Uncategorized SC upholds K'taka HC order, refuses to quash proceedings...

SC upholds K’taka HC order, refuses to quash proceedings against loan defaulter


New Delhi, Jun 11 (ILNS) The Supreme Court today upheld the order of the Karnataka High Court, which had dismissed the appeal of a loan defaulter and refused to quash the proceedings initiated against him under Section 138 of the Negotiable Instruments Act.

The petitioner submitted before the apex court that the disputed cheque was never issued by him, in fact, at the time of taking loan, the said respondents had mortgaged the property having value of Rs nine crore, to which the SC replied, “We do not find any error in the order passed by the HC.”

The Bench of Justice Hemant Gupta and Justice V Ramasubramanian had refused to pass any directions in the matter.

The appeal was filed against the order of the Punjab and Haryana High Court, seeking directions to quash and set aside the proceedings for the offence punishable under Section 138 of the NI Act.

The High Court in its order dated March 30, 2021, had refused to quash the proceedings, while stating that as per the prima facie, material before the court would disclose that the cheque was presented and bounced, for which notice was issued and thereafter when the demand was not complied, the cause of action arose to invoke Section 138 of the NI Act against the petitioner.

The Counsel for the petitioner before the High Court had submitted that he was under financial distress, he even produced documents of ITR to show he has suffered huge loss due to the collapse of real estate market.

The petitioner also contended that the properties were pledged in the favour of respondents and they were having civil right to seek appropriate remedy, but instead they had filed criminal proceedings, to which the court had stated that the fact as to whether the petitioner is having financial distress or not has to be considered by the Magistrate only during the course of the trial.

The petitioner’s counsel also submitted before the Court that he was not in position to appear before the Court, since he was almost on death bed by showing the medical records.

The High Court had said that the same may be presented before the Magistrate contesting with regard to the financial distress and also the health condition of the petitioner.

The High Court further held, “I do not find any merit in the petition to quash the very initiation of the proceedings against the petitioner. The Judgement, which has been quoted by the Counsel for the petitioner, is on the merits with regard to the financial distress and not at the stage of issuance of process against the petitioner. Hence, it is not a fit case to exercise the powers under Section 482 of CrPC to quash the proceedings.” ILNS/KR/RJ


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