2021 (10) TMI 1024 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - cheque issued by the petitioner or not - role played in the transaction with the defacto-complainant/respondent - offence punishable under Section 138 of the Negotiable Instrument Act - HELD THAT - In the disposition of the dispute, the arbitrators shall be governed by the express terms of this agreement and otherwise by the laws of the State of (specify) which shall be govern the interpretation of the Agreement. The decision of the arbitrators shall be final and conclusive on the parties and shall be a bar to any suit, action or proceeding instituted in any court or before any administrative tribunal. Notwithstanding the foregoing, judgment on any award by the arbitrators may be entered in any court of competent jurisdiction. This arbitration provision shall survive any expiration or termination of the agreement. While perusing the records, it could be seen that the defacto complainant was working as an employee in the said Company and 2nd accused Mr. Saravanan General Manager of the firm in his personal capacity issued a cheque for liability as the arrears of salary to be paid to the defacto-complainant but the case under Section 138 of N.I. Act was filed against VT Manpower Consultancy Services Private Limited. - It could also be seen that there are allegations and counter allegations against each parties and as per clause 19 (Arbitration) of the Agreement of Employment of VT Manpower Consultancy Services Private Limited, the parties expressly agree that all disputes or controversies arising out of this agreement, its performance, or the alleged breach thereof, if not disposed of by agreement, shall be resolved by arbitration in accordance with this section. Either party must demand such arbitration only within three (3) months after the controversy arises by sending a notice of demand to arbitrate under the Indian Arbitration and Conciliation Act, 1996, to the other party. This Court cannot have a roving enquiry in this matter and as per the order of the Hon'ble Supreme Court where guidelines were issued for quashing the FIR, this case would not fall under the guidelines issued and this Court is of the view that the petitioner's claim to quash the C.C. No. 4965 of 2014 on the file of the III-FTC, Saidapet, Chennai, cannot be accepted and all the aspects regarding employment and other aspects have to be decided only before the trial Court. This Court is not inclined to quash the proceedings - petition dismissed.

Summary

Issues Involved:
1. Quashing of complaint under Section 138 of the Negotiable Instruments Act.
2. Role and liability of the petitioner in the issuance of the dishonored cheque.
3. Applicability of arbitration clause in the employment agreement.
4. Jurisdiction of the High Court under Section 482 Cr.P.C. to quash the proceedings.

Issue-wise Detailed Analysis:

1. Quashing of Complaint under Section 138 of the Negotiable Instruments Act:
The petitioner sought to quash the complaint filed under Section 138 of the N.I. Act, arguing that the cheque in question was issued by the second accused, Mr. Saravanan, in his individual capacity, and not by the petitioner or the company. The petitioner contended that the cheque did not bear the company's seal and was not authorized by the company. The court observed that the cheque was indeed issued by Mr. Saravanan, and the defacto complainant claimed it was for salary arrears. The court concluded that the issue of whether the cheque was issued in a personal or official capacity could only be determined during the trial.

2. Role and Liability of the Petitioner:
The petitioner argued that the cheque was issued by Mr. Saravanan in his personal capacity and not by the company, VT Manpower Consultancy Services Private Limited. The respondent claimed that the cheque was issued by Mr. Saravanan as the General Manager of the company for salary dues. The court noted that the complaint was filed against the company and Mr. Saravanan jointly and severally. The court emphasized that the determination of the capacity in which the cheque was issued and the liability of the petitioner required a detailed examination of evidence, which could only be done at the trial stage.

3. Applicability of Arbitration Clause in the Employment Agreement:
The petitioner highlighted Clause 19 (Arbitration) of the employment agreement, which mandated arbitration for resolving disputes arising out of the agreement. The court acknowledged the existence of the arbitration clause but noted that the arbitration process had not been initiated by either party. The court held that the presence of an arbitration clause did not preclude the filing of a complaint under Section 138 of the N.I. Act, as the criminal proceedings were independent of the contractual arbitration process.

4. Jurisdiction of the High Court under Section 482 Cr.P.C.:
The petitioner invoked Section 482 Cr.P.C. to quash the proceedings, citing judgments from the Supreme Court. The court referred to the Supreme Court's rulings in Devendra Prasad Singh Vs. State of Bihar & Anr., Central Bureau of Investigation Vs. Arvind Khanna, and M. Jayanthi Vs. K.R. Meenakshi & anr., which clarified that the High Court should not engage in a detailed examination of evidence or disputed facts while exercising its inherent jurisdiction under Section 482 Cr.P.C. The court concluded that the petitioner's grounds for quashing the complaint could not be entertained at this stage and should be addressed during the trial.

Conclusion:
The court dismissed the Criminal Original Petition, stating that the petitioner's request to quash the proceedings in C.C. No. 4965 of 2014 could not be accepted. The court emphasized that all aspects regarding the employment dispute and the issuance of the cheque should be decided by the trial court. The petitioner was granted the liberty to raise all relevant grounds before the trial court. Consequently, the connected miscellaneous petition was also closed.