REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. _1180 OF 2009 ARISING OUT OF

SPECIAL LEAVE PETITION (CRIMINAL) NO. 369 OF 2006

JUGESH SEHGAL … APPELLANT

VERSUS

SHAMSHER SINGH GOGI … RESPONDENT

J U D G M E N T

D.K. JAIN, J.

Leave granted.

2. This  appeal  arises  from the  judgment  and  order  dated  13th  

December, 2005 rendered by a learned Single Judge of the  

High Court  of  Punjab & Haryana  at  Chandigarh  in  Criminal  

Miscellaneous  No.  47932-M  of  2004.  By  the  impugned  

judgment, the learned Judge, while partly allowing the petition  

preferred  under  Section  482  of  the  Code  of  Criminal  

Procedure, 1973 (for short “the Code”) seeking quashing of a  

private complaint filed by the respondent (hereinafter referred

to as “the complainant”) under Section 138 of the Negotiable  

Instruments Act, 1881 (for short “the Act”) has dismissed the  

petition qua the appellant.

3. In  order  to  appreciate  the  controversy,  a  few material  facts  

may be stated thus:

The  complainant  is  engaged  in  the  trading  of  petroleum  

products.  According to  him,  the  appellant,  his  father,  brother  and  

mother  used  to  purchase  mobile  oil  from him from time  to  time.  

According to the complainant,  on 20th November, 2000, all  four of  

them got  issued  a  cheque  bearing  No.  227739  drawn  on  Indian  

Bank,  Sonepat  in the sum of  Rs.24,92,115/-  in  discharge of  their  

liability  towards  him.  The  complainant  presented  the  cheque  for  

payment  to  his  bankers,  which  was  returned  unpaid  on  29th  

December, 2000 with the remarks “Account closed”. Thereafter, on  

17th January, 2001, the complainant got a legal notice issued to all  

the four accused asking them to pay the cheque amount. In their  

reply to the legal notice, the accused denied having any business  

dealings  with  the  complainant  as  also  the  issue  of  cheque  in  

question by any one of them. Their stand was that no such cheque  

was ever signed, issued or got issued by them at any point of time in  

favour of the complainant.

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4. Dissatisfied  with  the  response  to  the  legal  notice,  the  

complainant  filed  a  complaint  under  Section  138  of  the  Act  

against  the  afore-noted  four  persons.  Paragraph  3  of  the  

complaint, which contains the gist of complainant’s case and  

has a bearing on the issue involved in this appeal, reads as  

follows:

“That  the  complainant  handed  over  the  cheque  No.  227739,  dt.  20.11.2000  of  Indian  Bank,  Sonepat  to  its  banker  Oriental  Bank  of  Commerce,  Samalkha  for  the  collection of the amount of aforesaid cheque after about  one  month  as  requested  by  the  complainants.  But  the  Indian Bank, Sonepat returned the said cheque with the  remarks  “Account  closed”  vide  return  memo  dated  29.12.2000.  The  return  memo  dated  29.12.2000  alongwith  original  cheque  was  returned  by  the  O.B.C.,  Samalkha alongwith its forwarding letter dt. 03.01.2001 to  the  complainant  vide  which the O.B.C.,  Samalkha also  informed that a sum of Rs.3136/- has been debited in the  complainant’s  account  as  collection  charges.  After  receiving  the  return  memo  alongwith  forwarding  03.01.2001, the complainant came to know for the first  time  that  the  accused  have  issued  the  aforesaid  cheque  dt.  20.11.2000  with  a  fraudulent  intention  knowing fully well that the accused have no sufficient  amount for the encashment of the aforesaid cheque  or the said account was not in existence on that date  or the said account pertained to someone else. The  complainant  has also came to know that  all  the above  named  accused  being  a  family  members,  formed  an  unlawful group to play fraud with the public and there was  several other instances.”

           (emphasis supplied)

5. The Chief Judicial Magistrate, Panipat took cognizance of the  

complaint and vide order dated 20th September, 2003, directed  

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issue  of  notice  to  all  the  accused.  All  the  accused  put  in  

appearance; notice of accusation was given; they pleaded not  

guilty and claimed trial.  Thereafter, all  the four accused filed  

petition under Section 482 of the Code praying for quashing of  

the  complaint.  As  noted  earlier,  by  a  short  order,  the  High  

Court  has  dismissed  the  petition  qua  accused  No.1,  the  

appellant herein, on the ground that the plea of the appellant  

that  the cheque was not  issued by him involved a disputed  

question of fact which could not be gone into by the Court in  

proceedings under Section 482 of the Code. As regards the  

rest  of three accused petitioners,  the learned Judge allowed  

the petition holding that neither the cheque had been issued by  

them nor they had been shown to be vicariously liable under  

Section 141 of the Act.  Aggrieved by the said decision, the  

appellant has come up in appeal before us.

