2010 (8) TMI 1173 - HC - Indian Laws

Dismissal of Petition Challenging Summoning Order and Cheque Liability under Section 138

Sandeep Khanna and Ors Versus State and Ors.

The petition challenging the summoning order dated 26th April 2006, the separate accusation of Mr. Sandeep Khanna and M/s. Kripa Overseas, the ... - Issues Involved:1. Validity of the summoning order dated 26th April 2006.2. Separate accusation of Mr. Sandeep Khanna and M/s. Kripa Overseas.3. Cheque given as security and its implications under Section 138 of the Negotiable Instruments Act.4. Impact of the Memorandum of Understanding dated 3rd May 2007 on the ongoing case.Detailed Analysis:1. Validity of the Summoning Order Dated 26th April 2006:The petitioner contended that the summoning order was non-speaking, mechanical, and passed without application of mind. The court examined the order and found that it was a computer print-out with handwritten entries for dates and counsel names. The court held that the handwritten entries did not prove that the order was pre-dictated or mechanically issued. The order explicitly stated that the Magistrate had heard the complainant's counsel, perused the affidavit, and found sufficient evidence to summon the accused. Thus, the court rejected the claim that the order was passed without examining the allegations and evidence.2. Separate Accusation of Mr. Sandeep Khanna and M/s. Kripa Overseas:The petitioner argued that Mr. Sandeep Khanna, being the sole proprietor of M/s. Kripa Overseas, should not have been made a separate accused. The court noted that the complaint described both the individual and the business name separately, likely out of abundant caution. The court concluded that this did not merit interference with the summoning order as the net effect was that Mr. Sandeep Khanna, the sole proprietor, was summoned.3. Cheque Given as Security and Its Implications Under Section 138 of the Negotiable Instruments Act:The petitioner argued that the cheque of Rs. 10 Crores was given as security, and hence, no offence under Section 138 of the Act was made out on its dishonour. The court referred to various judgments, including K.S. Bakshi and Anr. v. State and Anr., and concluded that the context and purpose of the cheque issuance were crucial. The court held that mere use of the term 'security' in the complaint was irrelevant. What mattered was whether the cheque was issued towards payment of debt or liability. The court found that the cheque formed part of the consideration under the contract and was thus issued towards a liability. Therefore, prima facie, a case under Section 138 was made out.4. Impact of the Memorandum of Understanding Dated 3rd May 2007:The petitioner claimed that the Memorandum of Understanding (MOU) amounted to a compromise, thus compounding the offence. The court referred to the MOU, which stipulated that legal cases would be withdrawn only after the entire payment was made. Since the payments were not made, the court held that the offence was not compounded. The court also referred to the Supreme Court's observations in Lata Construction v. Rameshchandra Ramniklal Shah, emphasizing that the original contract rights were not extinguished as the payment condition was not met. Consequently, the court rejected the contention that the offence was compounded by the MOU.Conclusion:The petition was dismissed, and the court held that the observations made were specific to the disposal of the petition and not binding on the trial court. The court found no merit in the petitioner's arguments regarding the summoning order, separate accusation, cheque as security, and the impact of the MOU.