2022 (9) TMI 995 - HC - Indian Laws

Court dismisses Criminal Original Petition, directs trial to proceed promptly, rejects arguments on voidness, cheque nature, and quashing.

K. Ramraj Versus Sudarshan

The court dismissed the Criminal Original Petition, finding that the complaint established a prima facie case against the petitioner. The court directed ... Dishonor of Cheque - legally enforceable debt or not - ingredients of section 138 of NI Act complied with or not - Unlawful consideration - allegation is that the agreement alleged to have been entered into between the parties is a void contract as the consideration alleged was unlawful and the agreement itself was against public policy - it is also alleged that the cheque in dispute had been issued only as a security for the debt incurred by the petitioner's partner Ganesha Kannan - HELD THAT:-Section 23 of Indian Contract Act says that the consideration or object of the agreement is unlawful if it is fraudulent. To put it in other way, in order to bring the case within the purview of Section 23, it is necessary to show that the object of the contract or consideration of the agreement or the agreement itself is unlawful - In the case on hand, though the petitioner has alleged that the agreement is void and that the consideration is illegal, immoral and against public policy, he has not elaborated anything further. Moreover, whether the cheque allegedly issued in pursuance of the compromise agreement can be considered as the same was given for discharging the legally enforceable debt. In the case on hand, the question as to whether there was a dispute as contemplated in the compromise agreement, which obviated the obligation of the petitioner to honour the cheque which was issued in pursuance of the agreement cannot be gone into at this stage and that too in the proceedings under Section 482 Cr.P.C., and it is a matter for trial. Whether the cheque in dispute has been issued as a security? - HELD THAT:- In the case on hand, the petitioner himself has specifically stated in the quash petition that the cheque in dispute was given only as a security. If that be the case of the petitioner, then it cannot be stated that no offence is made out, since the cheque issued by him has been dishonoured. Even otherwise, the question whether the petitioner had issued the cheque in dispute as security, pursuant to the compromise agreement entered into between the parties and whether at the time when the cheque was presented, it was not for discharge of any debt or other liability cannot be gone into by this Court in these proceedings and the same can only be determined during the trial of the case - This Court has no hesitation to hold that the contention of the petitioner that the prosecution initiated by the respondent is not maintainable as the cheque was issued as a security cannot legally be entertained. A perusal of the complaint and other records available, makes out a prima facie case against the petitioner at this stage and there appear to be sufficient ground for proceeding against the petitioner. Hence, this Court concludes that the Criminal Original Petition is devoid of merits and the same is liable to be dismissed - Criminal Original Petition is dismissed. Issues Involved:1. Whether the agreement between the parties is void due to unlawful consideration and against public policy.2. Whether the cheque issued by the petitioner was given as security and its implications under Section 138 of the Negotiable Instruments Act.3. Whether the proceedings under Section 482 Cr.P.C. to quash the criminal case are justified.Issue-wise Detailed Analysis:1. Void Agreement Due to Unlawful Consideration and Public Policy:The petitioner argued that the agreement entered into with the respondent was void as the consideration was unlawful and against public policy, as per Section 23 of the Indian Contract Act. The petitioner contended that the work done by the respondent was unauthorized and thus the agreement for payment was void. The court noted that the petitioner failed to provide detailed elaboration on how the consideration was illegal or against public policy. The court emphasized that Section 23 of the Indian Contract Act limits the freedom to enter into contracts if they involve illegal acts, are prohibited by law, or cannot be performed without disobedience of the law. However, the court found no evidence to support the petitioner's claim that the agreement was void or the consideration illegal.2. Cheque Issued as Security:The petitioner claimed that the cheque was issued as a security for the debt incurred by his partner and should not attract Section 138 of the Negotiable Instruments Act. The court referred to several Supreme Court judgments, including *Sunil Todi vs. State of Gujarat* and *Sripati Singh vs. State of Jharkhand*, which clarified that a cheque issued as security can still be considered for the discharge of a legally enforceable debt. The court held that the petitioner's argument that the cheque was given as security does not negate its character as an instrument for a legally enforceable debt. The court concluded that whether the cheque was issued as security and not for the discharge of a debt is a matter to be determined during the trial, not in proceedings under Section 482 Cr.P.C.3. Justification for Quashing Proceedings under Section 482 Cr.P.C.:The petitioner sought to quash the criminal proceedings, arguing that the complaint did not attract the ingredients of Section 138 of the Negotiable Instruments Act and was an abuse of the court process. The court, however, found that the complaint and other records made out a prima facie case against the petitioner. The court cited the Supreme Court's decision in *Dhruvaram Murlidhar Sonar vs. State of Maharashtra*, which stated that the exercise of powers under Section 482 Cr.P.C. to quash proceedings should be an exception and not a rule, to be exercised sparingly and with caution. The court concluded that the petitioner's contentions could not be entertained at this stage as they required evidence to be established during the trial.Conclusion:The court dismissed the Criminal Original Petition, noting that the complaint made out a prima facie case and there were sufficient grounds for proceeding against the petitioner. The court directed the Judicial Magistrate (Fast Track Court), Thoothukudi, to complete the trial and dispose of the case expeditiously, preferably within three months.