2025 (1) TMI 2 - HC - Indian Laws

Seeking quashing of Criminal Complaint - Dishonour of Cheque - continuation of legal proceedings commenced by the company in its former name by its new name - inherent jurisdiction under Section 482 of the CrPC for quashing the proceedings. Continuation of legal proceedings commenced by the company in its former name by its new name - HELD THAT - It is relevant to note that the inherent jurisdiction of the Court under Section 482 of the CrPC ought to be exercised sparingly especially when the matter is at the stage of issuance of summons as the same has the effect of scuttling the proceedings without the parties having an opportunity to adduce the relevant evidence. The Hon ble Apex Court, in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) 2022 (4) TMI 1434 - SUPREME COURT , adverting to a catena of judgments, had underscored the parameters for exercising inherent jurisdiction to quash the proceedings at the stage of the summoning order. In the present case, apart from raising an argument in relation to the cheques in dispute being given as security, the petitioners have sought to challenge the complaints essentially on the ground that the same are not maintainable by virtue of the same being filed in the old name of the complainant company - It is argued that even though the name of the complainant company was changed on 28.05.2018, however, the complaints were subsequently filed in the erstwhile name in June, 2018. In the case of MUNISH KUMAR GUPTA VERSUS M/S MITTAL TRADING COMPANY 2024 (4) TMI 1212 - SC ORDER , the Hon ble Apex Court had set aside the order whereby the concerned High Court had permitted the complainant to amend the date in the complaint by observing that if such amendment was not permitted, the same will be fatal to the case of the complainant. In the said case, the complainant therein had claimed that the error in the date of the cheque in dispute in the evidence as well as the complaint was merely typographical in nature. The Hon ble Apex Court observed that the date of the cheque is a relevant aspect as the same was instrumental in determining whether the issue of notice was within the time frame as provided under the NI Act and as to whether there was sufficient balance in the account of the issuer on the date. In view of the same, it was held that the amendment as sought for was not justified. While a bald averment is made that grave prejudice would be caused to the petitioners if the substitution of the new name of the complainant company is allowed, however, in the opinion of this Court, mere use of the old name of the complainant company is not a relevant aspect as the same is not likely to have any effect on the merits of the case. No cogent argument is made in relation to how the change in name will affect the case against the petitioners or as to how their defence would be hampered by such a change - It is also relevant to note that the mere change in name does not alter or affect the rights of the company. Furthermore, the agreement between the complainant company and the accused company is not disputed. The change of the name of the complainant company is merely formal in nature and the same can be easily cured. The same also has no effect on the original nature of the complaint. Application of inherent jurisdiction under Section 482 of the CrPC for quashing the proceedings - HELD THAT - It is incumbent on this Court to exercise its inherent jurisdiction to ensure substantial justice. In light of the same, considering that the petitioners have failed to show as to how they will be gravely prejudiced by a mere correction in the name of the company, quashing of the criminal proceedings merely on account of a technical error at this junction, when the signatures on the cheques in dispute have not been disputed and the claim of the complainant company has not been adjudicated on merits, would be unmerited and it will frustrate the ends of justice - considering that the complaints have been pending since the year 2018, this Court considers it apposite to request the learned Trial Court to expedite the proceedings. The present petitions are dismissed.

Summary

Issues Involved:

1. Maintainability of complaints filed in the old name of the complainant company.
2. Allegation of cheques being issued as security.
3. Application of inherent jurisdiction under Section 482 of the CrPC for quashing the proceedings.

Issue-wise Detailed Analysis:

1. Maintainability of Complaints Filed in the Old Name of the Complainant Company:

The primary contention raised by the petitioners was that the complaints were not maintainable as they were filed in the old name of the complainant company, which had undergone a change of name before the filing of the complaints. The petitioners argued that the complainant company ceased to exist in the eyes of law after the merger and change of name, rendering the complaints non-est. They relied on judgments such as Munish Kumar Gupta v. Mittal Trading Co. and S.R. Sukumar v. S. Sunaad Raghuram to support their argument that amendments to correct the name should not be allowed post-cognizance as it would result in a time-barred complaint being entertained.

The court analyzed the applicability of these judgments and concluded that the change in the name of the complainant company was a mere technical flaw that could be easily cured. The court emphasized that the change of name does not alter or affect the rights of the company and that the agreement between the complainant and accused companies was not disputed. It was noted that the mere filing of the complaint in the old name appeared to be an oversight, and the complainant company had taken steps to rectify this through applications for substitution of the authorized representative and change of name, which had been allowed in one of the criminal complaints. Therefore, the court held that the complaints were maintainable despite being filed in the old name.

2. Allegation of Cheques Being Issued as Security:

The petitioners contended that the cheques in dispute were issued as security, supported by the Distribution Agreement between the parties, and that payments were being made through RTGS. However, the court did not delve deeply into this issue at the stage of quashing the proceedings, as the factual controversy was yet to be canvassed and considered by the trial court. The court underscored that the stage of issuing process is not for evaluating the truthfulness of the allegations or the weight of the defenses raised by the accused. Therefore, this issue was left to be determined during the trial.

3. Application of Inherent Jurisdiction under Section 482 of the CrPC for Quashing the Proceedings:

The court reiterated the principles governing the exercise of inherent jurisdiction under Section 482 of the CrPC, emphasizing that it should be exercised sparingly and with caution, especially at the stage of issuance of summons. The court referred to the parameters laid down in Rathish Babu Unnikrishnan v. State (NCT of Delhi) and other judgments, highlighting that pre-trial quashing should only occur in the rarest of cases where the factual defense is of unimpeachable quality.

In the present case, the court found that the petitioners failed to demonstrate how they would be prejudiced by the correction of the complainant company's name. It was noted that the signatures on the cheques were undisputed, and the claim of the complainant company had not been adjudicated on merits. Consequently, the court concluded that quashing the proceedings on account of a technical error would frustrate the ends of justice. The court dismissed the petitions and requested the trial court to expedite the proceedings, considering the complaints had been pending since 2018.

Conclusion:

The court dismissed the petitions seeking quashing of the criminal complaints, holding that the complaints were maintainable despite being filed in the old name of the complainant company. The court found no merit in the petitioners' arguments regarding the issuance of cheques as security or the alleged prejudice caused by the name change. The court emphasized the need for the trial court to adjudicate the factual controversies and directed expedited proceedings.