2021 (1) TMI 855 - HC - Indian Laws

Court upholds jurisdiction in Section 138 case, denies quashing order. Validity of legal notice & MoU affirmed.

The court declined to quash the summoning order and the proceedings of Complaint Case No. 14 of 2019 under Section 138 of the Negotiable Instruments Act. ... Quashing of summoning order - Section 138 of the Negotiable Instruments Act - Section 139 presumption - Rebuttable presumption - Prima facie case - Legal notice requirement under Section 138 - Place of dishonour determines jurisdiction - Res judicata and distinct causes of action - Section 482 Cr.P.C. extraordinary jurisdiction to quashQuashing of summoning order - Section 482 Cr.P.C. extraordinary jurisdiction to quash - Whether the summoning order dated 13th March, 2019 and the entire proceedings under Section 138 N.I. Act should be quashed. - HELD THAT: - The High Court examined whether the present case falls within the narrow categories warranting exercise of extraordinary jurisdiction under Section 482 Cr.P.C. at the pre-trial stage. Applying the settled principles from apex court decisions, the Court held that a pre-trial quashing would be inappropriate where the Magistrate has taken cognizance and issued process and where the questions raised by the accused involve factual controversies suitable for trial. The Court therefore declined to undertake a threadbare factual inquiry which might prejudice the trial and observed that the complaint, affidavits under Sections 200 and 202 Cr.P.C. and other material disclose sufficient grounds to proceed. Consequently, the prayer for quashing the summoning order and the entire proceedings was refused and interim protection, if any, was discharged. [Paras 33, 34, 35]Prayer to quash the summoning order and proceedings is refused; interim order discharged.Section 138 of the Negotiable Instruments Act - Legal notice requirement under Section 138 - Prima facie case - Whether the ingredients of Section 138 N.I. Act are prima facie satisfied by the complainant. - HELD THAT: - The Court considered the statutory ingredients: issuance of cheque in discharge of debt or liability, presentation within validity, return of cheque unpaid for insufficiency of funds, receipt of bank intimation, service of statutory notice within thirty days and failure to pay within fifteen days. The record showed that four cheques signed by the accused were issued, presented within six months, returned with remark 'FUNDS INSUFFICIENT', intimation received, notice sent on 22.11.2018 and received by the drawer on 26.11.2018, and no payment made within fifteen days. In view of these facts, the Court found that all ingredients for a prima facie case under Section 138 are satisfied at this stage and therefore there are sufficient grounds for proceeding against the accused; issues going to merits are for trial. [Paras 11, 12, 26, 27]A prima facie case under Section 138 N.I. Act is made out and the complaint may proceed to trial.Place of dishonour determines jurisdiction - Section 138 of the Negotiable Instruments Act - Whether the Court of Additional Chief Judicial Magistrate, Bhadohi at Gyanpur had territorial jurisdiction to try the complaint. - HELD THAT: - Relying on the principle that jurisdiction is determined by the place where the cheque is dishonoured, the Court noted that the complainant's account was maintained at Kashi Gomti Sanyukt Gramin Bank, Branch-Ugapur, District Bhadohi and the cheques were dishonoured there. Applying the law that venue for prosecution under Section 138 is the place of dishonour, the Court held that the Bhadohi Court has jurisdiction to try the complaint. The decision distinguished the separate complaint filed in Pune which related to a different cheque and bank. [Paras 28, 30]The Additional Chief Judicial Magistrate, Bhadohi at Gyanpur has jurisdiction to try the complaint.Res judicata and distinct causes of action - Section 138 of the Negotiable Instruments Act - Whether the proceedings in Bhadohi are barred by res judicata or are parallel to proceedings instituted earlier in Pune. - HELD THAT: - The Court examined the two complaints filed by the complainant and observed that they pertain to dishonour of different cheques and different amounts, thus arising from distinct causes of action. Res judicata applies to matters already decided between the same parties on the same cause; it does not preclude separate proceedings for separate dishonours. Consequently, the complaint filed in Bhadohi was not a barred or res judicata proceeding merely because another complaint relating to a different cheque was filed in Pune. [Paras 29, 30]Proceedings in Bhadohi are not barred by res judicata; they concern a distinct cause of action.Final Conclusion: The High Court refused to quash the summoning order or