# Mehrab Logistics & Aviation Ltd. & Anr v. State of U.P. & Ors

- **Citation:** (2024) 2 ILRA 242
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-02-13
- **Case number:** Application U/S 482 No. 7529 of 2022
- **Bench:** Shamim Ahmed
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/mehrab-logistics-aviation-ltd-anr-v-state-of-u-p-ors-51416
- **Pages:** 12

## Headnote

Criminal Law - Criminal Procedure Code,
1973 - Sections 200, 202 & 482 - Indian
Penal Code, 1860 - Sections 406 & 420 -
Negotiable
Instruments
Act,
1881
-
Sections 68, 138, 138(2), 145(1), 14-A,
18 & 18-A - Application U/s 482 Cr.P.C. - for
quashing the summoning order and the entire
criminal proceedings - arising out of dishonour
of two cheques - Complaint Case - offence
under Section 138 of the NI Act - applicant
plead that, the complaint is based upon an
invalid MoU and a time-restricted authorization
letter0 - further, cheques alleged to be forged,
stolen, and not supported by any legally
enforceable liability - and serious procedural
lapses attributed to both the bank and the trial
court - the complainant argued that the
cheques were issued as security for unpaid
service fees related to a hotel sale - court finds
that - Forensic analysis confirms discrepancies in
signatures, - no cogent evidence of a
subsisting legal debt or liability - transaction
appears to be civil in nature and does not
attract penal consequences under Section 138
of the N.I. Act - trial court failed to conduct
proper judicial scrutiny and misapplied settled
legal principles - Applying Supreme Court
guidelines under Section 482 Cr.P.C. - court
held that - the case lacked the essential
ingredients of a criminal offence under Section
138 of the N.I. Act and appeared to be civil in
nature - hence, the impugned summoning order
and entire proceedings are against the spirit and
directions issued by the Hon'ble Apex Court and
are liable to be set aside - and the matter is
remanded back to the trial court for fresh
consideration within four months, in accordance
with legal standards and Supreme Court
precedents
-
Application
stands
allowed
accordingly.
(Para - 22, 23, 24, 26, 27, 28, 38, 39, 40)

Application Allowed. (E-11)

List
of
referred
Cases:
-
2 All. Mehrab Logistics & Aviation Ltd. & Anr. Vs. State of U.P. & Ors.
243

## Text

_Characters 0–39,964 of 40,414. This is a partial read: ask again with offset=39964 for what follows._

242 INDIAN LAW REPORTS ALLAHABAD SERIES

When any property is produced
before any Criminal Court during an
inquiry or trial, the Court may make such
order as it thinks fit for the proper custody
of such property pending the conclusion of the
inquiry or trial, and, if the property is subject to
speedy and natural decay, or if it is otherwise
expedient so to do, the Court may, after
recording such evidence as it thinks necessary,
order it to be sold or otherwise disposed of."

18. From the aforesaid statutory
provisions, it appears that undoubtedly the
Court has power to dispose of the seized vehicle
of the revisionist, which is used in excavation of
earth. The learned Judicial Magistrate has
committed a manifest error in rejecting the
application for release of the JCB vehicle on the
ground that it has no jurisdiction.

19. Accordingly, impugned orders dated
20.07.2022 passed by Judicial Magistrate-I,
Gonda and 19.06.2022 passed by the Additional
Sessions Judge, Gonda are hereby quashed and
the learned Judicial Magistrate-I, Gonda is
directed to pass a fresh order on the application
for release of the vehicle, in accordance with
law, in the light of the observations made in this
order, within a period of 30 days from the date
of receipt of certified copy of this order.
---------
(2024) 2 ILRA 242
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 13.02.2024

BEFORE

THE HON'BLE SHAMIM AHMED, J.

Application U/S 482 No. 7529 of 2022

Mehrab Logistics & Aviation Ltd. & Anr.
 ...Applicants
Versus
State of U.P. & Ors. ...Opposite Parties
Counsel for the Applicants:
Abhishek Singh

Counsel for the Opposite Parties:
G.A., Amandeep Singh, Praveen Tripathi,
Shakti Krishna Chaube

