M/S. Pioneer Drip Systems Pvt. Ltd vs M/S. Jain Irrigation Systems Ltd
2009 Latest Caselaw 125 Bom

                                 (1)




                                                                  
              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                         BENCH AT AURANGABAD




                                          
                CRIMINAL WRIT PETITION NO. 701 OF 2009




                                         
    1.   M/s. Pioneer Drip Systems Pvt. Ltd.,   ..          Petitioners
         141/14-15, Durga Bhavan,
         First Floor, D.P. Road,




                                 
         Now at Office : 6-3-1109/1,
         Ground Floor, Navbharat Chambers,
                      
         Rajbhavan Road, Somajiguda, Hyderabad,
         Hyderabad - 52 (Andhra Pradesh).

    2.   Mr. B.V.V. Satyanarayana
                     
         Managing Director,
         M/s. Pioneer Drip Systems Pvt. Ltd.,
         Age. 53 years, Occ. Business,
         R/o. 141/14-15, Durga Bhavan,
          

         First Floor, R.P. Road,
         Secunderabad (Andhra Pradesh).
       



                                 Versus





    1.   M/s. Jain Irrigation Systems Ltd.,      ..         Respondent
         Plastic Park, Bambhori, Tq. Dharangaon,
         Dist. Jalgaon (Maharashtra)
         Through its Employee and Authorized Person





         Mr. Kailash Nagolal Agrawal,
         Age. 45 years, Occ. Service,
         R/o. Jalgaon, Dist. Jalgaon.


    Shri B.L. Sagar-Killarikar, Advocate for the petitioners.
    Shri K.C. Sant, Advocate for the respondent.




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                                 CORAM             :       P.R. BORKAR,J.

                                 RESERVED ON       :       11.12.2009
                                 PRONOUNCED ON     :       17.12.2009




                                                 
    J U D G M E N T :-




                                       

1. This is a petition filed by the original accused

person challenging issuance of process in Summary Criminal

Case No. 2972 of 2004, filed in the Court of 2nd Jt. Judicial

Magistrate, First Class, Jalgaon, which order was confirmed

in Criminal Revision Application No. 142 of 2006 by the

Additional Sessions Judge-2, Jalgaon, on 23.06.2009.

2. Rule. Rule made returnable forthwith. With

consent of learned advocates appearing for the parties, this

petition is heard finally at the stage of admission.

3. It is no more disputed that the respondents M/s.

Jain Irrigation Systems Ltd., Jalgaon filed Criminal Case No.

2972 of 2004 against the present petitioners for commission

of offence punishable under Section 138 of the Negotiable

Instruments Act. It is alleged that the respondent company

has business of manufacturing/marketing PVC pipes, irrigation

system and components etc. Present petitioner No. 2 is the

Managing Director of petitioner No.1 and it is also doing

business of PVC pipes, drip irrigation system and components,

as dealer of complainant/respondent company. From time to

time the petitioners purchased irrigation system and

components from the respondent company on credit on the terms

and conditions mutually agreed upon.

4. As per the complaint lodged by the respondent,

amount of Rs. 50,90,622/- was due and present

petitioners/accused issued cheque bearing No. 625844 dated

01.12.2003 for the sum of Rs. 50,90,622/-, drawn on the State

Bank of India, Commercial Branch, Securnderabad. When said

cheque was presented at Jalgaon Branch of the State Bank of

India, same came to be dishonoured and therefore notice dated

23.06.2004 was issued to the present petitioner and same was

received by the petitioner on 26.08.2004. Inspite of receipt

of said notice, payment was not made and therefore complaint

was filed for offence punishable under Section 138 of the

Negotiable Instruments Act.

5. The learned advocate Shri B.L. Sagar-Killarikar for

the petitioner drew my attention to Exh. "B" - letter dated

January 7, 2003 issued by the petitioner No.2 to the Credit

Controller of respondent company. It is as under:-

"We confirm the discussion we had with you and we have already sent cheques and as informed, we are

sending a blank cheque to be presented in the month of May, 2003 after discussing and finalizing the amount. By that time all the pending issues may be sorted out. The details of the cheque enclosed are

as follows:-

               S.No.        Cheque No.         Name of the Bank

               1            625844             State Bank of India
       

We shall be glad if you can close the matter and

start the dispatch as expected without any further clarification.

You have seen our organization and you know our

commitments and if there is any delay our routine work will suffer and our overhead cost will increase unnecessarily.

Please confirm the dispatch details urgently to us."

