Hitesh Kumar And Ors vs State Of Jharkhand And Ors

Cr. M.P. No.2635 of 2017

Petitioner, in this application, has prayed for quashing the order dated 04.07.2016 passed by the Judicial Magistrate First Class, Palamau at

Daltonganj, whereby cognizance of offence under Section 420 of the Indian Penal Code and Section 138 of the Negotiable Instruments Act was taken

and thereafter summons were issued to the petitioner. Further, he challenges the order dated 13.06.2019 passed by the Judicial Magistrate First Class,

Palamau at Daltonganj whereby the petition under Section 239 read with Section 245 of the Code of Criminal Procedure of the petitioner was

dismissed. Vide order dated 14.10.2019 of this Court, the aforesaid order was also allowed to be impugned in this criminal miscellaneous petition.

The criminal proceeding arises out of complaint case being Complaint Case No.1839 of 2015, instituted by the opposite party No.2 against the

petitioner for allegedly committing an offence under Sections 420, 406 of the Indian Penal Code and Section 138 of the Negotiable Instruments Act.

The complainant in the complaint petition stated that this accused person was studying with the daughter of the complainant at London. After

completion of his studies, he settled at Bengaluru and started to work there. As a result of their earlier friendship, this petitioner also became

acquainted with the accused person, as he was very cordial with the family of the complainant. The accused came to know that the complainant was

also doing business. The accused came to Daltonganj and asked for Rupees One Crore from the complainant so that he could use the same in his

business as the accused did not have money by that point of time. The complainant further stated that because of the closeness of the complainant and

the accused, the complainant had a belief that he will return the amount and did not apprehend that the accused had any bad intention. Thus, from

January 2014 to July 2014 the complainant gave Rs.2 crore from the account of his daughter and also from his account and some cash. He stated that

four agreements were also entered into between the parties, in lieu of giving such loan, on non-judicial stamp paper bearing No. B 489155, B 489156,

B 489157, and B 489159, through which the accused assured that he will return the money by July 2015. It is further mentioned in the complaint that

three cheques, totaling to Rs.1 crore (amounting to Rs.50 lakh, Rs.25 lakh and Rs.25 lakh) were handed over to the complainant duly signed by the

accused. Further three more cheques of Rs.1 crore were also given (subject matter of Complaint Case No.1833 of 2015 and Cr. M.P. No.2655 of

2017). In June/July 2015 when the complainant met the accused, the accused assured that the amount will be credited sometime in October. Then, on

20.10.2015, cheques were deposited in the account of the complainant, but, the same got dishonoured. The complainant sent legal notice under Section

138 of the Negotiable Instruments Act, but, no reply was given. The complainant had no other alternative than to approach the Court by filing the

complaint case.

The complainant examined himself on solemn affirmation and he has adduced three witnesses in support of his contention, during enquiry. The

Court, thereafter, considering the complaint and the statement of the enquiry witnesses, vide order dated 04.07.2016, took cognizance of the offence

under Section 420 of the Indian Penal Code and Section 138 of the Negotiable Instruments Act and issued summons to this petitioner. Thereafter

during pendency of this criminal miscellaneous petition, a discharge petition was filed by the petitioner, which was rejected on 13.06.2019 by the

Judicial Magistrate First, Palamau.

Being aggrieved by these two orders, the accused has approached this Court for quashing both these two orders, i.e., order taking cognizance and

order by which discharge petition filed by the petitioner was rejected and prayed for quashing the entire criminal case.

Learned counsel for the petitioner submits that from the entire materials on record, i.e., complaint petition, statement of the witnesses during enquiry

and before charge evidence, only one conclusion can be arrived at that no criminal offence is made out in the instant case. He submits that the entire

case is nothing but relates to giving a loan for business purpose by the complainant and the failure of the accused to repay the same. He submits that

the same cannot constitute a criminal offence. He submits that the complainant has suppressed material facts, which would be evident from the

statement of the complainant witnesses recorded before charge, wherein they have categorically stated that there was long standing monetary

transaction between the parties since long. This vital fact has been suppressed by the complainant in the complaint only to mislead the Court and to

convert a civil dispute into a criminal offence. It is submitted that the witnesses of the complainant had demolished the case of the complainant. It is

lastly submitted that the evidence recorded and the documents brought by the complainant will clearly suggest that there are no ingredients of Section

420 of the Indian Penal Code.

