Dismissed

Bajranglal Agarwalla v. Radheshyam Singhal

Orissa HC24 Jul 2023CRLMC/141/2021

Case brief

AI extract

What is this about?

The single judge dismissed the criminal miscellaneous application challenging the order of cognizance under Section 138 NI Act. The court held that the proceeding was justified against the petitioner regarding the dishonoured cheque and refused to interfere with the order of the lower court.

What did the court decide?

CRLMC No. 141 of 2021 stands dismissed; criminal proceeding under Section 138 N.I. Act against the petitioner is not to be interfered with.

Bajranglal Agarwalla Vs Radheshyam Singhal — Cheque Dishonour | Orissa HC (2023)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

CRLMC No.141 of 2021

Bajranglal Agarwalla

…. Petitioner

Mr. S.P. Mishra, Senior Advocate & Mr. G.N. Parida, Advocate

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-Versus-

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Radheshyam Singhal

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…. Opposite Party Mr. A. Ray, Advocate

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CORAM:

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JUSTICE R.K. PATTANAIK

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DATE OF JUDGMENT:24.07.2023

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Instant petition under Section 482 Cr.P.C, is filed by the petitioner challenging the order of cognizance dated 17^th March, 2020 passed in 1.C.C. Case No. 03 of 2020 by the learned S.D.J.M., Boudh and the entire criminal proceeding arising therefrom on the grounds inter alia that the same is not tenable in law and hence, liable to be quashed in the interest of justice.

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According to the petitioner, he as the proprietor of M/s Shree Vinayak Textiles, Boudh and for the purpose of business and financial dealings, had opened an account in IDBI Bank, Boudh Branch, Boudh in the name of the proprietary concern and in order to ease day to day transactions, kept certain signed cheques without any date, amount and name of any individual therein, so that even in his absence, the same would be able to be used with no hassle in the transactions but on 2^nd January, 2018 found two of the cheques out of cheque book where missing which could not be traced out despite search and finally, FIR (Annexure-1) was lodged on 7^th January, 2018 and at the same time, the Bank was intimated vide Annexure-2 to stop payment, if in case the lost CRLMC No. 141 of 2021 Page 1 of 8

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Bajranglal Agarwalla Vrs. Radheshyam Singhal

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cheques were presented for collection. The petitioner’s case is that he received a notice under Section 138 N.I. Act from the opposite party, since one of the missing cheques was stated to have been dishonored for the alleged amount. It is claimed by the petitioner that two FIRs were lodged dated 7^th January, 2018 and 7^th January, 2020 (Annexure-4), but no action was taken thereon by the local police though an SD Entry dated 16^th January, 2020 was made, as a result of which, he was constrained to file a complaint registered as 1.C.C. Case No. 17 of 2020 for the offences under Sections 209, 211, 380, 420, 426, 428 and 469 IPC. As per the petitioner, the complaint at the instance of the opposite party alleging existence of any liability is not maintainable, especially when, the dishonored amount relates to one of the missing cheques for which FIR dated 7^th January, 2018 was lodged by him. It has been alleged that the opposite party by a practicing fraud, presented the lost cheque before the Bank for collecting the sum when there was no liability to discharge on account of any such family settlement, which is claimed and averred in the complaint. On the above ground, the criminal proceeding in 1.C.C Case No. 03 of 2020 is challenged and sought to be quashed by the petitioner and as a necessary corollary, the order of cognizance dated 17^th March, 2020.

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Heard Mr. Mishra, learned Senior Advocate appearing for the petitioner assisted by Mr. Parida, Advocate and Mr. Ray, learned counsel appearing for the opposite party.

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Reiterating the grounds, as described hereinabove, Mr. Mishra, learned Senior Advocate appearing for the petitioner submits that in absence of any such legally enforceable debt, the complaint at the behest of the opposite party is not tenable in law. It is further submitted that with a concocted story, the complaint was filed by

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CRLMC No. 141 of 2021 Page 2 of 8

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Bajranglal Agarwalla Vrs. Radheshyam Singhal

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the opposite party, who utterly failed to produce any evidence with respect to the family settlement and there is no proof to show that the petitioner had ever promised him to pay any amount on account of such settlement. It is also submitted that there has been statutory delay in filing the complaint, since the legal notice was received by the petitioner on 11^th December, 2019, which means the complaint was to be filed on or before 10^th January, 2020, however, was received by the learned court below on 21^st January, 2020, which is, hence, barred by limitation in view of Section 142(b) of the N.I. Act. While advancing the above arguments, Mr. Mishra, learned Senior Advocate relies on the following decisions, such as, Indus Airways Pvt. Ltd. and Others Vrs. Magnum Aviation Pvt. Ltd. and Others (2014) 2 SCC 539 ; John K. Abraham Vrs. Simon C. Abraham and Another (2014) 2 SCC 236 ; and Siba Shankar Sahu Vrs. Utkal Asbestos Ltd. 1994(1) OLR 165 .