Criminal Law - Criminal Procedure Code,
1973 - Sections 200, 202 & 482 - Indian
Penal Code, 1860 - Sections 406 & 420 -
Negotiable
Instruments
Act,
1881
-
Sections 68, 138, 138(2), 145(1), 14-A,
18 & 18-A - Application U/s 482 Cr.P.C. - for
quashing the summoning order and the entire
criminal proceedings - arising out of dishonour
of two cheques - Complaint Case - offence
under Section 138 of the NI Act - applicant
plead that, the complaint is based upon an
invalid MoU and a time-restricted authorization
letter0 - further, cheques alleged to be forged,
stolen, and not supported by any legally
enforceable liability - and serious procedural
lapses attributed to both the bank and the trial
court - the complainant argued that the
cheques were issued as security for unpaid
service fees related to a hotel sale - court finds
that - Forensic analysis confirms discrepancies in
signatures, - no cogent evidence of a
subsisting legal debt or liability - transaction
appears to be civil in nature and does not
attract penal consequences under Section 138
of the N.I. Act - trial court failed to conduct
proper judicial scrutiny and misapplied settled
legal principles - Applying Supreme Court
guidelines under Section 482 Cr.P.C. - court
held that - the case lacked the essential
ingredients of a criminal offence under Section
138 of the N.I. Act and appeared to be civil in
nature - hence, the impugned summoning order
and entire proceedings are against the spirit and
directions issued by the Hon'ble Apex Court and
are liable to be set aside - and the matter is
remanded back to the trial court for fresh
consideration within four months, in accordance
with legal standards and Supreme Court
precedents
-
Application
stands
allowed
accordingly.
(Para - 22, 23, 24, 26, 27, 28, 38, 39, 40)

Application Allowed. (E-11)

List
of
referred
Cases:
-
2 All. Mehrab Logistics & Aviation Ltd. & Anr. Vs. State of U.P. & Ors.
243
1. Indus Airways Pvt. Ltd. & ors. Vs Magnum
Aviation Pvt. Ltd. & ors.; (2014) 12 SCC 539,

2. B. Krishna Reddy Vs Syed Hafeez (Died) Per
Legal Representative Naseema Begum & anr.;
(2020) 17 SCC 488,

3. Dashrath Rupsingh Rathod Vs St. of Mah.,
2014(9) SCC 129,

4. Vinay Kumar Shailendra Vs Delhi High Court
Legal Services Committee & anr. - 2014(10) SCC
708,

5. Inder Mohan Goswami Vs St. of Uttaranchal
(2007)12 SCC 1,

6. Lalan Kumar Singh & ors. Vs St. of Mah. -
2022 SCC Online SC 1383,

7. St. of Har. Vs Bhajan Lal reported in 1992
Supp (1) SCC 335,

8. R.P. Kapoor Vs St. of Punj. - AIR 1960 S.C.
866,

9. St. of Bihar Vs P.P. Sharma - 1992 SCC
(Crl.)192,

10. Zandu Pharmaceutical Works Ltd. Vs Mohd.
Saraful Haq 18 & anr. - (Para-10) - 2005 SCC
(Cri.) 283,

11. Neeharika Infrastructure Pvt. Ltd. Vs St. of
Mah., AIR 2021 SC 1918,

12. In S.W. Palankattkar & ors. Vs St. of Bihar,
2002 (44) ACC 168

(Delivered by Hon'ble Shamim Ahmed, J.)

1. List has been revised and the case
is being taken up in the revise call.

2. Heard Shri Raghvendra Singh,
learned Senior Advocate assisted by Shri
Abhishek Singh, learned Counsel for the
applicants,
Shri
Sachin
Upadhaya,
Advocate holding brief of Shri Praveen
Tripathi, Advocate
as
well
as
Shri
Amandeep Singh, learned Counsel for the
opposite party No.2 and Shri Anirudh
Kumar Singh, learned A.G.A-I for the
State-opposite party No.1. No counsel
appeared on behalf of the opposite party
No.3 whereas name of Shri Shakti Krishna
Chaube, Advocate is shown in the cause
list.

3. The instant application has been
moved on behalf of the applicants with a
prayer to quash the summoning order dated
22.07.2022 passed in Complaint Case
No.83520 of 2021, under Section 138 N.I.
Act, Police Station P.G.I., District Lucknow
as well as to set aside the entire
proceedings in pursuance thereof pending
before the learned Presiding Officer,
Additional Court No.10, Lucknow.

4. Learned counsel for the applicants
submitted that the present case arises out of
complaint preferred by the opposite party
no.2. The applicant no.1 is a company
incorporated under the Companies Act,
1956
bearing
Corporate
Identification
Number (CIN) U60301UP1957PLC023015
and having its registered office at Mehrab
Tower, Sixth Floor TC-16V, Vibhuti
Khand, Gomti Nagar, Lucknow (hereinafter
referred as "Company" for sake of brevity).
The applicant no.2 is the Managing
Director of the Company and the affairs of
the Company are run and managed by him.