6. He also drew my attention to another letter dated

June 30, 2004, issued by the President - (Marketing) of

respondent company to the petitioner No.1. Subject of the

letter is 'Clearing of Outstanding'. There is reference to

the letter by petitioner No.2 sent on 22.06.2004 and it is

stated "As you are aware, there is huge outstanding on your

account and as of this day the debit balance exceeds Rs. 31

lacs.". By the letter full payment was expected within 7

days of receipt of the letter. It is argued before this

Court that if as on June 30, 2003, amount of Rs. 31 lacs was

outstanding, how amount of Rs. 50,90,622/- would be

outstanding on 01.12.2003 as mentioned in paras 4 and 5 of

the complaint. It is further argued that on 25 th May, 2004,

the Credit Controller of respondent company issued letter to

petitioner No.1 and stated that the total amount due was Rs.

32,49,839/-. In reply affidavit it is not mentioned that

there were subsequent transactions. Relying on these

documents it is argued that the blank cheque issued in good

faith with letter dated 7th January, 2003 (Exh. "B" with the

petition) has been misused and false date and exorbitant

amount are mentioned on the cheque and the complaint is

filed. This is nothing but gross abuse of the process of the

Court and therefore this Court should intervene and quash and

set aside the order of issuance of the process.

7. The learned advocate also drew my attention to

Exh."I" collectively produced with the petition. Therein

copy of O.S. No. 23 of 2003 filed in the Court of First

Additional Chief Judge, City Civil Court, Secunderabad, is

produced. That was a suit filed by petitioner No.1 through

petitioner No.2 for settlement of account. The suit was

decreed under Order 8 Rule 10 of C.P.C. and some of the

documents considered by the Court are letter dated 07.01.2003

regarding issuance of blank cheque referred to above, and the

letter dated 30th June, 2004, by which it is stated that on

that day balance was Rs. 31 lacs. The Court decreed the suit

for accounts. It is argued before me that thus suit for

accounts is filed; it is decreed and there is nothing on

record to show that the appeal is filed, though, the learned

advocate Shri K.C. Sant made statement that the appeal is

filed against said decree.

8. It is argued that the relationship of manufacturer

and dealer is admitted. It is also admitted that goods were

sold on credit. So, the accounts will have to be settled.

It is also argued that various documents produced with the

writ petition clearly show that time and again the petitioner

called upon the respondent to settle the account, but there

was no response from the respondents company and misusing the

blank cheque issued, the complaint is filed and it is nothing

but abuse of process of the Court. It is also breach of

trust in giving the blank cheque. Amount of Rs. 31 or 32

lacs was outstanding even according to the letters issued by

the respondents, but amount of Rs. 50.9 lacs was mentioned on

the cheque and the Court machinery is being used for recovery

of exorbitant excessive amount, which was not due legally.

9. Both sides cited several authorities. The first

case cited by the learned advocate for the respondent is

Natural Sugar and Allied Industries Ltd., and Anr. V/s.

Razzak s/o. Hazi Gaffar and Ors., 2006 (4) Mh.L.J.771. In

para 16 to 20 of the said case it is laid down that at the

stage of issuance of process it is not permissible to go into

the allegations of the complaint. The only scrutiny that

would be permissible is as to whether after reading the

complaint as a whole or taking the averments on its face

value and accepting them in entirety, whether the ingredients

to constitute an offence, for which the process has been

issued are made out or not. It is also observed that it was

not permissible for High Court to go into the documents which

have been placed before it for the first time by both the

parties, to find out whether the dispute is of Civil nature.

It may be noted that in that case Court was called upon to

exercise jurisdiction under Section 482 of the Cr.P.C. and

that was not a writ petition. In this petition, the

respondent has filed reply affidavit and it can very well be

taken into consideration.

10. Another case cited is State of Madhya Pradesh V/s.

Awadh Kishore Gupta and Ors., 2003 AIR SCW 6501. That was

case under Prevention of Corruption Act. Application was

under Section 482 of Cr.P.C. and scope of exercising powers

in a case of acquisition of disproportionate asset by public

servant was considered. In para 11 of the said case,

following law is laid down :-

"11. As noted above, the powers

possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise.

Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. High Court being the highest Court of a State should

normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and

hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course,

no hard and fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage. (See : The Janata Dal etc. v. H.S. Chowdhary and others, etc. (AIR 1993 SC

892), Dr. Raghubir Saran v. State of Bihar and another (AIR 1964 SC 1)). It would not be proper

for the High Court to analyse the case of the complainant in the light of all probabilities in order to determine whether a conviction would be sustainable and on such premises, arrive at a

conclusion that the proceedings are to be quashed. It would be erroneous to assess the material before it and conclude that the complaint cannot be proceeded with. In proceeding instituted on complaint, exercise of the inherent powers to quash

the proceedings is called for only in a case where the complaint does not disclose any offence or is

frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High

Court to quash the same in exercise of the inherent powers under Section 482 of the Code. It is not, however, necessary that there should be meticulous analysis of the case before the trial to find out whether the case would end in conviction or acquittal. The complaint has to be read as a whole.

