TaxTMI 
TaxTMI 
2026 (10) TMI 2
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.... Negotiable Instruments Act. The Learned Magistrate examined the complainant and took cognizance of only offence under Section 420 of the Indian Penal Code and directed to issue summons in terms of Section 204 of Cr.P.C. Hence this Revisional application has been filed to quash the entire proceeding. Submissions 3. The Learned Advocate representing the petitioner submits that in discharge of their part legal liabilities towards the petitioner no. 1 company, the complainant signed, issued, and delivered the cheques valued of Rs. 91,87,990/- in favour of the petitioner no. 1 company namely J.R. Creation Advertisers Private Limited including the other cheque of Rs. 91,87,990/- dated 31.03.2017 drawn on Oriental Bank of Commerce, Prince Street, Calcutta with the assurance that cheque are good for payment and shall be honoured on presentation. As per instruction of the complainant the petitioner no. 1 company presented the said cheque for encashment with his banker and it has return dishonoured with remarks "Funds Insufficient". A legal notice was issued on 16.07.2012 to the complainant by the petitioner no. 1 company through speed post at their address and despite service of noti....
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....n the present case. Secondly both the petition of complaint and solemn affirmation at the most gives rise to settlement of claim and counter claim and any culpability and or mens rea are hopelessly absent by any stretch of imagination. That apart the factum of dishonour of cheque annexed herein above glaringly proves that the complaint has come out to extort money from the petitioner company by filing this false and baseless case before a competent court of law. Fourthly both the petition of complaint and solemn affirmation prima facie are grossly unsuccessful to make out any case in terms of Section 420 of the Indian Penal Code in any manner. 6. It is further submitted that it is well settled by various decisions of Hon'ble Apex Court that the crux of Section 420 of Indian Penal Code is mens rea from the inception or any other word initial deception. Mere failure of a person to keep promise subsequently a culpable intention right are the beginning that is when the promise is made cannot be presumed. The further point raised on behalf of the petitioner that there was non-compliance of Section 202 of the Cr.P.C, when evidently the complaint shows that the petitioners have arraign....
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.... AIR 2023 SC 228 para 5 to 7,11,12,16-17,20,22 and 23 to 25 in order to substantiate that cheating for settlement of accounts not maintainable. 9. The Learned Advocate put reliance on the decision of Greaves Cotton Limited & Ors. Vs. State of West Bengal & Anr. 2023 SCC OnLine Cal 454 para 15 in respect of mere non-compliance of Section 202 Cr.P.C when no case made out is no ground to remand. With respect to vicarious liability which is a misnomer as no specific role attributed to the petitioner relied upon GHCL Employees Stock Option Trust vs India Infoline Limited & Ors. (2013) 4 SCC 505 and Sunil Bharti Mittal Vs. Central Bureau of Investigation (2015) 4 SCC 609 para 37 to 44. 10. Per contra the Learned Advocate representing the Opposite Party placed his argument to that extent that the revisional application is not maintainable in its present form due to doctrine of merger. It is submitted that the application is bad due to suppression of material facts as prior to making application for quashing before this Court the petitioner should have come up with clean hand but out of extreme desperation the petitioner choose to deliberately suppress and manipulate the facts and ci....
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....e party to adduce the witnesses for a forensic expert, an official of the company unearth and plethora of forgery committed by the Opposite Party. In compliance with such order the Trial Court at Kakardoma summoned the forensic expert and the deposition was recorded and report was submitted before the court when the said report has actually supported the contention of the Opposite Party regarding the commission of forgery of cheque. In has been conclusively opined by the forensic expert that there were certain modification by altering the number before depositing the same to the bank the report of the forensic expert along with conclusive finding of such tampering was duly submitted before this court in course of the instant proceeding during the deposition of the official of the bank also confirmed the stop payment notice of the cheque in question which were of the year 2011. During the recording a statement under Section 313 and 281 of the Code of Criminal Procedure it has been duly stated and mentioned before the Trial Court regarding the forgery committed by the petitioners who have moved the instant application before this Court and portrayed the same in detailed manner which ....
