Andhra HC (Pre-Telangana)
B.G. Gopal vs State Of Andhra Pradesh And Ors. on 10 September, 1991
Equivalent citations: 1992CRILJ2991
ORDER
1. The is a petition under section 482, Cr.P.C. to quash the proceedings in C.C. No. 400 of 1988 on the file of the Additional Judicial First Class Magistrate, Nellore.
2. The facts relevant for decision of this criminal petition are : The petitioner is the proprietor of Laxmi Wines, Anantapur. He had dealings with Sreenivasa Wine, Nellore (R.2 Sreenivasa Wines is the distributor of Macdowell liquors for various liquor shops and retail vendors. Sreenivasa Wines was dealing with Lakshmi Wines. Subsequently some disputes arose regarding the liquor supplied to Siddardha liquors, Anantapur. In this connection the petitioner filed a suit O.S. No. 8 of 1988 on the file of the Subordinate Judge, Anantapur. In that suit apart from the partners of the Siddardha Liquors, Sreenivasa Wines and its managing partners were later impleaded as defendants 9 and 10. After the filing of that suit in connection with the business transactions and for supply of goods during 1985-86 the petitioner issued ten post-dated cheques, the details of which are mentioned in para 4 of the Criminal petition. It is stated that these cheques issued on the Bank of Baroda were dishonoured. The petitioner claims he paid the entire amount by way of demand draft and Telegraph Transfers. On the ground that these cheques were dishonoured, R. 2 gave a complaint to the police and ultimately C.C. No. 400 of 1988 on the file of the II Additional Judicial First Class Magistrate was filed for offences under sections 406 and 420, IPC. In fact, no amounts were due from the petitioner to the second respondent. On the other hand the second respondent is liable to refund an amount of Rs. 4,35,784-35. This is the amount lying with R-2 to credit of the petitioner. To recover that amount, the petitioner filed O.S. No. 114 of 1989 on the file of the subordinate Judg's Court. This is the amount due with interest as on 16-5-1986. The two suits are now pending on the file of the Subordinate Judge, Anantapur. In such a background, the complainant filed a false criminal case with false allegations on the basis of the ten post-dated cheques the amount of which was realised long ago. This criminal case has been filed only as a counter-blast to the civil suits and for evading payment of the amounts due to the petitioner. Assuming everything in favour of the second respondent, there are absolutely no allegations to the effect at the time of issuing the cheques, the petitioner had any intention of cheating or defrauding R-2. The fact of realisation of the amount covered by the cheques was suppressed. The complaint and the chargesheet do not disclose that the cheques were issued with any dishonest intention and that at the time of issuing the cheques, the petitioner was fully aware that there were no funds to his credit in the account nor are there allegations to the effect that he had no intention to pay. In these circumstances, the proceedings in C.C. No. 400 of 1988 are liable to be quashed. There is no offence made out to satisfy the ingredients of S. 420, IPC or S. 406, IPC. If the prosecution is not quashed, it would amount to abuse of process of the Court, causing injustice and prejudice to the petitioner.
3. Various allegations are also made in the petition to indicate that R-2 being a very powerful party at Nellore is trying to harass the petitioner and that no senior advocate at Nellore is prepared to file vakalat for the petitioner and in such circumstances, the criminal case should also be transferred to the Subordinate Judge's Court at Anantapur, so that the two suits and this criminal case would be tried together conveniently.
4. Sri Krishnamurthy, appearing for the petitioner, contends that this criminal complaint was filed while civil litigation for the transactions between the parties is pending. The liability, if any of the petitioner is a pure civil liability. The ten post-dated cheques were issued between the dates 2-7-1985 to 1-3-1986 i.e., before the Negotiable Instruments Act was amended with effect from 1-4-1989. The case will have to be judged in the light of the law existing prior to 1-4-1989. It is well established by decisions of the various courts that where no goods are delivered as a result of issuing of a post-dated cheque which was ultimately dishonoured, no offence under S. 415 or 420, IPC is made out. Only in cases where by virtue of issuing post-dated cheques, the complainant is induced to part with goods subsequently, at the most criminal offence can be made out. He relies upon a large number of decisions of different High Courts in support of this contention.
5. On behalf of the respondent, Sri V. Pattabhi contends that in this case there is ample material to indicate that the accused had dishonest intention even at the time of issuing the cheques. When he had no money in his account, with mala fide intention, he issued post-dated cheques for huge amounts. He also contends that the question whether the accused had a criminal intention to cheat the complainant or not is a matter which could be gone into only at the stage of trial. In the present complaint and the charge-sheet, there are allegations to show that there is more than mere dishonour of the post dated cheques. In fact, after the cheques were dishonoured, when enquiries were made to collect the amount, the petitioner closed his business and simply disappeared. In such circumstances mala fide intention has to be presumed. He places strong reliance on D. Raj Arora v. R. Viswanathan (1) 1988 (1) Crimes 812.
