2024 (6) TMI 706 - HC - Indian Laws

Criminal conspiracy case quashed as malicious prosecution in cheque dishonour dispute under Section 138 NI Act

M/s Century Cement (Prop. Century Textiles & Industries Ltd.), Manoj Kumar Sharma @ Manoj Sharma, Devendra Kumar Mishra @ D.K. Mishra, Jayant Dua, Vibhu Goyle, Rakesh Kumar Verma, Sanjay Kumar Sultania, Alok Misra. Versus The State of Jharkhand, Mohan Lal Bhalotia

HC quashed criminal proceedings in cheque dishonour case, finding it constituted malicious prosecution. Petitioners had issued cheques as security for ... Dishonour of Cheque - Quashing of the entire criminal proceeding arising out of Complaint Case - Criminal conspiracy to encash the cheques provided to the petitioners under the agreement by forging and fabricating bills of huge amount despite no material having been supplied - HELD THAT:- It is an admitted fact further that the cheque was issued as security pursuant to financial transaction by M/s New City Agency, which is admitted in the complaint petition itself and that cheque cannot be considered as worthless piece of paper under every circumstance. A reference may be made to the judgment passed by the Hon'ble Supreme Court in the case of SRIPATI SINGH (SINCE DECEASED) THROUGH HIS SON GAURAV SINGH VERSUS THE STATE OF JHARKHAND & ANR. [2021 (11) TMI 66 - SUPREME COURT] (Since Deceased) through his son wherein, it has been held that 'If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.' In view of the above, when the case under Section 138 of the Negotiable Instruments Act was already filed by the petitioner-company, opposite party no. 2 was having all the opportunity to defend the case in that pending complaint case and without doing so, he has filed the present complaint case implicating the petitioners. The Court comes to a conclusion that the present case is arising out of an agreement and the dispute, if any, is there, that is civil in nature and for that complaint case has been filed only to cut short the civil proceeding where some delay take place in deciding the cases and the present case has been filed after knowing about filing of the complaint case by the petitioner-company in the State of Chhattisgarh, which clearly suggests that this is a malicious prosecution against the petitioners, as such, the entire criminal proceeding arising out of Complaint Case No. 379 of 2019 including the order taking cognizance dated 24.07.2019, pending in the Court of the learned Judicial Magistrate, 1st Class, Bokaro are, hereby, quashed. Petition allowed. Issues Involved:1. Quashing of entire criminal proceeding arising out of Complaint Case No. 379 of 2019.2. Allegations of criminal conspiracy, breach of trust, cheating, and forgery.3. Validity of cheque issued as security.4. Abuse of court process and malicious prosecution.Summary:1. Quashing of Entire Criminal Proceeding:The petitions sought quashing of the entire criminal proceeding arising out of Complaint Case No. 379 of 2019, including the order taking cognizance dated 24.07.2019, pending in the Court of the learned Judicial Magistrate, 1st Class, Bokaro.2. Allegations of Criminal Conspiracy, Breach of Trust, Cheating, and Forgery:The complaint alleged that the petitioners entered into a criminal conspiracy to encash cheques provided under an agreement dated 31.05.2012 by forging and fabricating bills despite no material being supplied. The complainant further alleged that the petitioners committed criminal breach of trust, cheating, and forgery for personal gains.3. Validity of Cheque Issued as Security:The petitioners argued that the cheque was issued as security pursuant to a financial transaction, which is admitted in the complaint petition itself. The Hon'ble Supreme Court in Sripati Singh (Since Deceased) through his son Gaurav Singh v. State of Jharkhand and another, reported in 2021 SCC OnLine SC 1002, held that a cheque issued as security cannot be considered a worthless piece of paper under every circumstance.4. Abuse of Court Process and Malicious Prosecution:The court observed that the present complaint case was filed maliciously to counter the case filed by the petitioner-company u/s 138 of the Negotiable Instruments Act in Chhattisgarh. The court referred to the judgment in Krishna Lal Chawla and others v. State of Uttar Pradesh and another, reported in (2021) 5 SCC 435, emphasizing the role of the lower judiciary in preventing abuse of court process and curbing frivolous litigation.Conclusion:The court concluded that the dispute is civil in nature, arising out of an agreement, and the present complaint case was filed to cut short the civil proceeding. The entire criminal proceeding arising out of Complaint Case No. 379 of 2019, including the order taking cognizance dated 24.07.2019, was quashed. The petitions were allowed and disposed of.