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2012 DIGILAW 593 (RAJ)

Arjun Singh v. R. T. D. C. , Jaisalmer

2012-03-06

SANDEEP MEHTA

body2012
JUDGMENT 1. - Heard learned counsel for the parties. 2. The instant misc. petition has been filed by the petitioner seeking quashing of the proceedings pending in the Court of Judicial Magistrate, Jaisalmer in Criminal Case No. 120/2006 for the offence under Section 138 of the Negotiable Instruments Act and challenging the order dated 10.11.2008 passed by the Judicial Magistrate, Jaisalmer reading out the accusations to the petitioner for the aforesaid offence as affirmed in revision by the learned Sessions Judge, Jaisalmer by his order dated 22.1.2009. 3. Succinctly stated the facts of the case are that the respondent/complainant invited tenders for the operation of a travel counter at Moomal Hotel, Jaisalmer for a period of three years. The petitioner participated in the tender proceedings and on being declared to be a successful bidder, an agreement was signed between the parties as per which, the license fees for operating the travel counter was fixed at Rs. 6111/- per month. The petitioner is said to have given post dated cheques to the complainant as advance towards the monthly lease money. It appears that dispute arose between the parties interse right at the inception regarding the place where the counter was to be erected and it is petitioner's case that the complainant failed to hand over the possession of the counter to him whereupon the petitioner instructed his bank to stop payment of the post dated cheques. There was an arbitration clause between the parties interse and accordingly, the matter was referred to the sole arbitrator under the provisions of the Arbitration and Conciliation Act. The arbitrator decided the dispute in favour of the petitioner vide award dated 27.1.2006. In the interim, the complainant submitted a complaint in the Court of Judicial Magistrate, Jaisalmer after the advance cheque given by the petitioner was bounced because of the instruction given by the petitioner to his bank for stopping payment of the said cheque. The petitioner has been summoned in the said complaint and pursuant to his appearing before the learned Magistrate, the accusation of the offence has also been read over vide order dated 10.11.2008. The petitioner filed a revision challenging the order dated 10.11.2008 but the revisional court has affirmed the order dated 10.11.2008 vide its order dated 22.1.2009 and hence, the instant misc. The petitioner filed a revision challenging the order dated 10.11.2008 but the revisional court has affirmed the order dated 10.11.2008 vide its order dated 22.1.2009 and hence, the instant misc. petition has been filed seeking quashing of orders impugned as well as proceedings of the complaint filed against the petitioner. 4. Assailing the orders impugned passed by the courts below, counsel for the petitioner submits that in this case, the respondent/complainant has failed to show that there existed any legally enforceable debt so as to permit the continuance of the proceedings under Section 138 of the Negotiable Instruments Act. It is submitted that the advance cheques were given by the petitioner against the proposal of the complainant to hand over a travel counter to the petitioner as per the terms and conditions of the contract. The counter was never handed over to the petitioner as per the agreement and, therefore, the petitioner was constrained to file proceedings under the Arbitration and Conciliation Act against the respondent. The Arbitrator in pursuance to the proceedings thus initiated, has passed an award in favour of the petitioner holding that the respondent had failed to provide a travel counter to the petitioner as per the contract. It is submitted that the award of the Arbitrator was thereafter challenged by the respondent by filing an application under Section 34 of the Act and the learned District Judge, Jaisalmer by his order dated 15.7.2008 has confirmed the award passed by the Arbitrator. It is submitted that the order of the District Judge, Jaisalmer dated 15.7.2008 was also challenged by the complainant by filing a misc. appeal before this Court being S.B. Civil Misc. Appeal No.448/2009 and this Court has also dismissed the appeal by its judgment dated 9.2.2012 and thus, the award of the Arbitrator having attained finality, no action can be permitted to be taken in relation to the causes which have already been decided by the Arbitrator. Thus, it is submitted that in view of the findings of the Arbitrator that the respondent was not entitled to receive the license fees from the petitioner because it did not provide the counter as warranted under the agreement, then the prosecution of the petitioner on the very same facts for having failed to make the payment of the advance cheque against the license fees, was not warranted. It is argued that in view of the finding of the competent arbitrator who was appointed to decide the issue in dispute that the petitioner was not liable to make payment of the license fees, the prosecution of the petitioner on the very same grounds cannot be said to be justified. Counsel for the petitioner in support of his arguments, has placed reliance on the judgments of the Hon'ble Apex Court delivered in the cases of (1) Anita Malhotra vs. Apparel Export Promotion Council & Anr. reported in (2012) 1 SCC 520 and (2) Harshendra Kumar D. vs. Rebatilala Korley etc. reported in JT 2011 (2) SC 586 . Counsel for the petitioner also submits that the judgment of the District Judge dated 15.7.2008 was also challenged by filing misc. appeal being S.B. Civil Misc. Appeal No. 448/2009 and this Court has dismissed the said appeal by judgment dated 9.2.2012 and thus, the award of the arbitrator having attained finality, no action can be permitted to be taken in relation to the issues which has already been decided by the arbitrator against the respondent and the same issue being the sole cause of action in the impugned proceedings. 5. Per contra, learned counsel for the complainant/ respondent has submitted that merely the fact that the arbitrator has decided the proceedings interse between the parties it cannot be a ground to quash the proceedings of the complaint. Placing reliance on the decisions of the Hon'ble Apex Court in the judgments delivered in the cases of (1) Trisuns Chemical Industry vs. Rajesh Agarwal and Ors. reported in AIR 1999 SC 3499 and (2) Sri Krishna Agencies. vs. State of A.P. and Anr. reported in AIR 2009 SC 1011 , learned counsel for the complainant submits that mere pendency of the arbitration proceedings interse between the parties cannot be a ground for quashing of the proceedings of a criminal complaint. It is submitted that there is a presumption in favour of the holder of the cheque regarding the existence of legally enforceable debt and, therefore, the petitioner is under a burden to rebut the said presumption and merely because the arbitrator has decided the issue, the proceedings of the complaint should not be quashed. 