6. Learned counsel appearing for the appellant submitted that the  

High Court gravely erred in declining to exercise its jurisdiction  

under Section 482 of the Code in a case where the complaint  

ex  facie  lacked  the  basic  ingredients  of  the  offence  under  

Section 138 of the Act for which the appellant has been made  

to stand trial.  It was contended that admittedly, the cheque in  

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question,  purportedly  issued  by  the  appellant,  was  from an  

account not maintained by him with the Indian Bank but by one  

Ms. Shilpa Chaudhary and therefore,  the basic ingredient  of  

Section 138 of  the Act  was missing.  It  was also urged that  

since the said bank account had already been closed on 3rd  

November, 2000, there was no question of the subject cheque  

being issued in favour of the complainant by the appellant on  

20th November,  2000.  It  was  pleaded  that  the  filing  of  the  

complaint under the said provision is an abuse of the process  

of  the  Court  and  therefore,  the  High  Court  ought  to  have  

quashed the complaint.

7. Per  contra,  learned  counsel  appearing  on  behalf  of  the  

complainant, supported the impugned order and submitted that  

having  issued  the  cheque  to  the  complainant  under  his  

signatures by making a false representation that the account  

was  maintained  by  him,  the  appellant  had  duped  the  

complainant.  It  was  contended  that  at  this  juncture  the  

question  whether  or  not  the  cheque  was  issued  by  the  

appellant is pre-mature as the same would be determined only  

after  the  evidence  has  been  led  by  the  parties.  Learned  

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counsel thus, argued that the appellant having played a fraud  

on the complainant, does not deserve any relief.

8. It  is true that Section 138 of the Act was enacted to punish  

unscrupulous  drawers  of  cheques  who,  though  purport  to  

discharge their liability by issuing cheque, have no intention of  

really doing so, yet to fasten a criminal liability under the said  

provision,  necessary  ingredients  of  the  Section  are  to  be  

satisfied. Section 138 of the Act reads as follows:

138. Dishonour of cheque for insufficiency, etc., of  funds in the account—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 be extended to two  years,  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;

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(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 cheque 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 purposes of this section, "debt or  other liability" means a legally enforceable debt or other  liability.

9. It is manifest that to constitute an offence under Section 138 of  

the Act, the following ingredients are required to be fulfilled:

(i) a  person  must  have  drawn  a  cheque  on  an  account  maintained by him in a bank for payment of a certain amount  of money to another person from out of that account;

(ii) The  cheque  should  have  been  issued  for  the  discharge,  in  

whole or in part, of any debt or other liability;

(iii) that 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;  

(iv) that cheque is returned by the bank unpaid, either because of  

the amount of money standing to the credit of the account is  

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insufficient to honour the cheque or that it exceeds the amount  

arranged to be paid from that account by an agreement made  

with the bank;  

(v)   the payee or the holder in due course of the cheque 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 15 days  

of the receipt of information by him from the bank regarding the  

return of the cheque as unpaid;  

(vi)  the drawer of such cheque fails to make payment of the said  

amount of money to the payee or the holder in due course of  

the cheque within 15 days of the receipt of the said notice;  

10. Being  cumulative,  it  is  only  when  all  the  afore-mentioned  

ingredients are satisfied that the person who had drawn the  

cheque can be deemed to have committed an offence under  

Section 138 of the Act.

11. In the case before us, it is clear from the facts, briefly noted  

above,  and in para 3 of the complaint  as extracted,  that  on  

receipt of  the return memo from the bank, the complainant is  

stated  to  have  realized  that  the  dishonoured  cheque  was  

issued from an account which was not maintained by accused  

No.1—the appellant herein, but by one Shilpa Chaudhary. As a  

matter of fact and perhaps having gained the said knowledge,  

on 20th January, 2001, the complainant filed an FIR against all  

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the accused for offences under Sections 420, 467, 468, 471,  

406 of the Indian Penal Code (IPC). Thus, there is hardly any  

dispute that the cheque, subject matter of the complaint under  

Section 138 of the Act, had not been drawn by the appellant on  

an account  maintained  by him in  the  Indian  Bank,  Sonepat  

branch. That being so, there is little doubt that the very first  

ingredient of Section 138 of the Act, enumerated above, is not  

satisfied and consequently the case against the appellant for  

having  committed  an  offence  under  Section  138  of  the  Act  

cannot be proved.

12. The  next  question  for  consideration  is  whether  or  not  

in the light of the afore-mentioned factual position, as projected  

in  the  complaint  itself,  it  was  a  fit  case  where  the  High  

Court should have exercised its jurisdiction under Section 482  

of the Code?

13. The  scope  and  ambit  of  powers  of  the  High  Court  under  

Section 482 of the Code has been enunciated and reiterated  

by  this  Court  in  a  series  of  decisions  and  several  

circumstances  under  which  the  High  Court  can  exercise  

jurisdiction in quashing proceedings have been enumerated.  

