Dsa Engineers (Bombay) & Others vs M/S. U.E.M. India Pvt. Ltd.
1999 Latest Caselaw 363 Del

ORDER

J.B. Goel, J.

1. This petition under Section 482 of the Code of Criminal Procedure (for short "the Code") and Article 227 of the Constitution of India has been filed by the petitioners (accused) for quashing the complaint filed by the respondent for offence under Section 138/141/142 of the Negotiable Instruments Act (for short "the Act") and the orders of summoning dated 19.8.1996, 6.12.1996 and 10.1.1997 passed thereon by the learned M.M.

2. Petitioner No.1, a partnership firm, and petitioners No.2 to 4 as its partners have been arrayed as accused Nos. 1 to 4 in the complaint.

3. Briefly, the facts are that the respondent-complainant in its complaint under Section 138 of the Act has alleged that in the month of May 1994, the accused had placed an order upon it for the design, supply, erection, installation and commissioning of Sewage Treatment Plant for Hotel Trident at Ahmedabad for a consideration of Rs.13,25,000/-; that during the execution of the work, the complainant had been raising bills from time to time but the payments were not made and were being avoided by adopting delaying tactics and then on 10.11.1995 a cheque bearing No.339438 dated 25.11.1995 for a sum of Rs.3,37,434/- drawn on State Bank of India, Nehru Place, New Delhi branch in favour of the complainant as part payment of their dues was given. The cheque was presented through its banker but was returned unpaid on 27.11.1995 with the remarks "Refer to drawer". On being informed the accused expressed regrets being in financial crisis and asked the respondent to wait for some time. The cheque was again presented on 27.12.1995 but was again Dishonored on 29.12.1995 with the remarks "Payment stopped by the drawer". A legal notice dated 6.1.1996 was served on the accused persons which was acknowledged by them in their reply dated 27.1.1996 but the payment was not made. And the complaint was filed on 12.2.1996.

4. After recording evidence the learned Magistrate found prima facie case to proceed and summoned the accused. They did not appear on 2-3 dates in spite of warrants issued against them and filed this petition for quashing the criminal proceedings.

5. The petitioners inter alia have alleged that petitioner No.4 is not a partner of petitioner No.1 and has been improperly imp leaded; there is no cause of action as the amount mentioned in the cheque is not due and on the other hand over payment has been made for which a civil suit has been filed by the petitioners; on the facts and the circumstances no case under Section 138 of the Act is made out and the complaint is liable to be quashed. Respondent in its reply has denied the averments made.

6. I have heard learned counsel for the parties.

7. The first contention is that petitioner No.4, Mr. D.M.Singh, is not a partner and the complaint against him is not maintainable. D.M. Singh is accused No.4 in the complaint. In para 3 of the complaint, it has been pleaded that accused No.1 is a partnership firm and accused No.2, 3 and 4 are its partners, incharge of and responsible to the said firm for the conduct of its business. In the present petition, it is alleged that petitioner No.4 is not a partner of petitioner No.1. In the counter filed by the respondent, it is pleaded in para 4 as under :-

"...It is denied that the petitioner No. 4 is not the partner in petitioner No. 1 firm... The petitioner No. 4 is a partner in this firm is established by letter dated 22.11.1995 signed by him as partner in this firm. ...Even otherwise the petitioner No.4 is a responsible person of the petitioner No.1 as is also evident from the facts that most of correspondence and dealings are made by him with respondent No.1. It is further submitted that the present petition has also been filed by petitioner No.4 and also deposed in his affidavit that he is well aware of the facts and circumstances of the case."

8. In rejoinder filed on behalf of the petitioner, these facts have not been refuted; Petitioners have placed on record some correspondence exchanged between the parties and most of these letters have been signed by Mr. D.M.Singh on behalf of the petitioner No. 1. It is also seen that notice dated 6.1.1996 was sent by the complainant to the firm as well as its three partners. A reply dated 27.1.1996 has been sent to this demand notice on behalf of all the 4 petitioners including Mr. D.M.Singh and in this reply no such averment has been made that Mr. D.M.Singh is not a partner and/or responsible for the affairs of the partnership business.