5. Learned counsel for the applicants
further submitted that on 17.11.2021, the
opposite party no.2 preferred a complaint
under
Section
138
of
Negotiable
Instruments Act, 1881 (hereinafter referred
to as "N.I. Act" for the sake of brevity)
against the applicants before the learned
trial court alleging there in that the
applicant
no.2
and
other
co-accused
persons contacted him on behalf of the
244 INDIAN LAW REPORTS ALLAHABAD SERIES
Company for the purpose of sale of hotel
and authorized him to deal for the sale of it
and agreed to pay Rs.10 Crores as a fee for
the services to be rendered by him vide
alleged Memorandum of Understanding
(Annexure No.4) (hereinafter referred to as
"MoU" for the sake of brevity) which was
executed between them. It has been further
alleged in the aforesaid complaint that in
lieu of the services rendered by the
complainant, the accused issued two
account
payee
cheques,
which
were
dishonored, as such, the accused are liable
to be prosecuted for committing the offence
under Section 406, 420 I.P.C. as well as
Section 138 of N.I. Act. It was also alleged
by the opposite party No.2 that an
authorization-cum-declaration letter dated
14.08.2020 was issued by the Director
(Vishnu Kumar Pandey) of applicant No.1
Company in favour of opposite party No.2
(Annenxure No.5).

6. Learned counsel for the applicants
further submitted that the opposite party
no.2 0submitted his statement on affidavit
under Section 145(1) of N.I. Act read with
Section 200 Cr.P.C. which is nothing but
the reiterated version of the complaint
made by the opposite party No.2 against
the applicants.

7. Learned counsel for the applicants
further submitted that on perusal of the
authorization letter dated 14.08.2020, it
would reveal that the alleged authorization
letter as claimed by the opposite party No.2
has been issued for the specific time period
of 15 working days i.e. from 16.08.2020 till
30.08.2020 and there is no averment in the
complaint made by the opposite party No.2
that the said letter has been extended
further. He further submitted that there was
no debt on the date 24.06.2021 when the
alleged cheques were issued as admittedly
the sale of the hotel took place on
12.07.2021. It is admitted case of the
complainant that the alleged authorization
letter has not been issued by the applicant
no.2, who being a Managing Director is
solely authorized to issue any such letter on
behalf of the Company.

8. Learned Counsel for the applicants
further submitted that the alleged two
cheques which were stolen/misplaced from
the possession of the applicant Company
were reported to be lost by an employee of
the applicant Company, namely-Raghuvir
Prasad, who reported about the lost cheques
to the concerned police station but the
veracity of the aforesaid report was denied
by police vide letter dated 02.12.2022,
wherein it has been specifically stated that
no such G.D. Entry was found in the
concerned police station about the report
for lost cheques. He further submitted that
even the police has denied the report
regarding lost cheques, thus, it appears that
the alleged cheques were handed over to
the complainant with the connivance of an
employee of the applicant Company only
with the intention to misappropriate the
alleged cheques.

It is further argued that even
though the alleged MoU was prepared as a
draft, the same was only communicated
through e-mail, which was neither signed
by any of the parties nor any stamp or seal
of the company was appended on it nor
there is any date. An unsigned, unstamped,
undated draft MoU/any agreement without
payment of any stamp duty is inadmissible
as a piece of evidence in the eyes of law.

9. Learned counsel for the applicants
further submitted that the complainant has
neither disclosed his own credentials or his
alleged
proprietorship
firm
"KBJ
2 All. Mehrab Logistics & Aviation Ltd. & Anr. Vs. State of U.P. & Ors.
245
Engineering
Services"
such
as
PAN
No./GSTIN No./Income Tax Returns so as
to ascertain his capacity to crack the
claimed deal of sale.

10. Learned counsel for the applicants
further submitted that the complainant
somehow got handover to the two blank
cheques
of
the
company
with
the
connivance
of
an
employee
of
the
applicants'
Company
and
thereafter,
conspired to extract the money from the
company illegally as he also knew that the
hotel
property
is
being
sold.
The
complainant in furtherance of the aforesaid
criminal conspiracy and evil design,
presented the aforesaid lost two cheques
before the State Bank of India, S.G.P.G.I.
Branch, Lucknow on 24.06.2021 with
forged signature of the applicant no.2 and
filling the self imagined amount of Rs.5
Crores in each cheque and entered the same
date as 24.06.2021 on the aforesaid two
cheques.

11. Learned counsel for the applicants
further submits that in both the cheques,
there was a note present "valid upto Rs.50
lacs at non home branch" and on
14.07.2021, the aforesaid bank closed the
bank account of the applicant Company in
view of the circular dated 06.08.2020
issued by Reserve Bank of India, which
prohibited the running of multiple current
accounts in the same bank and intimation
regarding the same was given to the
applicant company.

12.