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On the contrary, Mr. Ray, learned counsel for the opposite party submits that the petitioner’s alleged claimed about an FIR and case having been registered by the local police is false and misleading, inasmuch as, the written complaint is related to an SD Entry only. It is contended by Mr. Ray that such a course of action adopted by the petitioner is to wriggle out of his liability to pay the opposite party and apparently cooked up a story of cheques being lost. As regards, delay in filing the complaint and on the question of limitation, it is submitted by Mr. Ray that the opposite party received the Memo of dishonor of cheque on 25^th November, 2019, whereafter, a legal notice was sent which was within thirty days as per Section 138 N.I. Act and the same was received by the petitioner on 10^th December, 2019 followed by a reply dated 7^th January, 2020 reaching at them on 10^th January, 2020, later to which, the complaint was filed on 21^st January, CRLMC No. 141 of 2021 Page 3 of 8

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2020 within fifteen days from the cause of action. Mr. Ray lastly submits that there was a settlement in the family to make the payment and in discharge of such liability, the alleged cheque was handed over to the opposite party as against the background fact that the petitioner had siphoned off funds of the family business and had purchased Kisan Vikas Patra (KVP) for an amount of Two crore in his name and other family members, such as, wife and daughters. It is claimed by Mr. Ray that it was an amicable settlement and an agreement in the family which was arrived at in presence of witnesses after such mischief was confronted to the petitioner and in that connection, the alleged cheque was issued to the opposite party and hence, it was in relation to the said liability, but with an oblique motive, the Bank was instructed to stop payment, in the event, any such cheque was presented. With an intention to avoid making payment, cunningly the local P.S. was falsely intimated about the missing of the cheques followed by the second FIR, so therefore, it is contended by Mr. Ray that the impugned order of cognizance dated 17^th March, 2020 passed in 1.C.C. No. 03 of 2020 should not be interferred with leaving the matter to be examined by the learned court below.

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6 . The petitioner and opposite party are related as brothers. In fact, the petitioner is the eldest among the three brothers and happens to be the proprietor of M/s Shree Binayak Textiles. As per the complaint, the petitioner issued two post dated cheques duly signed for the alleged sums handed over to the other brother, namely, Satyanarayan Agrawala, since there was an amicable settlement of dispute in the family during which the former agreed to pay the respective shares as per the calculation subject to maturity of the purchased KVP. In other words, as per the complaint, the cheques were issued by the petitioner as security during the interregnum. As to the family settlement, it is a CRLMC No. 141 of 2021 Page 4 of 8

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question of fact. However, considering the complaint, it is prima facie made to suggest that on account of a family settlement and later to an agreement reached at between the parties, the petitioner had issued the alleged cheques. As according to the opposite party, the alleged cheques were issued in his individual capacity in order to clear the liability at the end. To be specific, the petitioner was alleged of having purchased KVP out of the common fund of the family without the knowledge of his brothers and when a dispute arose, it was amicably settled as according to the opposite party with an understanding that respective shares shall be paid on its maturity after two years and as security for the interim period till the collection, the post dated duly filled and signed cheques dated 21st November, 2019 and 21st December, 2019 were issued.

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7 . If the cheques were lost and said to have misutilized by the opposite party is a matter of defence. Such a ground is to be examined by the learned Court below on receiving evidence from the side of the petitioner. Admittedly, the cheque in question was in the hands of the opposite party and the same was presented before the Bank for encashment which was returned for the reason that the account is closed. In fact, the alleged cheque is dated 21^st November, 2019 and on the same day, it stood dishonored with intimation by the Bank. It is made to appear that after receipt of a legal notice on 10^th December, 2019, the second FIR was lodged by the petitioner on 7^th January, 2020. In fact, such intimation received from the petitioner was endorsed as an SD Entry, but thereafter, since no case was registered, he filed the complaint in 1.C.C. Case No. 17 of 2020. Since the cheque was not honoured but bounced back and there was non-payment of the amount, the opposite party filed the complaint on 21^st January, 2020, whereupon, the learned Court below took CRLMC No. 141 of 2021 Page 5 of 8

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cognizance of the offence under Section 138 N.I. Act vide

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Annexure-7.

