2017 (1) TMI 1300 - HC - Indian Laws

Quashing of Complaint Case for Abuse of Legal Process: Respondent's Post-Settlement Pursuit Unjustified

Gangotri Enterprises Limited & Ors. Versus Sanjay Bansal

The Court quashed the complaint case against the petitioners, emphasizing that the respondent's pursuit of the complaint post-settlement, despite ... Dishonour of cheques - Negotiable Instruments Act - filing of complaints - Held that:- It is apparent that as per the Memorandum of Agreement cheque No.344158 for a sum of ₹ 50 lakhs dated 30th November, 2013 was given to the respondent in discharge of the liability for two security cheque Nos.038531 and 038532 for a sum of ₹ 25 laksh each which were dishonoured and now having encashed the said cheque of ₹ 50 lakhs the respondent cannot turn around and say that he has utilized the same in discharge of the other debts of the petitioners and complaint under Section 138 of the Negotiable Instruments Act, 1881 (in short ‘NI Act’) should continue. As noted above, the above noted complaint was for offence punishable under Section 138 NI Act for dishonor of the two cheque Nos.038531 and 038532 and not for any other offence for which the respondent has entered into a settlement agreement. Hence the continuance of the above noted complaint on the plea of the respondent now taken is a clear abuse of the process of the Court. Consequently, complaint case titled “Sanjay Bansal vs. Gangotri Enterprises Ltd. & Ors.” and the order issuing summons and the proceedings emanating therefrom are quashed. Issues:Quashing of complaint case, Acceptance of cheques, Memorandum of Agreement, Abuse of process of the Court, Application of Section 138 of the Negotiable Instruments Act.Analysis:The petitioners sought the quashing of a complaint case filed against them by the respondent, alleging non-payment for supplies made. The respondent claimed that the petitioners handed over post-dated cheques as guarantees, but these were returned unpaid. Subsequently, a new cheque was issued and honored, leading to a Memorandum of Agreement for withdrawal of the complaint. However, despite acknowledging the settlement, the respondent pursued the complaint, leading to legal proceedings and bailable warrants being issued against the respondent.The main issue before the Court was whether the respondent could continue the complaint despite accepting a new cheque in settlement of the dishonored cheques. The petitioners argued that the acceptance and encashment of the new cheque should have led to the withdrawal of the complaint, as per the Memorandum of Agreement. The respondent's claim of adjusting the amount towards other payments was deemed an abuse of the Court's process.Referring to legal guidelines, the Court highlighted the principles for quashing a complaint case, emphasizing that such power should be sparingly exercised and only in exceptional cases. The respondent's admission of signatures on the Memorandum of Agreement further strengthened the petitioners' case for quashing the complaint. The Court concluded that the respondent's pursuit of the complaint post-settlement was unjustified and amounted to an abuse of the legal process. Consequently, the complaint case and related proceedings were quashed, and the petition was disposed of.In summary, the judgment addressed the acceptance of cheques, the validity of the Memorandum of Agreement, and the abuse of the Court's process. By analyzing the legal principles and the parties' actions, the Court determined that the respondent's continuation of the complaint post-settlement was unwarranted, leading to the quashing of the case.