2024 (10) TMI 210 - HC - Indian Laws

Magistrate cannot recall process once issued in cheque dishonour case, frozen account no bar to Section 138 complaint

Sheikh Owais Tariq Versus Satvir Singh S/o. Joginder Singh

HC held that once magistrate takes cognizance and issues process against accused in dishonour of cheque case, proceedings cannot be dropped as no ... Dishonour of Cheque - Account Frozen - no provision for dropping of proceedings was available in the Code of Criminal Procedure - stand of the respondent is that the situation was beyond his control as such, the respondent could not have been proceeded against for commission of offence under section 138 of the Act. Whether the learned revisional court is right in returning a finding that the learned Magistrate has wrongly dismissed the application for dropping of proceedings? - HELD THAT:- The finding returned by the learned Revisional Court that the learned trial court has wrongly dismissed the application for dropping of proceedings in the complaint filed by the petitioner, is contrary to the settled proposition of law that once the Magistrate takes the cognizance and issues the process against the accused, then the Magistrate cannot put the clock back and drop the proceedings at the behest of the accused because there is no such provision in the Code of Criminal Procedure, permitting the Magistrate to recall his order, whereby he has taken the cognizance and issued process against the accused - the observation of the learned Revisional Court is contrary to law and, as such, it is held that the Revisional Court was not right in returning the finding that the trial court had wrongly dismissed the application for dropping of the proceedings filed by the respondent herein. Whether the complaint for dishonour of cheque due to the reason ‘account frozen’ is maintainable under section 138 of the Act? - HELD THAT:- The cheque was issued on 01.07.2014 and the same was dishonoured on 14.07.2014 and in absence of any finding as to when the account was frozen i.e. whether the account was frozen prior to the issuance of the cheque or after the issuance of the cheque and further as to whether the accounts of the respondent was having sufficient amount to honour the cheque at the time of issuance of cheque or not and rightly so because there was no material before the Revisional Court to return any such finding, the petitioner herein could not have been knocked out of the court at the threshold. The learned Revisional Court has put the cart before the horse and has returned a finding which could have been returned only after the full-fledged trial. Rather, the onus would be on the respondent to prove that he was not aware about the freezing of the account when the cheque was drawn, the account was frozen due to reasons beyond his control and the account was having sufficient balance when the cheque was dishonoured. In Vikram Singh vs. Shyoji Ram, [2022 (2) TMI 1475 - SC ORDER], the High Court had quashed the proceedings of the complaint under section 138 of the Act, as the witnesses had stated that the accused had not opened the account with the Bank but in the memo it was mentioned that the cheque was dishonoured due to the reason ‘Account Frozen’. The Hon’ble Supreme Court of India set aside the order passed by the High Court by observing that the “Account Frozen” would presuppose the existence of the account and it was premature to quash the compliant. The Hon’ble Supreme Court of India remanded the matter back for full-fledged trial. This court is of the considered view that the complaint under section 138 of the Act is maintainable even if the cheque is dishonoured due to reason ‘Account frozen’ - Order of Revisional Court dated 09.05.2018 is set aside and the order of the trial court dated 14.11.2017 is restored. The matter is remanded back to the trial court and the trial court shall proceed in accordance with law - Petition allowed by way of remand. Issues Involved:1. Whether the learned Revisional Court is right in returning a finding that the learned Magistrate has wrongly dismissed the application for dropping of proceedingsRs.2. Whether the complaint for dishonour of cheque due to the reason 'account frozen' is maintainable under section 138 of the Negotiable Instruments Act, 1881Rs.Detailed Analysis:Issue No: (i)Whether the learned Revisional Court is right in returning a finding that the learned Magistrate has wrongly dismissed the application for dropping of proceedingsRs.a. The Revisional Court's finding that the learned Trial Court wrongly dismissed the application for dropping proceedings is contrary to the settled proposition of law that once the Magistrate takes cognizance and issues the process against the accused, the Magistrate cannot recall his order. This principle is supported by the judgment of the Apex Court in *Adalat Prasad v. Rooplal Jindal*, (2004) 7 SCC 338, which states that 'the Criminal Procedure Code does not contemplate a review of an order. Hence, in the absence of any review power or inherent power with the subordinate criminal courts, the remedy lies in invoking Section 482 of the Code.'b. Accordingly, the observation of the learned Revisional Court is contrary to law. Therefore, it is held that the Revisional Court was not right in returning the finding that the Trial Court had wrongly dismissed the application for dropping the proceedings filed by the respondent.Issue No: (ii)Whether the complaint for dishonour of cheque due to the reason 'account frozen' is maintainable under section 138 of the ActRs.a. Section 138 of the Negotiable Instruments Act, 1881, allows for the filing of a complaint for dishonour of cheque when the amount in the account is insufficient or exceeds the amount arranged to be paid. However, judicial pronouncements have extended this to include dishonour due to account closure, payment stopped by the drawer, signature mismatch, and image not found. The Apex Court in *Laxmi Dyechem v. State of Gujarat*, (2012) 13 SCC 375, held that dishonour for reasons such as account closed, payment stopped, and signature mismatch fall within the first contingency provided under the Act.b. In the present case, the respondent did not plead in his application for dropping proceedings that he had sufficient funds in the account and was unaware of the account freezing at the time of cheque issuance. The Revisional Court could not have put the onus on the complainant to prove insufficient funds besides the account being frozen. The Revisional Court's observation is contrary to the specific pleadings made by the petitioner, who alleged that the respondent fraudulently issued the cheque despite no funds being available.c. The Revisional Court's finding should have been returned only after a full-fledged trial. The onus would be on the respondent to prove unawareness of the account freezing, the freezing being beyond his control, and sufficient balance in the account during the dishonour.d. In *Vikram Singh vs. Shyoji Ram*, 2022 Legal Eagle(SC) 792, the Supreme Court of India set aside the High Court's order quashing the complaint under section 138 due to 'Account Frozen,' stating that it presupposes the existence of the account and remanded the matter for a full-fledged trial.Conclusion:In view of the above, the complaint under section 138 of the Act is maintainable even if the cheque is dishonoured due to the reason 'Account frozen.' The judgments cited by the learned counsel for the respondent are not applicable in this case. The present petition is allowed, the order of the Revisional Court dated 09.05.2018 is set aside, and the order of the Trial Court dated 14.11.2017 is restored. The matter is remanded back to the Trial Court to proceed in accordance with the law. The parties shall appear before the Trial Court on 19.09.2024.