2022 (2) TMI 539 - HC - Indian Laws

Dishonor of Cheque - multiplicity of/parallel proceedings - 1st respondent had proceeded against the petitioner-accused under Section 138 of the NI Act as well as filed a private complaint for the offences under Sections 406, 420 and 506 IPC - contention of the learned counsel for the petitioner was that when the acts alleged attract an offence under a special enactment, the question of the same facts attracting the penal provisions under IPC would not arise - HELD THAT - The 1st respondent had initiated prosecution against the petitioner-accused under Section 138 of the NI Act apart from filing the private complaint for the alleged offences under Sections 406, 420 and 506 IPC and the facts prima facie would disclose that the petitioner-accused had an intention to deceive since inception of the transaction as he had received goods but failed to pay the amounts and went on issuing cheques without retaining sufficient amount in his account, which shows that he had an intention to cheat the 1st respondent since inception. The businesses are conducted on trust but the petitioner failed to maintain the trust and committed breach without payment of money after receiving the goods. He also closed the business and kept himself absconding in the case under Section 138 NI Act due to which LPC proceedings were initiated against him. As it is not only a simple case of failure to repay the value of the goods but also shows his dishonest intention to deceive the 1st respondent not to pay the money after receiving the property and caused wrongful loss to the 1st respondent and wrongful gain to himself, it is considered not a fit case to quash the proceedings. The Criminal Petition is dismissed.

Summary

Issues:
Petition to quash proceedings under Sections 406, 420, and 506 IPC for bounced cheques in a business transaction.

Analysis:
1. The petitioner, accused in a case involving bounced cheques, sought to quash proceedings under Sections 406, 420, and 506 IPC. The petitioner's defense was based on the premise that the transactions were part of a business deal where cheques were given for the sale of a new product. The petitioner argued that the bounced cheques did not amount to cheating as there was no dishonest intention at the time of making the promise to pay.

2. The respondent, on the other hand, contended that issuing cheques without sufficient funds amounted to cheating. The respondent had also filed a case under Section 138 of the Negotiable Instruments Act (NI Act) against the petitioner. The respondent highlighted the petitioner's actions, such as closing the shop and remaining absconding, as evidence of malafide intent to deceive and grab money.

3. Upon review of the case, the court noted that the petitioner had issued multiple cheques that were all returned due to insufficient funds. The court referenced precedents to distinguish between the offenses under Section 138 of the NI Act and Section 420 IPC, emphasizing the importance of establishing mens rea for each offense. The court concluded that the petitioner's actions indicated an intention to deceive from the beginning of the transaction.

4. The court rejected the petitioner's argument that the offenses under the NI Act and IPC could not be based on the same facts. The court found that the petitioner's conduct, including failing to repay for received goods and absconding, demonstrated a dishonest intention to cheat the respondent. The court held that the case involved more than a mere failure to repay and amounted to wrongful loss to the respondent and wrongful gain to the petitioner.

5. Consequently, the court dismissed the Criminal Petition to quash the proceedings, citing the petitioner's breach of trust, dishonest intentions, and failure to repay the due amounts. The court found that the case did not warrant quashing the proceedings, considering the petitioner's actions and the overall circumstances of the business deal.

Conclusion:
The court's decision to dismiss the petition was based on the petitioner's conduct, which indicated a deliberate intention to deceive and cheat the respondent in a business transaction involving bounced cheques. The court emphasized the importance of establishing mens rea in distinguishing between offenses under the NI Act and IPC, ultimately ruling that the petitioner's actions amounted to wrongful loss and gain, justifying the continuation of legal proceedings.