9. It is well established that proceedings against an accused in the initial stages can be quashed if on the face of the complaint or the papers accompanying the same if not rebutted no offence is constituted; It is also well established that disputed facts cannot be determined in proceedings under Section 482 of the Code. In Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi, , the legal position has been noticed as under :-

"It is not the province of the Magistrate to enter into a detailed discussion of the merits or de-merits of the case nor can the High Court go into this matter in its revisional jurisdiction which is a very limited one.........

The scope of the inquiry under Section 202 of the Code of the Criminal Procedure is extremely limited - limited only to the ascertainment of the truth or falsehood of the allegations made in the complaint - (i) on the materials placed by the complainant before the Court; (ii) for the limited purpose of finding out whether a prima facie case for issue of process has been made out; and (iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defense that the accused may have. In fact it is well settled that in proceedings under Section 202 the accused has got absolutely no locus standi and is not entitled to be heard on the question whether the process should be issued against him or not."

10. It cannot be said that there is no material on record to proceed against D.M. Singh whether Mr. D.M.Singh is not liable, is his defense and could be determined after the evidence is led before the Trial Court and this question of fact cannot be determined by this Court in these proceedings. The complaint against him thus is not liable to be quashed on this ground.

11. The next contention is that the petitioners are not liable to make any payment to the complainant for the reasons stated in the petition. The plea is that no payment is due as work was not executed and rather over payment was made for which a civil suit has been filed. Obviously, this is a defense of the petitioners. That cannot be gone into in these proceedings , Section 139 of the Act gives rise to presumption of fact that the cheque was given in discharge of a debt or liability legally recoverable. So long as the complaint discloses facts which constitute prima facie case making out offence under Section 138/141/142 of the Act, the complaint cannot be quashed.

12. The next contention is that cheque was Dishonored because cheque was presented after notice for stopping payment was given.

13. Section 138 of the Act, so far as relevant, reads as under :-

"Dishonor of Cheque for insufficiency, etc. of funds in the account :-

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other privision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extent to twice the amount of the cheque or with both."

14. This section gets attracted in terms if the cheque is Dishonored because of insufficient funds or when the amount exceeds the arrangement made with the bank. However, keeping in view the aims and objects in enacting the rovisions in Chapter XVII containing sections 138 to 142 of the Act, it has been held by the Supreme Court in Electronics Trade and Technology Development Corporation Vs. India Technologists and Engineers (Electronics) Pvt. Ltd. and which has been reaffirmed by a three-Judge Bench decision in M/s. Modi Cements Limited Vs. Shri Kuchil Kumar Nandi that even if a cheque is Dishonored because of "stop payment" instructions to the bank, still Section 138 gets attracted.

15. However, in Electronics Trade (supra), it had been held that if before a cheque is presented for encashment, a notice is issued by the drawer to the payee or the holder not to present the same for encashment or to the Bank to stop payment and yet the cheque is presented to the bank for payment and it is returned on the instructions of the drawer not to make payment, Section 138 would not be attracted. This was followed by another bench in K. K. Sidharthan Vs. T. P. Praveena Chandra and Anr. . But, this view has been overruled by the 3-Judge bench judgement in M/s. Modi Cements Ltd. (supra) where it has been held that notwithstanding that the drawer had issued notice to the drawee or to the bank for stoppage of the payment, Section 138 of the Act still gets attracted. This contention thus also has no force.

16. It is also contended that the cheque was first presented and Dishonored on 27.11.1995 and on that basis no otice under Section 138 of the Act was given and the heque presented second time will not give a cause of action. This point is also no longer res integra. It has been held in Sadanandan Bhadran Vs. Madhavan Sunil Kumar that successive presentation of the Dishonored cheque is allowable under Section 138 during the period of its validity. However, the cause of action for filing a complaint arises only when after Dishonor of the cheque a notice is first given. "Cause of Action" in this respect is not used in a generic and wide sense as in Section 20 of the Code of Civil Procedure but it is used in restricted sense in Section 138 read with Section 142(b). In the present case, on the first Dishonor, no notice was given; the cheque was represented during its period of validity, and the notice was given only after the cheque was dishonored second time. Thus the complaint filed on the basis of that notice has been validly instituted. This contention also has no force.