As per his submission, so far as it relates to Section 138 of the Negotiable Instruments Act, it is argued that the Hon’ble Supreme Court has

held that if a cheque is given by way of security, gets dishonoured, no offence under Section 138 of the Negotiable Instruments Act shall be made out.

He submits that it is admitted case from the documents which are referred in the complaint petition itself, that the cheques were given by way of

security. This fact, according to the petitioner, has very well been suppressed by the complainant in his complaint petition. Since the cheques were by

way of security, no offence under Section 138 of the Negotiable Instruments Act is made out. He submits that the learned Judicial Magistrate has not

even whispered in the impugned order by which discharge petition of the petitioner has been rejected, as to what are the materials, which surfaced,

which constitutes a criminal offence against the petitioner so as to frame charge against him. Counsel for the petitioner refers to several documents

and bank statements to suggest that maximum amount of loan has been repaid and the complainant, with a malafide intention had produced the

cheques, which were, in fact, deposited by way of security.

Learned counsel appearing on behalf of the complainant submits that from the facts of this case and from the facts narrated in the complaint

petition, it would be crystal clear that the petitioner had taken loan of Rs.2 crore from the complainant. The said amount was, admittedly, paid through

the bank account of complainant’s daughter, through complainant’s bank account and also sometime, by way of cash. He submits that the

accused did not had any intention to repay the loan from the very beginning thus, gave three cheques, which got dishonoured. This fact clearly

constitutes an offence punishable under Section 420 of the Indian Penal Code. Since cheques were dishonoured, offence under Section 138 of the

Negotiable Instruments Act is attracted in this case. It is submitted that whether the cheques were given for purposes of security or not is a matter of

trial and cannot be decided at the stage of either taking cognizance or at the stage of framing of charge. It is submitted that since the offence is made

out, cognizance was correctly taken by the Court below and there were materials to frame charge, hence charge has been framed against the

petitioner after rejecting the discharge petition filed by the petitioner.

I have heard learned counsel for the parties at length and have gone through the entire records. I have also perused the pleadings filed by both the

parties and the documents filed. Be it noted that I have taken cognizance of only the documents filed by the complainant on which the complainant has

relied upon, because the defence document cannot be looked into at this stage.

Cognizance was taken of offence under Section 420 of the Indian Penal Code and Section 138 of the Negotiable Instruments Act. The allegation

against the petitioner is that he had taken loan from the complainant, which was paid through the account of the complainant and his daughter.

Petitioner has also given undertakings on non-judicial stamp papers that he will return the said amount and cheques were also handed over to the

complainant, but, on depositing threee cheques, out of the cheques given, in the Bank, those got dishonoured. From perusal of the complaint petition, I

find that the complainant has mentioned that four agreement documents were notorised in respect of the said loan, which was given to the petitioner.

The said documents, i.e., non-judicial stamp papers, were numbered as B 489155, B 489156, B 489157, and B 489159. Since reference of these four

documents find mentioned in the complaint petition and the complainant also annexed these documents in his pleadings before this Court and these

documents were also admitted by the complainant’s daughter in her evidence before charge, this Court for the purpose of a fair and just decision

of this case, feels that there is no impediment in relying on the same while arriving at a just conclusion, as these are not defence documents. Further,

the evidence before charge of the complainant witnesses have also been brought on record by the petitioner, which have also been admitted by the

complainant. Thus, this Court also finds no impediment if those depositions are perused and the matter is decided on the merits on the basis of said

depositions.

It is a well settled principle of law that at the time of taking cognizance, the Court has only to see whether any prima facie case is made out or

not. If a prima facie case is made out, the Court is bound to take cognizance. At the time of framing of charge, in a complaint case, the Court has to

see as to whether there are any materials to frame charge on the basis of materials on record, i.e., the complaint petition and the statement of the

witnesses, which have been recorded before charge.

As stated earlier, the case of the complainant is that he was cheated as the accused had taken loan of Rs.2 crore from him on the pretext of doing

business, but, did not refund the same and rather handed over three cheques, which got dishonoured. Further, it has been mentioned that four

agreements were entered into by and between the parties. These documents of agreements entered into between the parties have been brought on

record by the opposite party No.2, i.e., the complainant himself. These agreements are on non-judicial stamp papers of Rs.50/- each, which are

numbered as B 489155, B 489156, B 489157, and B 489159. Reference of these four agreements are there in the complaint petition itself. From

perusal of these documents, I find that the complainant undertook to repay the loan amount. It has also been mentioned in the said documents that in

the year 2014, different sums were paid as loan to the accused person. Further in Clause 5 of all the four agreements, it has been categorically

mentioned that cheque leaves have been handed over by the borrower (accused) to the lender (complainant herein) as security against loan of Rs.2

crore.