Learned
Counsel
for
the
applicants further submitted that when the
opposite party No.2 got those two blank
cheques with the connivance of an
employee of the applicant Company, he
presented the said two cheques by filling an
imagined amount of Rs.5 Crores in each
cheque to non home branch as he knew that
the aforesaid cheques will be dishonored by
the Bank and the applicant Company will
be liable for an offence under the
provisions of N.I. Act, even though, the
signatures of the applicant were forged and
were made in the two cheques to falsely
implicate the applicant Company.

13.

Learned
Counsel
for
the
applicants further submitted that despite the
fact that the cheques should have been
returned by the bank with an endorsement
at the memo that "exceeds arrangement
refer to drawer" or with the endorsement
that the "same is unacceptable in the
S.G.P.G.I Branch, which is a non home
branch", however, when the two alleged
cheques were presented in the bank the
same were dealt in a most casual and
mechanical
manner
and
returned
as
dishonored with the note of "insufficient
fund" on the same day of being presented
without informing the applicant No.2.

14. Learned counsel for the applicants
further submitted that the act/omission on
the part of concerned employees of the
bank in issuing an incorrect bank return
memo is illegal as well as constitutes
dereliction of duty resulting in false
prosecution of the applicants as no offence
under Section 138 N.I. Act could have been
made out against the applicant Company
and therefore, the connivance of the
employee of opposite party No.3 cannot be
ruled out. It is further submitted that the
act/omission on the part of the concerned
bank employee has also caused irreparable
damage to the reputation and image of the
applicant Company.

It is further argued that it is the
admitted case of the complainant that no
bill was ever raised in discharge of the
246 INDIAN LAW REPORTS ALLAHABAD SERIES
liabilities for which two alleged cheques
were issued which casts suspicion over the
story of the complainant as a person/firm
providing any service and charging the fee
of Rs.10 Crores is also liable for 18%
GST/Service Tax which is a huge amount
and cannot escape the eyes of tax
department. Further, argument of learned
Counsel for the applicants is that it is fact
of common knowledge that the brokerage
in any sale is paid in percentage and
normally it is not more than 1% of an
astronomical amount that too about 25% of
the forged value of property, which is not
believable.

15.

Learned
Counsel
for
the
applicants further submitted that the two
cheques of Rs.5 Crore presented by the
opposite party No.2 before the incompetent
Bank who has no jurisdiction to entertain
the same as they were not presented at the
Home Branch deliberately and even though
the cheques were issued on the same day
but the signature on both the cheques were
not similar and there was complete
mismatch. It was also argued that a forged
signature was made on both the cheques of
the applicant No.2, who has also denied his
signature on the aforesaid two cheques.

It is further argued that even
though the signature which was done by the
applicant No.2 in the sale deed of Hotel and
the signature shown in the two cheques are
entirely different and has no resemblance
that also falsify the story of opposite party
No.2.

16.

Learned
Counsel
for
the
applicants further argued that the case
under Section 138 of N.I. Act can only be
attracted in the Court if there exists any
debt or the liability on the person who has
issued the cheque and in the present case,
no debt or other liability exists on the
applicants and the case filed by the
opposite party No.2 is false and fabricated
and does not fall under the provisions of
Section 138 N.I. Act.

17.

Learned
Counsel
for
the
applicants also argued that provisions of
Section 68 of N.I. Act are also not attracted
in the present case as the there was no
promisery note, bill of exchange or cheque
made, drawn or accepted payable at a
specified place and not elsewhere must, in
order to charge any party thereto. Section
68 of N.I. Act is quoted hereinunder:-

"68. Presentment for payment of
instrument payable at specified place and
not elsewhere.-

A
promissory
note,
bill
of
exchange or cheque made, drawn or
accepted payable at a specified place and
not elsewhere must, in order to charge any
party thereto, be presented for payment at
that place."

18. Learned counsel for the applicants
further submitted that the learned trial court
did not conduct any proper inquiry as
envisaged under Section 202 Cr.P.C. for
ascertaining the truth and veracity of the
allegations made in the complaint and for
the purpose of deciding whether there
exists sufficient ground for proceeding
against the applicants/accused and in a
mechanical manner without application of
judicial
mind,
summoned
the
applicants/accused
vide
impugned
summoning order dated 22.07.2022.

19. Learned counsel for the applicants
further submitted that the impugned order
dated 22.07.2022, by which the applicants
were summoned, is also non speaking as
the Magistrate has not considered any
2 All. Mehrab Logistics & Aviation Ltd. & Anr. Vs. State of U.P. & Ors.
247
material
available
before
him
while
summoning the applicants to face the trial.
As such, the impugned order dated
22.07.2022 on the face of record appears to
be unjustified and is passed against the
provisions of the N.I. Act , therefore, the
same is liable to be set aside by this Court
alongwith the entire proceeding.

