Fokhoruddin Ali Ahmed V. Akbar Ali

Crl.Pet./581/2025

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Fokhoruddin Ali Ahmed filed a petition seeking to quash a complaint under Section 138 of the Negotiable Instruments Act, 1881, which alleged that he issued a cheque for Rs. 10,00,000 that was dishonored. The petitioner argued that the cheque was issued for a cash transaction exceeding Rs. 20,000, which violated Section 269 SS of the Income Tax Act, and thus, the debt was not legally enforceable. The respondent countered that the cheque was issued and the transaction was not illegal. The court dismissed the petition, emphasizing that the presumption of a legally enforceable debt under Section 139 of the N.I. Act stands unless rebutted by the accused.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 821561 (HC-GAUHATI)
• Appeal Type: Others
• Pronouncement Date: 02-12-2025
• Assessment Year: misc
• Other Referred Cases: P.C Hari Vs. Shine Varghese & Anr., K.N. Beena Vs. Muniyappan & Anr., Sanjabij Tari Vs. Kishore S. Borcar & Anr., Rangappa Vs. Sri Mohan
• Laws Referred To: Negotiable Instrument Act, 1881, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SARFRAZ NAWAZ; B LASKAR; J ABBAS
• Assessee Lawyers: S S S RAHMAN; G SARMAH; B H SHIRIN
• Keywords: Cash transaction; Cheque Dishonor; Legally Enforceable Debt; Police report; Quashing of complaint; General diary entry
• Section: 139; 271D; 269SS; 269; 138; 528

Judgement Text

"Page No.# 1/9 GAHC010106142025 2025:GAU-AS:16499 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : Crl.Pet./581/2025 FOKHORUDDIN ALI AHMED SON OF LATE INTAZUDDIN AHMED, PERMANENT RESIDENT OF VILL- BORTALOWA, P.O. DHALIGAON, P.S. KAJALGAON, DIST. CHIRANG, (BTR), ASSAM, PIN- 783385. VERSUS AKBAR ALI SON OF LATE MOHAMMAD ALI, RESIDENT OF VILLAGE BORTALOWA, DHALIGAON, KAJALGAON, CHIRANG, ASSAM, PIN-783385 Advocate for the Petitioner : MR. S S S RAHMAN, MS G SARMAH,MS B H SHIRIN Advocate for the Respondent : MR SARFRAZ NAWAZ, MS. B LASKAR,MR. J ABBAS Printed from counselvise.com Page No.# 2/9 BEFORE HONOURABLE MR. JUSTICE SANJEEV KUMAR SHARMA JUDGMENT & ORDER (CAV) 02.12.2025 1. Heard Mr. S.S.S. Rahman, learned counsel for the petitioner and Mr. S. Nawaz, learned counsel for respondent no.2. 2. This is an application under Section 528 of BNSS, 2023 has been filed by the petitioner, namely, Fokhoruddin Ali Ahmed, has prayed for quashing of the NICR Case No.02/2025, registered under Section 138 of N.I Act, 1881, pending before the learned Court of Chief Judicial Magistrate, Chirang. 3. The brief facts of the case are that a complaint case being N.I.C.R. Case No. 02/2025 was registered by the respondent against the petitioner under Section 138 of Negotiable Instrument Act, 1881 claiming enforceable liability of an amount of Rs. 10,00,000/-(Rupees Ten Lakhs Only) and the same is pending before the learned Court of Chief Judicial Magistrate, Chirang. 4. According to the learned counsel for the petitioner, the allegations made in the complaint are all false and that the petitioner has lost his SBI cheque book bearing the account number 30132028434 of Bortalowa Bazar. The loss of the Cheque book was duly reported by the son of the petitioner Shahanur Ahmed at Kajalgaon Police station and a General Diary Entry vide GDE No. 27 was registered on 15.10.2024 and in this regard the police gave a police report dated 08.04.2025, where it is clearly stated about the loss of the cheque book and the misuse of the said cheque book by the respondents and some Printed from counselvise.com Page No.# 3/9 other persons. 5. The learned counsel for the petitioner also submitted that after the loss of the cheque book bearing the account number 30132028434, an e- complaint was lodged on 04.04.2025 to the Assam Police Online Citizen Service on behalf of the petitioner by the petitioner's son, Sahanur Ahmed, as the petitioner was severely ill. 6. The learned counsel for the petitioner further submitted that the petitioner prior to the institution of the N.I.C.R. Case No. 04/2025 received a demand notice dated 21.12.2024 from one Ikramul Hoque, Advocate claiming the payment of the amount of Rs. 10,00,000/-(Rupees Ten Lakhs Only) as enforceable liability and on receipt of the demand notice dated 21.12.2024, the petitioner through his learned advocate send a reply cum legal notice to the demand notice stating that all the allegations made therein are false. The reply to the demand notice was sent on 30.12.2024. 