Therefore, it is unnecessary to burden the judgment by making  

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reference to all the decisions on the point.  It would suffice to  

state that though the powers possessed by the High Courts  

under  the said provision are very wide but  these should be  

exercised in appropriate cases,  ex debito justitiae to do real  

and substantial justice for the administration of which alone the  

courts exist.  The inherent powers do not confer an arbitrary  

jurisdiction  on  the  High  Court  to  act  according  to  whim  or  

caprice.   The  powers  have  to  be  exercised  sparingly,  with  

circumspection and in the rarest of rare cases, where the court  

is convinced, on the basis of material on record, that allowing  

the proceedings to continue would be an abuse of the process  

of  the  court  or  that  the  ends  of  justice  require  that  the  

proceedings ought to be quashed. [See:  Janata Dal Vs.  H.S.  

Chowdhary  &  Ors.1, Kurukshetra  University  &  Anr.  Vs.  

State of Haryana & Anr.2 and State of Haryana & Ors.  Vs.  

Bhajan Lal & Ors.3]

14. Although in  Bhajan Lal’s case  (supra),  the court  by way of  

illustration, formulated as many as seven categories of cases,  

wherein  the  extra-ordinary  power  under  the  afore-stated  

1 (1992) 4 SCC 305 2 (1977) 4 SCC 451 3 1992 Supp (1) SCC 335

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provisions could  be exercised by the  High Court  to  prevent  

abuse of process of the court yet it was clarified that it was not  

possible to lay down precise and inflexible guidelines or any  

rigid formula or to give an exhaustive list of the circumstances  

in which such power could be exercised.  

15. The purport of the expression “rarest of rare cases” has been  

explained  very  recently  in  Som Mittal  Vs.  Government  of  

Karnataka4.  Speaking for the three-Judge Bench, Hon’ble the  

Chief Justice said:

“When the words 'rarest of rare cases' are used after the  words  'sparingly  and  with  circumspection'  while  describing the scope of Section 482, those words merely  emphasize  and  reiterate  what  is  intended  to  be  conveyed  by  the  words  'sparingly  and  with  circumspection'.  They  mean  that  the  power  under  Section 482 to quash proceedings should not be used  mechanically or routinely, but with care and caution, only  when a clear case for quashing is made out and failure  to interfere would lead to a miscarriage of justice. The  expression  "rarest  of  rare  cases"  is  not  used  in  the  sense in which it is used with reference to punishment  for offences under Section 302 IPC, but to emphasize  that the power under Section 482 Cr.P.C. to quash the  FIR or  criminal  proceedings  should  be used sparingly  and with circumspection.”

16. Bearing in mind the above legal position, we are of the opinion  

that it was a fit case where the High Court, in exercise of its  

4 (2008) 3 SCC 574

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jurisdiction  under  Section  482  of  the  Code,  should  have  

quashed the complaint under Section 138 of the Act.

17. As  already  noted  hereinbefore,  in  para  3  of  the  complaint,  

there  is  a  clear  averment  that  the  cheque  in  question  was  

issued from an account which was non-existent on the day it  

was issued or that the account from where the cheque was  

issued “pertained to someone else”. As per complainant’s own  

pleadings, the bank account from where the cheque had been  

issued,  was  not  held  in  the  name  of  the  appellant  and  

therefore, one of the requisite ingredients of Section 138 of the  

Act was not satisfied.  Under the circumstances, continuance  

of further proceedings in the complaint under Section 138 of  

the  Act  against  the  appellant,  would  be  an  abuse  of  the  

process of the Court. In our judgment, therefore, the decision  

of the High Court cannot be sustained.

18. In the result, the appeal is allowed; the impugned order is set  

aside and as a consequence, Criminal Complaint No. 275 of  

2008  pending  against  the  appellant  in  the  Court  of  Chief  

Judicial Magistrate, Panipat is quashed.

                             ……………………………………….J.   (D.K. JAIN)

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 ……………………………………..…J.                     (R.M. LODHA)

NEW DELHI;  JULY 10, 2009.

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                IN THE  SUPREME COURT OF INDIA                 CRIMINAL  APPELLATE  JURISDICTION

                                   CRIMINAL APPEAL NO. 1180 OF 2009   

  Jugesh Sehgal ..    Appellant(s)

                    Versus

Shamsher Singh Gogi ..    Respondent(s)                                                           O R D E R

 Criminal Complaint No. 275 of 2008 mentioned in paragraph 18 of  

the judgment dated July 10, 2009 be read as "Criminal Complaint No.  

59/2 of 2001".

                                   ....................J.            [ D.K. JAIN ]  

                                   ....................J.                                 [ R.M.  LODHA ]                                            NEW DELHI, JULY 16, 2009.      

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