Thus, from the aforesaid facts, which are admitted and emerges from the documents of the complainant himself, it is clear that the cheques, which

were dishonoured, were given by way of security. It is not in dispute by any of the parties and the reference of the cheques which are in the

agreement are same which were dishonoured and subject matter of the complaint.

The Hon’ble Supreme Court, in the case of Sudhir Kumar Bhalla versus Jagdish Chand reported in (2008) 7 SCC 137 has held that the

criminal liability of the appellant under the provisions of Section 138 of the Negotiable Instruments Act are attracted only on account of dishonor of

cheque issued in discharge of liability or debt, but not when they were issued as a security. Counsel for the complainant-opposite party No.2 had

placed before this Court a judgment of the Hon’ble Supreme Court in Criminal Appeal Nos.1382-1383 of 2019 [M/s Womb Laboratories Pvt Ltd.

versus Vijay Ahuja & Anr.] and by referring to the said judgment, he submitted that whether cheques were given for the purpose of security or

against discharge of a debt or liability is a matter of trial and cannot be decided at the stage of framing of charge or taking cognizance. Thus, he

submitted that this Court cannot give a finding on these facts.

When I go through the judgment of the Hon’ble Apex Court in the case of Womb Laboratories (supra) I find that it was the defence of the

accused that the cheques were given by way of security and thus the same became the defence version. In this case, I find that there are some

difference in the facts. It is is not only the case of the accused that the cheques were given as a security, but, in fact, this statement of the accused

gets fortified from the statement of the complainant himself. Statement of the complainant in the complaint that four agreements were entered into is

an admitted fact by the complainant. These four documents were produced by the complainant before this Court, wherein it has been clearly

mentioned that the cheques were given as security. Thus, on the facts of this case, it can be said that it is the case of the complainant also that the

cheques were given by way of security. Hence, this is not a case where the defence only stated that cheques were given by way of security. Thus, on

the facts of this case, the judgment of the Hon’ble Supreme Court in Womb Laboratories (supra) is not applicable here. Further, it is very

surprising that the agreement documents, which is the complainant’s documents and which state that the cheques were given by way of security,

though has reference in the complaint petition, but, the complainant has very cleverly not mentioned in the complaint petition that the cheques were

given by way of security, rather, gave an impression to the Court that the said cheques were given in discharge of debts and liabilities.

Further, when I go through the complaint petition, I find that the complainant has stated that in 2014, the amount of loan was asked for and Rs.2

crore from time to time was given after 2014. From the perusal of the entire complaint petition, it gives an impression that the parties entered into this

relationship from July 2014. There is no whisper about any relationship between the parties prior to that.

The evidence before charge has been brought on record by the accused petitioner through a supplementary affidavit. This evidence before charge

has not been denied by the complainant, rather, they also admit the same. The witness No.3 is the daughter of the complainant, from whose account

huge amount was also paid to the accused after 2014 as alleged in the complaint petition. When I go through her evidence, I find that she in her

statement at paragraph 16 has stated that in the year 2011 to 2013, amount of Rs.35 lakh was given to the accused through her bank account. In

paragraph 15, she stated that she is not aware in 2011, how much amount she has transferred to the accused. Further, in paragraph 16, she has stated

that she is not remembering as to in the year 2011 how much amount was transferred by the accused to her. She stated that from 2012 to December

2013, approximately Rs.23-25 lakh was transferred from her account to the accused. She further stated that between 2012 and 2013 roughly Rs.1.5

lakh to Rs.2 lakh was transferred to the account of the accused from the account of her father (complainant herein) and her maternal uncle.

Paragraph 17 of her evidence before charge is very vital. She states that from 2012 to December 2013, the accused has transferred Rs.15-16 lakh in

her account. Further, in the year 2012, about Rs.1.30 crore was transferred to the account of the accused from her account and also from the account

of her relatives. Further, she stated in paragraph 18 of her evidence that in 2014, Rs.10 lakh was transferred from the account of this accused to her

account. From her statement in paragraph 19, it is quite clear that there were monetary transactions between them from 2011 to 2014. In paragraph

20 she has stated that from 2011 to 2014, there were no disputes in respect of any bank transaction between them. In paragraph 21 she categorically

states that from 2011 to 2014, she has not kept any records of the bank transactions between them and it was this accused, who was keeping all the

accounts, as there were good relations between them. She stated that the accused was maintaining a diary and was keeping the record and was also

entering the same in the diary maintained by her. In paragraph 25, she stated that in 2014, loan of Rs.2 crore was taken, but, the same was not

returned.

