Allowed

M/S Commander Poultries etc. v. M/S Singla Trading Co.

Punjab & Haryana HC10 Jul 2012CRM-M/19376/2008

Case brief

AI extract

What is this about?

This petition sought to quash criminal proceedings under Section 138 of the Negotiable Instruments Act. The High Court held that since the cheque amount was paid during the civil suit and the offence is now compoundable, continuing the criminal trial would be an abuse of process. The petition was allowed and proceedings quashed.

What did the court decide?

Complaint No.79/2 dated 5.3.2007, summoning order dated 9.3.2007, notice of accusation dated 23.4.2008 and all subsequent proceedings were quashed.

M/S Commander Poultries etc. Vs M/S Singla Trading… — Cheque Dishonour | Punjab & Haryana HC (2012)

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Criminal Misc. No.M-19376 of 2008 (O&M)

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In the High Court of Punjab and Haryana at Chandigarh

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Criminal Misc. No.M-19376 of 2008 (O&M) Date of decision: 10.7.2012

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M/s Commander Poultries and others

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......Petitioners

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Versus

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M/s Singla Trading Company

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.......Respondent

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CORAM: HON'BLE MRS. JUSTICE SABINA

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Present: Mr.Baldev Singh, Sr. Advocate with Mr. Deepender Singh, Advocate, for the petitioners.

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Mr.Daldeep Singh, Advocate, for the respondent.

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SABINA, J.

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This petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 for quashing of complaint No.79/2 dated 5.3.2007 (Annexure P-1) titled as M/s Singla Trading Company vs. M/s Commander Poultries and others under Section 138 of the Negotiable Instruments Act, 1881 (for short- “ the Act”); summoning order dated 9.3.2007 (Annexure P-2); notice of accusation dated 23.4.2008 (Annexure P-3) and all the subsequent proceedings arising therefrom.

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The contents of the complaint (Annexure P-1) read as

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under:-

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Criminal Misc. No.M-19376 of 2008 (O&M)

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“That complainant is the Proprietor of M/s Singla Trading Company Panchkula Road Barwala. The company of complainant’s deals in supplying the Poultry Feeds etc. whereas the accused have a poultry farms at the above stated address. The accused have purchased the poultry feeds from the trading company of complainant. On 19.4.2006, the accused purchased poultry feeds from complainant vide Bill No. 603, and to make the payment of the same, issued two cheques bearing Nos. 118864 & 118865 both dated 27.11.2007 of worth . 80,000/- and 27,621/- respectively, payable at UBI Bank Sector-8, Panchkula. The accused have further purchased the poultry feeds from complaint on 26.4.2006 vide bill No. 604 and to make the payment of the poultry feed accused have issued cheque bearing No. 118867 dated 27.11.2006 of worth . 1,28,947/- payable at UBI Bank Sector-8 Panchkula. Therefore accused again purchased poultry feeds from complainant on 28.4.2006 of worth `. 44,908/- payable of the same. While issuing the cheques in favour of complainant, the accused have assured that the cheques will be honoured on presentation to the bank.

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That as per assurances of the accused, the complainant presented the cheques in the bank for encashment but all the four cheques were dishonoured with the remarks “Insufficient Funds” vide bank memo

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Criminal Misc. No.M-19376 of 2008 (O&M)

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dated 21.12.2006.

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That thereafter the accused have been served with a legal notice dated 23.12.2006 requesting to make the payment of aforesaid cheques. On receipt of the legal notice, the accused contacted the complainant and requested to make the payment of . 80,000/- against cheque No. 118864 & . 27,621/- against Cheque No. 118865 and for the balance payment you had issued two cheques bearing No. 118871 amounting to . 1,28,947/dated 22.1.2007 and cheque No. 118872 amounting to . 44,908/- dated 22.1.2007 both payable at UBI Bank Sector-8, Panchkula. The accused assured the complainant that the cheques issued by the accused will be honoured definitely on the presentation.

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That as per assurances given by the accused, the complainant presented the cheques in the bank for encashment but both the cheques were dishonored with the remarks “Insufficient Funds” vide bank memo dated 5.2.2007. The complainant again served upon accused with a legal notice and requested to make the payment of cheque amount but despite that the accused failed to make the payment of cheque amount.

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That again the cheques could not be honoured due to fault on the part of accused and the accused had played a fraud upon the complainant as well as cheated complainant intentionally, as the accused have issued the

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Criminal Misc. No.M-19376 of 2008 (O&M)

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cheques with dishonest intention, knowingly that there are insufficient funds in the account of the accused.

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That complainant is legally entitled to recover/receive the cheques amount from the accused and the accused are legally bound to pay the cheques amount to the complainant.