17. It is then contended that before the complaint was lodged, the petitioners had already filed a civil suit for recovery of their dues amounting to Rs. 61041/- against the respondent-complainant and as the matter involved in the civil suit and the present complaint is similar, the criminal complaint is liable to be stayed for which reliance has been placed on some case law.

18. It appears that the petitioners have filed a civil suit for the recovery of Rs.61,041/-, shortly before the omplaint was filed, alleging that over-payment has been made to the complainant in respect of the transaction in question and nothing is due from them to the complainant.

19. The principles govering the stay of one of the two proceedings where civil as well as criminal proceedings have been instituted have been considered by a Constitution Bench of the Supreme Court in M.S. Sheriff and another Vs. State of Madras and others . In this case, the High Court had ordered prosecution of two sub-inspectors of police for perjury under Section 193 IPC in connection with two affidavits filed by them denying that they had wrongfully detained in custody the two complainants. The said two complainants/petitioners had also filed two civil suits for damages for wrongful confinement. The question for consideration before the Supreme Court was whether the criminal proceedings should be stayed. In paras 15 and 16 of the judgement, it was laid down as under :-

"15. As between the civil and criminal proceedings we are of the opinion that the criminal matters should be given precedance. There is some difference of opinion in the High Courts of India on this point. No hard and fast rule can be laid down but we do not consider that the possibility of conflicting decisions in the civil and criminal courts is a relevant consideration. The law envisages such an eventuality when it expressly refrains from making the decision of one Court binding on the other, or even relevant except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassment.

16. Another factor which weighs with us is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should wait till everybody concerned has forgotten all about the crime. The public interests demand that criminal justice should be swift and sure; that the guilty should be punished while the events are still fresh in the public mind and that the innocent should be absolved as early as is consistent with a fair and impartial trial. Another reason is that it is undesirable to let things slide till memories have grown too dim to trust.

This, however, is not a hard and fast rule. Special considerations obtaining in any particular case might make some other course more expedient and just. For example, the civil case or the other criminal proceeding may be so near its end as to make it inexpedient to stay it in order to give precedence to a prosecution ordered under S. 476. But in this case we are of the view that the civil suits should be stayed till the criminal proceedings have finished."

20. In State of Rajasthan Vs. Kalyan Suindram Cement Industries Ltd. & Others also, it has been held that the Courts rarely stay the criminal cases and only when the compelling circumstances require the exercise of their power.

21. In Ramachandra Iyer Vs. N. C. Menon 1962 (1) Crl.L.J. 642 (Kerala), it has been held as under:-

"That the High Court has ample powers to stay the criminal proceedings during the pendency of civil proceedings in a proper case is well settled. It is also equally clear that the mere pendency of a civil suit or appeal is not in itself a sufficient ground for staying the criminal proceedings. There is a consensus of judicial opinion that there is no invariable rule that the criminal proceedings should necessarily be stayed pending the trial of the civil suit. The matter is entirely one of the discretion of the court to exercise, having regard to the facts and circumstances of the each case, the only general rule that could be adumbrated being that every court should be left as far as possible to dispose of the case on its file with the utmost expedition.

Merely because the civil suit had been filed before the criminal complaint is no reason by itself to stay the criminal case.

No doubt, if the object of the criminal proceedings in a private prosecution is to prejudice the trial of the civil suit or to use them as a lever to coerce the accused into a compromise of the civil suit, the criminal proceedings can be stayed till the decision of the civil suit.

No hard and fase rule can be laid down for the High Court to exercise discretion. It will depend upon the circumstances of each case, the test in which case would be whether the accused is likely to be seriously prejudiced by the continuance of the criminal proceedings against him during the pendency of the civil proceedings."