From the aforesaid facts, it is quite clear that there was a long standing monetary transactions going on between the parties. This fact of long

standing monetary transaction from 2011, which was continuing between the parties, has been suppressed by the complainant in the complaint petition.

From the evidence before charge of the daughter of the complainant, it is clear that there were monetary transactions from 2011 to 2014 and the

amounts were paid to the accused and accused also paid amounts in her account and there was no dispute in these transactions. The complainant in

the complaint petition gives an impression that their relationship started in the year 2014, which is not correct.

When a complainant approaches the Court seeking some relief against some person, he has to come up with clean hands. He cannot suppress

material facts to give a wrong impression to the Court. In this case, the same has been done by the complainant. The suppression of fact by the

complainant is in two counts: that there were monetary transactions between the parties from 2011 has been suppressed in the complaint, which has

been substantiated by the evidence of the complainant witness (P.W.3) before charge and also the recital of the agreement to the effect that cheques

were given by way of security was also suppressed. These two vital facts, which goes to the root of the case, have been cleverly suppressed by the

complainant. These two facts have been derived by this Court not from any submission of the accused, rather the same have surfaced from the

documents and evidence of the complainant and which the complainant admits, which can very well be taken note of by this Court.

When a party approaches the Court for any relief, he must come with clean hands. It is expected that in a petition filed by him before the Court,

he will narrate all the facts. If it is the complainant, who approaches the Court seeking relief, he must also be fair enough and should come with clean

hands. In this case, I find that all the important facts have been suppressed by the complainant in the complaint petition. During course of leading

evidence before charge, those facts surfaced before the Court. Some surfaced during hearing of this criminal miscellaneous petition, that too at the

instance of the complainant. The process of the Court cannot be abused by anyone by distorting and narrating incomplete or incorrect facts. The

Hon’ble Supreme Court in the case of “A. Shanmugam â€"versus- Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Parfipalanai

Sangam Represented by its President Etc., reported in (2012) 6 SCC 430â€​ in Para- 38 & 39 has held as follows:-

“38. False averments of facts and untenable contentions are serious problems faced by our courts. The other problem is that litigants

deliberately create confusion by introducing irrelevant and minimally relevant facts and documents. The court cannot reject such claims,

defences and pleas at the first look. It may take quite some time, at times years, before the court is able to see through, discern and reach to

the truth. More often than not, they appear attractive at first blush and only on a deeper examination the irrelevance and hollowness of

those pleadings and documents come to light.

Our courts are usually short of time because of huge pendency of cases and at times the courts arrive at an erroneous conclusion

because of false pleas, claims, defences and irrelevant facts. A litigant could deviate from the facts which are liable for all the conclusions.

In the journey of discovering the truth, at times, this Court, on later stage, but once discovered, it is the duty of the Court to take

appropriate remedial and preventive steps so that no one should derive benefits or advantages by abusing the process of law. The court

must effectively discourage fraudulent and dishonest litigants.â€​

Further, in Para- 43.4, the Hon’ble Supreme Court has held as follows:-

“43.4. Once the court discovers falsehood, concealment, distortion, obstruction or confusion in pleadings and documents, the court

should in addition to full restitution impose appropriate costs. The court must ensure that there is no incentive for wrong doer in the temple

of justice. Truth is the foundation of justice and it has to be the common endeavour of all to uphold the truth and no one should be

permitted to pollute the stream of justice.â€​

As held earlier, all the aforesaid facts are undisputed facts and admitted by the complainant, which surfaced from the pleadings of the complainant and

admission from the complainant, thus, cannot be said to be a defence version. Thus, in view of Para-43.4 of the aforesaid judgment “A.

Shanmugam†(supra) it is the duty of this Court to take full cognizance of those facts to not only avoid the abuse of the process of the Court, but to

do complete justice when the truth has been churned out. Though, the aforesaid judgment was delivered by the Hon’ble Supreme Court in a civil

litigation, but the principles can very well be applied in the criminal litigation when these types of suppression of fact are glaring.

