Devinder Singh and ors. vs State (U.T.) Chandigarh

S.K. Jain, J.

Jujhar Singh through a written application lodged FIR No. 87 of dated 1.7.1988 in Police Station, Chandigarh under Sections 406/420 Indian Penal Code on the allegations, "that he was running poultry feed business in the name and style of M/s. Dale Poultry Farm at village Mauli, Post Office, Mani Majra, U.T. Chandigarh. He used to supply poultry feed to Shri Devinder Singh of M/s. Mandrin Poultry Farms Private Limited as also to Mrs. Atamjit Kaur wife of Devinder Singh of M/s Biba Poultry Farm. They purchased poultry feed for some months, but the supply was stopped as they did not honour their commitments. Devinder Singh, first petitioner, had issued four cheques dated 16.12.1986, 16.1.1987, 24.1.1987 and 1.2.1987 respectively, whereas Mrs. Atamjit Kaur, petitioner No. 2, had issued two cheques dated 20.1.1987 and 7.2.1987. These cheques were presented before their bankers but the same were dishonoured. He approached them that since their cheques had been dishonoured, they should pay the amount in cash but they had not paid even a single penny to him for the last about two years and, therefore, they had cheated him for the amount due from them. When he insisted for payment, they had abused him and threatened to kill him."

On the challan having been put up before him, learned Judicial Magistrate 1st Class, Chandigarh, vide his order of November 10, 1988, (Annexure P2), found that a prima facie case under Sections 420/406 of the Indian Penal Code was made out against the accused. Consequently, he charged them accordingly vide chargesheet Annexure P1.

Criminal Revision No. 1168 of 1988 has been filed by Sh. Devinder Singh and Mrs. Atamjit Kaur for quashing the above said order and chargesheet as well as the proceedings of the case on the ground that there were business dealings between the petitioners and Jujhar Singh complaint for the last several years and the petitioners had been purchasing poultry feed from him regularly. It was mutually decided that the petitioners shall give postdated cheques at the time of supply of feed as security for payment and the cheques shall not be presented to the bank and will be returned to the petitioners at the time of payment of the amount thereof in cash. This was being followed right from the year 1986 and, therefore, dishonouring of the cheques would create only a civil liability and not a criminal one on the part of the petitioners.

I have heard Sh. H.S. Gill, Advocate, for the petitioners and Sh. Rajiv Vij, Advocate, for Sh. Anand Swaroop, Senior Advocate, Standing Counsel for Union Territory, Chandigarh, and have carefully gone through the material on record.

Learned Counsel for the petitioners has urged that the dishonoured cheques have been issued by the petitioners in favour of the complainant Jujhar Singh to discharge their preexisting liability arising from dealings between them i.e. supply of poultry feed by Jujhar Singh to them, therefore, dishonouring of the cheques by the bank amounts to breach of promise only and is, therefore, a civil liability. No criminal offence either of cheating or criminal breach of trust is made out against the petitioners and therefore, order Annexure P2 and the charge sheet Annexure P3 are liable to be quashed. He has cited at the bar the following judgments in his support :

(i)Chhote Lal Aggarwal v. State of Punjab, 1987(2) Recent CR 263;

(ii)Sohan Lal Jain, Prop M/s Lakshmi Synthetics v. M/s Sun Flag Textiles Limited, 1988(1) Recent CR 157;

(iii)Smt. Pushpa Khera and another v. Pishori Lal, 1990(3) Recent CR 446 ; and

(iv) Vipan Khanna v. D.P. Jain, 1992(1) CLR 289.

In order to find out as to whether an offence under Section 420 of the Indian Penal Code is made out or not in the facts and circumstances of this case it is expedient to examine Section 420 of the Indian Penal Code which is reproduced as under :

"Cheating and dishonestly inducing delivery of property :

"Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven year, and shall also be liable to fine."

In order to bring the offence within the definition of Section 420, there has to be an inducement made dishonesty with the intention of cheating the person to deliver any property. So far as the facts of the instant case are concerned, there is no averment in the complaint that the poultry feed was supplied to the petitioners on any such inducement made dishonestly. The whole history makes it quite clear that the poultry feed was supplied against the value which became due from the petitioners and to discharge that outstanding amount, the petitioners does not attract the provisions of Section 420 of the Indian Penal Code. As is clear from the facts narrated in the First Information Report, the goods were supplied without any inducement and the cheques were given later. After the cheques were given, no goods are said to have been delivered on the basis of any assurance or inducement and therefore, this is not a case where the petitioners were required to be charged and face trial.

