Mutation in revenue records does not create title

Mutation of a property in the revenue record does not create or extinguish title nor has it any presumptive value on title. It only enables the person in whose favour mutation is ordered to pay the land revenue in question. The learned Additional District Judge was wholly in error in coming to a conclusion that mutation in favour of Inder Kaur conveys title in her favour. This erroneous conclusion has vitiated the entire judgment.                                   (Para 9)

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos. 3725-3726 OF 2015

[Arising out of Special Leave Petition (Civil) Nos. 3377-3378 of2011]

H. Lakshmaiah Reddy & Ors.                                            .. Appellants

-vs-

L. Venkatesh Reddy                                                        .. Respondent

J U D G M E N T: C. NAGAPPAN, J.

1.     Leave granted.

2.      These appeals are preferred against judgment dated 8.9.2010 in R.S.A. No.1500 of 2009 by which the High Court of Karnataka at Bangalore allowed the Second Appeal filed by the respondent herein and against the final order dated 25.11.2010 in RP No.398/2010 by which the High Court dismissed the Review Petition filed by the appellant.

3.      The respondent herein filed the suit against the appellants seeking for the relief of declaration of his title to the suit property and for consequential relief of permanent injunction restraining the appellants herein from interfering with his physical possession. Briefly the case of the plaintiff is that the suit property belonged to Guramma wife of the first defendant and the mother of the plaintiff and on her death the first defendant had given declaration before the revenue authorities to change the Katha in the name of the plaintiff in respect of the suit schedule property and mutation was effected accordingly and the revenue record stood in the name of the plaintiff for a long period of time. It is the further case of the plaintiff that the first defendant entered into second marriage with one Jayamma and defendants 2 to 5 are their children and they denied the ownership of the plaintiff in the suit property and therefore, the suit came to be filed.

4.      A common written statement was filed by the defendant stating that the suit property was purchased in the name of  Guramma under registered sale deed dated 14.11.1959 and  sale consideration was paid by the first defendant and after  the death of Guramma, the first defendant married Jayamma in 1973 and defendants 2 to 5 were born out of the wedlock and the plaintiff as well as the first defendant being the legal heirs of Guramma had succeeded to the suit property and the first defendant gifted a portion of suit property measuring 5 acres in favour of defendants 2 to 5 by registered gift deed dated 12.12.2003 and the suit is liable for dismissal.

5.      The trial court framed seven issues and after consideration of oral and documentary evidence dismissed the suit. On the appeal preferred by the plaintiff, the lower appellate court held that the plaintiff and the first defendant being class-I heirs of deceased Guramma are entitled to half share each in the suit property and decreed the suit in part. Challenging the same the plaintiff preferred second appeal and the High Court allowed the same by setting aside the judgment of the lower appellate court and decreed the suit in full as prayed for. Aggrieved by the same the defendants have preferred the present appeals. For the sake of convenience, the parties are described in this judgment as arrayed in the suit.

6.      Mr. Basavaprabhu S. Patil, the learned senior counsel  appearing for the appellants mainly contended that the High Court has failed to note that the plaintiff himself had never pleaded a case of relinquishment of the share by the first defendant in the suit property and what was pleaded in the plaint was that he had succeeded to the property of his mother  absolutely and his father namely the first defendant has consented before the revenue authorities for change of name in the Katha in favour of the plaintiff in respect of the suit schedule property and thus the first defendant had acquiesced to the fact of the entire suit property being put in the name of the plaintiff and according to the learned counsel the mutation entry can never be considered as relinquishment of right or title and the High Court has committed a serious error in accepting the case of the plaintiff and in support of his submissions relied on the decision of this Court in Balwant Singh and another vs. Daulat Singh (Dead) by Lrs. And ors. [(1997) 7 SCC 137].