6. The point for consideration is whether the proceedings in C.C. No. 400 of the 1988 are liable to be quashed in exercise of the jurisdiction of this court under S. 482, Cr.P.C.
Point :
In the FIR filed in this case, it is simply stated that post-dated cheques were issued on the bank of Baroda and they were dishonoured as there was no money in the account. In the elaborate typed complaint given to the police on the basis of which FIR was registered, it is categorically stated that till 1985 July, they were regularly paying the money due to the complainant for goods supplied. Then they had fallen in arrears to a tune of Rs. 4,00,000/- and in spite of repeated demands and correspondence, they did not pay the amounts. Then it is stated that knowing fully well that there was no money in the account, the post-dated cheques were issued and that it was a case of intention to defraud and cause wrongful loss. Subsequent enquiries revealed that the petitioner closed down the business and disappeared.
7. In the charge-sheet, it is simply stated that the post-dated cheques were dishonoured and that the cheques were issued for goods supplied earlier. Except stating that there was no amount in the account, no other allegations are indicated to show that knowing fully well that there is no amount to his credit in the account, the petitioner issued the cheques. The chargesheet does not also indicate that the police investigation revealed that the post-dated cheques were issued at a time when the petitioner knew fully well that he had no amount to his credit and that he issued them with the intention to defraud R-2. In such a background, we have to see whether the criminal proceedings are liable to be quashed.
8. Only after the Negotiable Instruments Act has been amended with effect from 1-4-1989 and Chapter XVII was introduced, mere dishonour of cheque is made an offence and punishable if the provisions of Chapter XVII are complied with. Prior to this amendment, mere dishonour of a cheque was always considered to be not a criminal liability but merely a civil liability. The earliest decision is Chidambaram Chettiar v. Shanmugham Pillai (2) AIR 1938 Madras 129 : (1938 (39) Cri LJ 261). In this decision, the High Court held that in the world of business things are often done which are betrayals of confidence and deceptions which arouse moral indignation, but nevertheless Civil wrongs which can be righted by Civil Courts and are not crimes which can be punished by a Criminal Court. Not every immoral act is criminal and it is an abuse of the process of a Court to attempt to create a new crime in order to compel men to conform to a high standard of probity in business dealings or to force them to execute their promises. The court observed that in such cases, the High Court can, exercising jurisdiction under S. 561-A, prevent specious and spiteful criminal prosecutions. The court further pointed out that in the offence of cheating there are two elements - deception and dishonest inducement to do or omit to do something. Mere deception is not a criminal offence. It must be further established to show that if the victim of deception was made to do something as a result of the deception. The Court pointed out that a post-dated cheque for payment of goods already received is a mere promise to pay on a future date and if such a cheque is dishonoured, it is only a broken promise and it is not a criminal offence. The same view is taken by a number of High Courts. Radharaman Sahu v. Trilochan Nanda (3) 1991 Crl. LR 1603 : (1991 Cri LJ 1603) is a decision of the Orissa High Court. The facts of that decision are very near to the facts of our case. In that case, the accused was an old customer of the complainant-company. The complainant supplied goods to the accused on credit and requested him to pay in cash. The accused prevailed over the complainant to accept cheques, under the impression that he has sufficient funds in his account. The cheques were dishonoured. In such a case, the court held that it could not be said that any deception or fraudulent or dishonest inducement was practised by the accused. At the most it can be said that the accused made a false promise to the complainant and the breach of promise may make him liable for damages but it does not give rise to a criminal liability under Section 420, IPC In fact, in that decision the court observed that even if the post-dated cheques were given with the accused knowing that there were no sufficient funds in the account even then it would not amount to an offence under S. 420, IPC Madhavarao v. Sambhajirao (4) deals with a case of Trust. The court observed in paras that the test to be applied by the court is as to whether the uncontroverted allegations made constitute prima facie an offence. The court cannot be utilised for any oblique purpose. If no useful purpose is likely to be served by allowing the criminal prosecution to continue, the court may, after taking into consideration the special facts, quash the proceedings. The court also pointed out that there would be certain situations where it would be predominantly a civil wrong and certain other situations where actions may amount to a predominantly criminal liability. P. Eswara Reddy v. State of A.P. (5) 1985 (3) APLJ 43 : (1986 Cri LJ 207) reiterates the principle laid down by the Madras High Court in Chidambaram Chettiar v. Shanmugham Pillai (2) supra and holds that once the debt is already incurred by the accused and subsequently a cheque is issued to the complainant for encashment and if it is dishonoured, the ingredients of S. 415, IPC are not satisfied, and the mere evasion or deferment in realisation of the amount due amounts to a pecuniary advantage obtained by the accused and under the Indian law, it cannot be treated as an offence. V. V. L. N. Chary v. N. A. Martin (6) 1983 Crl. LJ 106 is a decision of the Kerala High Court, which deals with facts which are almost identical with the facts of our case. The court held that a post-dated cheque is given for goods already delivered which is dishonoured did not give rise to a criminal offence under S. 420, IPC unless there is evidence and indication to show that the accused was fully aware of the fact that he had no funds in the account and that he had no intention to provide funds for the cheque issued. The point emphasised by the decision is that a post-dated cheque for payment of goods already delivered is only a promise to pay on a future date and if the promise was broken by the dishonour of the cheque, the liability being only civil, no criminal offence will be there. The court further pointed out that there are no averments in the complaint that at the time when the cheque was issued, the accused was aware that there was no money in the bank to honour the cheque or that the accused did not intend to make sufficient funds available in his account by the time the cheque was to be presented for encashment. The court pointed out at page 109 that a subsequent failure to comply with a promise is not sufficient to infer dishonest intention which is an essential ingredient for the offence under S. 420 of the IPC. A mere deception or a mere dishonest intention by itself is not a criminal offence. In that view of the matter, the court, exercising powers under S. 482, Cr.P.C. quashed the criminal proceedings.
