The Karnataka High Court has reiterated that invoking provision of dishounour of cheque under the NI Act doesn't bar the aggrieved to file criminal complaint under cheating provisions of IPC.
The single-judge bench of Justice M Nagaprasanna observed that NI Act is predominantly a civil law and therefore under Section-138 only fine is imposed for legally enforcable debt but if element of mens rea is suspected, proceedings under Section 406, 420 IPC can concurrenlty be initiated for sentencing.
The petitioners who are the the Directors of a Company have questioned criminal proceedings against them for the offence punishable under Section 420 of the IPC.
The Company was engaged in the business of import. The Directors of the Companypetitioners approached the 2nd respondent/complainant seeking financial assistance to meet immediate financial needs that arose in its business. A transaction between the two took place. When the complainant tried to realize the money back with the help of cheques issued in his favour, they were returned with the endorsement “account closed”.
Accordingly, proceedings under Section 138 of the Act were initiated and at the same time, a private complaint invoking Section 200 of the Cr.P.C. alleging cheating under Section 420 of the IPC on the part of the Company and its Directors was also lodged. The learned Magistrate, on registration of the said private complaint, directed investigation under Section 156(3) of the Cr.P.C and an FIR eventually got registrered.
The Counsel for the petitioners submitted that the complainant having invoked the jurisdiction of the competent criminal Court by filing a complaint alleging offence punishable under Section 138 of the Act could not have again registered a complaint for the offence of cheating as it would amount to filing two complaints for the same offence.
He averred that doing so goes against the Apex Court decision in Mrs. Priyanka Srivastava and another Vs. State of U.P. and Others, 2015 Latest Caselaw 223 SC
Counsel for the 2nd respondent/complainant contended that invoking Section 138 of the Act will not preclude the complainant from registering a crime for offence punishable either under Section 406 or 420 of the IPC as it does amount to cheating and inducement on the part of the accused. He averred that the petitioners have to come clear in trial to get rid of the charges.
The Court summed up the issue before it as to whether the complaint invoking Section 200 of the Cr.P.C. for offence punishable under Section 420 of the IPC would become maintainable after initiation of proceedings invoking Section 138 of the Act?
The Court observed that the issue with regard to registration of criminal case for offence punishable under the IPC notwithstanding registration of case under the Act is no longer res integra as the Supreme Court in Sangeetaben Mahendrabhai Patel Vs State of Gujarat & ANR, 2012 Latest Caselaw 240 SC upheld the maintainability of a petition under Section 420 of the IPC during the pendency or even after conviction under Section 138 of the Act holding that the two operates in differenty field.
The Top Court clarified that the same doesn't amount to 'double jeopardy'.
"In a case under the Act what is required to be noticed is, whether it is for a legally enforceable debt and a fine is imposed. In an offence involved on the same instrument under Sections 406 or 420 IPC sentence of seven years can be imposed and the element mens rea is what is required to be seen in a case for offence of cheating under Section 420 of the IPC inter alia. The Apex Court holds that there can no question of it being violative of Article 20(2) of the Constitution of India or Section 300(1) of the Cr.P.C. as it does not amount to double jeopardy."
The Court also rejected the second contention of the petitioner noting that complaint is in compliance with the mandate of Mrs. Priyanka Srivastava (supra).
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