there is no explanation from the
applicant as to why this plea was not taken in the earlier application.
Chapter XXB of the Act, 1961 provides for requirement as to mode of acceptance, payment or repayment in certain cases to counteract evasion of
tax. Section 269SS of the Act, 1961 was inserted by the Finance Act, 1984.
The provision of Section 269SS of the Act, 1961, which was inserted by the Finance Act, 1984 was as under:
“269SS Mode of taking or accepting certain loans and deposits:- No person shall, after the 30the day of June, 1984, take or accept from any other
person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank
draft or use of electronic clearing system through a bank account if,-
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is
remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause
(a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more:
Provided that the provisions of this section shall not apply to any loanor deposit taken or accepted from, or any loan or deposit taken or accepted by,-
(a) Government:
(b) any banking company, post office savings bank or co-operative bank;
(c) any corporation established by a Central, State or Provincial Act;
(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be
recorded in writing, notify in this behalf in the Official Gazette:
Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or
accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income
chargeable to tax under this Act. Explanation.- For the purposes of this section,-
(i) “banking company†means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking
institution referred to in section 51 of that Act;
(ii) “co-operative bank†shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(iii) “loan or deposit†means loan or deposit of money.â€
In the case of Assistant Director of Inspection Investigation Vs. A.B. Shanthi, (2002)6 SCC 25,9 the Hon’ble Apex Court observed that the
object of introducing Section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given
some false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is
unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for
the so-called lender also to manipulate his records later to suit the plea of the taxpayer. The main object of Section 269-SS was to curb this menace.
As regards the tax legislations, it is a policy matter, and it is for Parliament to decide in which manner the legislation should be made. Of course, it
should stand the test of constitutional validity.
In the light of the facts of the present case, the object of the parties when the transaction was entered into cannot be said to be to circumvent or
defeat the purpose of the Act, 1961.
Section 269SS of the Act, 1961 mandates no person, after the cut of date i.e. 30th day of June, 1984, shall take or accept from any other person
any loan or deposit otherwise than by an account payee cheque or an account payee bank draft if the amount was more than Rs.20,000/-. Breach of
the provisions of Section 269SS of the Act, 1961 provides penalty to which a person would be subjected to under Section 271D of the Act, 1961.
Section 271D does not provide that such transaction would be null and void.
In Nutan Kumar and others Vs. IInd Additional District Judge and others, (2002)8 SCC 3,1 the Hon’ble Supreme Court held that unless a
statute specifically provides that a contract contrary to the provisions of the statute would be void, the contract would remain binding between the
parties.
Breach of Section 269SS of the Act, 1961 provides that the penalty to which the person would be subjected to under Section 271D of the Act,
1961. Section 271D does not provide that such a transaction would be null and void. There is no provision under the Act, 1881 which would vitiate the
entire loan transaction for dealing with cash amount above Rs.20,000/-. The culpability of offence under Section 138 of the Act, 1881 will not freeze
for the reason of violation of Section 269SS of the Act, 1961 and nothing prevents the operation of the statutory presumption under Section 118 and
Section 139 of the Act, 1881. The applicant could not show any statutory provisions under the Act, 1961 or any other law which stipulates that a loan
transaction which is in violation of Section 269SS of the Act, 1961, would be void. Violation of Section 269SS of the Act, 1961 would not render the
loan as not recoverable through a legal process. The payer of the money in cash in violation of Section 269SS of the Act, 1961 would, therefore, be
entitled to enforce an agreement of advancement of money in cash beyond Rs.20,000/-.
Mr. Rakesh Thapliyal, learned Senior Counsel placed reliance on the Judgment in Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, (2008)4 SCC
In this case, the Hon’ble Supreme Court observed, “The courts below failed to notice that ordinarily in terms of Section 269SS of the
Income Tax Act, any advance taken by way of any loan of more than Rs.20,000/- was to be made by way of an account payee cheque only.
In Rangappa Vs. Sri Mohan, (2010)11 SCC 441, the Hon’ble Supreme Court had specifically noticed the judgment in Krishna Janardhan Bhat
(Supra) and yet the Hon’ble Supreme Court accepted the case of the complainant who claimed to have made an advance of Rs.45,000/- in cash
and proceeded to uphold the conviction, even though the case rested on the fact that cash advance of a sum more than Rs.20,000/- was made.
Therefore, on this aspect, Krishna Janardhan Bhat (Supra) stood impliedly overruled by the Hon’ble Apex Court.
Under Section 139 of the Act, 1881, there is a presumption in favour of the holder. Section 139 of the Act, 1881, stipulates that 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. It is also well settled that at the time of the consideration of the case for summoning, the merit of the
case cannot be tested. In the case at hand, the respondent-complainant has proved prima facie the basic ingredients of the offence under Section 138
of the Act, 1881.
Mr. Rakesh Thapliyal, learned Senior Counsel argued that the allegations in the complaint are totally false.
It is wholly impermissible for this Court to enter into the factual arena to adjudge the correctness of the allegations in the complaint. The Court
would not also examine the genuineness of the allegations made in the complaint, since the Court does not function as a Court of Appeal or Revision
while exercising its jurisdiction under Section 482 of the Code of Criminal Procedure, 1973.
In Pepsi Food Limited Vs. Special Judicial Magistrate and others, 1998(36) ACC 2,0 the Hon’ble Apex Court has observed that the power
conferred on the High Court under Article 226 and 227 of the Constitution of India, and under Section 482 of the Code have no limits, but more the
power more due care and caution is to be exercised in invoking these powers.
The case in hand is also not covered under any of the categories referred to in paragraph 102 of the judgment of the Hon’ble Apex Court in
State of Haryana and others Vs. Bhajan Lal and others (1992) Supplementary (1) SCC 335.
In State of Haryana and others Vs. Bhajan Lal (Supra), the Hon’ble Apex Court examined the extraordinary power under Article 226 of the
Constitution of India and also the inherent powers under Section 482 of the Code. Para 102 of the judgment of Hon’ble Apex Court reads as
follows:-
“In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by
this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under section 482 of the
code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be
exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any
precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases
wherein such power should be exercised.
(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety
do not prima facie constitute any offence or make out a case against the accused.
(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence,
justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section
155(2) of the Code.
(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the
commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted
by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever
reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is
instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing
efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.
As so far as the contentions of the applicant are concerned on the facts of this case, the applicant can raise disputed question of facts before the
learned trial court.
In the result, the application has no force. The application, filed under Section 482 of the Code of Criminal Procedure, 1973, is dismissed.
However, the dismissal of the application itself shall not prejudice the case of the applicant on merits.