2023 (8) TMI 344 - HC - Indian Laws

Dishonour of Cheque - discharge of existing liability - petitioner s right to cross-examine denied - dismissal of petitioner s application u/s 311 Cr P. C. - HELD THAT - It is a stark case of impugnity with which the petitioner has taken the system for a ride. Complaint under Section 138 NI Act was filed in 2014 and more than 9 years have elapsed since then. The petitioner had been seeking adjournments on one pretext or the other. Time and again, the petitioner got the coercive process/execution of NBWs halted by stating that he was ready to amicably settle the matter. The fact that the same was only a ploy, is evident from the fact that he did not even diligently appear before the mediator. In the second round of mediation, even after arriving at settlement on 13.08.2019, despite repeated opportunities neither did the petitioner honour his own undertaking in the MOU to pay the dues nor did he comply with the undertaking given by him before the court from time to time to make the payment - even two cheques issued by the petitioner pursuant to settlement, were dishonoured, thus compelling the respondent herein to file the petition for contempt bearing Cont. Cas(C) 424 of 2020, which is stated to be pending. It is well settled that though Section 311 Cr.P.C confers wide power on the Court, the same needs to be exercised only to meet the ends of justice. This power has to be exercised with great care, caution and circumspection and only for strong and valid reasons. Power under this provision shall not be exercised, if the court is of the considered view that the application has been filed as an abuse of process of law. One can also not lose sight of the intent of the legislature in providing a criminal sanction for dishonour of the cheque, that is, to ensure the credibility of transactions involving negotiable instruments. As noted above, the petitioner delayed inordinately, conclusion of the proceedings under Section 138 NI Act, thus impacting not only the faith in negotiable instruments, but also in the justice dispensation system. The petitioner even made mockery of process of negotiated settlement through mediation. Thus, the application under Section 311 Cr.P.C was nothing but a gross abuse of process of law. Thus, no infirmity is found in the impugned order rejecting the petitioner s application u/s. 311 Cr.P.C and the same does not call for any interference. The petition is accordingly dismissed with the cost of Rs. 25,000/- to be paid to the respondent.

Summary

Issues Involved:
1. Application under Section 311 Cr.P.C.
2. Settlement and Memorandum of Understanding (MOU).
3. Conduct and adjournments by the petitioner.
4. Legislative intent behind Section 138 NI Act.

Summary:

1. Application under Section 311 Cr.P.C.:
The petitioner sought to set aside the order dated 03.02.2022 by the Ld. Metropolitan Magistrate, which dismissed his application under Section 311 Cr.P.C. for recalling the complainant/respondent for cross-examination. The petitioner argued that his right to cross-examine was closed on the first date due to his counsel being out of station. The respondent countered that the petitioner admitted liability in the settlement/MOU and had no grounds for cross-examination.

2. Settlement and Memorandum of Understanding (MOU):
The petitioner and respondent entered into a Memorandum of Understanding (MOU) for a settled amount of Rs. 1,00,00,000/- in four installments. The petitioner admitted to taking a loan of Rs. 35,00,000/- and agreed to pay Rs. 1 crore. Despite partial payments, the petitioner failed to adhere to the terms, leading to dishonored cheques and a contempt petition by the respondent.

3. Conduct and Adjournments by the Petitioner:
The petitioner repeatedly sought adjournments and failed to appear in court, leading to the issuance of bailable warrants and non-bailable warrants (NBWs). The petitioner also misled the court regarding settlement payments and failed to comply with court orders, resulting in multiple adjournments and coercive processes being halted.

4. Legislative Intent behind Section 138 NI Act:
The court emphasized that Section 311 Cr.P.C. should be exercised with caution and only for valid reasons. The petitioner's conduct was seen as an abuse of the process of law, delaying the proceedings under Section 138 NI Act, which undermines the credibility of negotiable instruments and the justice system. The court cited precedents to highlight the importance of timely justice and the detrimental effects of dilatory tactics.

Conclusion:
The court found no infirmity in the impugned order rejecting the petitioner's application under Section 311 Cr.P.C. and dismissed the petition with a cost of Rs. 25,000/- to be paid to the respondent. The petitioner's repeated delays and non-compliance with court orders were deemed a gross abuse of the process of law.