2022 (4) TMI 764 - HC - Indian Laws

Dishonor of Cheque - scope of the term Taking cognizance - breach of contract - issuance of summon upon accused person - dispute between the parties is purely civil in nature or not - sections 406/409/120B of the Indian Penal Code - section 138 of NI Act - HELD THAT - The entire order which forms the very basis of issuing summon upon the accused persons, including the present petitioner, has been acted in a mechanical way on a printed order where the magistrate had put only the next date and put his signature beneath the order. This is a glaring example to show that a responsible officer like judicial magistrate is putting signature on a printed order without even knowing what is written in the order. There is no whisper in the entire complaint put by OP-2 that the complaint relates to any dishonour of cheque to attract section 138 of the Negotiable Instrument Act 1881(N.I. Act). Without going through the contents of the complaint Magistrate found prima facie case under section 138 of N.I. Act. From the sum and substance of the complaint it appears that complainant had tried to make out in his complain No.C-16913/11, a case under section 406/409/120B of the Indian Penal Code and not a single word has been used in the entire complaint in connection with dishonour of any cheque, so that it can attract section 138 of N.I. Act. It is by now well-settled that although the word cognizance has not been described in the Code of Criminal Procedure but under section 190 of the Code of Criminal Procedure, cognizance of offence by magistrate said to have taken when the magistrate takes notice of the acquisition and applies his mind to the allegations made in the complaint and on being satisfied that the allegations, if proved would constitute an offence, only then he decides to initiate the judicial proceeding against the offender by issuing summon. Taking cognizance of an offence is not a mere formality. Before taking cognizance magistrate is to apply his judicial mind to see, if on the fact alleged there is prima facie case to issue process. Taking cognizance is mental act as well as judicial act. Taking cognizance though requires great exercise of judicial mind and is not a mechanical process but it appears in the present case that the magistrate concerned has understood the term taking cognizance as delivery system in the post office without application of mind. Unfortunately this is never the intention of the legislature, as is evident from the provision of section 190(a) of Code of Criminal Procedure which shows learned magistrate can proceed on curtain direction upon receiving the petition of complaint of facts which constitute such offence. Magistrate never considered whether the allegations levelled in the complaint constitutes offence under section 138 of N.I. Act and whether prima facie case persists which is pre-eminently required and the same cannot be surrogated to a mechanical process. Revision application allowed.

Summary

Issues:
Allegations in a complaint case under sections 406/409/120B of the Indian Penal Code, issuance and non-payment of a bank guarantee, mechanical issuance of summon without proper application of judicial mind.

Analysis:

1. The petitioner, a manager of HDFC Bank, along with two others, was accused in a complaint case for alleged offenses under sections 406/409/120B of the Indian Penal Code. The complaint pertained to the non-payment of a bank guarantee issued by the bank in favor of the complainant for the supply of paper mills equipment. The petitioner approached the High Court seeking to quash the proceedings on various grounds.

2. The complaint alleged that the accused No. 1, a proprietor of a company, failed to execute a performance bank guarantee as per the purchase order, leading to a demand for the guarantee money due to the equipment's poor performance. Despite the complainant's demand, the bank mentioned that the original bank guarantee was not with them but with the accused No. 1, resulting in non-payment and subsequent filing of the complaint.

3. The High Court noted that the summon issued by the Metropolitan Magistrate was based on a mechanical order lacking proper scrutiny. The magistrate failed to apply judicial mind and wrongly found a prima facie case under section 138 of the Negotiable Instrument Act, despite the complaint primarily alleging offenses under the Indian Penal Code and not related to dishonor of a cheque.

4. The Court emphasized that taking cognizance of an offense requires the magistrate to apply judicial mind to the allegations before initiating proceedings. In this case, the magistrate's mechanical approach in issuing summon without understanding the complaint's contents rendered the cognizance non-est in the eye of the law. The Court held that the entire proceeding was unsustainable and quashed the same.

5. Consequently, the High Court allowed the revision application, quashed the proceedings before the Metropolitan Magistrate 14th Court, Calcutta, and clarified that parties could pursue other legal remedies if available. No costs were awarded, and the judgment directed the supply of a certified copy to the parties and the concerned magistrate.

By thoroughly analyzing the issues raised in the complaint case and the procedural irregularities in the magistrate's order, the High Court concluded that the mechanical issuance of summon without proper application of judicial mind rendered the entire proceeding unsustainable and ordered its quashing.