2025 (12) TMI 1604 - HC - Indian Laws

Joint s.138 cheque-bounce complaint for two payees: split required; one payee's case quashed, other continues despite arbitration clause

A joint complaint under s.138 NI Act covering dishonour of two cheques issued in favour of two distinct payees was held impermissible, since each ... Maintainability of complaint - Dishonour of Cheque - joint complaint was filed in respect of two cheques issued in favour of two different companies and two demand notices were sent - Earlier the entire proceeding was quashed - HELD THAT:- In the case of Manzoor Ahmed Sofi [2022 (12) TMI 1589 - JAMMU & KASHMIR AND LADAKH HIGH COURT] a joint complaint was filed before the Magistrate alleging that by way of an agreement, the accused allotted some work in partnership and an amount was outstanding as the cost of work and the petitioner issued three cheques out of which two were for an amount of ₹6 lakhs and Rs. 5 lakhs and one cheque for an amount of ₹6 lakhs was issued in favour of the respondent no. 2, which were presented for engagement and were returned on presentation for the reason of insufficiency of funds. Joint legal notice of demand was issued and ultimately the complaint was filed. The only ground agitated was regarding maintainability as it was a joint complaint on behalf of two or more persons is not maintainable as the same is not contemplated either under the provisions of the Cr.Pc or in the N.I Act 1881. The High Court considered various judicial pronouncement and found divergent views expressed by different High courts regarding maintainability of a joint complaint and agreed with the view expressed by the co-ordinate bench of the Jammu and Kashmir and Ladakh High Court in the case of Mohammad Safi Mir versus Haji Bashir Ahmed Dar [2021 (4) TMI 1106 - JAMMU & KASHMIR HIGH COURT] while dealing with a similar question, held that a joint complaint by two or more persons is not maintainable. It is the settled law that for each distinct offence of which any person is accused, there should be a separate charge and there is no provision dealing with joinder of charges, authorising two or more complaints to file a single complaint in terms of Section 138 of N.I Act, it is only the person who is signatory to cheque and the said cheque is drawn by that person on account maintained by him and issued for discharge in whole or in part of any debt or other liabilities and said cheque is returned and paid who can be prosecuted under the provision .Therefore, this provision does not speak about joint liability. The other point raised by the petitioner regarding invoking of arbitration clause, the judgement relied upon by the learned Advocate of the Opposite Party in the case of Krishna agencies [2008 (11) TMI 746 - SUPREME COURT] where the point raised that the applicant already taken records to arbitration proceedings and therefore the dispute was obviously a civil nature and criminal complaint could not be proceeded with. It was held by the Hon’ble Supreme Court that there can be no bar to the simultaneous continuance of a criminal proceeding and civil proceeding if the two arises from separate causes of action - In this case, the dispute was regarding dishonour of cheques attracts the provisions specially mentioned in the Negotiable Instrument Act however the present petitioner never made attempt to invoke the said clause, even when the legal notice was given to M/s Terra Motors and the said company gave reply informing that the cheques were placed for encashment in the month of September, 2023 but dishonoured. Therefore, on that score also, the proceeding cannot be quashed which has been lodged under Section 138 of N.I Act. Lastly, the point regarding premature filing of the complaint it can be seen that the first notice was received on October 13, 2023, and a complaint was lodged on November 22, 2023, that is more than after one month from the date of receipt of notice - the notices were again sent through registered post, which was received by accused on November 7, 2023, and if the date of filing the complaint is counted from that date then it would be on the 15th day which may not be considered in terms of the settled law - This Court is unable to accept such contention as it is clear that the notice was received firstly on 13th of October 2023 and therefore the complaint can be said to be lodged within time. Thus, instead of quashing of the entire proceeding, it is allowed to be continued so far the cheque being no. 801263 dated 26th September 2023 of Rs. 31,50,000/- issued in favour of the Opposite Party no. 2 being the complainant no.1, Terra Motors, India Pvt Ltd by the petitioner and so far the proceeding regarding the dishonour of cheque no, 801268 dated 21st September 2023 of Rs. 1,50,000/- against opposite party No. 3, M/S Terra Financial services Private Limited is concerned, the same stand quashed with the liberty to the complainant to lodge the complaint against the said company for taking appropriate legal remedy in respect of the cheque issued in his favour. This revisional application is allowed in part. Issues: (i) Whether a joint complaint by two complainants in respect of distinct cheques issued in favour of different payees on different dates is maintainable under the Negotiable Instruments Act, 1881; (ii) Whether invocation of an arbitration clause in the underlying agreement bars or compels quashing of criminal proceedings under Section 138 NI Act; (iii) Whether the complaint was prematurely filed in contravention of the notice-period requirement under Section 138 NI Act.Issue (i): Maintainability of a joint complaint filed by multiple complainants in respect of distinct cheques issued in favour of different payees on different dates.Analysis: The Court examined statutory scheme and precedents on joinder and found no provision authorising a single joint complaint by multiple complainants for separate offences under Section 138. The facts showed two cheques issued in favour of different companies on different dates and separate notices sent/received on different dates. Reliance on prior decisions established that while the entire proceedings need not be quashed, procedural irregularity as to joinder affects maintainability of complaint insofar as it is not in proper form.Conclusion: The joint complaint is not maintainable insofar as it relates to one of the cheques; the proceeding is quashed in respect of that cheque. (In favour of Appellant on this aspect)Issue (ii): Effect of an arbitration clause on continuance of criminal proceedings under Section 138 NI Act.Analysis: The Court applied authority that criminal proceedings and civil/arbitral proceedings can proceed simultaneously where causes of action are distinct. The petitioner had not invoked the arbitration clause when notices were exchanged and cheques were dishonoured; the dishonour of cheques attracts specific penal provisions under the NI Act which are not displaced merely by existence of an arbitration clause.Conclusion: Invocation of the arbitration clause does not bar continuation of the criminal complaint under Section 138 NI Act; the proceeding may continue in respect of the properly maintainable cheque. (Against Appellant on this aspect)Issue (iii): Whether the complaint was prematurely filed contrary to the 15-day requirement in the proviso to Section 138 NI Act.Analysis: The Court reviewed dates of dispatch and receipt of notices and the filing date of the complaint. Notices were received on distinct dates; when examined against the 15-day requirement, the complaint was found to have been lodged within the permissible period in respect of the properly maintainable cheque.Conclusion: The complaint is not premature; the filing is within the statutory time limits in respect of the maintainable cheque. (Against Appellant on this aspect)Final Conclusion: The revisional petition is allowed in part the criminal proceedings under Section 138/142 NI Act are quashed insofar as they relate to one of the cheques (the complaint lacking maintainability in that respect) and shall continue in respect of the other cheque; the arbitration clause and prematurity arguments do not merit quashing of the maintainable complaint.Ratio Decidendi: Where separate cheques are issued to different payees on different dates, a single joint complaint by multiple complainants is not maintainable under Section 138 NI Act; the court may sever and quash proceedings in respect of the improperly joined cheque while permitting the prosecution to continue in respect of the properly maintainable cheque.