2001 JTR(SC) 1286
2001 AIR(SC) 3512 ; 2001 AIR(SCW) 4382 ; 2001 43 AllCriC 846 ; 2002 AllMR(Cri)(SC) 1869 ; 2001 3 BBCJ(SC) 235 ; 2002 1 CivLJ 150 ; 2001 CriLR 703 ; 2001 CrLJ 4746 ; 2001 4 CTC 189 ; 2001 DCR 572 ; 2001 3 EastCrC(SC) 310 ; 2001 ISJ(Banking) 780 ; 2001 2 JCC 160 ; 2001 7 JT 614 ; 2001 4 RCR(Cri) 302 ; 2001 3 RLW(Raj) 433 ; 2001 6 Scale 305 ; 2001 8 SCC 15 ; 2001 SCC(Cri) 1402 ; 2001 6 SLT 572 ; 2001 KHC 1168 ; 2001 7 Supreme 78
2001(7) Supreme 78
SUPREME COURT OF INDIA
(From Calcutta High Court)
D.P. Mohapatra & K.G. Balakrishnan, JJ.
M/s. Indseam Services Ltd. -Appellant
versus
Bimal Kumar Kejriwal (HUF) -Respondent
Criminal Appeal No. 941 of 2001
(Arising out of SLP (Crl.) No. 4405 of 2000)
Decided 14-9-2001
Counsel for the Parties :
For the Appearing Parties : Rakesh Dwivedi, D.A. Dave, Senior Advocates, Ashish Wad, Ms. J.S. Wad, Ms. Niharika Bahl, Gaurav Kejriwal, Ms. Ruby Singh Ahuja, Advocates.
IMPORTANT POINT
Avoidance of the function of Judicial determination in Section 482 Cr.P.C. petition by another single Judge of the High Court on the ground that on a previous occasion another single Judge had made observation that cognizance should have been taken u/s 420 IPC, ignoring the further direction given in that order to the Magistrate to hold inquiry into the complaint is not proper in criminal trial.
Act
Referred
:CRIMINAL PROCEDURE CODE : S.482, S.401, S.200, S.398, S.397, S.203
INDIAN PENAL CODE : S.420, S.415, S.120(b)
NEGOTIABLE INSTRUMENTS ACT : S.141, S.138
(A) The proceedings involve the application of the Negotiable Instruments Act read with the Indian Penal Code in the context of cheque dishonour leading to allegations of cheating. Section 138 read with Section 141 of the Negotiable Instruments Act addresses liability for dishonour of a cheque for non-payment of a debt or liability, while Section 138 read with Section 141 requires drawing a cheque on an account maintained in a bank and establishes a statutory presumption of liability upon proof of dishonour. Section 420 of the Indian Penal Code defines the offence of cheating by deceitful or fraudulent means, and Section 120B read with Section 420 provides for punishment for criminal conspiracy. Section 482 of the Criminal Procedure Code grants inherent powers to High Courts, Section 401 allows for the revision of orders, Section 200 outlines the procedure for executive reference, Section 398 relates to the withdrawal of complaints, Section 203 provides for dismissal of complaints where no offence appears, and Sections 397 and 398 relate to powers to summon and compel attendance during investigation. The dispute arose from the issuance of cheques by the corporate accused which were dishonoured, with the complainant alleging that the corporate entity had obtained the goods or entered into contracts by deceit, thereby invoking the provisions of the Negotiable Instruments Act and Section 420 read with Section 120B of the Indian Penal Code.
(B) Key legal principles include that the mere existence of a civil dispute does not automatically preclude criminal prosecution under the Negotiable Instruments Act; however, the ingredients of cheating under Section 420 IPC require a finding of deceit at the time of contract formation. A High Court directing a Magistrate to take cognizance under Section 420 IPC binds the Magistrate, but the single bench of the High Court must independently assess whether a prima facie case of cheating is made out on the complaint and must consider whether the dispute is of a civil nature and whether criminal prosecution would constitute an abuse of process.
Facts of the case:
The complaint case was registered by an authorised representative alleging that three cheques issued by the officers of the appellant company in favour of the respondent were returned by the bank on instructions from the drawer. The complainant alleged offences under Section 138/141 of the Negotiable Instruments Act and Section 420 read with Section 120B of the IPC. The Magistrate initially dismissed the complaint under Section 203 of the Criminal Procedure Code, holding the matter to be of a civil nature. The High Court set aside this order, observed that the Magistrate should have taken cognizance under Section 420 IPC, and directed the Magistrate to hold a further enquiry and pass appropriate orders. Subsequently, the Magistrate took cognizance under Section 420/120B IPC. The appellant filed a revision petition against the cognizance order, which was dismissed by a single judge of the High Court, who declined to interfere based on the earlier direction of another single judge. This appeal followed.