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8 . The contention of the opposite party is that there was a family settlement in which the petitioner agreed to pay a share each to the brothers on maturity of KVP after two years and during that time, had issued two post dated cheques duly filled, one of which, was returned unpaid due to closure of the account. Mr. Mishra, learned Senior Advocate for the petitioner submits that there was no legally enforceable debt against the petitioner rather the opposite party managed to procure it and submitted for collection. It is contended that there is no evidence regarding family settlement and hence, the complaint cannot stand in absence of any subsisting liability or debt to attract a prosecution under Section 138 N.I. Act. In Indus Airways Pvt. Ltd. (supra) cited from the side of the petitioner, it has been held therein that the drawal of a cheque must be towards discharge of subsisting or past adjudicated liability which is sine qua non to bring an offence under Section 138 N.I. Act. In fact, in the above decision, the parties had a contract and a cheque was drawn against advance payment and it was one of the conditions of the agreement that the purchaser has to pay the amount in advance and according to the Apex Court, in such a situation, if there was breach of such condition, then the purchaser may have to make good the loss that might have occasioned to the sale but that does not create a criminal liability under Section 138 N.I. Act. In the peculiar facts and circumstances of the case, when there was contract and it has a condition to make the advance payment, any such cheque issued in that respect, the Supreme Court, in the aforesaid case, held and observed that the loss can be replenished for any such breach of the condition by enforcing a civil liability and leads to no criminal consequence. However, in the present case, drawal CRLMC No. 141 of 2021 Page 6 of 8

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and issuance of the cheque by the petitioner was as a security in case of non-payment, since there was a settlement in the family to pay the opposite party his share on maturity of KVP. As earlier stated, the family settlement whether did take place between the parties or otherwise is a question to be looked into by the learned court below. In so far as Section 138 N.I. Act is concerned, the essential ingredients are that any such cheque drawn by a person for payment to another towards discharge in whole or part of any debt or liability is returned by the Bank unpaid for any of the reasons due to insufficiency of fund, such person shall be deemed to have committed the offence. In the case of the petitioner, if there was really a family settlement and in that connection, he had issued the alleged cheque to the opposite party even if as a security as against a promise to pay him the share out of the maturity amount of KVP, in such an eventuality, when it was presented before the Bank for encashment and for collection and stood dishonored, prima facie a case under Section 138 N.I. Act may be said to have been made out. It is stated at the cost of repetition that whether a lost cheque was misutilized by the opposite party as against the claim of the petitioner said to have intimated it to the local P.S. is a defence for him to take while denying the liability. Since the basic principles in a prosecution for an offence under Section 138 N.I.Act have been restated time and again, which is taken judicial notice of, the other decisions which have been referred to and relied upon from the side of the petitioners are not discussed in detail.

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9 . As to the limitation, it is claimed that the complaint is barred by time as it was to be filed on or before 10^th January, 2020. However, in reply to the above, it has been drawn to the attention of the Court that the petitioner sent a reply dated 7^th January, 2019 to the legal notice, which was received by him on CRLMC No. 141 of 2021 Page 7 of 8

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10^th December, 2019. Such reply, as according to the opposite party, was received on 10^th January, 2020 and thereafter, the complaint under Section 138 N.I. Act was filed on 21^st January, 2020 and if that be the case, it is to be held that such an action was within limitation. Having considered the contentions from the petitioner as well as opposite party, the Court reaches at a logical conclusion that since the alleged cheque is stated to have been drawn and handed over on account of a family settlement which was in respect of a liability though as a security during the interim period till such time, the liability is discharged, the complaint so filed later to the dishonour of cheque and nonpayment of the alleged sum, the learned Court below rightly held an offence under Section 138 of the N.I. Act deemed to have been committed and consequently, passed the impugned order dated 17^th March, 2020. Having said that, the Court is of the considered view that the criminal proceeding as against the petitioner in 1.C.C. No. 03 of 2020 is justified which is not to be interferred with in exercise of its inherent jurisdiction leaving the parties to raise all such grounds available to them under law for a decision by the learned court below during and in course of inquiry and trial.

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10 . Accordingly, it is ordered.

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11 . In the result, the CRLMC stands dismissed.

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Signature Not Verified

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Digitally Signed Signed by: BALARAM BEHERABalaram Designation: Senior Stenographer Reason: Authentication Location: ORISSA HIGH COURT, CUT TACK Date: 25-Jul-2023 20:57:48

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CRLMC No. 141 of 2021 Page 8 of 8

Bajranglal Agarwalla v. Radheshyam Singhal

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Bajranglal Agarwalla v. Radheshyam Singhal

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