Promod Kumar Rai Vs. Ms. Cholamandalam Dbs Finance Ltd. - Court Judgment

ASHIM KUMAR BANERJEE.J:

1. Parties being the petitioner and the respondent no.1 entered into an agreement under which the respondent no.1 extended financial assistance to the petitioner to the extent of rupees thirty-four lakhs vide loan agreement dated August 29, 2007. The petitioner contended that at the time of sanction of the loan the respondent no.1 got blank papers signed by him as well as his parents and brother. He also executed a deed of mortgage in respect of his properties. It was agreed that in case of dispute the parties would resolve such dispute through arbitration. Under the agreement the loan was to be repaid along with interest at the rate of 14.25 per cent per annum by payment of one hundred eighty monthly instalments at the rate of rupees forty-five thousand eight hundred and fifty-two payable on and from October 5, 2007.

2. The petitioner paid fifteen instalments. The respondent no.1, however, wrongfully adjusted the said instalments against interest, that too at the rate of forty-eight percent per annum. Dispute arose which resulted in arbitration proceeding. The petitioner challenged the venue. The respondent no.1 inflated claim to the extent of rupees forty lakhs forty-one thousand four hundred and three together with interest at the rate of eighteen per cent and hidden interest at the rate of forty-eight per cent per annum. The arbitrator published his award dated March 30, 2010 which is under challenge before this Court in its Original Side.

3. At the time of sanction of the loan, the petitioner issued blank cheques drawn on ICICI Bank, Howrah Branch. The respondent no.1 got those cheques dishonoured by depositing those in the account of the petitioner and initiated proceeding under Section 138 of the Negotiable Instrument Act, 1981 which was pending before the Court of learned Metropolitan Magistrate, 10th Court, Calcutta. The petitioner came up before this Court challenging the said proceeding being Case No.3029 of 2010, inter alia, on the ground that the proceeding pending before the learned Magistrate was not maintainable as the subject controversy was covered by the ex parte award.

4. Mr. Ananto Kumar Lala, learned counsel appearing for the petitioner, contended that the learned Magistrate did not have jurisdiction to entertain the petition in view of the dispute being civil in nature and that too covered by the arbitration award dated March 30, 2010. Mr. Lala contended in the alternative that the drawer bank was at Howrah. Hence, the learned Magistrate at Kolkata could not have entertained the said application. The proceeding was also vitiated by suppression of material fact that the subject controversy was covered by the arbitration award which was obtained by the respondent no.1. The cheque was allegedly dishonoured in 2008 whereas the complaint was lodged after about ten months. Hence, the proceeding was vitiated by delay. Mr. Lala relied on the decision in the case of B. Suresh Yadav –VS- Sharifa Bee And Another reported in 2007, Volume-XIII Supreme Court Cases Page-107.

5. Mr. Sandipan Gangully, learned counsel appearing for the respondent no.1 on the other hand contended that the agreement under which the loan was advanced contained an arbitration clause. Dispute arose due to nonrepayment of loan. The respondent approached the arbitral Tribunal for recovery of the loan amount. This would have no bearing with the offence committed by the petitioner under Section 138 as he failed to honour the cheque issued by him in repayment of the loan. He further disputed the contention made by Mr. Lala on jurisdiction. According to him, since the cheque was deposited in the bank of the respondent no.1 at Chowrangee within the territorial jurisdiction of the learned Magistrate the proceeding was maintainable. He relied on the following decisions :-

i) 1998 Supreme Court Cases (Criminal) Page-1723 (State of Madhya Pradesh –VS- Harsh Gupta)

ii) 2002 Calcutta Criminal Law Reporter (Calcutta) Page-438 (M/s. Essar Projects Ltd. & Others –VS- WPIL Ltd. & Another)

iii) 2004 Supreme Court Cases (Criminal) Page-353 (State of Madhya Pradesh –VS- Awadh Kishore Gupta & Others)

iv) 2005 Volume-I Calcutta Criminal Law Reporter (Calcutta) Page-581 (Fateh Chand Bhansali –VS- M/s. Hindusthan Development Corporation Ltd.)

v) 2007 Volume-II Calcutta Criminal Law Reporter (Calcutta) Page-407 (Paltu Shaw & Another –VS- Kanhailal Gupta & Others)

vi) AP No.632 of 2008 in the High Court at Calcutta (L & T Finance Limited –VS- Mr. Gupteshwar Upadhyay & Another)

vii) Eastern Criminal Notes 2010 Volume-I (Calcutta) Page-737 (Sitaram Agarwal & Others –VS- State of West Bengal)

6. I have considered the rival contentions and the decisions cited at the Bar. In the case of B. Suresh Yadav (Supra), the Apex Court held that when a civil suit was pending between the parties on the self-same issue and a contrary stand was taken in the complaint before the criminal Court the High Court was competent to quash the proceeding under Section 482.