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.... Legal notice was issued and a reply was also given and a reply was also given to the same and a proceeding under Section 138 read with Section 141 of Negotiable Instrument Act was initiated when the opposite party refuted such claim and claimed that forgery has been proved. 15. Before delving deep into the matter and to discuss the nuances of the specific provision of the IPC and its applicability in the instant case this court is of the view that since an issue has been raised regarding suppression of material facts and the subsequent development arose therein, it is necessary to consider that aspect at the outset. 16. The specific stand of the Opposite Party is that no cheque was issued in the year 2017 and the same has been manipulated and in connection with the proceedings pending before the Court of Delhi u/s 138 of NI Act, the Court sent the disputed cheques before the forensic expert and also summoned the said forensic expert who submitted before the Court a report and that report supports the contention of the opposite Party regarding commission of forgery of cheques and it was conclusively opined by the forensic expert that letter "1" of 2011 in the date of the cheq....
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....e instance of the Opposite Party and the Learned Magistrate mechanically took cognizance of the offence under Section 420 IPC and directed to issue summon under Section 420 IPC. The matter was heard at length and at the stage when the complainant was to respond he filed an Affidavit in opposition long after 8 years from filing this revisional application along with several annexures and an affidavit affirmed by one Forensic Science Consultant from Gurugram and such opinion is not at all conclusive proof of evidence. 21. The complainant lodged the complaint specifically commission forgery and cheating and the Learned Magistrate has issued the summon only in respect of the offence under Section 420 IPC but the germane of such complaint from the beginning was that there was no cheque issued in the year 2017 and the petitioners have forged the cheque .Therefore apparently such allegation has got some prima facie proof where an expert has given opinion to that extent. Whether such report will be accepted by the court or not is a completely separate issue however if proved to be true would have a direct impact in the instant proceeding. 22. The power under Section 482 Cr.PC is to b....
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....act cannot give rise to criminal prosecution for cheating unless fraudulent, dishonest intention is shown at the beginning of the transaction but in the instant case the fate of the case lodged as the petitioner under Section 138 N.I. Act has direct nexus in view of the subsequent development. 23. In the decision as relied upon of the petitioner in D.P. Gulathi vs. State of UP (Supra) a proceeding under Section 138 of Negotiable Instrument Act was initiated and subsequently, the complainant Director of SVS computer filed the criminal complaint alleging offences under Section 420, 406, 467, 468 and 471 IPC against the appellant and others. The Hon'ble Supreme Court took note of Rajeeb Thapar and Ors. Vs. Madan Lal Kapur (2013) 3 SCC 330 where four steps test with regard to quashing of proceeding was enumerated and accordingly the proceeding was quashed as continuance of such proceeding was abuse of process of law. 24. In the case of Mahindra & Mahindra Financial Services Vs Rajib Dubey (Supra), the complainant alleged that after availing higher purchase finance seven blank cheques were issued by him as security under an understanding that re-payment would be made through deman....
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....inal proceedings cannot be used to pursue purely civil claim. Accordingly the proceedings were quashed. In none of the above cases in the proceeding under 138NI Act the alleged cheque was sent for forensic test and an adverse report was received which supported the case of the subsequent complaint .Hence in the factual matrix of the instant case the above judgements are distinguishable. The petitioners waited for long 4 years when the proceeding under Section 138 Negotiable instrument Act has almost reached the verge of completion of trial and certain facts have come out which primarily supports the case of the prosecution in this case and despite having knowledge the entire proceeding cannot be quashed at the threshold since at present it cannot be said that it would be an abuse of the process of law. 27. So far the point raised regarding non-compliance of Section 202 Cr.P.C fact remains no inquiry was done, the Learned Advocate of the petitioner relied upon Greaves Cotton Limited and Other V/s State of West Bengal and Anr. 2023 SCC Online Cal 454 passed by the Learned Single Bench where it was observed; "15. Primarily on a reading of the aforesaid set of judgements....
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....gs may be quashed where the allegations do not disclose any offence or where the continuation of prosecution would serve no useful purpose. Relying on Punjab National Bank Vs. Surendra Prasad Sinha AIR 1992 SC 1815 and Maksood Saiyed Vs. State of Gujarat (2008) 5 SCC 668, the Court further held that criminal law should not be used for harassment and that directors or officers of a company cannot be prosecuted on the basis of vicarious liability unless the statute subsequently provides for it and the complaint contains necessary averments. It was held by the Hon'ble Apex Court that High Court had correctly noted that issuance of summons against respondent no. 2 to 7 was illegal and amount of abuse of process of law as "in the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case against respondent no. 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them". 30. In the decision of Sunil Bharati Mittal Vs. CBI (Supra) it was held that a Director or person managing a company may be prosecuted along with the company if....