Allowed

A.C. Narayanan v. the State of Maharashtra

Bombay HC7 Aug 2008WP/1185/1998

Case brief

AI extract

What is this about?

The High Court of Judicature at Bombay, in a criminal writ petition, exercised power under section 482 CrPC to quash criminal proceedings under sections 406 and 420 IPC. The court held that the allegations only amounted to a breach of promise following the dishonour of a settlement cheque, without establishing fraud or dishonest intent required for criminal offences.

What did the court decide?

Criminal proceedings under sections 406 and 420 IPC were quashed, and a consequential order was directed to be passed by the Magistrate to release the passport.

A.C. Narayanan Vs the State of Maharashtra — Cheque Dishonour | Bombay HC (2008)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.1185 OF 1998.

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A.C. Narayanan. ..Petitioner.

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versus

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1.The State of Maharashtra. 2. Mr. Uday Narayan Ranade.

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..Respondents.

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Mr. G.S. Hegde with Mr.C.M. Lokesh, i/b. M/s. Hegde & Associates, for the Petitioner. Mr. D.P.Adsule, APP, for the Respondent-State. None for the Respondent No.2.

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CORAM : A.S. OKA, J. DATE : 7TH AUGUST,2008.

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ORAL JUDGMENT :

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1.	On 7th August 2008, this	Writ	Petition was
called	out for final hea	ring.	The learn	ed	Counsel
appearing	for the Petition	er	pointed out	that	a
specific	notice of the date	fix	ed in the	Petition	has
been	served to the Advo	cate	appearing for	the	second
Respondent	(original Complainant).		None	appeared	for
the s	econd Respondent.	The	submissions	of	the
learned	Counsel appearing	for	the Petiti	oner	were
heard.	As none appeared	for	the second	Res	pondent,
Judgment	was not dictated	on	earlier date	and	the
Petition	was kept today.	W	hen the	Petition	was
called	out today, none	a	ppears for	the	second

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Respondent. Hence, I proceed to deliver the

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Judgment.

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2. The	second Respondent file	d a private
complaint alleg	ing commission	of offence under
sections 406 and	420 of the	Indian Penal Code against
the Petitioner.	The second	Respondent claimed that
he was the	Constituted Attorn	ey of one Mr.Avinash T.
Bal, Manager	of "Kaustubh En	terprises HUF" and Mrs.
Sonia Avinash	Bal, the	owner of "Business
Enterprises".	It is stated	that the Petitioner was
carrying on busi	ness in the	name of Ravi Investments.
A case made	out in the	complaint is that the
Petitioner offered	Mr. Avinash	Bal to take part in
his proposed	real estate	division of M/s.Harvest
Financial Limited.	It is alle	ged that the said Mr.
Avinash Bal	spent substantial	amount and later on it
was discovered	that the project	and promises of the
Petitioner were	unrealistic.	According to the case
of the seco	nd Respondent, as	the said Mr. Avinash
Bal decided	to dis-associate	himself from the
Petitioner, the	accounts were	settled and a
memorandum of	understanding wa	s drawn. It is stated
that the P	etitioner gave diff	erent cheques to Mr.
Avinash Bal	aggregating to	Rs.1.5 crores. It is
stated that as	the cheques	issued by the Petitioner

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were dishonoured, there were four compl	aints filed by
Mr. Avinash Bal against the Petitione	r under section
138 of the Negotiable Instruments	Act, 1881
(hereinafter referred to as "the said	Act of 1881").
The case made out in the complaint is	that the second
Respondent was repeatedly approached	by the
Petitioner for settlement. It is stated	that the
Petitioner also approached Mr. Avinash	Bal and his
Advocates and offered to settle	the dispute.
Therefore, meetings were held in which	the Petitioner
offered to pay the entire amount. At	that time, a
cheque in the sum of Rs. 15 lacs was	issued by the
Petitioner towards part payment of the	amount payable
to Mr. Avinash Bal. The said	cheque was
dishonoured. It is alleged in the co	mplaint that the
cheque in the sum of Rs.15 lacs was is	sued by the
Petitioner in discharge of the liability	which was
the subject matter of the cases under the	said Act of
1881 pending before the learned Magistrate.	It was
alleged that the Petitioner has	shown gross
disrespect to the Court by allowing the	cheque to be
dishonoured. The second Respondent	alleged that the
remedy of filing a case under section 13	8 of the said
Act of 1881 would not be effective.	An allegation
was made in the said complaint of	committing offences

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of	criminal breach of t	rust an	d cheating.	An	order
was	passed by the	learned	Magistrate in	the	said
complaint	directing inve	stigation	under		section
156(3)	of the Code of	Crimi	nal Procedure,	1973.	The
Police	registered an	offence	against the		Petitioner
punishable	under sections	420	, 406 of	the	Indian
Penal	Code. A charge	sheet	was filed by	the	Police
after	carrying out the	investi	gation. The	pra	yer in

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this Petition is for quashing the proceeding of the

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criminal case.

