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2009 DIGILAW 983 (ORI)

L. P. ELECTRONICS (O) PVT. LTD. v. TIRUPATI ELECTRO MARKETING PVT. LTD.

2009-12-23

I.MAHANTY

body2009
JUDGMENT : Indrajit Mahanty, J. - Indrajit Mahanty, J.-In the present application u/s 482 of the Code of Criminal Procedure, prayer has been made by the petitioner to quash the criminal proceeding in I.C.C. Case No. 847 of 2008 filed u/s 138 of the Negotiable Instruments Act pending before the teamed S.D.J.M., Bhubaneswar and/or to direct stay of further proceeding till disposal of C.S. No. 91 of 2008 pending in the Court of learned Civil Judge (Senior Division), 1st Court, Cuttack. 2. Mr. Banshidhar Baug, learned Counsel for the petitioners submitted that the petitioners had issued a letter to the opp. party-claimant on 19.10.2007 requesting them to settle the accounts and the outstanding claims of the petitioners and claim that after adjustment of all outstanding claims of the petitioners with the opp. party, was entitled to get an amount of Rs. 28,293.70 from the petitioners. Based on such an assertion, the petitioner enclosed the Account Payee cheque for the self-same amount drawn on ICICI Bank, Cuttack and requested the opp. party-complainant to return back the blank cheque bearing No. 006033 of the State Bank of India, Cuttack City Branch which had been handed over to the opp. party-complainant in May 2007, as security. It is further alleged that the said letter was addressed to the complainant but the same was received by one of its employees, who used to go to the petitioners show-room at Cuttack either for giving delivery of materials or for collecting payments from the petitioners. The petitioners further submission is that, although the opp. party-complainant received the said letter dated 19.10.2007, but did not give any reply thereto and instead, the complainant sent a letter dated 17.12.2007, claiming therein that of an amount Rs. 6,27,281/- was outstanding against the petitioners in terms of their book of accounts. It is further contended that in support of the petitioners reply to the complainant's letter dated 17.12.2007, petitioner No. 2 was threatened by the complainant-company that they would seek encashment of the blank cheque given by the petitioners as security. Based on such an apprehension the petitioners wrote to the Bank i.e. State Bank of India, Cuttack City Branch on 24.12.2007, requesting them to effect "stop payment" of cheque No. 006033, if presented for encashment. It is further stated on behalf of the petitioners that the opp. Based on such an apprehension the petitioners wrote to the Bank i.e. State Bank of India, Cuttack City Branch on 24.12.2007, requesting them to effect "stop payment" of cheque No. 006033, if presented for encashment. It is further stated on behalf of the petitioners that the opp. party-complainant filled up the said blank cheque given to it as security with an amount of Rs. 6,20,637/- and placed it for encashment which was dishonoured and returned on 27.12.2007 on "stop payment" as per instruction issued by the petitioners to its Bankers. Learned Counsel for the petitioners further asserts that petitioner No. 1 at the relevant time i.e. on 24.12.2007 as well as on 27.12.2007 had sufficient funds in its account to honour the said cheque but since there was dispute regarding the quantum of entitlement of the opp. party-complainant, the petitioners had issued instructions to its Bankers to make stop payment. 3. From the pleadings, it further appears that, on the return of the cheque by the Bank on 27.12.2007, the opp. party-complainant on 8/10.1.2008 issued statutory notice, u/s 138, N.I. Act to the present petitioners followed up with a subsequent notice dated 15.1.2008. It is stated that the petitioners responded to the said notice under cover of its letter dated 31.1.2008. 4. In paragraph-19 of the petition, it is stated that after opp. party-complainant issued notice u/s 138, N.I. Act and after giving reply thereto by the petitioners on 31.1.2008, the petitioners filed C.S. No. 91 of 2008 in the Court of the Learned Civil Judge (Senior Division), 1st Court, Cuttack on 18.2.2008. The suit was filed with a prayer for settlement of accounts between the petitioner and opp. party-complainant and for a decree that the opp. party is only entitled to receive Rs. 28,294/- from the petitioners. The said suit remains pending as on date. 5. It is further stated that during pendency of the aforesaid suit No. 91 of 2008, which was filed on 18.2.2008, the opp. party-complainant initiated I.C.C. Case No. 847 of 2008 in the Court of the learned S.D.J.M., Bhubaneswar u/s 138, N.I. Act. In this proceeding, learned S.D.J.M., Bhubaneswar after taking cognizance in the said case u/s 138, N.I. Act, directed issue of process against the petitioners and other Directors of the company. 6. Mr. party-complainant initiated I.C.C. Case No. 847 of 2008 in the Court of the learned S.D.J.M., Bhubaneswar u/s 138, N.I. Act. In this proceeding, learned S.D.J.M., Bhubaneswar after taking cognizance in the said case u/s 138, N.I. Act, directed issue of process against the petitioners and other Directors of the company. 