From the aforesaid facts and from the documents of the complainant, this Court finds that long standing business transaction and inability of

refunding a loan has been given a color of criminal offence of cheating punishable under Section 420 of the Indian Penal Code. A breach of trust with

mens rea gives rise to a criminal prosecution. In this case when I go through the evidence before charge of the complainant and the documents of the

complainant, I find that there were long standing business transactions between the parties. Since 2011 money was advanced by the complainant and

his family members to the accused and the complainant witness admits that money was also transferred from the account of the accused to the

account of daughter of the complainant. From the evidence, I find that there is no material to suggest existence of any mens rea. Thus, this case

becomes a case of simplicitor case of non-refunding of loan, which cannot be a basis for initiating criminal proceeding. The Hon’ble Supreme

Court in the case of Samir Sahay alias Sameer Sahay versus State of U.P. & Anr. reported in (2018) 14 SCC 233 held that when the dispute between

the parties was ordinarily a civil dispute resulting from a breach of contract on the part of the appellant by non-refunding of amount advanced, the

same would not constitute an offence of cheating. In this case also, I find that it is true case that the amount of loan has not been refunded, thus, this

cannot come within the purview of cheating, though the complainant by suppressing the material facts, has tried to give a different color. Thus, I find

that no case punishable under Section 420 of the Indian Penal Code can be made out in this case.

Further, I find that it is the documents of the complainant, which show that the cheques were given by way of security. Even if I do not believe

the statement of the accused, the documents of the complainant cannot be brushed aside. As held earlier, supported by the decision of the Hon’ble

Supreme Court in the case of “Sudhir Kumar Bhalla†(supra) a cheque given by way of security cannot attract Section 138 of the Negotiable

Instruments Act. Since the cheques were given by way of security, which is evident from the complainant’s documents (though this fact has also

been suppressed in the complaint petition), I find that Section 138 of the Negotiable Instruments Act is also not attracted in this case.

Further, I find that the Judicial Magistrate, while deciding the discharge petition, has also misdirected himself in passing the impugned order dated

13.06.2019. While dismissing the discharge application filed by the petitioner, the Judicial Magistrate only confined himself to the complaint petition and

has stated not even a single word as to what are the materials, which surfaced in the evidence before charge. The impugned orders suggest that the

materials, which were necessary to be considered while deciding the discharge application were not considered by the court below.

Thus, in view of what has been held above, I find merit in this criminal miscellaneous petition as no offence under Section 420 of the Indian Penal

Code and Section 138 of the Negotiable Instruments Act is made out. Accordingly, the order taking cognizance dated 04.07.2016 passed by the

Judicial Magistrate First Class at Daltonganj in Complaint Case No.1839 of 2015 and the order dated 13.06.2019 passed by the Judicial Magistrate

First Class, Palamau in Complaint Case No.1839 of 2015 by which discharge petition of the petitioner was rejected, are hereby set aside.

Consequentially, the entire criminal proceeding in connection with Complaint Case No.1839 of 2015 is also hereby quashed.

This criminal miscellaneous petition (Cr. M.P. 2635 of 2017), accordingly, stands allowed.

Cr. M.P. No. 2655 of 2017

So far as Cr. M.P. No.2655 of 2017 is concerned, I find that only difference between this case and Cr. M.P. No.2635 of 2017 is three cheques.

The three cheques, which got dishonoured for which Complaint Case No.1839 of 2015 was initiated, which was subject matter of Cr. M.P. No.2635

of 2017. The second set of three cheques, which got dishonoured, are the subject matter of Complaint Case No.1833 of 2015, the orders passed

wherein and the proceeding whereof is under challenge in Cr. M.P. No.2655 of 2017.

It is an admitted case of the parties that these three cheques and other three cheques, which is subject matter of Cr. M.P. No.2635 of 2017 are

covered by agreements, reference whereof has been given in paragraph 2 and paragraph 9 of this order. Both the parties agreed that all the

transactions are one and same, but, two cases were filed for dishonouring of these six cheques. Both the parties contended that arguments in both the

cases are same and materials are also same.

In view of what has been held above, this criminal miscellaneous petition (Cr. M.P. 2655 of 2017) is also allowed. Accordingly, the order taking

cognizance dated 04.07.2016 passed by the Judicial Magistrate First Class at Daltonganj in Complaint Case No.1833 of 2015 and the order dated

13.06.2019 passed by the Judicial Magistrate First Class, Palamau in Complaint Case No.1833 of 2015 by which discharge petition of the petitioner

was rejected, are hereby set aside. Consequentially, the entire criminal proceeding in connection with Complaint Case No.1833 of 2015 is also hereby

quashed.