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Judgment
52 paragraphs · 2,402 wordsN. Ananda
The petitioners in Criminal Petition No. 5896/2011, Criminal Petition No. 5899/2011 and Criminal Petition No. 3679/2011 arrayed as accused 1 to 3 in C.C. No. 31830/2009, C.C. No. 97905/2009 and C.C. No. 109155/2009 have filed these petitions to quash the proceedings therein pending trial for an offence punishable u/s 133 of the Negotiable Instruments Act, 1881 (for short ''the Act''). The sole respondent in all these petitions is the complainant in all the cases, The averments of complaint are common and parties are common. Therefore, these petitions are heard together and taken up for decision by this common order.
The brief facts as averred in the complaints are as follows:-
That on 19.04.2007. the complainant entrusted the construction of 317 villas at an approximate value of Rs. 40 crores in terms of letter of intent for villa construction in terms of Annexure-''A''. The accused accepted the letter of intent and started construction activity. However, accused could not keep up time schedule, which was one of the essential terms of contract. In continuation of the agreement dated 19.04.2007, parties entered into a second agreement on 19.11.2008, which according to the complainant was for the purpose of extending time to accused on the letter of intent dated 19.04.2007
Clause 11 of the agreement dated 19.11.2008 reads thus:-
Performance Security:
a) Performance Security amount shall he Rs. 125 Lakhs (Rupees One hundred Twenty-five Lakhs only).
b) Of this Rs. 125 lakhs, Rs. 50 lakhs (Rupees Fifty lakhs only) will be retained by VHDC from present RA Bill.
c) Balance Rs. 75 lakhs (Rupees Seventy-five lakhs only) will be recovered within 6 months, from the dale of this Agreement, from RA Bills in equal installments.
d) SDIL shall deposit 6 nos. cheques totaling to Rs. 75 lakhs (Rupees Seventy five lakhs only). This cheque shall be returned when the amount of Rs. 75 lakhs (Rupees Seventy-five lakhs only) has been recovered from the RA Bills as mentioned in sub-para (c) above.
e) The amount of Rs. 125 lakhs (Rupees One hundred Twenty-five lakhs) which will be retained as Performance Security shall be returned to SDIL on successful completion and handover of ail Villas. The Performance Guarantee shall not carry any interest.
The accused failed to construct villas as per time schedule. Therefore the complainant presented the cheques offered as performance security. The cheques were dishonoured due to stop payment. Therefore, the aforestated complaints were initiated by the complainant.
The petitioners (accused) have contended that after construction was taken up they came to know that there was a public interest litigation in respect of site of construction and Town Planning Authority had directed to stop the work. On 21.04.2009, when this matter was brought to the notice of complainant, the complainant gave evasive reply. Therefore, the accused issued a legal notice dated 01.05.2009, terminating the contract and also for settlement of accounts by taking a joint measurement of work executed by accused. They also invoked clause 7 of the agreement for appointment of an Arbitrator,
The learned counsel for accused has made following submissions:-
I. The cheques are not supported by legally recoverable debt or liability. The cheques offered as performance security should not have been presented by the complainant in view of termination of agreement by accused vide notice dated 01.05.2009.
II. The Town Planning Authority had directed accused to stop construction work. There was a public interest litigation in respect of construction of site.
III. The accused have already approached the Arbitrator. The claims and counter claims are pending adjudication before the Arbitrator.
IV. There was no existing debt or liability to present the cheques offered as performance security. Therefore, proceedings are liable to be quashed.
The learned counsel for complainant has made following submissions:-
I. The parties entered into an agreement of civil works contract vide letter of intent dated 19.04.2007. which in fact was accepted by accused. One of the essential terms being the work shall be commenced within 30 days and all the villas shall be completed on or before 12 months from the date of commencement i.e.. 19.05.2007.
II. The accused did hot complete the work on time. Therefore, the complainant was forced to enter into an agreement dated 19.11.2008. which was in continuation of letter of intent dated 19.04.2007 to facilitate extension of time. The accused accepted the terms of agreement dated 19.11.2008. The accused did not complete construction, on the other hand, accused terminated contract on untenable grounds. Therefore, the complainant had presented file cheques, which were offered as performance, security, after the cheques were dishonoured, the above complaints were initiated.
The learned counsel for complainant has relied on a decision of the Supreme Court reported in I.C.D.S. Ltd. Vs. Beena Shabeer and Another, and a decision of the Delhi High Court, reported in K.S. Bakshi and Another Vs. State and Another, to contend that liability due to breach of agreement by accused can be enforced. Therefore, the complainant was justified in presenting cheques and after the dishonor of cheques, the complainant was justified in initiating the complaints u/s 138 of Negotiable Instruments Act.