9. The only decision which is supposed to strike a different note is D. Rajaroara v. R. Viswanatham (1) supra. In that decision Justice K. Jayachandra Reddy held that mere issuing of a cheque which is subsequently dishonoured does not make an offence of cheating unless there are allegations in the complaint that by taking the cheque the complainant sustained any damage in his mind, body, reputation or property. His Lordship also pointed out that if there is something to indicate that the person entertained dishonest intentions at the time of issuing the cheque itself, then it would amount to a criminal offence. In that decision the party first agreed to issue a draft for the full amount but subsequently he instructed the bank to stop the payment. In such a background when the cheque was dishonoured, His Lordship came to the conclusion that the criminal proceedings cannot be quashed because it is difficult to say at that particular stage that no offence is made out. His Lordship observed that the general submission that in all cases when a cheque is dishonoured it does not amount to an offence cannot be universally accepted. It depends upon the facts of each case. If there are allegations to the effect that the accused had dishonest intention not to pay even at the time of the issuance of the cheque and the act of issuing a cheque which was dishonoured has caused damage to the complainant, it amounts to cheating.
10. The decision reported in D. Raja Arora v. R. Viswanathan (1) Supra is completely distinguishable from the facts of our case. There is ample material in that case to indicate that at the time of issuing the cheque which was dishonoured, the accused entertained the intention not to pay. He first promised to pay full amount by draft, later gave a cheque for part of the amount and subsequently he instructed the bank to stop payment. That is a clear indication that the whole thing started with a dishonest intention in the mind of the accused. Such a situation is not present in the case on hand.
11. In the present case, the post-dated cheques are issued long after the goods were supplied. It is admitted by the complainant that till July, 1985, all payments were made promptly and regularly. In fact, in the typed First Information given to the police, it is categorically stated that they were paying the money regularly. Only after July, 1985 they had fallen in arrears approximately to an extent of four lakhs and in spite of demands, the money was not paid. The only allegation is that subsequently he closed the business and disappeared. There are no allegations to the effect that the accused never took steps to provide funds in the bank account to enable the cheques to be honoured. There is no allegation that while the accused was carrying on business, he was acting deceptively prior to the civil litigation commencing between the parties. The other fact is that the petitioner filed O.S. No. 8 of 1988 which is pending in the Subordinate Judge's court at Anantapur and subsequently O.S. No. 114 of 1989 was filed against the present complainant for recovering a large amount of money equal to about 4,37,000/- and odd. Judged in the background of events, it is quite clear that the liability is purely of a civil character. The parties were litigating about the liability in the civil court. At such a time, the complaint was given to the police at Nellore on 10-7-1988 and the chargesheet was filed on 17-2-88. It is interesting to see that in the chargesheet, there is absolutely no mention about what is the actual bank balance available in the petitioner's account when the post-dated cheques were given. In fact, the police officials do not appear to have investigaged into the fact as to what is the outstanding balance in the bank account of the accused. The appendix of evidence in the chargesheet only shows that witnesses from the bank are cited to be examined only to speak about dishonouring of the cheques. Judging the entire matter in the light of the principles enunciated in the three important decisions Chidambaram Chettiar V. Shanmugham Pillai (2) supra V. V. L. N. Chary v. N. A. Nartin (6) supra and P. Eswara Reddy v. State of A.P. (5) supra, I am firmly of the view that the liability of the petitioner is only a pure civil liability and that the ingredients for an offence under S. 420, IPC as well as for the offence under S. 406, IPC are not made out by the FIR and the chargesheet. It looks as if the criminal complaint is given as a counterblast for the civil litigation between the parties. Allowing the criminal proceedings to continue would amount to abuse of process of the court. Such proceedings should be quashed in exercise of the powers of this court under S. 482, Cr.P.C.
12. In the result, the petition is allowed. The criminal proceedings in C.C. No. 400 of 1988 on the file of the Additional Judicial First Class Magistrate, Nellore, are hereby quashed.
13. Petition allowed.