20. Learned counsel for the opposite
party no.2 has opposed the argument raised
by the learned counsel for the applicants
and submitted that in lieu of the MoU sent
by the complainant to the applicants vide
email dated 08.10.2020, the applicant no.2
issued two post-dated cheques to the
complainant
bearing
nos.955800
and
955801
dated
24.06.2021
for
Rs.5,00,00,000/- each as security and
ensured the complainant that if the payment
of service fee is not made by the applicants,
the complainant can present the cheques for
encashment. He further submitted that the
first advance payment in lieu of the sale of
said hotel was made on 29.09.2020 and in
part payments all the sale amount of the
Hotel was paid till June, 2021 but even
after receiving the sale amount of the said
Hotel and repeated requests of the
complainant to pay his service fee, the
applicants did not pay even a single penny
to the complainant, thus, he submitted that
the impugned summoning order dated
22.07.2022 has been rightly passed by the
learned trial court in accordance with law,
therefore, the same is not liable to be
quashed and the instant application is liable
to be rejected.

21. Learned A.G.A-I for the State also
opposed the argument advanced by learned
Counsel for the applicants and submitted
that the summoning order dated 22.07.2022
is rightly passed and no interference by this
Court is required in the instant matter.

22. After hearing learned counsel for
the respective parties and after perusal of
the materials available on record, prima
facie it appears that the learned trial court
has failed to appreciate the materials
available on record and has committed
manifest illegality while passing the
impugned order while summoning the
applicants as the same is passed without
considering the evidence produced by the
applicants, which is unsustainable in the
eyes of law.

23. It is further observed that this
Court is not the handwriting expert but
prima facie on detail examination and
comparison of the respective signature
samples, which were present on the sale
deed executed by the applicant No.2 in
respect of sale of Hotel and the signatures
which were present on the two lost
cheques,
the
cardinal
principles
of
identification
of
signatures
and
on
comparing the writing habits, general and
personal characteristics of both the sets of
signature samples and upon close scrutiny
of the nature of the writing of the
comparative signatures reveals that the
writing pertains to a good skilled writer
capable of making forceful and crisp
strokes
in
the
writing
of
complete
signatures with no hesitation or clumsiness
in stroke making. The writing is found to
be fluently and smoothly written in normal
and natural flow of running signatures
motion without any care of caution.

24. It is further observed that there are
dissimilarities
in
the
signatures
and
sufficient amount of dissimilarity is found.
Cumulative
consideration
of
all
the
dissimilarities in the writing habits between
the signature samples, which lead to a
conclusion that the person who did the
signature on the sale deed executed in
248 INDIAN LAW REPORTS ALLAHABAD SERIES
respect of sale of hotel and the signature
which was present on the lost two cheques
are not the same person, who did the
specimen signatures. This fact has also
been confirmed by a forensic expert, whose
report is annexed as Annexure No.21 to the
affidavit filed in support of the present
application.

25. It is observed earlier that this
Court is not a handwriting expert, though,
prima facie from bare perusal of the
cheques, both the signatures are different
whereas, the cheques were issued on the
same date. It is further observed that on
perusal of the signature on the sale deed,
which was executed by the applicants for
sale of Hotel, wherein the signature of the
applicant No.2 is present. thus, it transpires
that signatures on the cheques and
signature on the sale deed are different,
there appears force in the argument of
learned counsel for the applicants that the
cheques were not signed by the applicant
No.2 and this fact has also not been
considered by the trial court while passing
the impugned order.

26. It is further observed that though a
case of breach of trust may be, both a civil
wrong and a criminal offence, but there
would be certain situations where it would
predominantly be a civil wrong and may or
may not amount to a criminal offence. The
present case is one of that type where, if at
all, the facts may constitute a civil wrong
but the ingredients of a criminal offences
are wanting.

27. It is further observed that this is a
very clear case of the parties entering into
an agreement or MoU, if any, and
compounding
the
offence
to
save
themselves from the process of litigation.
When such a step has been taken by the
parties, and the law very clearly allows
them to do the same, the Courts then cannot
override such compounding and impose its
will.

On perusal of the authorization
letter dated 14.08.2020, it would reveal that
the alleged authorization letter as claimed
by the opposite party No.2 has been issued
for the specific time period of 15 working
days i.e. from 16.08.2020 till 30.08.2020
and there is no averment in the complaint
made by the opposite party No.2 that the
said letter has been extended further. He
further submitted that there was no debt on
the date 24.06.2021 when the alleged
cheques were issued as admittedly the sale
of the Htoel took place on 12.07.2021. It is
admitted case of the complainant that the
alleged authorization letter has not been
issued by the applicant no.2, who being a
Managing Director is solely authorized to
issue any such letter on behalf of the
Company, thus, there exists no debt or
liability upon the applicants.

