2011 (9) TMI 1180 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the criminal complaint u/s 138 of the Negotiable Instruments Act is maintainable.
2. Whether the "stop payment" instructions negate the offence u/s 138.
3. Whether the complaint constitutes an abuse of process of law.

Summary:

Issue 1: Maintainability of the Complaint u/s 138 of the Negotiable Instruments Act

The applicants sought to quash Criminal Complaint No. 6076 of 2006 and the order dated 15.11.2006. The applicants argued that the complaint does not disclose an offence u/s 138 of the Negotiable Instruments Act, as the cheque was not returned due to insufficient funds or exceeding the amount arranged with the bank. The cheque was dishonored due to "stop payment" instructions issued by the applicants because the complainant failed to fulfill obligations under the Service Level Agreement.

Issue 2: Impact of "Stop Payment" Instructions

The applicants contended that "stop payment" instructions do not constitute an offence u/s 138. They relied on several judgments, including Hiten P. Dalal v. Bratindranath Banerjee, S.N. Palanitkar v. State of Bihar, and M/s. M.M.T.C. Ltd. v. M/s. Medcl Chemicals and Pharma (P) Ltd., which discuss the burden of proof and the conditions under which "stop payment" instructions may not lead to an offence u/s 138.

Issue 3: Abuse of Process of Law

The applicants argued that the complaint was an abuse of process of law, as the complainant did not disclose the reply to the notice, which would have shown the true facts. The court noted that the complainant failed to disclose complete and correct facts as required under provisos [b] and [c] of Section 138. The court referred to the decision in State of Haryana v. Bhajan Lal, which outlines circumstances where the High Court can exercise power u/s 482 CrPC to prevent abuse of process.

Conclusion:

The court concluded that the impugned complaint is an abuse of process of law and does not disclose an offence u/s 138 of the Negotiable Instruments Act. Consequently, the criminal complaint and the proceedings initiated were quashed and set aside. The applications were allowed, and the rule was made absolute.