6. Mr. Baug, learned Counsel for the petitioners, inter alia, submitted that since the civil suit had been filed by the petitioners and was pending regarding settlement of account, the further continuance of the criminal proceeding, during pendency of the civil suit is not permissible under law and the same amounts an abuse of the process of Court. In the light of the aforesaid contentions, the petitioners have prayed to either quash the criminal proceeding in I.C.C. Case No. 847 of 2008, initiated u/s 138, N.I. Act pending in the Court of the learned S.D.J.M., Bhubaneswar and/or in the alternative, had sought for direction for stay of further proceeding in the said complaint case, pending disposal of Civil Suit No. 91 of 2008 in the Court of Civil Judge (Sr. Division), 1st Court, Cuttack. 7. Mr. Debasis Das, learned Counsel for the opp. party-complainant, on the other hand, stated that it is well settled in law by the Apex Court in the case of M/s. Medchl Chemicals and Pharma P. Ltd. Vs. M/s. Biological E. Ltd. and Others that both criminal law and civil law remedy can be pursued in diverse situations. Whereas the object of criminal law is to punish an offender who commits an offence against a person, property or the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life, but this does not however, affect civil remedies at all, for suing the wrong-doer. It is anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred. Therefore, the two types of actions, namely, civil and criminal are quite different in content, scope and impart. He placed further reliance in the case of Sri Krishna Agencies v. State of A.P. and Anr. I (2009) BC 374 (SC) : (2009) 42 OcR 241 (SC). Therefore, the two types of actions, namely, civil and criminal are quite different in content, scope and impart. He placed further reliance in the case of Sri Krishna Agencies v. State of A.P. and Anr. I (2009) BC 374 (SC) : (2009) 42 OcR 241 (SC). In the said Judgment, the Hon'ble Supreme Court has categorically laid down the principle that, there can be no bar to the simultaneous continuance of a criminal proceeding and a civil proceeding, if the two arise from separate causes on action. In the said case the complainant in Section 138, N.I. Act had been initiated since "stop payment" orders were issued by the drawer. It was contended on behalf of the drawer that since the drawee had taken recourse to arbitration proceedings, the dispute was obviously civil in nature and the criminal complaint could not be proceeded with. The High Court had accepted the aforesaid contention of the drawer and had quashed the complaint. The Hon'ble Supreme Court while placing reliance on the judgment rendered in the case of Trisuns Chemical Industry Vs. Rajesh Agarwal and others where a similar question arose in relation to arbitration proceeding and a complaint was filed under Sections 415 and 420, Cr.P.C. In the said decision, it was held that, merely because arbitration proceeding had been undertaken, a criminal proceedings could not be thwarted. Placing reliance on the aforesaid judgment, Their Lordships of the Supreme Court came to hold that "there can be no bar to the simultaneous continuous of a criminal proceeding and civil proceeding if two arise from the separate causes of action". Reliance was also placed by the learned Counsel for the opp. party-complainant on a further judgment of the Hon'ble Supreme Court rendered in the case of Smt. Rumi Dhar v. State of West Bengal and Anr. II (2009) CCR 486 (SC) : II (2009) DLT 438 (SC) : (2009) 43 OCR 324 (SC), wherein the Division Bench presided over by the Hon'ble Justice S.B. Sinha came to hold in paragraph 18 thereof which is as follows: 18. It is, now a well settled principle of law that in a given case, a civil proceeding and a criminal proceeding can proceed simultaneously. Bank is entitled to recover the amount of loan given to the debtor. It is, now a well settled principle of law that in a given case, a civil proceeding and a criminal proceeding can proceed simultaneously. Bank is entitled to recover the amount of loan given to the debtor. If in connection with obtaining the said loan, criminal offences have been committed by the persons accused thereof including the officers of the Bank, criminal proceedings would also indisputably be maintainable. When a settlement is arrived at by and between the creditor and the debtor, the offence committed as such does not come to an end. The Judgment of a tribunal in a civil proceeding and that too when it is rendered on the basis of settlement entered "into by and between the parties, would not be of much relevance in a criminal proceeding having regard to the provisions contained in Section 43 of the Indian Evidence Act. Mr. Das also placed reliance on an another judgment in the case of State of Rajasthan Vs. Kalyan Sundaram Cement Industries Ltd. and Others whereby the Hon'ble Supreme Court to hold that the complainant, after issuing notice u/s 138, N.I. Act filed a suit for recovery and also initiated a proceeding u/s 138, N.I. Act as well as u/s 420, I.P.C. When the aforesaid action was challenged, the High Court directed stay of the civil proceedings pending disposal of the criminal case. The Hon'ble Supreme Court came to hold that "it is settled law that pendency of the criminal matters would not be an impediment to proceed with the civil suits". The criminal Court would deal with offence punishable under the Act. On the other hand, the Courts rarely stay the criminal cases and only when the compelling circumstances require the exercise of power. We have never come across stay of any civil suits by the Courts so far. The High Court of Rajasthan is only an exception to pass such orders. The High Court proceeded on wrong premise that the accused would be expected to disclose their defence in the