2021 (6) TMI 633 - HC - Indian Laws

Dishonor of Cheque - liabilities discharged by payment of dues, which was not considered by Court - seeking closure of proceedings as per Section 143 of Negotiable Instruments Act r/w. 258 of Cr.P.C. - HELD THAT - The Hon'ble Apex Court in M/S. METERS AND INSTRUMENTS PRIVATE LIMITED ANR. VERSUS KANCHAN MEHTA 2017 (10) TMI 218 - SUPREME COURT categorically held that where the cheque amount with interest and cost, as assessed by the Court is paid by a specified date, the Court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 of Cr.P.C. Normally, general rule for trial of case under Chapter XVII of the Negotiable Instruments Act is to follow the summery procedure and summons trial procedure can be followed where sentence exceeding one year may be necessary, taking into account of the fact that punishment under Section 357 (3) of Cr.P.C., with sentence of less than one year will not be adequate. In the present case, the option left to the petitioners herein is to approach the Court below and file an appropriate application under Section 143 N.I. Act r/w. 258 of Cr.P.C., raising all the grounds including the ground that they have already paid the entire amount covered under the cheques in dispute - petition disposed off.

Summary

Issues Involved:
1. Quashing of proceedings under Section 138 of the Negotiable Instruments Act.
2. Payment of the cheque amount after the statutory period.
3. Application of Section 143 of the Negotiable Instruments Act read with Section 258 of Cr.P.C.
4. Abuse of process of law.
5. Interest and costs associated with the cheque amount.

Detailed Analysis:

1. Quashing of proceedings under Section 138 of the Negotiable Instruments Act:
The petitioners filed Criminal Petition Nos. 656, 678, and 679 of 2021 under Section 482 of Cr.P.C. to quash the proceedings in C.C. Nos. 77, 76, and 78 of 2020, pending before the II Special Magistrate, Rajendra Nagar, Ranga Reddy District. These cases were registered for the offence punishable under Section 138 of the Negotiable Instruments Act. The petitioners argued that they had paid the entire amount demanded in the legal notices, thus discharging their liability. Despite this, the lower court took cognizance of the offence without considering the payments made.

2. Payment of the cheque amount after the statutory period:
The petitioners transferred a total amount of ?78,55,000/- in three installments from HDFC Bank on 24-12-2020, 28-12-2020, and 30-12-2020. However, these payments were made 55 days after the statutory period of 15 days prescribed under Section 138 of the Negotiable Instruments Act. The 2nd respondent argued that the petitioners committed an offence under Section 138 since they failed to pay the cheque amount within the prescribed period and did not pay the interest.

3. Application of Section 143 of the Negotiable Instruments Act read with Section 258 of Cr.P.C.:
The petitioners contended that the court should close the proceedings under Section 143 of the Negotiable Instruments Act read with Section 258 of Cr.P.C. since they had paid the cheque amount. The Hon’ble Supreme Court in M/s. Meters and Instruments Private Limited and another v. Kanchan Mehta held that the court could close the proceedings if the cheque amount with interest and costs, as assessed by the court, is paid by a specified date.

4. Abuse of process of law:
The petitioners argued that the lower court's cognizance of the offence and issuance of summons was an abuse of process of law since the payments had already been made. They also claimed confusion in the demand made by the 2nd respondent in the legal notices, which delayed the payments. Furthermore, Petitioner No. 4 argued that he had nothing to do with the cheques in dispute.

5. Interest and costs associated with the cheque amount:
The 2nd respondent contended that the petitioners had not paid the interest and costs associated with the cheque amount. The Hon’ble Supreme Court’s judgment emphasized that the court could close the proceedings if the cheque amount with interest and costs is paid. The petitioners were advised to approach the lower court and file an application under Section 143 of the Negotiable Instruments Act read with Section 258 of Cr.P.C. to address these issues.

Conclusion:
The court dismissed the Criminal Petitions, granting liberty to the petitioners to file applications under Section 143 of the Negotiable Instruments Act read with Section 258 of Cr.P.C. before the II Special Magistrate, Rajendra Nagar, Ranga Reddy District Court. The lower court was directed to consider the applications in view of the guidelines issued by the Hon’ble Supreme Court in the M/s. Meters and Instruments Private Limited case.