In Jawahar Lal Bansal v. Mohinder Singh and another, 1980 PLR 116, it was observed by this Court that the distinction will have to be drawn between a case where post dated cheque is issued in order to discharge an existing liability and a case where it is issued against delivery of goods with an assurance that it will be encashed when presented to the bank. In the first case, it would amount only to breach of promise if the cheque is not encashed but in the second case, it may be prima facie evidence of an inducement to cheat.

Similar view was taken by Delhi High Court in Bhola Nath Arora and another v. The State, 1982(2) Crl. LJ 1482, wherein it was held that drawing up of a cheque does not imply any representation that the drawer has money in the Bank to the amount shown in the cheque, and the mere fact that the cheque is dishonoured may not in itself give rise to as criminal offence. However, the position is different where the property is purchased by the accused and the price is paid through cheque. In such a case, there is an implied representation that the cheque should be encashed on presentation to the bank . Consistent view of this Court has been that unless delivery of goods had been made against a cheque then due to dishonouring of the same, which was issued for an existing liability, no criminal offer is made out.

In Prem Chand and others v. State of Punjab, 1979 CLR (Punjab and Haryana) 262, the goods had already been parted with when a postdated cheque was issued in favour of the complainant. This cheque was presented to the bank but was dishonoured and consequently an FIR was registered against the accused under Section 420 of Indian Penal Code. It was held that in such circumstances, issuing of the cheque was a mere promise to pay and when this promise was broken, it did not amount to a criminal offence and was deemed to be a civil matter.

In similar circumstances, in Dinesh Saha v. Sat Narain Kukara, 1979 PLR 33, it was held that it was an ordinary business transaction in respect of which payment was to be made by the accused subsequent to the delivery. The time that intervened between the delivery and the issuing of the cheque indicated that the payment was not to be made at the time of the delivery of the goods and in such circumstances the dishonouring of the cheque amounted to a civil liability and not a criminal offence under Section 420 of the Indian Penal Code.

In Municipal Corporation of Delhi v. Ram Kishan Rohtagi and others, 1983(1) R.C.R.(Criminal) 73 : AIR 1983 Supreme Court 67, it was held that proceedings against an accused at the initial stage can be quashed only if on the face of the complaint, or, the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then High Court will be justified in quashing the proceedings in exercise of its power under Section 482 of the Code.

In the instant case, from the allegations made in the complaint, it is quite patent that the complainant had been supplying poultry feed to the petitioners on various occasions and they had issued cheques at various times. The cheques mentioned in the earlier part of the judgment issued by the petitioners in favour of complainant were dishonoured. From all the above facts detailed in the complaint, it is quite obvious that the cheques mentioned hereinbefore were not issued against the delivery of goods. Rather, the delivery of the goods i.e. poultry feed purchased by the petitioners from the complainant had been made much before the said cheques were issued in favour of the complainant. Thus, at the time of issuance of the said cheques, the complainant was not in any manner, induced to deliver, or, part with any property, or, to do, or omit to do anything by any of the petitioners. The dispute between the parties merely amounts to breach of promise, and gives rise to civil liability, it does not amount to commission of an offence of cheating.

Sh. Gill has further argued that Section 406 of the Indian Penal Code, is in a way antithesis of the offence under Section 420, Indian Penal Code. In case of Criminal misappropriation, the property is voluntarily kept in the custody of accused and in a case for cheating the accused by adopting deceitful means induces the complainant to part with property. It is difficult to imagine how an accused person can be tried for these two offences in the same trial. It must be said that provisions under Sections 406/420 of the Indian Penal Code are mutually exclusive and order summoning the petitioners under both the provisions aforesaid is legally unsustainable.

As a sequel to the above discussion, this revision petition succeeds and is allowed. The impugned order Annexure P2 and the chargesheet Annexure P1 as well as the proceedings of the case in the trial Court are hereby quashed.