28. Further, on perusal of Section 138
N.I. Act which reveals that it is a penal
provision, it must, therefore, be construed
strictly, section 138 (2) enacting part of the
provision makes it abundantly clear that
what constitutes an offence punishable with
imprisonment and/or fine is the dishonour
of a cheque for insufficiency of funds, etc
in the account maintained by the drawer
with the bank for discharge of a debt or
other liability whether in full or part. The
language
used
in
the
provision
is
unambiguous and the ingredients of the
offence clearly discernible namely (a)
cheque is drawn by the accused on an
account maintained by him with a banker,
(b) the cheque amount is in discharge of a
debt or liability, and (c) the cheque is
returned unpaid for insufficiency of funds
2 All. Mehrab Logistics & Aviation Ltd. & Anr. Vs. State of U.P. & Ors.
249
or that the amount exceeds the arrangement
made with the bank. Any dishonour falling
within the four corners of the enacting
provision would be punishable without
much ado.

Section 138 is structured in two
parts, the primary and the provisory. The
contents of the proviso place conditions on
the operation of the main provision, while
it does not form a constituent of the crime
itself, it modulates or regulates the crime in
circumstances where,unless its provisions
are complied with, the already committed
crime remains impervious to prosecution.

The
cause
of
action
for
prosecution will arise only when the period
stipulated in the proviso elapses without
payment. Ingredients of the offence have
got to be distinguished from the conditions
precedent
for
valid
initiation
of
prosecution. The stipulations in the proviso
must also be proved certainly before the
offender can be successfully prosecuted.
But in the strict sense they are not
ingredients of the deemed offence under the
body of Section 138 of the N.I. Act, though
the said stipulations must also be proved to
ensure and claim conviction. It is in this
sense that it is said that the proviso does not
make or unmake the offence under Section
138 of the NI Act. That is already done by
the body of the sections.

29. Further, Hon'ble the Supreme
Court in case of Indus Airways Private
Limited
and
Others
Vs.
Magnum
Aviation Private Limited and others;
(2014) 12 SCC 539 in para 9 has held as
under:-

"13. The explanation appended
to Section 138 explains the meaning of the
expression 'debt or other liability' for the
purpose of Section 138. This expression
means a legally enforceable debt or other
liability. Section 138 treats dishonoured
cheque as an offence, if the cheque has
been issued in discharge of any debt or
other liability. The explanation leaves no
manner of doubt that to attract an offence
under Section 138, there should be legally
enforceable
debt
or
other
liability
subsisting on the date of drawal of the
cheque. In other words, drawal of the
cheque in discharge of existing or past
adjudicated liability is sine qua non for
bringing an offence under Section 138. If a
cheque is issued as an advance payment for
purchase of the goods and for any reason
purchase order is not carried to its logical
conclusion
either
because
of
its
cancellation or otherwise, and material or
goods for which purchase order was placed
is not supplied, in our considered view, the
cheque cannot be held to have been drawn
for an exiting debt or liability. The payment
by cheque in the nature of advance payment
indicates that at the time of drawal of
cheque, there was no existing liability."

30. Further, the Hon'ble Apex Court
in the case of B. Krishna Reddy Vs. Syed
Hafeez (Died) Per Legal Representative
Naseema Begum and Another; (2020) 17
SCC 488 and in paragraph 8 and 9 of the
aforesaid judgment was pleased to observe
as under:-

"8. In our view, the offence
alleged was that a cheque was given
towards consideration for purchase of a
property. Neither any document was
produced on record nor there was any
evidence that any conveyance was executed
in favour of the appellant. Thus, the
submission of the appellant that there was
no existing debt or liability against which
the cheque was given had to be accepted.
In our view, the High Court was in error in
250 INDIAN LAW REPORTS ALLAHABAD SERIES
accepting the appeal and upsetting the view
taken by the Trial Court.

9. We, therefore, allow this
appeal, set-aside the decision of the High
Court and restore the judgment and order
of acquittal passed by the Trial Court."