7. The learned counsel for the petitioner further submitted that in view of Section 269 of the Income Tax Act, amounts in excess of Rs.20,000/- are required to be paid by cheque or other means but not by cash and referred to a judgment of the Hon’ble Kerala High Court in P.C Hari Vs. Shine Varghese & Anr., reported in 2025 SCC Online Ker 5535. 8. The learned counsel for the petitioner has submitted that cash transactions above Rs.20,000/- in violation of Section 269 SS of the Income Tax Act does not constitute a legally enforceable debt under the N.I Act. Therefore, the complaint deserves to be quashed. Printed from counselvise.com Page No.# 4/9 9. The learned counsel for the petitioner has also relied upon the following judgments which are as follows : i) K.N. Beena Vs. Muniyappan & Anr., reported in (2001) SCC 458 ii) Sanjabij Tari Vs. Kishore S. Borcar & Anr. in Criminal Appeal No.1755 of 2010 iii) P.C Hari Vs. Shine Varghese & Anr., reported in 2025 SCC Online Ker 5535 10. In Sanjabij Tari (Supra), the Apex Court observed that the judgment of the Court in APS Forex Services Private Limited, only says that presumption under Section 139 of the N.I Act is rebuttable and when the same is rebutted, the onus would shift back to the complaint to prove his financial capacity, more particularly, when it is a case of giving loan by cash but it nowhere states that transactions involving dishonour of cheques, in lieu of cash loans, the presumption under Section 139 of the N.I Act does not arise. 11. In K.N. Beena(Supra), it has been held that the burden of proving that a cheque had not been issued for a debt or liability is on the accused and that the Apex Court in the case of Hiten P. Dalal Vs. Bratindranath Banerjee, reported in (2001) 6 SCC 16 : 2001 SCC (Cri) 960 has also taken an identical view. 12. It is not discernible as to how the any of the aforesaid two decisions helps the petitioner. Printed from counselvise.com Page No.# 5/9 13. However, the main contention of the petitioner that cash transactions in excess of Rs.20,000/- being in violation of the Section 269 SS of the Income Tax Act cannot constitute a legally enforceable debt under the N.I Act is sought to be supported by a decision of the Kerala High Court in P.C Hari (Supra), wherein, the learned Single Judge has held that a debt arising through a legal transaction cannot be treated as an legally enforceable debt. 14. Mr. S. Nawaz, learned counsel for the respondent has referred to the decision of Sanjabij Tari (Supra), wherein, the Hon’ble Supreme Court has overruled the aforesaid decision of the Kerala High Court in P.C Hari (Supra) and as held as follows : “However, this Court is of the view that any breach of Section 269SS of the IT Act, 1961 is subject to a penalty only under Section 271D of the IT Act, 1961. Further neither Section 269SS nor 271D of the IT Act, 1961 state that any transaction in breach thereof will be illegal, invalid or statutorily void. Therefore, any violation of Section 269SS would not render the transaction unenforceable under Section 138 of the NI Act or rebut the presumptions under Sections 118 and 139 of the NI Act because such a person, assuming him/her to be the payee/holder in due course, is liable to be visited by a penalty only as prescribed. Consequently, the view that any transaction above Rs.20,000/- (Rupees Twenty Thousand) is illegal and void and therefore does not fall within the definition of legally enforceable debt' cannot be countenanced. Accordingly, the conclusion of law in P.C. Hari (supra) is set aside.” 15. The learned counsel for the respondent has also relied upon Three Judge Bench decision of the Supreme Court in Rangappa Vs. Sri Mohan, reported in (2010) 11 SCC 441, wherein, it has been held that : Printed from counselvise.com Page No.# 6/9 “Once the accused admits that the signature on the cheque is his own, Section 139 of the Act mandates a presumption that the cheque pertain to a legally enforceable debt or liability. The presumption is of a rebuttable nature and the onus is then on the accused to raise a probable defence.” 