7.      Per contra the learned Senior counsel appearing on behalf of the respondents contended that pursuant to the statement made by the 1^st  defendant to the Revenue Authorities, the entire suit property was put in the name of plaintiff, by effecting mutation entry in Katha and revenue records and thus the 1^st  defendant, by his conduct had acquiesced to the said fact, as rightly held by the High Court. Alternatively the learned senior counsel contended that even if this Court holds in law that the 1^st  defendant continues to be the title holder of half of suit property as class-I heir of deceased Guramma, in view of special circumstances, the justice of the case does not require interference or the relief could be moulded in a different fasion. In support of his submission he relied on Taherakhatoon (D) By Lrs. Vs. Salambin Mohammad (1999) 2 SCC 635 and Chandra Singh & Ors. Vs. State of Rajasthan & Anr. (2003) 6 SCC 545).

8.    We considered the rival contentions. There is no dispute in the factual matrix. Guramma was the first wife of 1^st  defendant and the plaintiff was their only son and suit property was purchased by Guramma by Exh. P-1 sale deed dated 14.11.1959 and the property stood in her name in revenue record. The plaintiff was born on 1.10.1965 and Guramma died on 20.1.1966. As per Section 15 of the Hindu Succession Act, the husband and the son of deceased Guramma, namely 1^st defendant and the plaintiff, being class-I heirs succeeded to the suit property. As per Exh. P-8, Katha of suit property was changed to the name of plaintiff from his mother on 9.1.1990 and the endorsement therein made by the Tahsildar reveals that the 1st defendant accepted the mutation of entry in the name of the plaintiff, being their only son and on the basis of  the said declaration, the mutation was effected and it was not challenged. Exh. D-10 is the RTC extract covering the period from 1989 to 1992 and the plaintiff was shown as the owner of  the suit property.

9.      As rightly contended by the learned senior counsel appearing for the appellants, 1^st  defendant did not relinquish or release his right in respect of the half share in the suit property at any point of time and that is also not the case pleaded by the plaintiff. The assumption on the part of the High Court that as a result of the mututation, 1^st  defendant divested himself of the title and possession of  half  share  in suit property is wrong. The mutation entries do not convey or extinguish any title and those entries are relevant only for the purpose of collection of land revenue. The observations of this Court in Balwant Singh’s case  (supra) are relevant and are extracted below :

a)   “21. We have considered the rival submissions and we are of the view that Mr Sanyal is right in his contention that the courts were not correct in assuming that as a result of Mutation No. 1311 dated 19-7-1954, Durga Devi lost her title from that date and possession also was given to the persons in whose favour mutation was effected. In Sawarni  vs. Inder Kaur (1996) 6 SCC 223, Pattanaik, J.,speaking for the Bench has clearly held as follows: (SCC p. 227, para 7)

b)   “7. … Mutation of a property in the revenue record does not create or extinguish title nor has it any presumptive value on title. It only enables the person in whose favour mutation is ordered to pay the land revenue in question. The learned Additional District Judge was wholly in error in coming to a conclusion that mutation in favour of Inder Kaur conveys title in her favour. This erroneous conclusion has vitiated the entire judgment.”

c)   22. Applying the above legal position, we hold that the widow had not divested herself of the title in the suit property as a result of Mutation No. 1311 dated 19-7-1954. The assumption on the part of the courts below that as a result of the mutation, the widow divested herself of the title and possession was wrong. If that be so, legally, she was in possession on the date of coming into force of the Hindu Succession Act and she, as a full owner, had every right to deal with the suit properties in any manner she desired.”

  In the circumstances, we are of the opinion that the High Court erred in concluding that the 1^st  defendant by his conduct had acquiesced and divested himself of title of his half share in suit property and the said erroneous conclusion is liable to be set aside.

10.          The learned senior counsel appearing for the respondent/plaintiff strenuously contended that the 1^st defendant is now 90 years old and owns lots of properties as enumerated in the list furnished by him before this Court and the plaintiff is his only son through first wife and litigation pertains to only one property namely the suit property and though this Court gave ample opportunities, no settlement could be arrived at between the parties and considering the special circumstances, this Court in exercise of jurisdiction under Article 142 of the Constitution may not interfere with the High Court judgment, which will do complete justice to the parties and relied on the decisions cited supra.

11.          We are not in a position to appreciate this contention. The High Court misdirected itself and committed  serious error warranting our interference with the impugned judgment.