the complaint proceedings under Section 138 N.I. Act, held that a prima facie case is made out, upheld the territorial jurisdiction of the Bhadohi court, and found the Bhadohi proceedings not barred by res judicata; the application under Section 482 Cr.P.C. is dismissed and interim protection discharged. Issues Involved:1. Quashing of the summoning order dated 13th March, 2019.2. Quashing of the entire proceedings of Complaint Case No. 14 of 2019 under Section 138 of the Negotiable Instruments Act.3. Jurisdiction of the Additional Chief Judicial Magistrate, Bhadohi, Gyanpur.4. Allegations of res judicata and parallel proceedings.5. Validity of the legal notice and the Memorandum of Understanding.6. Claims of mala fide intentions and abuse of process of law.Issue-wise Detailed Analysis:1. Quashing of the Summoning Order Dated 13th March, 2019:The applicant sought to quash the summoning order issued by the Additional Chief Judicial Magistrate, Bhadohi, Gyanpur. The court examined whether the ingredients of Section 138 of the Negotiable Instruments Act were satisfied. The court noted that the cheques issued by the accused were dishonored due to insufficient funds, and the legal notice was duly served. The court held that all the statutory requirements under Section 138 were met, and thus, the summoning order was valid. The court found no reason to quash the summoning order.2. Quashing of the Entire Proceedings of Complaint Case No. 14 of 2019:The applicant also sought to quash the entire proceedings of the complaint case. The court observed that the complaint, along with the affidavits of the complainant and her witnesses, made out a prima facie case under Section 138 of the Negotiable Instruments Act. The court emphasized that the presumption under Sections 118 and 139 of the Act is in favor of the complainant and shifts the burden to the accused to rebut the presumption. The court found that the proceedings were not malicious or an abuse of the process of law and thus refused to quash the proceedings.3. Jurisdiction of the Additional Chief Judicial Magistrate, Bhadohi, Gyanpur:The applicant argued that the court in Bhadohi, Gyanpur, did not have jurisdiction. The court held that the jurisdiction was proper as the complainant's bank account, where the cheques were deposited and dishonored, was located in Bhadohi. The court referred to the Supreme Court's decision in Dashrath Rupsingh Rathod v. State of Maharashtra, which states that the place where the cheque is dishonored determines the jurisdiction. Thus, the Additional Chief Judicial Magistrate, Bhadohi, Gyanpur, had the jurisdiction to try the case.4. Allegations of Res Judicata and Parallel Proceedings:The applicant claimed that the proceedings were barred by res judicata as a similar complaint was filed in Pune. The court rejected this argument, stating that res judicata applies to cases already decided by a court. The court noted that the complaints were for different cheques and amounts, thus representing different causes of action. The court held that the proceedings in Bhadohi and Pune were not parallel but separate, each based on distinct transactions.5. Validity of the Legal Notice and the Memorandum of Understanding:The applicant questioned the validity of the legal notice and the Memorandum of Understanding (MoU). The court found that the legal notice complied with the statutory requirements, as it was served within the prescribed period. Regarding the MoU, the court noted that its registration status did not affect the validity of the cheques issued. The court emphasized that the primary issue was the dishonor of the cheques, which was adequately supported by the evidence.6. Claims of Mala Fide Intentions and Abuse of Process of Law:The applicant alleged that the proceedings were initiated with mala fide intentions and constituted an abuse of process. The court held that such claims involve questions of fact that should be adjudicated during the trial. The court cited several Supreme Court judgments, emphasizing that quashing proceedings at the pre-trial stage should be avoided unless the case falls within recognized categories justifying such action. The court found no justification to quash the proceedings on the grounds of mala fide intentions or abuse of process.Conclusion:The court refused to quash the summoning order dated 13th March, 2019, and the entire proceedings of Complaint Case No. 14 of 2019. The court found that the Additional Chief Judicial Magistrate, Bhadohi, Gyanpur, had proper jurisdiction, and the proceedings were not barred by res judicata or parallel proceedings. The legal notice and the MoU were deemed valid, and the claims of mala fide intentions were to be addressed during the trial. The application was rejected, and any interim orders were discharged.