If it appears that on consideration of the allegations in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. When an information is lodged at the police

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station and an offence is registered, then the mala fides of the informant would be of secondary

importance. It is the material collected during the investigation and evidence led in Court which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by itself be the basis

for quashing the proceeding."

11. It is argued before this Court that in this writ

petition the respondent has filed affidavit-in-reply and in

para 5 it is simply stated that letter dated 7 th January,

2003, was not received, but there was no denial that a blank

cheque was issued bearing No. 625844, as mentioned in the

letter dated January 7, 2003, produced at Exh. "B". It may

be noted that in that letter it is mentioned that the

accounts were to be settled and it was accepted by the

authorities to sort out pending issues after discussion and

finalization of accounts. So, basic factual matrix in the

writ petition are not specifically denied. In para 6 of the

petition, there is reference to the letter dated June 30,

2004 and in reply affidavit in para 8 it is said that no

comments are required in view of earlier paragraphs, but

there is denial of issuance of letter dated 30.06.2004. In

para 4 there is reference to letter dated 25th May, 2004 in

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which it is said that on that day balance was Rs.

32,49,839/- and same be paid immediately. It is stated in

para 6 of the reply affidavit that though the petitioner has

stated that letter dated 25.05.2004 was sent by answering

respondent calling upon the respondent to pay amount of Rs.

32,49,839/-, however, the petitioner has not annexed copy of

this letter at all and therefore there is no substance in

para 4. We find the copy of letter at page 31 annexed as

part of Exh. "C" with the petition.

12. Another case cited on behalf of the respondent is

the case of Purushottam s/o. Maniklal Gandhi V/s. Manohar K.

Deshmukh and Anr., 2007 (1) Mh.L.J.210. Single Bench of this

Court has observed in para 18 of the said case that it is

open to a person to sign and deliver a blank or incomplete

cheque and is equally open for the holder to fill up blanks

and specify the amount therein. This does not amount to any

alteration in the cheque, since the cheque was not initially

issued for any different specified sum which was changed. In

para 19 of the said case it is observed that when a drawer of

a cheque delivers a signed cheque, he gives an authority to

the holder to put a date of his choice. In this case it is

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argued that there is no dispute regarding the propositions of

law which are correctly mentioned, but wherever blank cheque

is given, automatically there is a trust and if it is shown

that there is breach of that trust and evidence of misuse of

the blank cheque, then Court may not allow abuse of process

of law and may refuse to entertain criminal proceeding which

was necessarily for recovery of amount. It is no news that

criminal prosecutions under Section 138 of the Negotiable

Instruments Act are often used as a pressure tactics and as a

more speedy and efficient mode of recovery of money. So,

there is merit in the argument that in such circumstances

Court should be more cautious in not allowing its processes

and powers to be abused. Else Courts would become tools of

oppression in the hands of unscrupulous persons.

13. Here we may usefully refer to Section 20 of the

Negotiable Instruments Act. As per section 20, no doubt

whenever an incomplete negotiable instrument is handed over,

the drawer prima facie gives authority to the holder thereof

to complete the negotiable instrument. Section 20 of the

Negotiable Instruments Act reads as follows:-

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"20. Inchoate stamped instruments - Where one person signs and delivers a paper stamped in

accordance with the law relating to negotiable instruments then in force (India) and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete,

as the case may be upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder

in due course for such amount.

Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."

. As per section 20 of the Negotiable Instruments Act

the holder is to specify amount not exceeding the amount

covered by the stamp and the person signing shall be liable

upon such instrument, in the capacity in which he signed the

same, to any holder in due course for such amount. However,

the proviso is important. Proviso makes it clear that no

person other than holder in due course shall recover from the

person delivering the instrument anything in excess of the

amount intended by him to be paid thereunder. So, prima

facie so far as original holder is concerned, drawer is

liable to the only amount intended by him to be paid

thereunder. Only the holder in due course to recover the

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entire amount mentioned in the cheque, may be in excess of

the amount intended by drawer thereunder, from the drawer and

in such case drawer is entitled to recover excess amount.

'Holder in due course' is defined in Section 9 of the Act.

Section 20 as quoted above is very clear that holder is not

entitled to amount more than intended by the drawer to be

paid under the instrument.

14.