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That the act and conduct of the accused established the deceitful means and intention of the accused that has defrauded the complainant. Under these circumstances the accused committed an offence under Section 138 of the Negotiable Instruments Act as amended upto date, by issuing the cheque in question; which was dishonoured on its presentation to the concerned bank. The accused has cheated and deceived the complainant intentionally and wilfully.

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That the present complaint is being filed within limitation as prescribed under the Act.

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That the cheque in question was handed over to the complainant by the accused at the residence of the complainant at Sector-20, Panchkula and the information regarding dishonouing of the cheque in question was received by the complainant at his residence at Panchkula and the banks of both the parties are situated at Panchkula which is within the jurisdiction of this Hon’ble Court and hence this Hon’ble Court has got the jurisdiction to entertain and try the present complaint.

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Criminal Misc. No.M-19376 of 2008 (O&M)

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That the cause of action arose in favour of the complainant and against the accused when the cheque in question was issued to the dependent by the accused and thereafter when the said cheque was dishonoured by the concerned bank on its presentation and also when the legal notice was served upon the accused to make the payment, but the accused had failed to discharge his liabilities within the stipulated period as mentioned in the notice, hence the necessity has arisen to file the present complaint.

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That the requisite court fee has been affixed on the complaint.

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It is, therefore, respectfully prayed that the accused may kindly be summoned, tried, and punished in accordance with law for the commission of offence under Section 138 of the Negotiable Instruments Act and other relevant provisions.”

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Learned senior counsel for the petitioners has submitted that the cheque amount in question has already been paid to the respondent. Hence, the continuation of criminal proceedings against the petitioners were nothing but an abuse of process of law.

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Learned counsel for the respondent, on the other hand, has submitted that on 27.11.2006 four cheques had been issued by petitioner No.1 in discharge of contractual liability. The cheques in all amounted to ` 2,81,474/-. When the said cheques were presented for encashment, they were dishonoured. Thereafter, settlement was

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Criminal Misc. No.M-19376 of 2008 (O&M)

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arrived at between the parties and 17,621/- were paid to the respondent in cash. Qua the remaining amount two cheques amounting to 1,28,947/- and 44,908/- were issued by the petitioners. However, when the said two cheques were submitted for encashment, they were dishonoured. Although the respondent had received ` 1,73, 855 qua the said cheques in civil litigation but the same were received without any prejudice to the rights of the respondent qua the complaint in question. The offence had already been committed by the petitioners under Section 138 of the Act and the payment of the amount in question during trial did not absolve the petitiones from their liability qua commission of the offence under Section 138 of the Act. In support of his argument, learned counsel has placed reliance on Rajneesh Aggarwal vs. Amit J.Bhalla (2001) 1 Supreme Court Cases 631, wherein, in para 7, it was held as under:-

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“So far as the question of deposit of the money during the pendency of these appeals is concerned, we may state that in course of hearing the parties wanted to settle the matter in Court and it is in that connection, to prove the bona fide, the respondent deposited the amount covered under all the three cheques in the Court, but the complainants counsel insisted that if there is going to be a settlement, then all the pending cases between the parties should be settled, which was, however not agreed to by the respondent and, therefore, the matter could not be settled. So far as the criminal

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Criminal Misc. No.M-19376 of 2008 (O&M)

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complaint is concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding of sentence, it may have some effect on the Court trying the offence. But by no stretch of imagination, a criminal proceeding could be quashed on account of deposit of money in the Court or that an order of quashing of criminal proceeding, which is otherwise unsustainable in law, could be sustained because of the deposit of money in this Court. In this view of the matter, the so-called deposit of money by the respondent in this Court is of no consequence.”

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After hearing learned counsel for the parties, I am of the opinion that the present petition deserve to be allowed.

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In the case of State of Haryana vs. Bhajan Lal , , 1992 Supp(1) Supreme Court Cases 335 , the Apex Court has held as under:-

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“The following categories of cases can be stated by way of illustration wherein the extraordinary power under Article 226 or the inherent powers under Section 482, Cr.P.C. Can be exercised by the High Court either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently chennelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein

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Criminal Misc. No.M-19376 of 2008 (O&M)

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such power should be exercised:-

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(1) Where the allegations made in the first information report or the complainant/respondent No.2, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

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(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1)of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

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(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do no disclose the commission of any offence and make out a case against the accused.

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(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a Police Officer without an order of Magistrate as contemplated under Section 155(2) of the Code.

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(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

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Criminal Misc. No.M-19376 of 2008 (O&M)

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(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted)to the institution and continuance of the proceedings and/or where there is specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of aggrieved party.

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Where a criminal proceeding is manifestly attended with mala fide and/or where the proceedings is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

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We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.”