22. Inherent power of the High Court could be exercised to further the object of the enactment and ends of justice and not to frustrate the purpose behind the enactment. Chapter XVII of the Act containing the fascicule of Sections 138 to 142 was brought into the statute book by Section 4 of the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988. The "objects and reasons" clause of the Bill indicates that the new Chapter was incorporated to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer with adequate safeguards to prevent harassment of honest drawers.

23. This type of crime has increased enormously, shaking the confidence of public and of the commercial world in particular in the efficacy of the law existing before the enactment of Chapter XVII. This type of cases will involve both criminal as well as civil liability, because for recovery of the amount of the cheque one will have to approach the Civil Court. Mostly, in such cases, the drawer of cheque would be tempted to take all sorts of pleas in consonance with his conduct to defeat or delay the claim of the drawee of the cheque and if the criminal proceedings are stayed it will defeat the very purpose of the enactment in such cases.

24. The possibility of conflicting decisions in civil and criminal courts in itself is not a relevant consideration for stay of one of the two proceedings. At the same time though no hard and fast rule could be laid down, however, the normal rule seems to be that it is undesirable that a criminal prosecution should wait for decision in civil suit which may take years or even decades to reach final determination, first in trial court and then in appellate courts, as by that time evidence may be lost. The public interest demands that criminal justice should be swift and sure; that the guilty should be punished while the events are still fresh in the public minds and that the innocent should be absolved as early as is consistent with a fair and impartial trial. There should be some special circumstances to warrant stay of criminal proceedings.

25. It is thus evident from this legal position that the trial of criminal cases cannot be stayed only for the reason that a civil suit involving identical dispute is pending between the parties. Civil suits take years, sometimes couple of decates, first in the Trial Court, thereafter in the appellate Courts to reach end. It would be inexpedient that the trial of an offence should wait for such a long time. Such a long delay will neither be in the public interest nor in that of the accused. It would, on the other hand, reflect discredibility on the administration of criminal justice.

26. Learned counsel for the petitioner has relied on Nandu Babu Vs. Rajendra Kumar Singh , Dharmeswar Kalita Vs. The State AIR 1952 Assam 78, Charanjiv Ahluwalia Vs. State 1996 RLR 116 and R. K. Khatri Vs. State (CBI) 1996 RLR 118 and Narender Anand Vs. Maruti Udyog Limited 1998 RLR Notes 1.

27. These cases are based on their own facts and circumstances. As already noticed whether to stay or not either of the proceedings will primarily depend on its own facts and circumstances.

28. In the present case, the complaint was filed within the time frame prescribed under Section 138 of the Act. Section 139 of the Act gives rise to a presumption in favour of the holder/payee of the cheque that the cheque has been given towards the discharge in whole or in part of an existing debt or other liability. The cheque was presented twice. The first time the cheque was Dishonored because of "Refer to drawer" and not because of "stop payment" instructions given by the petitioners. The cheque was again presented on 27.12.1995 and on its Dishonor a notice of demand dated 6.1.1996 was immediately issued and the complaint was filed on 12.2.1996. The suit was filed by the petitioner after the notice of demand was served on the petitioners and even after reply was sent. It is not that the suit was pending for a long time or was likely to be disposed of early. In the circumstances the possibility of the suit having been filed as a device to evade, defeat, or delay the criminal liability cannot be ruled out. Prima facie it cannot be said that the complaint is filed with some sinister or ulterior motive.

29. Keeping in view the purpose of the enactment and also the legal position noticed above and also taking into consideration that no special circumstances exist in the present case, in my view no valid ground exist for stay of criminal proceedings. This petition has no merit, is misconceived and seems to be a misuse of the process of this Court.

30. The same is accordingly dismissed with costs of Rs.20,000/-. The petitioners shall either deposit these costs in the Court or pay to the complainant-respondent within two weeks.

31. Trial court records be sent back forthwith.