12.          In the result the impugned judgment and decree of the High Court are set aside and the judgment and decree of the lower appellate court is restored and the appeals are allowed in the above terms. No costs.

…………………………….J.

(V. Gopala Gowda)

…………………………….J.

(C. Nagappan)

New Delhi;

April 17 , 2015

Beneficial Interest between Nominee and Legal Heirs

In view of the clear legal position, it is made abundantly clear that the amount in any head can be received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with law of succession governing them. In other words, nomination does not confer any beneficial interest on the nominee.                                        (Para 19)

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.809 OF 2002

Shipra Sengupta .. Appellant

Versus

Mridul Sengupta & Others .. Respondents

J U D G M E N T: Dalveer Bhandari, J.

1.     This appeal is directed against the judgment dated 12.9.2000 passed by the High Court of Madhya Pradesh at Jabalpur in Miscellaneous Civil Case No. 1209 of 1998.

2.      The appellant is the wife of Late Shri Shyamal Sengupta who was a Head Clerk in the State Bank of India, Bhopal, Madhya Pradesh. He was initially an employee of the Imperial Bank of India and after constitution of the State Bank of India under the State Bank of India Act, 1955, the business of the Imperial Bank of India was taken over by the State Bank of  India as per the provisions of the State Bank of India Act, 1955. Shyamal Sengupta died issueless on 8.11.1990 at Bhopal. He left behind him his widow Smt. Shipra Sengupta, his mother Niharbala Sengupta, his brothers Pushpal Sengupta and Mirdul Sengupta.

3.      It may be pertinent to mention that Shyamal Sengupta was unmarried at the time when he joined the service of the bank and he nominated his mother as his nominee.

4.      The appellant herein Smt. Shipra Sengupta filed an application under section 372 of the Indian Succession Act, 1956, in which she claimed that she was entitled to her share of insurance, gratuity, public provident fund etc. etc. According to the appellant, her claim was based on the principle that any nomination made by Shyamal Sengupta prior to his marriage would automatically stand cancelled after his marriage.

5.      The appellant submitted that after the death of her husband both, she and mother of the deceased Niharbala Sengupta, were Class-I heirs under the schedule of the Hindu Succession Act, 1956 and consequently she was, therefore, equally entitled to succeed to the property along with her mother-in-law Niharbala Sengupta.

6.      The Trial Court granted succession certificate to the appellant and the mother of the deceased in respect of total amount of life insurance, gratuity, public provident fund and general provident fund due to Shyamal Sengupta. The Trial Court held that both of them shall be entitled to half share in the aforesaid amounts due to Shyamal Sengupta from different heads. As to rest of the items mentioned in paragraph 6 of the application, the Trial Court held that the appellant alone was entitled to a succession certificate.

7.      In an appeal jointly filed by the mother of the deceased Niharbala Sengupta and brother of the deceased Pushpal Sengupta, the Appellate Court rejected the contention of the applicants that on account of nomination made in favour of Niharbala Sengupta, in respect of the aforesaid items, the appellant Smt. Shipra Sengupta would not get any share in the amount credited or payable to Shyamal Sengupta. The learned District Judge held that the nomination did not confer any beneficial interest in the amount due towards life insurance, gratuity, public provident fund and general provident fund.

8.      The learned District Judge relied on the decision of this Court in Smt. Sarbati Devi & Another v. Smt. Usha Devi (1984) 1 SCC 424 and on Om Wati v. Delhi Transport Corporation, New Delhi & Others 1988 Lab. I.C. 500 and modified the order of the Civil Judge in respect of other items holding that the mother of the deceased Niharbala Sengupta being the Class-I heir under the Hindu Succession Act, 1956 was equally entitled to the half share along with the appellant Smt. Shipra Sengupta. Accordingly, the learned District Judge modified the order passed by the Civil Judge and directed him to issue succession certificate in accordance with the modifications made by him in the order of the Civil Judge.