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Facts are not in dispute in the present case. The respondent had filed the complaint (Annexure P-1) against the petitioners under Section 138 of the Act qua dishonour of cheques bearing No.118867 dated 27.11.2006 amounting to 1,28,947/and 118872 dated 22.1.2007 amounting to 44,908/- issued by the

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Criminal Misc. No.M-19376 of 2008 (O&M)

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petitioners in favour of the respondent. When the said cheques were presented for encashment they were dishonoured with the remarks “Insufficient funds”, vide bank memo dated 5.2.2007. The respondent filed a civil suit for recovery of the cheque amount in question i.e. ` 1,73,855/- along with interest. Copy of the plaint of the civil suit filed by the respondent has been placed on record as Annexure P-6. During the pendency of the suit, payment of the cheque amount was made to the respondent and following order was passed on 5.11.2007 (Annexure P-7):-

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“Power of Attorney on behalf of defendant No. 3 has been fled today. Shri Somnath, SPA as referred above has given the separate statement that he is ready to accept the Draft No. 014502 dated 22.9.2007 of amount of 1,73,855/- from the defendants and in view of this has withdrawn the case. Learned counsel for the plaintiff has vide his separate statement stated that he has no objection on the release of Draft No. 014502 dated 22.9.2007 of amount 1,73,855/- of the plaintiff. In view of the above statement, the suit of the plaintiff is dismissed being withdrawn. The draft as referred above may be released to the plaintiff against proper receipt. Photocopy of the draft be retained on the file. File be consigned to the record room, after due compliance.”

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The statement of Somnath, Special Power of Attorney holder, on behalf of the respondent-company, before the Civil Judge (Annexure R-2) reads as under:-

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Criminal Misc. No.M-19376 of 2008 (O&M)

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“Stated that I am accepting draft No.014502 of ` 1,73,855/- of the defendant. This case of mine will have no effect on the complaint under Section 138 N.I.Act. In view of my above statement I withdraw my case. It may be consigned to the record.”

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Thus, the respondent had resorted to two remedies with

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regard to cheques in question. The respondent had filed a civil suit under Order 37 Rules 1 and 2 read with Section 151 of the Code of Civil Procedure, 1908 for recovery of ` 1,73,855/- along with interest. The said suit was dismissed as withdrawn in view of the statement made by the plaintiff as the amount in question was paid to it during the pendency of the suit. Although the plaintiff had stated in his statement that this case would not have any effect on the complaint under Section 138 of the Act but the fact remains that the complaint as well as the civil suit were filed qua the same cheques in dispute. The cheque amount has already been disbursed to the respondent. The question arises as to whether the criminal proceedings are liable to continue although the cheque amount has been paid to the complainant-respondent.

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As per the decision given by the Apex Court in Rajneesh Aggarwal's case (supra) , once the offence of dishonour of cheque has been committed then the deposit of the amount covered by the cheque during trial would not absolve the accused of the liability of offence. The said decision was given in the year 2001. At that time the offence under Section 138 of the Act was not compoundable. Section 147 of the Act was introduced by way of amendment which

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ultimately became Act 55 of 2002 making the offence under Section 138 of the Act compoundable. Section 147 of the Act reads as under:-

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“ Offences to be compoundable:- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable.” Thus, now offence under the Act is compoundable.

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In the present case, although the respondent has got the civil suit for recovery of the cheque amount in dispute dismissed as withdrawn after accepting the cheque amount in question but the respondent wants to continue with the criminal proceedings. The respondent wants to settle some other scores by wanting to continue with the criminal proceedings. The respondent cannot blow hot and cold in the same breadth. On the one hand he has accepted the entire cheque amount from the petitioners in the civil proceedings but on the other hand, he does not want to give his consent for compounding of the offence under Section 138 of the Act. Since the petitioners have discharged their entire liability arising out of the dishonouring of the cheques in question, it would not be fair to subject them to prosecution and trial for an offence under Section 138 of the Act. In view of the now changed scenario, the judgment relied upon by the learned counsel for the respondent fails to advance the case of the respondent. Hence, in the facts and circumstances of the present case, the continuation of criminal proceedings against the petitioners would be nothing but an abuse of

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Criminal Misc. No.M-19376 of 2008 (O&M)

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process of law.

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Accordingly, the petition is allowed. Complaint No.79/2 dated 5.3.2007 (Annexure P-1) titled as M/s Singla Trading Company vs. M/s Commander Poultries and others under Section 138 of the Act; summoning order dated 9.3.2007 (Annexure P-2); notice of accusation dated 23.4.2008 (Annexure P-3) and all the subsequent proceedings arising therefrom are quashed.

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(SABINA) JUDGE

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July 10, 2012 anita

M/S Commander Poultries etc. v. M/S Singla Trading Co.

Case brief

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M/S Commander Poultries etc. v. M/S Singla Trading Co.

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