2019 (6) TMI 448 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - the offences alleged in the complaint are not made out - HELD THAT - It is not the case of the complainant that by fabricating the cheques, the amount was credited into the account of the accused, thereby resulting in misappropriation of amount. The contention of the complainant that the documents in respect to the liability are fabricated also Prima facie appears to be after thought. There is no evidence of fabrication of documents. Admittedly Civil proceeding are pending before the appropriate Court and the claims of respective parties are subject matter of the said proceeding. The Cheque for an amount of ₹ 71,17,132.90/ was dishonoured. The said Cheque was also signed by the complainant. It was dishonoured on 12 09 2000. After receipt of intimation from banker, notice was issued to the complainant demanding the amount in accordance with Section 138 of Negotiable Instrument Act. According to the petitioner the said notice was not replied by the complainant. The defence of respondent No.1 is that there is failure to establish Prima facie that notice was issued by the advocate for the complainant therein and was received by the accused - The fact remains, there was no amount in the account of the complainant and the cheques were dishonoured for insufficient funds. The proceedings under Section 138 were initiated by the accused. The petitioners have relied upon the invoices in support of their claims. Civil proceedings are also pending in the respective Court. Several accused are impleaded in this proceeding. The allegations against them are vague. It would be an abuse of Process of Law to continue the prosecution against the petitioners and hence the proceedings are required to be quashed and set aside - Petition allowed.

Issues Involved:
1. Validity of criminal proceedings initiated by respondent No.1.
2. Allegations of cheque forgery and misappropriation.
3. Legitimacy of the issuance of process by the Metropolitan Magistrate.
4. Claims of abuse of process of law by the petitioners.
5. Overlapping civil and criminal proceedings.

Detailed Analysis:

1. Validity of Criminal Proceedings Initiated by Respondent No.1:
The petitioners challenged the criminal proceedings initiated by respondent No.1 through Criminal Case No.10/S/2001. The complaint alleged multiple offences under various sections of the Indian Penal Code, including Sections 403, 405, 463, 464, 477A, 192, 193, 120A, 120B, 201, 202, 425, 426 read with Section 34. The complaint was filed on 09-02-2001, and the Metropolitan Magistrate issued a process on 09-03-2001, finding sufficient grounds to proceed against the accused.

2. Allegations of Cheque Forgery and Misappropriation:
The complainant alleged that the accused conspired to forge and misappropriate cheques. Specifically, a blank cheque inadvertently signed by the complainant was allegedly forged to show a liability of ?71,17,132.90 in favor of Patel Polymers Pvt. Ltd. (Accused No.6). Another cheque for ?92,40,000 was also claimed to be forged in favor of Magic Creation Pvt. Ltd. (Accused No.10). The complainant reported the loss of the cheque book to the police and the bank, but the cheques were dishonored due to insufficient funds rather than stop payment instructions.

3. Legitimacy of the Issuance of Process by the Metropolitan Magistrate:
The petitioners argued that the Metropolitan Magistrate issued the process mechanically without proper scrutiny. They claimed the complaint was false and filed as a counterblast to avoid liabilities. The court found that the complainant's allegations of forgery and fabrication of documents appeared to be an afterthought, with no prima facie evidence of document fabrication. The court noted that the cheques were dishonored due to insufficient funds, not because of any alleged forgery.

4. Claims of Abuse of Process of Law by the Petitioners:
The petitioners contended that the continuation of the criminal proceedings amounted to an abuse of the process of law. They argued that the complaint was filed with malafide intentions to pressure the petitioners. The court observed that the complainant's actions appeared to be a counterblast to the proceedings initiated by the accused under Section 138 of the Negotiable Instruments Act. The court found that the allegations against several accused were vague and lacked specificity.

5. Overlapping Civil and Criminal Proceedings:
The court noted that civil proceedings were also pending regarding the disputed cheques. The petitioners had filed civil suits for the recovery of the amounts allegedly due under the cheques. The court emphasized that the claims of the respective parties were subject to adjudication in the civil proceedings. Given the overlapping nature of the civil and criminal cases, the court found it inappropriate to continue the criminal prosecution.

Conclusion:
The court concluded that continuing the prosecution against the petitioners would be an abuse of the process of law. The proceedings in the impugned complaint bearing No.10/S/2001 were quashed and set aside against the petitioners.

Order:
1. Criminal Writ Petition No. 763 of 2001, 764 of 2001, and Criminal Writ Petition No. 836 of 2001 are allowed.
2. Proceedings in the impugned complaint bearing No.10/S/2001 pending in the Court of Metropolitan Magistrate Andheri, along with the order issuing process passed therein, are hereby quashed and set aside against the petitioners.
3. Petitions are disposed of.

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