31. In the case of Meters and
Instruments Private Limited v. Kanchan
Mehta 1, the Hon'ble Apex Court held that
the nature of offence under section 138 of
the N.I. Act, is primarily related to a civil
wrong and has been specifically made a
compoundable
offence.
The
relevant
paragraph of the judgment has been
extracted herein:

"This Court has noted that the
object of the statute was to facilitate
smooth
functioning
of
business
transactions. The provision is necessary as
in many transactions' cheques were issued
merely as a device to defraud the creditors.
Dishonor of cheque causes incalculable
loss, injury and inconvenience to the Vide
the Banking, Public Financial Institutions
and
Negotiable
Instruments
Laws
(Amendment)
Act,
1988
payee
and
credibility of business transactions suffers
a setback. At the same time, it was also
noted that nature of offence under Section
138 primarily related to a civil wrong
and the 2002 amendment specifically
made it compoundable."

32. Further, a three Judge Bench of
Hon'ble Supreme Court in Dashrath
Rupsingh
Rathod
Vs.
State
of
Maharashtra, 2014(9) SCC 129 in para
58 held as follows:

"58. To sum up:

58. 1. An offence under Section
138 of the Negotiable Instruments Act
1881 is committed no sooner a cheque
drawn by the accused on an account
being maintained by him in a bank for
discharge of debt/liability is returned
unpaid for unsufficiency of funds or for
the reason that the amount exceeds the
arrangement made with the bank.

58.2. Cognizance of any such
offence is however forbidden under
Section 142 of the Act except upon a
complaint in writing made by the payee
or holder of the cheque in due course
within a period of one month from the
date the cause of action accrues to such
payee or holder under clause (c) of
proviso to section 138.

58.3. The cause of action to file
a
complaint
accrues
to
a
complainant/payee/holder of a cheque in
due course if:

(a) the dishonoured cheque is
presented to the drawee bank within a
period of six months from the date of its
issue.

(b) if the complainant has
demanded payment of cheque amount
within
thirty
days
of
receipt
of
information by him from the bank
regarding the dishonour of the cheque,
and

(c) if the drawer has failed to
pay the cheque amount within fifteen days
of receipt of such notice.

58.4. The facts constituting
cause of action do not constitute the
ingredients of the offence under Section
138 of the Act.

58.5. The proviso to section 138
simply postpones/defers institution of
criminal proceedings and taking of
cognizance by the court till such time
cause of action in terms of clause (c) of the
proviso accrues to the complainant.

58.6. Once the cause of action
accrues to the complainant, the jurisdiction
of the court to try the cause will be
2 All. Mehrab Logistics & Aviation Ltd. & Anr. Vs. State of U.P. & Ors.
251
determined by reference to the place where
the cheque is dishonoured."

The ratio of Dashrath Rupsingh
Rathod case was followed by a subsequent
three Judge Bench in Vinay Kumar
Shailendra Vs. Delhi High Court Legal
Services Committee and another, 2014(10)
SCC 708.

33. It is further observed that the trial
court while summoning the applicants by
impugned order has totally failed to
appreciate the factual and legal aspect of
the matter. The legal position is well-settled
that 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. It is also for the
court to take into consideration any special
features which appear in a particular case to
consider whether it is expedient and in the
interest of justice to permit a prosecution to
continue. This is so on the basis that the
court cannot be utilised for any oblique
purpose and where in the opinion of the
court chances of an ultimate conviction is
bleak and, therefore, no useful purpose is
likely to be served by allowing a criminal
prosecution to continue, the court may
while taking into consideration the special
facts of a case also quash the proceeding
even though it may be at a preliminary
stage.

34. Further the Hon'ble Supreme
Court of India in the case Inder Mohan
Goswami v. State of Uttaranchal (2007)12
SCC 1 has held that it would be relevant to
keep into mind the scope and ambit of
section 482 Cr.PC and circumstances under
which the extra ordinary power of the court
inherent therein as provisioned in the said
section of the Cr.P.C. can be exercised, para
23 is being quoted here under:-

"23. This court in a number of
cases has laid down the scope and ambit of
courts powers under section 482 Cr.P.C.
Every High Court has inherent power to act
ex debito justitiae to do real and
substantial justice, for the administration of
which alone it exists, or to prevent abuse of
the process of the court. Inherent power
under section 482 Cr.P.C. can be exercised:

(i) to give effect to an order under
the Code;

(ii) to prevent abuse of the
process of court, and

(iii) to otherwise secure the ends
of justice."