9.      Niharbala Sengupta and Pushpal Sengupta, aggrieved by the order of the District Judge, filed a Civil Revision before the High Court. During the pendency of the said civil revision, Niharbala Sengupta died and her other son Mirdul Sengupta was substituted in her place on the basis of an alleged Will executed by her prior to her death in favour of Mirdul Sengupta. The Will expressly dealt with the amount to which she was entitled to receive as a consequence of grant of a succession certificate.

10.          Pushpal Sengupta did not challenge the Will by which he was affected. Therefore, the position that emerged was that the court must presume for the purpose of this revision that the Will is validly executed in favour of Mirdul Sengupta.

11.          In the impugned judgment, the High Court relied on the judgment of Sarbati Devi (supra) and observed that the nomination did not confer any beneficial interest on the nominee. The High Court passed the following order:

“(i) The amount of General Provident Fund deposited in the name of Shyamal Sengupta declaring that Mirdul Sengupta shall be entitled to entire sum due to Shyamal Sengupta together with interest to which he is entitled as per rules of deposit by the Bank till he is paid in full.

(ii) So far as rest of the items mentioned in paragraph 6(a) of the application under section 372 are concerned it is declared that after the death of Niharbala Sengupta, Mirdul Sengupta is entitled to succession certificate along with Shipra Sengupta. Both of them shall be entitled to 1/2 share each as directed by the District Judge.

(iii) The Civil Judge shall also direct non-applicant No. 2 or any other authority to pay the interest on the amount mentioned in paragraph 2 till that is paid to them at the usual rate of 9% from the date of death of Shyamal Sengupta or the usual rate available to the depositor/subscriber whichever is less.”

12.           The appellant, aggrieved by the impugned judgment of the High Court, preferred this appeal. The following questions have been raised by the appellant in this appeal:

“I. Whether nomination of mother by a member of  a Provident fund governed by the Imperial Bank of India Employees’ Provident Fund Rules before his marriage confers ownership on the nominee and destroys right of succession of the widow under Succession Act?

II. Whether nomination only indicates the hand which is authorized to receive the amount on the payment of which trustees of the provident fund get a valid discharge?

III. Whether the provident fund can be claimed by the heirs of the member of the provident fund in accordance with the law of succession governing them?

IV. Whether it was proper for the High Court to rely upon a forged and fabricated Will which was not even signed by Niharbala?

V. Whether it was proper for the High Court to accept the alleged Will on record in its revisional Jurisdiction, in absence of any application to that effect?

VI. Whether the High Court was entitled to take Will on record without giving fresh opportunity to lead evidence on it?

VII. Whether the High Court was right in interpreting and relying upon section 3(2) of  Provident Fund Act, 1925?”

13.          The appellant submitted that according to the settled legal position crystallized by the judgment of Sarbati Devi (supra), the principle of law is that the nomination is only the hand which accepts the amount and a nomination does not confer any beneficial interest in the nominee.

14.           In Sarbati Devi (supra), this Court has laid down that a mere nomination does not have the effect of conferring to the nominee any beneficial interest in the amount payable under the life insurance policy, on death of the insurer. The nomination only indicates the hand which is authorized to receive the amount on payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession.

15.           The appellant also placed reliance on the judgment of  this Court in Vishin N. Khanchandani & Another v. Vidya Lachmandas Khanchandani & Another (2000) 6 SCC 724, wherein this Court held that the law laid down in Sarbati Devi (supra) holds the field and is equally applicable to the nominee becoming entitled to the payment of the amount on account of National Savings Certificates received by him under Section 6 read with Section 7 of the Act who in turn is liable to return the amount to those in whose favour the law creates a beneficial interest, subject to the provisions of subsection (2) of Section 8 of the Act.

16.            Learned counsel for the appellant also placed reliance on a Division Bench judgment of the Delhi High Court in Ashok Chand Aggarwala v. Delhi Administration & Others (1998) VII AD (Delhi) 639. This case related to the Delhi Cooperative Societies Act. The High Court while following Sarbati Devi case (supra) held that it is well settled that mere nomination made in favour of a particular person does not have the effect of conferring on the nominee any beneficial interest in property after the death of the person concerned. The nomination indicates the hand which is authorized to receive the amount or manage the property. The property or the amount, as the case may be, can be claimed by the heirs of the deceased, in accordance with the law of succession, governing them.

