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2020 (2) TMI 805 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - section 138 of NI Act - invocation of jurisdiction under Section 156(3) of Cr.P.C. - HELD THAT - The provisions of Section 138 of N.I. Act may be attracted, because the cheque, which was given by the petitioner-accused no.1 to opposite party no.2-complainant, was returned as there was insufficient fund. In addition to the same, if on the basis of the factual matrix prima facie it is satisfied that the petitioner-accused no.1 had tried to deceive opposite party no.2-complainant in the entire transaction, then in that case criminal proceeding can also be initiated against the accused persons. In the present case, this is not proper stage where the proceeding so initiated has to be quashed either in exercise of power under Section 226 of the Constitution of India or even under Section 482 Cr.P.C. Rather, the Magistrate is well justified in directing the police authority to register the complaint petition as FIR under Section 156(3) Cr.P.C. and cause investigation into the matter. It is made clear that an accusation of commission of offence under Section 138 of N.I. Act cannot preclude the complainant to initiate a proceedings against accused persons under Sections 418, 420 read with Section 34 of IPC if ingredients of such offence are attracted. As such, the case under the N.I. Act can only be initiated by filing complaint, but in a case under the IPC, such a condition is not necessary. But in the case at hand when opposite party no.2-complainant lodged an FIR in the concerned police station, the same was not registered, therefore, there was no other way open to opposite party no.2-complainant than to approach the Magistrate by filing complaint case, who, in turn directed the police to register the complaint as FIR under Section 156(3) of Cr.P.C. and conduct investigation - impugned order is correct and is upheld. Petition dismissed.
Issues Involved:
1. Whether the Magistrate erred in directing the police to register an FIR and investigate under Section 156(3) Cr.P.C. without conducting an inquiry under Section 202 Cr.P.C. 2. Whether the case should be treated under Section 138 of the N.I. Act or Sections 418, 420 read with Section 34 of IPC. 3. Whether the criminal proceedings initiated were justified or an abuse of the process. Detailed Analysis: 1. Magistrate's Direction under Section 156(3) Cr.P.C. without Inquiry under Section 202 Cr.P.C. The petitioner contended that the Magistrate should have conducted an inquiry under Section 202 Cr.P.C. before directing the police to register an FIR and investigate under Section 156(3) Cr.P.C. The court clarified that under Section 202 Cr.P.C., a Magistrate has the discretion to either inquire into the case himself or direct an investigation by the police or another person. The provision does not mandate that an inquiry must be conducted by the Magistrate himself before issuing such a direction. The court found that the Magistrate was within his jurisdiction to direct the police to register the FIR and investigate, and no illegality or irregularity was committed in doing so. 2. Case under Section 138 of N.I. Act vs. Sections 418, 420 read with Section 34 of IPC The petitioner argued that the case should be treated under Section 138 of the N.I. Act due to the dishonor of the cheque and not under Sections 418, 420 read with Section 34 of IPC. The court noted that while the dishonor of the cheque could attract Section 138 of the N.I. Act, it does not preclude the initiation of proceedings under Sections 418, 420 read with Section 34 of IPC if the factual matrix indicates an intention to deceive and cheat. The court referenced the Supreme Court's rulings in Dr. Lakshman v. State of Karnataka and Sangeetaben Mahendrabhai Patel v. State of Gujarat, which support the position that criminal proceedings can be initiated alongside proceedings under the N.I. Act if there is an element of cheating and fraud. 3. Justification of Criminal Proceedings The petitioner contended that the criminal proceedings were malicious and an abuse of the process. The court rejected this argument, stating that the Magistrate's direction to register the complaint as an FIR and investigate was justified based on the prima facie satisfaction that a cognizable case was made out. The court emphasized that the presence of a civil remedy does not bar the initiation of criminal proceedings if there is evidence of fraudulent intent. The court referenced the Supreme Court's judgment in Dr. Lakshman, which held that the existence of a civil contract does not preclude criminal prosecution if there is an element of cheating or fraud. Conclusion The court concluded that the Magistrate's order directing the registration of the FIR and investigation under Section 156(3) Cr.P.C. was justified and within legal bounds. The petitioner's arguments were found to lack merit, and the criminal proceedings initiated were not an abuse of the process. Consequently, the court dismissed the petition, upholding the Magistrate's order and the ongoing criminal proceedings.
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