35. Further Hon'ble the Supreme
Court of India in the case of Lalankumar
Singh
and
Others
vs.
State
of
Maharashtra reported in 2022 SCC Online
SC 1383 has specifically held in paragraph
No.38 that the order of issuance of process
is not an empty formality. The Magistrate is
required to apply his mind as to whether
sufficient ground for proceeding exists in
the case or not. Paragraph No.38 of
Lalankumar Singh and Others (supra) is
being quoted hereunder:-

"38. The order of issuance of
process is not an empty formality. The
Magistrate is required to apply his mind as
to whether sufficient ground for proceeding
exists in the case or not. The formation of
such an opinion is required to be stated in
the order itself. The order is liable to be set
aside if no reasons are given therein while
coming to the conclusion that there is a
prima facie case against the accused. No
doubt, that the order need not contain
detailed reasons. A reference in this respect
could be made to the judgment of this
Court in the case of Sunil Bharti Mittal v.
Central Bureau of Investigation, which
reads thus:
252 INDIAN LAW REPORTS ALLAHABAD SERIES

"51. On the other hand, Section
204 of the Code deals with the issue of
process, if in the opinion of the Magistrate
taking cognizance of an offence, there is
sufficient ground for proceeding. This
section relates to commencement of a
criminal proceeding. If the Magistrate
taking cognizance of a case (it may be the
Magistrate receiving the complaint or to
whom it has been transferred under Section
192), upon a consideration of the materials
before him (i.e. the complaint, examination
of the complainant and his witnesses, if
present, or report of inquiry, if any), thinks
that there is a prima facie case for
proceeding in respect of an offence, he
shall issue process against the accused.

52. A wide discretion has been
given as to grant or refusal of process and
it must be judicially exercised. A person
ought not to be dragged into court merely
because a complaint has been filed. If a
prima facie case has been made out, the
Magistrate ought to issue process and it
cannot be refused merely because he thinks
that it is unlikely to result in a conviction.

53.
However,
the
words
"sufficient
ground
for
proceeding"
appearing in Section 204 are of immense
importance. It is these words which amply
suggest that an opinion is to be formed only
after due application of mind that there is
sufficient basis for proceeding against the
said accused and formation of such an
opinion is to be stated in the order itself.
The order is liable to be set aside if no
reason is given therein while coming to the
conclusion that there is prima facie case
against the accused, though the order need
not contain detailed reasons. A fortiori, the
order would be bad in law if the reason
given turns out to be ex facie incorrect."

36. Further, Hon'ble the Supreme
Court of India has provided guidelines in
case of State of Haryana Vs. Bhajan Lal
reported in 1992 Supp (1) SCC 335 for the
exercise of power under Section 482
Cr.P.C. which is extraordinary power and
used separately in following conditions:-

"102.(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 F.I.R.
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
2 All. Israr Ahmad Vs. State of U.P. & Anr.
253
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."

37. Further the Apex Court has also laid
down the guidelines where the criminal
proceedings could be interfered and quashed in
exercise of its power by the High Court in the
following cases:- (i) R.P. Kapoor Vs. State of
Punjab, AIR 1960 S.C. 866, (ii) State of Bihar
Vs. P.P. Sharma, 1992 SCC (Crl.)192, (iii)
Zandu Pharmaceutical Works Ltd. Vs. Mohd.
Saraful Haq and another, (Para-10) 2005
SCC
(Cri.)
283
and
(iv)
Neeharika
Infrastructure
Pvt.
Ltd.
Vs.
State
of
Maharashtra, AIR 2021 SC 1918.

38. In S.W. Palankattkar & others Vs.
State of Bihar, 2002 (44) ACC 168, it has been
held by the Hon'ble Apex Court that quashing
of the criminal proceedings is an exception than
a rule. The inherent powers of the High Court
itself envisages three circumstances under
which the inherent jurisdiction may be
exercised:-(i) to give effect an order under the
Code, (ii) to prevent abuse of the process of the
court ; (iii) to otherwise secure the ends of
justice. The power of High Court is very wide
but should be exercised very cautiously to do
real and substantial justice for which the court
alone exists.

39. Thus, in view of the law laid down by
the Hon'ble Apex Court and the facts and
circumstances, as narrated above and from the
perusal of the record, the impugned summoning
order dated 22.07.2022 passed in Complaint
Case No.83520 of 2021, under Section 138 N.I.
Act, Police Station P.G.I., District Lucknow and
the entire proceeding are against the spirit and
directions issued by the Hon'ble Apex Court
and are liable to be set aside.

40.

Accordingly,
the
impugned
summoning order dated 22.07.2022 passed by
Presiding Officer, Additional Court No.10,
Lucknow in Complaint Case No.83520 of
2021, under Section 138 N.I. Act, Police Station
P.G.I., District Lucknow and the entire
proceeding pending before the Presiding
Officer, Additional Court No.10, Lucknow is
hereby set aside and reversed and the matter is
remanded back to the trial court. Learned trial
court concerned is directed to pass a fresh order
within four months from today, keeping in view
the discussions/observations and judgments of
Hon'ble the Apex Court referred above.

41. For the reasons discussed above, the
instant application under Section 482 Cr.P.C. is
allowed in respect of the instant applicants.

42.