6. I have considered the arguments advanced at bar and have considered the orders impugned and have perused the record. 7. 6. I have considered the arguments advanced at bar and have considered the orders impugned and have perused the record. 7. Undisputedly, when the contract was entered into between the parties, there was an arbitration clause in the contract. The petitioner was to be provided travel counter at a particular place in Moomal Hotel. On a perusal of the complaint filed in this matter, it is revealed that there is no averment that any such counter was provided to the accused. The complaint filed by the respondent is absolutely silent in this regard. Even in the legal notice there is no averment that the counter in pursuance to and as per the agreement entered into between the parties, was provided to the petitioner. This was the bone of contention between the parties and because of the fact that the respondent did not provide the requisite travel counter to the petitioner, the matter was referred to the arbitrator who has decided the issue against the respondent. The decision of the arbitrator has been upheld by the District Judge in an application under Section 34 and the misc. appeal filed against the said order has been rejected by this Court as referred to above. Resultantly, the very substratum of the complainant's case regarding the cause for which the cheques were given has fallen out in this case. The only reason for which the cheques were advanced was that the respondent was supposed to provide a travel counter to the petitioner in the hotel Moomal. No such counter has been provided to the petitioner as per the finding recorded by the arbitrator. It is not averred in the complaint, the affidavit in support of the complaint or in the legal notice given by the complainant that any such counter was provided to the petitioner. Contrary to this, the finding of the arbitrator is that the counter was never provided. As such, there arose no question of the cheques being available for encashment unless and until the respondent complied with its duty under the contract. The respondent having failed to perform its duty under the contract was not entitled to receive the payment against the same by encashing the cheques. It is not disputed that the averments in the contract were to the effect that the cheques were issued against the payment of license fees. The respondent having failed to perform its duty under the contract was not entitled to receive the payment against the same by encashing the cheques. It is not disputed that the averments in the contract were to the effect that the cheques were issued against the payment of license fees. When the terms of the license were not carried out in its entirety, the petitioner could not be held liable to make payment of license fees and accordingly, there was nothing wrong in the action of the petitioner in stopping payment of cheque. 8. The Hon'ble Apex Court in the case of Radhey Shyam Kejriwal vs. State of West Bengal & Anr. reported in 2011 (3) SCC 581 , while examining the effect of the finding of a competent authority in a departmental proceeding upon a criminal case instituted on the same facts observed as below:- "We find substance in the submission of Mr. Sharan. There may appear to be some conflict between the views in the case of Standard Charted Bank (supra) and L.R. Melwani (supra) holding that adjudication proceeding and criminal proceeding are two independent proceedings and both can go on simultaneously and finding in the adjudication proceeding is not binding on the criminal proceeding and the judgments of this Court in the case of Uttam Chand (supra), G.L. Didwania (supra) and K.C. Builders (supra) wherein this Court had taken a view that when there is categorical finding in the adjudication proceeding exonerating the person which is binding and conclusive, the prosecution cannot be allowed to stand. Judgments of this Court are not to be read as statute and when viewed from that angle there does not seem any conflict between the two sets of decisions. It will not make any difference on principle that latter judgments pertain to cases under the Income Tax Act. Judgments of this Court are not to be read as statute and when viewed from that angle there does not seem any conflict between the two sets of decisions. It will not make any difference on principle that latter judgments pertain to cases under the Income Tax Act. The ratio which can be culled out from these decisions can broadly be stated as follows: (i) Adjudication proceeding and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceeding is not necessary before initiating criminal prosecution; (iii) Adjudication proceeding and criminal proceeding are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceeding is not binding on the proceeding for criminal prosecution; (v) Adjudication proceeding by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceeding in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceeding is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where allegation is found to be not sustainable at all and person held innocent, criminal prosecution on the same set of facts and circumstances can not be allowed to continue underlying principle being the higher standard of proof in criminal cases. In our opinion, therefore, the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court." Applying the above analogy to the case at hand, it is apparent that the finding of the arbitrator in relation to the very same issue which is the basis of the complaint under Section 138 of the Negotiable Instruments Act is that the respondent was not entitled to receive the payment of license fees. Thus, there remains no reason to allow the prosecution of the petitioner in the complaint filed for bouncing of the cheques issued against the license fees. The judgments which have been relied upon by the counsel for the complainant/respondent were essentially dealing with the facts when the arbitration proceedings were pending and the criminal proceedings were challenged on the ground of the pendency of the arbitration proceedings. In the instant case, the arbitrator has reached to a finding which has been affirmed right up to this Hon'ble Court. The judgments relied upon by the counsel for the respondent are distinguishable on facts.Consequently, the instant misc. petition is allowed, the orders dated 10.11.2008 and 22.1.2009 passed by the Judicial Magistrate, Jaisalmer and the learned Sessions Judge, Jaisalmer respectively and all proceedings taken in pursuance thereto are quashed.Stay petition also stands disposed of.Petition Allowed. *******