Findings of Court:
The court observed that the single judge avoided judicial determination on the acceptability of the plea raised by the accused for setting aside the cognizance order and for quashing the criminal proceedings merely on the ground of the earlier observation, ignoring the further direction to hold an enquiry. The court held that it was incumbent on the single judge to examine whether a prima facie case of cheating had been made out on the complaint and statement on oath, and to consider whether the dispute was of a civil nature and whether continuing the criminal proceeding would give rise to an abuse of the process of court.
Issues:
Whether the complaint petition disclosed a prima facie case of cheating under Section 420 IPC; whether the single judge properly considered the material on record and the contentions raised by the accused; whether the matter involved a civil dispute which, if pursued criminally, would amount to an abuse of the process of court; and whether the High Court was bound by the earlier observation of a co-ordinate bench without reassessing the merits.
Ratio Decidendi:
A single judge of the High Court must exercise independent judicial review when assessing whether a cognizance order under Section 420 IPC is sustainable, considering both the earlier direction to take cognizance and the requirement to hold an enquiry. The judge must determine on the merits whether the complainant has established a prima facie case of cheating and whether the dispute is of a civil nature such that criminal prosecution would constitute an abuse of process, rather than dismissing the revision petition solely on the basis of prior judicial observations.
Result:
The appeal is allowed and the impugned order setting aside the cognizance order is set aside. The matter is remitted to the High Court for a fresh consideration in accordance with law.
(A) The proceedings involve the application of the Negotiable Instruments Act read with the Indian Penal Code in the context of cheque dishonour leading to allegations of cheating. Section 138 read with Section 141 of the Negotiable Instruments Act addresses liability for dishonour of a cheque for non-payment of a debt or liability, while Section 138 read with Section 141 requires drawing a cheque on an account maintained in a bank and establishes a statutory presumption of liability upon proof of dishonour. Section 420 of the Indian Penal Code defines the offence of cheating by deceitful or fraudulent means, and Section 120B read with Section 420 provides for punishment for criminal conspiracy. Section 482 of the Criminal Procedure Code grants inherent powers to High Courts, Section 401 allows for the revision of orders, Section 200 outlines the procedure for executive reference, Section 398 relates to the withdrawal of complaints, Section 203 provides for dismissal of complaints where no offence appears, and Sections 397 and 398 relate to powers to summon and compel attendance during investigation. The dispute arose from the issuance of cheques by the corporate accused which were dishonoured, with the complainant alleging that the corporate entity had obtained the goods or entered into contracts by deceit, thereby invoking the provisions of the Negotiable Instruments Act and Section 420 read with Section 120B of the Indian Penal Code.
(B) Key legal principles include that the mere existence of a civil dispute does not automatically preclude criminal prosecution under the Negotiable Instruments Act; however, the ingredients of cheating under Section 420 IPC require a finding of deceit at the time of contract formation. A High Court directing a Magistrate to take cognizance under Section 420 IPC binds the Magistrate, but the single bench of the High Court must independently assess whether a prima facie case of cheating is made out on the complaint and must consider whether the dispute is of a civil nature and whether criminal prosecution would constitute an abuse of process.
Facts of the case:
The complaint case was registered by an authorised representative alleging that three cheques issued by the officers of the appellant company in favour of the respondent were returned by the bank on instructions from the drawer. The complainant alleged offences under Section 138/141 of the Negotiable Instruments Act and Section 420 read with Section 120B of the IPC. The Magistrate initially dismissed the complaint under Section 203 of the Criminal Procedure Code, holding the matter to be of a civil nature. The High Court set aside this order, observed that the Magistrate should have taken cognizance under Section 420 IPC, and directed the Magistrate to hold a further enquiry and pass appropriate orders. Subsequently, the Magistrate took cognizance under Section 420/120B IPC. The appellant filed a revision petition against the cognizance order, which was dismissed by a single judge of the High Court, who declined to interfere based on the earlier direction of another single judge. This appeal followed.