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The learned Counsel appearing for the

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Petitioner	submi	tted	that	goin	g	by	t	he	ave	rments	made
in the	comp	laint	and	by		taking	sta	te	ments	recorded	by
the	Police	for	its	face		value,	neit	her		an	offence
under	section	406	nor	under		section	4	20	was	made	out.
He	submitted	that	mer	ely	b	ecause	a	ch	eque	issued	on
the	basis	of	settl	ement		between		th	e	parties	was
dishonoure	d,	that	by	itsel	f	will	no	t	attrac	t	either
section	406	or	section	4	20	of	the		Indian	Penal	Code.
He	invited	my	attenti	on	to	the	ter	ms	and	co	nditions
of	the	memoran	dum	of		understand	ing		executed		between
the	Petitioner	and	Mr.		A	vinash	Bal.		He	pointed	out
that	the	com	plaints	filed		by	the		second	Res	pondent
under	section	138	of	the	sa	id Act	of		1881	which	are

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referred to in the complaint subject matter of this petition were dismissed by this Court. He therefore, submitted that it is a fit case to exercise power

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under section 482 of the Code of 1973 for quashing

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the proceedings.

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I have carefully considered the submissions. According to the case made out by the second Respondent, during the course of talks of settlement which took place after filing of the cases under section 138 of the said Act of 1881, the Petitioner issued a cheque in the sum of Rs.15 lacs in favour of the second Respondent towards the part payment of the amount payable by him. Only material averments made

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in the complaint are in paragraph nos. 8 and 9 which

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reads thus :-

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"8. I submit that grass disrespect has been shown by the Accused to the Court by handing down a cheque of Rupees Fifteen Lakhs unbackedly equal sum for its encashment as a part of subject matter before the Court. It is distressing that such an irresponsible action part of the Accused is beyond correction. It would not be effective remedy

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to file a case u/s. 138 of the Negotiable Instruments Act, 1881 against within a case of Negotiable Instruments Act, 1881. This is similar to a man suffering lift imprisonment for murder committing another murder during his sentence term.

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In the above circumstances, the Accused

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has clearly committed criminal breach of

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trust and cheating which are penal cognizable

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offences and has rendered himself liable for

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punishment for the same."

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The statement of the second Respondent was

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recorded by the Police during the investigation. In

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the said statement, the second Respondent stated thus

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	" I	filed	four	cases	under section	138	which
are p	ending	in		the cou	rt of	Met	ropolitan
Magistrate,	22nd	Co	urt	Room,	Andheri.		During
the	pendency	of		the	said cases,		Shri
Narayanan	ex	pressed		his	desire f	or	a
compromise,	ti	me	and	again.	During	one	such
occasion,	we		had	a	meeting with		Shri

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	Narayanan and	as	agreed therein	Shri
	Narayanan handed	over us	a cheque	for
	Rs.15,00,000/- (Ru	pees fifteen	lakhs only	) in
	lieu of the	amount due	in the said	cases.
	Reposing faith	in him, w	e decided to	accept
	the cheque.	At that	time Shri	Narayanan
	assured that	the cheque	would be	honoured.
	Believing his	word, we	deposited the	cheque
	with Samrao	Vitthal Ban	k, Vile Parle	(East).
	But this cheq	ue also bou	nced. This	ensured
	us that Shri	Narayanan	had given us	this
	cheque with	the purpose	of cheating	us."
Further	the statement	of the s	econd Respondent	was
recorded	in which	there is a	vague allegation	made

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that right from the beginning the Petitioner acted

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with an intention of cheating.

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If the averments made in the complaint and in

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the	state	ment	are	taken	fo	r its	face valu	e, an
offence		under	section	420	was	surely	not made	out as
it	is	not	asserted	that	an	intention	to deceive	was
in	exi	stence	at th	e tim	e w	hen in	ducement was	offered
by	the	P	etitioner.		Unless	the	second	Respondent
alleges		that	the	Petition	er-Accu	sed ha	d a	dishonest

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intention at the time of when the Petitioner agreed to part with a sum of Rs.15 lacs, the non-payment of the amount would not amount to an offence under section 420 and it may only amount to a breach of promise. In his complaint and the statement before

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the Police, the aforesaid ingredients are totally

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absent.

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7.	I	n so far as	alleged com	mission	of offenc	e of
breach	of	trust	is conc	erned,	the	law	is very	well
settled	that	every	breach	of	trust	may	not result	in
penal	offence.	A	n act	of	breach	of	trust involves	a

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civil wrong, but a breach of trust with mens rea

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gives rise to a criminal prosecution as well.

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8.			A	s stat	ed earlier	, the onl	y allegation made
against			the	Petit	ioner	is	that the cheque issu	ed	by
him		in	the	sum	of	Rs.15	lacs was dishonoured	and	he
has		sh	own	dis-	respect	to	the Court in		which
complai	nts		und	er	section	138	of the said Act	of	1881
were		pe	nding.		Thu	s, no	ingredients of an		offence
under			section	406	of	the	Indian Penal Code	were	made
out	both		in	the	compl	aint	as well as in th	e	statement
of	t	he	seco	nd	Respon	dent.	Thus, on plain	readi	ng of
the		a	verments		made	in	the complaint and t	he	material

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on record, no case is made out, much less, a prima-facie case of offence under sections 406 and

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420 of the Indian Penal Code. Hence, a case is made

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out for quashing the criminal proceedings.

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Rule is accordingly made absolute in terms of prayer clause (a). As a consequence of grant of relief in terms of prayer clause (a), the learned

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Magistrate will pass consequential order of releasing

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the passport.

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[ A.S.OKA, J.]

A.C. Narayanan v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

A.C. Narayanan v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

What the court decided

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