One more case cited by the advocate for the

petitioner is Vinod Tanna and Anr., V/s. Zaheer Siddiqui and

Ors., 2001 (2) Mh.L.J. 714. In that case the Court

considered presumption under Section 118 and 138 of the

Negotiable Instruments Act. It is observed that presumption

under Section 118 of the Act would favour the drawee until

the drawer proves contrary that the cheque was not drawn for

consideration and until the presumption under section 118 is

not rebutted it will not be open for the drawer to say that

section 138 is not attracted because the cheque was not

issued for discharge in whole or in part of any debt and

other liability. It is also observed that the petitioner

issued blank cheques, whether those were written by the

petitioner or those were written beyond instructions of

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petitioners by respondent No.2, whether amount due is lesser

than the amount endorsed on the cheque, these and such issues

are matters of defence, which can be taken at the trial.

Relying on this case, it is argued that the defence which the

petitioners are taking can be considered by the Trial Court

at the time of trial and they cannot be considered at this

stage. On the other hand it is argued that it is one of the

prime function of this Court to prevent abuse of process of

law, once it is satisfied on facts. No one is allowed to use

process of Court for mala fide purposes. Matters which are

essentially civil in nature cannot be allowed to be turned

into criminal prosecution to be used as a pressure tactics by

one of the parties.

15. The learned advocate for the petitioner relied upon

case of Krishna Janardhan Bhat V/s. Dattatraya G. Hegde, AIR

2008 S.C.1325. In that case it is laid down that presumption

under Section 139 of the Negotiable Instruments Act merely

raises presumption in favour of holder of cheque that same

has been issued for discharge of any debt or other liability.

Existence of legally recoverable debt is not matter of

presumption under Section 139. It is also stated that the

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accused is not required to step into witness box. He may

discharge his burden on the basis of materials already

brought on record. The learned advocate also referred to

difference in burden of proof on the complainant & the burden

of proof on the accused person as discussed in para 34.

16. Another case cited is M/s. Medchl Chemicals and

Pharma Pvt. Ltd., V/s. M/s. Biological E. Ltd., and Ors.,

2000 AIR SCW 682. In that case it is held that the complaint

cannot be quashed merely on the ground that civil remedy is

available. It is observed in para 17 of the said case that

the object of criminal law is to punish an offender who

commits an offence against a person, property or the State

for which the accused, on proof of offence, is deprived of

his liberty and in some cases even his life. This does not,

however, affect civil remedies at all for suing the wrongdoer

in case like arson, accidents etc. It is anathema to suppose

that when a civil remedy is available, a criminal prosecution

is completely barred. In that case, the prosecution was

initiated for offence under Section 120-B, 415, 418 and 420

of the Indian Penal Code.

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17. The learned advocate for the petitioner also relied

upon case of Pawan Enterprises V/s. Satish H. Verma, 2003

Bom.C.R. (Cri.) 474. In that case colour TV was purchased on

4th April, 1998 by the respondent from the applicant for total

consideration of Rs. 22,760/-. Rs. 5000/- were paid in cash

and post dated cheque of Rs. 17,745/- was issued on

08.01.1998. The respondent was supposed to pay balance

amount in installment or in accordance with post dated

cheque. When the cheque was presented for encashment on due

date, it was dishonoured. Notice was issued and thereafter

complaint under Section 138 of the Negotiable Instruments Act

was filed. In that case, it is observed in para 5 that it

was not disputed that on 08.01.1998, a post dated cheque of

Rs. 17,745/- was issued. However, on 19.01.1998 what was due

was only Rs. 10,975/- and under the circumstances the Court

refused to set aside the order of acquittal. It is argued

before this Court relying on said ruling that if the amount

for which the blank cheque issued was filled in was much

higher than the amount due in that case it cannot be said

that the cheque was issued towards debt or other liability

within meaning of Section 139, and offence under Section 138

of the Negotiable Instruments Act is committed.

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18. In the case of State of Karnataka V/s. L. Muniswamy

and Ors., AIR 1977 S.C.1489, in para 7 it is observed that

under Sections 227 and 482 of Cr.P.C., High Court is entitled

to quash a proceeding if it comes to the conclusion that

allowing the proceeding to continue would be abuse of process

of the Court or that the ends of justice requires that the

proceeding ought to be quashed.

19. Thus in my considered opinion, whenever blank

cheque or post dated cheque is issued a trust is reposed that

the cheque will be filed in or used as per the understanding

or agreement between parties. If there is prima facie reason

to believe that said trust is not honoured then continuation

of prosecution under Section 138 of the Negotiable

Instruments Act would be abuse of process of law. It is in

the interest of justice that parties in such case are left to

Civil remedy. In this case, in the facts and circumstances

narrated above, in my opinion, this petition should succeed.

The order of issuance of process under Section 138 of the

Negotiable Instruments Act is hereby quashed and set aside.

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20. The writ petition is allowed. Rule made absolute

accordingly.

[P.R. BORKAR,J.]

snk/2009/DEC09/crwp701.09