17.          The controversy involved in the instant case is no longer res integra. The nominee is entitled to receive the same, but the amount so received is to be distributed according to the law of succession.

18.          In terms of the factual foundation laid in this case, the deceased died on 8.11.1990 leaving behind his mother and widow as his only heirs and legal representatives entitled to succeed. Therefore, on the day when the right of succession opened, the appellant, his widow became entitled to one half of the amount of the general provident fund, the other half  going to the mother and on her death, the other surviving son getting the same.

19.          In view of the clear legal position, it is made abundantly clear that the amount in any head can be received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with law of succession governing them. In other words, nomination does not confer any beneficial interest on the nominee. In the instant case amounts so received are to be distributed according to the Hindu Succession Act, 1956. The State Bank of India is directed to release half of the amount of general provident fund to the appellant now within two months from today along with interest.

20.          The appeal filed by the appellant is accordingly allowed and disposed of, leaving the parties to bear their own costs.

……….…………………………….J.

(Dalveer Bhandari)

..……..….………...……….…….J.

(Dr. Mukundakam Sharma)

New Delhi;

August 20, 2009.

High Court cannot quash complaint u/s 482 CrPC accepting factual defence which are disputed one.

Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of  unimpeachable character 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 harassment to the accused. 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 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 genuine. The courts cannot also lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable.’

                                                                                                    (Para 11)

Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 471 OF 2015

(Arising out of SLP (Crl) No. 5295 OF 2014)

HMT Watches Ltd.                                                                                 ... Appellant

Versus

M.A. Abida & Anr.                                                                            … Respondents

WITH

CRIMINAL APPEAL NO. 472 OF 2015

(Arising out of SLP(Crl) No. 5800 OF 2014)

J U D G M E N T: PRAFULLA C. PANT, J.

1.     These appeals are directed 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 criminal 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), Kochi; and C.C. Nos. 1208, 1209, 1210,1211 and 1212 of 2007, pending in the Court of Judicial First Class Magistrate (Court No. III), Kochi. 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”).

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 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, dishonored by bankers with the endorsement – “payment 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 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 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 (RD) of watches manufactured by the appellant. The business with the appellant 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 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. 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 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 out.

7.      Section 138 of the Negotiable Instruments Act, 1881 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 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 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 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:

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 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 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 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 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 other liability.”

8.      Section 139 of the Negotiable Instruments Act, 1881provides that there shall be a presumption in favor of holder of a cheque as to the debt or liability. It reads as under:

“139. Presumption in favour of holder. - 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, 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.I. Act. It reads as under:

“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 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.”

10.              Having heard learned counsel for the parties, we are 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 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 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 un complied, even though the respondent no.1 (accused) had admitted that 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 controverted by the complainant before it.

11.              In Suryalakshmi Cotton Mills Limited v. Rajvir Industries Limited and others  (2008) 13 SCC 678  , this Court has made following observations explaining the parameters of  jurisdiction 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 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 in the matter.

xxx                                xxx                                                  xxx

22. Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of  unimpeachable character 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 harassment to the accused. 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 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 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 Limited v. Poduru Vidya Bhushan and others (2011) 13 SCC 88 , this Court expressed its views on this point as under:-

“12. At the threshold, the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged the respondents of the said liability at the threshold. Unless 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 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 court.

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.I. Act are not made out. We are not inclined to accept the 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 Gujarat (2014) 9 SCALE 437 , this Court has already held that 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 N.I. Act. Earlier also in Modi Cements Ltd. vs. Kuchil Kumar Nandi (1998) 3 SCC 249 , this Court has clarified that if a cheque is dishonoured because of stop payment instruction even then offence punishable under Section 138 of N.I. Act gets attracted.

14.                 For the reasons as discussed above, we find that 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 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.

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 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.

………………….....…………J.

[Dipak Misra]

.………………….……………J.

[Prafulla C. Pant]

New Delhi;

March 19, 2015