Findings of Court:
The court observed that the single judge avoided judicial determination on the acceptability of the plea raised by the accused for setting aside the cognizance order and for quashing the criminal proceedings merely on the ground of the earlier observation, ignoring the further direction to hold an enquiry. The court held that it was incumbent on the single judge to examine whether a prima facie case of cheating had been made out on the complaint and statement on oath, and to consider whether the dispute was of a civil nature and whether continuing the criminal proceeding would give rise to an abuse of the process of court.
Issues:
Whether the complaint petition disclosed a prima facie case of cheating under Section 420 IPC; whether the single judge properly considered the material on record and the contentions raised by the accused; whether the matter involved a civil dispute which, if pursued criminally, would amount to an abuse of the process of court; and whether the High Court was bound by the earlier observation of a co-ordinate bench without reassessing the merits.
Ratio Decidendi:
A single judge of the High Court must exercise independent judicial review when assessing whether a cognizance order under Section 420 IPC is sustainable, considering both the earlier direction to take cognizance and the requirement to hold an enquiry. The judge must determine on the merits whether the complainant has established a prima facie case of cheating and whether the dispute is of a civil nature such that criminal prosecution would constitute an abuse of process, rather than dismissing the revision petition solely on the basis of prior judicial observations.
Result:
The appeal is allowed and the impugned order setting aside the cognizance order is set aside. The matter is remitted to the High Court for a fresh consideration in accordance with law.
JUDGMENT
D.P. Mohapatra, J.-Leave granted.
2. M/s. Indseam Services Limited, an accused in complaint case No. C. 1628/96 pending before the Metropolitan Magistrate, 12th Court, Calcutta, has filed this appeal assailing the order dated 10.7.2000 of the Calcutta High Court dismissing the Revision Petition filed by it for quashing the order of the magistrate taking cognizance of the offence under Section 420, Indian Penal Code, and issuing process to the accused.
3. The complaint case was registered on receipt of the complaint filed by one Krishan Kumar Kejriwal, authorised representative of Bimal Kumar Kejriwal, who is the respondent herein, alleging, inter alia, that three cheques drawn by the officers of the appellant-company in favour of the respondent were returned by the bank on instructions received from the drawer not to encash them. The complainant contended that on the facts averred in the complaint petition the accused have committed the offences under Section 138/141 of the Negotiable Instruments Act and Section 420 read with Section 120B of the IPC.
4. The learned Magistrate on perusal of the complaint petition and statement of the complainant and other materials produced by him, dismissed the complaint petition under Section 203 of the Criminal Procedure Code holding that there was no sufficient ground for proceeding against the accused, vide the order dated 1.10.1996. Therein the learned Magistrate observed that the dispute between the parties cropped up due to breach of contract between them and that the dispute is of a civil nature. The complainant challenged the said order by filing a Review (sic) (Revision) Petition before the High Court. The High Court disposed of the case by the order dated 21.3.1997 holding that the learned Magistrate was right in not taking cognizance of the offence under Section 138/141 of the Negotiable Instruments Act and his order in that regard cannot be interfered with; that the learned Magistrate should have taken cognizance of the offence under Section 420 IPC. The High Court issued a direction to the learned Magistrate to hold further enquiry into the complaint and pass appropriate order. On receipt of the order of the High Court the learned Magistrate by the order dated 9.12.1997 took cognizance under Section 420/120B IPC and issued process to all the accused persons. The order passed by the Magistrate is quoted hereunder:
"I have also gone through the order of Hon ble High Court. On careful scrutiny of the materials on record, I find that there is sufficient ground to proceed against the accused persons u/s 120B/420 IPC.
Issue Summons against all the accused persons u/s 120B/ 420 IPC requisites are to be put in at once."
5. The appellant filed a revision petition in the High Court assailing the said order. The learned Judge declined to interfere with the cognizance order passed by the learned Magistrate for the reason that when there was a specific direction from the High Court to take cognizance of the offence under Section 420 IPC and the Magistrate passed the order in view of such direction it will not be proper for the High Court to hold otherwise. The relevant portion of the order reads as follows:
"It appears that the learned Magistrate took cognizance of the offence under Section 420/120B of the Indian Penal Code and issued process against the accused persons in view of the direction given by this Court. In my considered opinion when there is a specific direction from this Court directing the learned Magistrate to take cognizance of the offence under Section 420 IPC, it will not be proper for this Court to hold otherwise.