16. It has been further observed in the said judgment as follows : “14. In respect of the accused's stand that he had lost a blank cheque bearing his signature, the High Court noted that in the instructions sent by the accused to his Bank for stopping payment, there is a reference to Cheque No. 0886322 dated 20-7-1999. This is in conflict with the complainant's version wherein the accused had given instructions for stopping payment in respect of the same cheque, albeit one which was dated 8-2-2001. The High Court also noted that if the accused had indeed lost a blank cheque bearing his signature, the question of his mentioning the date of the cheque as 20-7-1999 could not arise. At a later point in the order, it has been noted that the instructions sent by the accused to his Bank for stopping payment on the cheque do not mention that the same had been lost. However, the correspondence does refer the cheque being dated 20-7-1999. 26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally Printed from counselvise.com Page No.# 7/9 enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. 27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof.” 17. The learned counsel for the respondent has drawn the attention of the Court to a purported police report issued by the O/C, Kajalgaon P.S, wherein, it is mentioned that the son of the accused had lodged an FIR stating that his father has lost his SBI Bank cheque book on 10.04.2024 at Bortalowa Bazar, which was reported to Kajalgaon P.S and recorded under GDE No.27 dated 15.10.2024 and that six individuals including the main accused Samsul Hoque Khandakar have fraudulently used the lost cheques to file cases against his father in the CJM Court, Kajalgaon, falsely claiming cash transactions. Printed from counselvise.com Page No.# 8/9 18. The learned counsel for the respondent has pointed out the legal notice in respect of the cheque in question was issued on 21.12.2024, in which case the petitioner could not have lodged an FIR, stating therein, about Kajalgaon P.S, GDE No.27 dated 15.10.2024, alleging that the respondent herein along with others had filed cases against his father before the CJM Court, Kajalgaon, by fraudulently using the lost cheques, unless the petitioner/accused had infact issued the said cheques. 19. It is submitted that six different individuals could not have found the cheques allegedly lost by the petitioner and preferred cases under the N.I Act against the petitioner herein. 20. A legal notice was issued by the complainant/respondent dated 21.12.2024, wherein it has been specifically stated that the accused petitioner had issued a cheque bearing no.485258 dated 10.12.2024, amounting to Rs.10 Lakhs only to the complainant/respondent. The accused petitioner, has stated that in his reply dated 30.12.2024, he has stated that all the allegations are false but has not specifically denied his signature on the cheque. 21. Even during the course of arguments, at the hearing of the instant criminal petition, the learned counsel for the respondent has not denied that the signature on the cheque is that of the petitioner or that they are forged. Printed from counselvise.com Page No.# 9/9 Therefore, it is an admitted position that the petitioner had signed the aforesaid cheque and therefore, in view of the decision of the Hon’ble Supreme Court in Rangappa(Supra), the presumption under Section 139 of the N.I Act is clearly attracted and it is for the petitioner/accused to rebut that presumption by leading evidence at the trial. 22. Moreover, since the main thrust of the petitioner is on the fact that the transaction in question was conducted in cash and being in excess of Rs.20,000/- cannot constitute legally enforceable debt in view of Section 269 SS of the Income Tax Act stands demolished by the decision of the Apex Court in Sanjabij Tari (Supra), I do not see any scope for interference in exercise of powers under Section 528 BNSS. 23. In view of the above, this criminal petition is found to be devoid of merit and accordingly, stands dismissed. 24. Interim order, if any, stands vacated. JUDGE Comparing Assistant Printed from counselvise.com "