criminal case by asking them to proceed with the trial of the suit. It is not a correct principle of law. Mr. Das also relied on a further judgment in the case of Korp Gems (India) Pvt. Limited and Another Vs. Suraj Products Ltd. referred to by Hon'ble Mr. It is not a correct principle of law. Mr. Das also relied on a further judgment in the case of Korp Gems (India) Pvt. Limited and Another Vs. Suraj Products Ltd. referred to by Hon'ble Mr. Justice R.N. Biswal of Orissa High Court wherein, it is held that following the rule laid down by the Hon'ble Supreme Court in the case of Medchl Chemicals and Pharma P. Ltd. (supra), held that it cannot be said that, continuance of the criminal proceeding against the present petitioners would be abuse of process of the Court. Mr. Das further placed reliance on a judgment of the Hon'ble Supreme Court, in the case of Goa Plast (P) Ltd. Vs. Chico Ursula D'Souza wherein His Lordship of the Supreme Court dealt with a "presumption of law" that arises u/s 139, N.I. Act in the following manner: 139. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. Thus it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of Banking operation and to ensure credibility in business transactions through Banks persuades to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong. If we hold otherwise, by giving instructions to Banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences u/s 138. If we hold otherwise, by giving instructions to Banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences u/s 138. Once a cheque is issued by a drawer, a presumption u/s 139 must follow and merely because the drawer issued notice to the drawee or to the Bank for stoppage of payment it will not preclude an action u/s 138 of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in M/S Modi Cements Limited Vs. Shri Kuchil Kumar Nandi. On same facts is the decision of this Court in Ashok Yeshwant Badave Vs. Surendra Madhavrao Nighojakar and Another. The decision in Mode case overruled an earlier decision of this Court in Electronic Trade and M/s. Electronics Trade and Technology Development Corpn. Ltd., Secunderabad Vs. M/s. Indian Technologists and Engineers (Electronics) Pvt. Ltd. and another, which had taken a contrary view. We are in respectful agreement with the view taken in Modi case. The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date. Reliance was also placed on paragraph 17 of the judgment of this Court in the case of M.M.T.C. Ltd. and Another Vs. Medchl Chemicals and Pharma (P) Ltd. and Another which reads as under: There is therefore no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. Thus they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability. 8. The burden of proving that there was no existing debt or liability was on the respondents. Thus they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability. 8. In the light of the submissions and judgments noted hereinabove and after careful perusal of the pleadings in the present petition, it is clear therefrom that the Civil Suit No. 91 of 2008 with a prayer to settle the accounts was filed by the petitioner only after receipt of notice from the opp. party-complainant u/s 138, N.I. Act. It is clear therefrom that after having issued instructions to the Bankers to effect "stop payment" for the cheque issued to the complainant and after receiving notice from the complainant u/s 138 N.I. Act, knowing fully well, that the same would lead to the filing of a complaint u/s 138, N.I. Act, had gone ahead and filed the civil suit clearly for the purpose of trying to defend themselves in course of the impending proceeding before the criminal Court. Section 139 of the N.I. Act which has been dealt by the Hon'ble Supreme Court in the case of Goa Plast (P) Ltd. (supra), the presumption arising therefrom has been held to be a presumption in law that the cheque was issued for the discharge of any debt or liability and such presumption can only be rebutted by adducing evidence by those who seek to rebut the said presumption. Therefore, once the cheque was issued by a drawee, the presumption u/s 139 of the Act must follow and merely because the drawer issued notice to the drawee or to the Bank for "stoppage of the payment" cannot prevent action u/s 138, N.I. Act by the drawee or the holder of the cheque in due course. It is well settled in the case of MA. Medchi Chemicals and Pharma P. Ltd. (supra) that in view of the presumption u/s 139, N.I. Act, the burden of proving that there was no existing debt or liability, was on the drawer of the cheque which he has to discharge in course of the trial and merely on the averments made by the petitioner herein, it cannot be concluded that there was no existing debt or liability. 9. 9. In view of the aforesaid judgments of the Hon'ble Supreme Court, since it is well settled in law that both a civil and criminal proceeding can proceed simultaneously, the mere filing of a civil suit by the petitioner, after receipt of notice u/s 138, N.I. Act, cannot/does not empower the petitioner to seek quashing or stay of the criminal complaint. In view of the reasons as recorded hereinabove, I am constrained to observe that the present application u/s 482, Cr.P.C. merits no further consideration and is hereby dismissed. Interim Order dated 12.12.2008 stands vacated. The learned S.D.J.M., Bhubaneswar is directed to proceed in the matter and dispose the I.C.C. No. 847 of 2008 expeditiously. Applicatioh dismissed. Final Result : Dismissed