7. In the case of State of Madhya Pradesh –VS- Harsh Gupta (Supra), the Apex Court observed that the High Court could not examine the defence in detail and come to a finding of innocence sitting in revisional jurisdiction. In the case of M/s. Essar Projects Ltd. (Supra), the learned single Judge of this Court held that the allegations made in the petition of complaint could only be considered by the trial Court after recording evidence and the plea as to maintainability could not be considered at the initial stage unless evidence was taken.

8. In the case of State of Madhya Pradesh –VS- Awadh Kishore Gupta (Supra), the Apex Court observed that High Court could not exercise power under Section 482 by appreciating evidence. It could only evaluate the material and documents on record to have a prima facie satisfaction that an offence was committed.

9. In the case of Fateh Chand Bhansali (Supra), the learned single Judge observed that the inherent power of the High Court under Section 482 should be exercised only in “rarest of the rare cases”.

10. In the case of Paltu Shaw (Supra) it was held, once the cheque was dishonoured it would have a presumption of offence which was to be rebutted by the accused by placing evidence on record. The power of the High Court in its revisional jurisdiction could not be exercised considering factual aspects.

11. In the case of L & T Finance Limited (Supra), the learned Judge of this Court observed that it was not right in initiating one proceeding at Calcutta and other at Mumbai compelling the other side to move from one State to the other to contest the proceedings.

12. In the case of Sitaram Agarwal (Supra), the learned single Judge of this Court observed that an arbitration proceeding for recovery and criminal proceeding on an independent cause of action could be proceeded with simultaneously as those were initiated on different premise.

13. On a combined reading of the law as decided by the aforesaid precedents and discussed by me above my understanding of the law on the subject is that the inherent power of the Court, sitting in its revisional jurisdiction, should be sparingly used. Where complaint ex facie does not disclose offence and continued pendency of the case would cause unnecessary delay and harassment the Court could exercise such power. In a case under Section 138 of the Negotiable Instrument Act the complainant was to prove that a cheque was issued by the respondent and that was dishonoured for non-payment.

14. Once such positive statement was made and documents were produced evidencing dishonour statutory presumption would follow that an offence was committed by the drawer of the said cheque and the onus would shift on the defence to rebut such presumption. This would mean involvement of factual controversy which needs adjudication. In the case of the like nature the High Court would have hardly any scope particularly when the case was at the initial stage, to consider whether the proceeding could be quashed or not. On the plea that the controversy was civil in nature, my view is when a cheque was issued that would itself show existence of a civil liability by the drawer in favour of the drawee. However the legislature thought it fit that factum of dishonour would constitute an offence committed by the drawer attracting punishment under the said provision. In the case before us the civil liability was the subject matter of dispute in arbitration which culminated in an award that was under challenge before the Civil Court. The instant case is restricted to dishonour of a particular cheque which might be a part of the claim in the arbitration proceedings. This fact might be relevant while computing the amount of compensation which might be awarded in favour of the drawee at the ultimate stage. That would not per se prevent the criminal Court to independently proceed irrespective of the fact that the award was in dispute and made subject matter of a setting aside application pending before the civil Court. In an identical situation the learned single Judge of this Court in the case of Lusture Agencies Private Limited and Another – VS- Magma Leasing Limited & Others reported in 2007 Volume-III Eastern Criminal Notes Page-453 held that the proceeding initiated under Negotiable Instrument Act irrespective of pendency of the arbitration proceeding was maintainable. I find no scope of disagreement.

15. The revisional application fails and is hereby dismissed.

16. Lower Court Records, if received in the meantime be sent down at once.

17. Urgent xerox certified copy will be given to the parties, if applied for.