Before adverting to factual controversies averred in the complaint, it is necessary to refer to a decision reported in I.C.D.S. Ltd. Vs. Beena Shabeer and Another, , wherein the Supreme Court has held:-
The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any of debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
In a decision reported in K.S. Bakshi and Another Vs. State and Another, , the High Court, of Delhi has held:-
Thus where a cheque forms part of a consideration under a contract it is paid towards a liability.
Section 2(d) of the Indian Contract Act, 1972 defines consideration as under:
When at the desire of the promisor, the promise or any other person has done or abstained from doing or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise.
Jural concept of consideration is as:
A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered, or undertaken by the other.
The jural concept of the consideration requires that something of value must be given, and that this can either be a benefit to the promisor or some detriment to the promise. In the decisions reported as Chidambaraiyer and Others Vs. P.S. Renga Iyer and Others, and Soma Bhatia v. State of U.P. AIR 1981 SC 1271, the Supreme Court compared the jural concept of the consideration and Section 2(d) of the Contract Act and held the tow as being practically the same. It was held that the word ''valuable'' in civil law could be negative or positive.
Thus, "consideration" is a very wide terms and is not restricted to monetary benefit. Consideration does not necessarily means money in return of money or money in lieu of goods or service. Any benefit or detriment of some value can be a consideration.
In view of what has been held in the aforestated decisions, the submission of learned counsel for accused that liability arising out of breach of contract cannot be enforced u/s 138 of the Act and the cheques offered as performance security should not have been presented cannot be accepted.
In a decision reported in Madhavrao Jiwajirao Scindia and Others Vs. Sambhajirao Chandrojirao Angre and Others, , the Supreme Court has held:-
The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for uncontroverted allegations as made prima facie establish the offence. It is also for the court, to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit prosecution to continue. This is so on the basis that the court cannot be utilized for any oblique purpose and where in the opinion of the court chances of an ultimate conviction are bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage.
In a decision reported in State of Karnataka Vs. L. Muniswamy and Others, the Supreme Court has held:-
... Section 482 of the new Code, which corresponds to Section 561 A of the Code of 1898 provides that:
Nothing in this Code shall be deemed to limit, or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.
In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceedings ought to be quashed. The saving of the High Court''s inherent powers, both in civil and criminal matters is designed to achieve a salutary public-purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case the veiled object behind a lame prosecution, the very nature of the material on which in the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere though justice has got to be administered according to laws made by the legislature. The compelling necessity for making these observations is that without a proper realization of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice between the State and its subjects would be impossible to appreciate the width and contours of that salient jurisdiction.
In the instant case, averments of complaint are based on breach of contractual obligations by the accused. The complainant has contended that accused committed breach of contract giving raise to liability. Therefore, the complainant presented the cheques, which were offered as security for due performance of contract. After dishonour of cheques, the impugned proceedings were initiated.
The accused have disputed the averments of complaints by contending that complainant was responsible for breach of contract for the following reasons:-
I. That the accused were facing trouble from villagers from inception of contract.
II. There was an order from the Town Planning Authority to slop construction.
III. There was a public interest litigation in respect of construction site.
The accused having taken up these contentions have not produced the order of Town Planning Authority or the order made in Public Interest Litigation to show such orders had impeded their construction activities.
The first agreement was entered into between parties on 19.04.2007, wherein accused had agreed to complete construction of 317 villas in all respects on or before 12 months from the date of commencement i.e., 19.05.2007. The accused did not complete the work. Therefore, parties entered into agreement dated 19.11.2008. which was in continuation of letter of intent/agreement dated 19.04.2007. In terms of article 11 of the agreement relating to performance security as extracted supra accused had offered cheques in question. The accused did not proceed with construction on the other hand, accused caused legal notice on 01.05.2009, pleading their inability to proceed with construction, setting forth aforestated reasons. At this stage, the version of accused cannot be accepted at its face value, even otherwise accused have not produced any documents to show either there was a prohibitory order of Town Planning Authority or prohibitory order of the court, which had prevented the accused from proceeding with construction work.
The accused have contended that they have already approached the Arbitrator. Therefore, dispute is of civil nature. The accused having contended that they have invoked the arbitration clause and approached the Arbitrator have not produced any document to show the terms of reference or the order of Arbitrator, It is not clear whether accused had invoked arbitration clause before the instant complaints were initiated. The contention of accused that cheques in question are not supported by consideration and they were not issued towards legally enforceable liability is a matter to be decided by the trial court.
In these petitions filed u/s 482 Cr.P.C., this court cannot, resolve factual controversies, even if valid defence is available to accused before trial court that cannot be a ground to quash the impugned proceedings.
In view of the above discussion, I hold that there are no grounds to interfere with the impugned order or to quash the impugned proceedings.
In the result I pass the following:-
ORDER
Criminal Petition No. 5898/2011, Criminal Petition No. 5899/2011 and Criminal Petition No. 3679/2011 are dismissed.