In view of the discussions made above I think it will not be proper for this Court to pass any further order or to go into the merit of the case in view of the judgment delivered by Justice Tiwari. This court cannot sit on appeal over the judgment and order passed by a co-ordinate bench of this Court. The revisional application is accordingly dismissed. However, liberty is granted to the petitioner to agitate all the points, which he has taken before this court in this revisional application, before the trial court at the appropriate stage of the proceedings."
6. Shri Rakesh Dwivedi, learned senior counsel appearing for the appellant raised the contentions that on reading the complaint petition and accepting the averments made therein as correct, no prima facie case for the offence of cheating punishable under Section 420 IPC is made out; that the averments made in the complaint petition do not show that the element of deceit on the part of the accused persons was present when the parties entered into the contract, that the transactions between the parties and liability of the appellant thereunder, if any, are of civil nature and criminal prosecution in such a case is a means of harassing the accused persons and gives rise to abuse of the process of court. Shri Dwivedi also contended that the learned magistrate passed the cognizance order without holding any enquiry despite the specific direction of the High Court.
7. Per contra, Shri D.A. Dave, learned senior counsel appearing for the respondent contended that the ingredients of the offence of cheating punishable under Section 420 IPC are made out on the averments in the complaint petition and therefore the learned Magistrate was right in passing the order taking cognizance of the offence under Section 420 IPC and the High Court rightly dismissed the Revision Petition filed by the appellant. Shri Dave further contended that the complainant had entered into the contract with the accused persons and parted with substantial sum of money (rupees eighty lakhs) on the basis of the three cheques issued by the latter in his favour which were returned by the Bank on the instructions issued by the accused persons. Referring to illustration (f) of Section 415 IPC Sri Dave submitted that on the averments made in the complaint petition the ingredients of the offence are satisfied.
8. On perusal of the order under challenge it is clear that the learned single Judge disposed of the revision petition filed by the appellant for setting aside the cognizance order and for quashing the criminal proceeding without entering into the merits of the case. The learned single Judge did not consider the nature of the contract between the parties, the arrangement for payment of dues by the accused persons to the complainant, nor did he record a finding that the ingredients of the offence of cheating defined under Section 415 IPC were prima facie made out from the averments in the complaint petition and the statement on oath by the complainant before the learned Magistrate. The learned single Judge felt bound by the observations made in the order passed on 21st March, 1997 in which another single Judge (Justice S.K.Tiwari) while accepting the position that the Magistrate rightly did not take cognizance of the offence under Section 138/141 Negotiable Instruments Act had observed that the learned Magistrate should have taken cognizance of the offence punishable under Section 420 IPC. From the order under challenge it is manifest that the learned single Judge did not pay due attention to the part of the order in which the learned Magistrate was directed to hold further enquiry into the complaint. While judging the question whether the cognizance order passed by the learned Magistrate was sustainable in law it was incumbent for the learned single Judge to go into the question whether the complainant has been able to make out a prima facie case for the offence of cheating on the averments in the complaint petition and his statement on oath. The matter should have been examined in the light of the contentions raised by the accused applicant in the revision petition and finding recorded. The learned single Judge also did not consider whether the learned Magistrate held any further enquiry before passing the cognizance order; whether the dispute raised in the case is of civil nature and continuing the criminal proceeding will give rise to abuse of the process of court.
9. We are constrained to observe that there has been an avoidance of the function of judicial determination of the question of acceptability or otherwise of the plea raised by the accused persons for setting aside the cognizance order and for quashing the criminal proceedings merely on the ground that on the previous occasion the single Judge had made an observation that cognizance should have been taken under Section 420 IPC, ignoring the further direction given in that order to the Magistrate to hold enquiry into the complaint.
10. For the reasons discussed in the foregoing paragraphs, the order under challenge being unsustainable has to be set aside and the matter is remitted to the High Court for fresh consideration. Since we are remitting the matter to the High Court for fresh consideration we do not deem it proper to make any observation on the merits of the case.
11. Accordingly, the appeal is allowed. The order passed on 10.7.2000 in Criminal Revision No. 1230/98 is set aside and the matter is remitted to the High Court for fresh disposal in accordance with law.
(N.K.R.) Appeal allowed accordingly.
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Parallel Citations of other Journals :
Indseam Services Ltd. v. Bimal Kumar Kejriwal (HUF), 2001(7) Supreme 78 : 2001 (7) JT 614 : 2001 Crl. L.R. (SC) 703 : 2001 ISJ (Banking) 781 : (2001) 8 SCC 15 : 2001 SCC (Crl.) 1402 : 2001Crl. L.J. 4746
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