Surya Silk Mills Pvt. Ltd. and Others vs Chenab Textile Mills

G.D. Sharma, J.—Through the medium of this petition quashing of proceedings (166 of 1988) titled Chenab Textile Mills v. Surya Silk Mills

Pvt. Ltd. pending for disposal under the provisions of Section 420/34, RPC in the court of learned Chief Judicial Magistrate, Kathua is sought.

The relevant facts of the case are that on 1-11-88, the complainant Chenab Textile Mills through its Security Officer namely, Mr. Chaggar Singh

filed complaint in the Court of learned Chief Judicial Magistrate, Kathua wherein it was alleged that the petitioners-accused in the month of March

1986 approached the respondent-complainant Mills with dishonest and fraudulent intention to part with goods which were being manufactured

there on the pretext of making purchases on credit. In the beginning the petitioners-accused had made all the payments, but abruptly at a later

stage, they stopped the payments even on repeated demands. It is averred that the petitioners-accused after being possessed of fraudulent and

dishonest intention on 9-4-1988 issued Cheque No. 001351 in the sum of Rs. 10,000/- and later on 1-5-1988 Cheque No. 001353 in the sum of

Rs. 5,000/- in favour of the respondent-complainant which were to be drawn on Bank of Baroda, Chandni Chowk, Delhi. These cheques were

presented through Jammu and kashmir Bank for collection, but were dishonoured for want of cash credit. After this, the sales Manager of the

respondent-complainant namely, Shri Arvind Aggarwal personally met the petitioners-accused and demanded balance amount in the sum of Rs.

2,44,226.51 paisa along with interest at the rate of Rs. 24% per annum accrued thereon, but no payment was made. The complainant Chaggar

Singh also examined himself as a witness and the learned Chief Judicial Magistrate, Kathua vide his order dated 18-11-88 issued the process

against the petitioners-accused for the alleged commission of offences falling under Sections 420/34, RPC.

The petitioners-accused have contended that the complaint was lodged merely to harass them and the dispute between the parties is only of civil

nature. It is averred that between the period commencing from 21-3-86 to 10-1-87 the transactions between the parties worth lakhs of Rupees

had taken place, but because of financial constraints the petitioners-accused could not make the full payment, but they at no point of time had any

dishonest intention of defrauding the respondent-complainant. It is also pleaded that the trial Magistrate lacked jurisdiction to entertain the

complaint because no cheque was issued within the territorial limits of the said Court.

Heard the arguments.

Mr. S. D. Sharma has reiterated the plea in his arguments that the facts of the present ease constitute only a civil liability and no ingredient of the

offence falling u/s 420 or Section 34. RPC was ever established before the process was issued. He has also contended that the cheques in

question were issued from Delhi and there was no alleged inducement or fraudulent representation at Kathua and the learned trial Magistrate

lacked the territorial jurisdiction. According to him, as per the allegations made in the complaint there was inducement in the month of March 1986

at Kathua and upto the alleged dates of issuing cheques i.e. on 9-4-88 and 1-5-88 transactions, worth lakhs of rupees had taken place and initial

inducement of Kathua must have filtered and evaporated. Bouncing of two cheques in question could not be streched for any inducement

retrospectively.

In support of his contention Mr. Sharma has cited the case of Devia Ram v. Ram Chand AIR 1953 J&K 22 and M.M.S.T. Chidambaram

Chettiar v. Shanmugham Pillal, AIR 1938 Mad 129 : 1938 Cri LJ 261.

Mr. D.S. Thakur has contended that this cheating took place in commercial transaction and there is no legal bar that such acts cannot fall within

the ambit of cheating. According to him, intention of the petitioner-accused herein from the very beginning was to defraud the respondent-

complainant.

In the case of Devia Ram and Another Vs. L. Ram Chand, it has been held that mere receipt of money would not be cheating unless it is shown

that it was received with the preconceived intention of denying it later on. If the intention is changed subsequently, it would not be cheating. The

whole transaction may amount to the breach of contract, might involve a breach of faith, a betrayal of confidence and might arouse moral

indignation, but that would not convert it into a criminal offence. In the case of M.M.S.T. Chidambaram Chettiar v. Shanmugham Pillai AIR 1938

Mad 129 : 1938 Cri LJ 261 (supra) it was held that issuing of post dated cheque which was dishonoured was not cheating.

After considering the respective contentions of the counsel for the parties and the law cited by Mr. S.D. Sharma it can be said that when a

transaction at the initial stage is asked to be quashed, the test to be applied by the Court is as to whether uncontroverted allegations as made prima

facie establish the offences. 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 a prosecution to continue. This is also on the basis that the Court cannot be utilised 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

proceedings even though it may be at a preliminary stage. There would be certain situations where it would predominantly be a civil wrong and

may or may not amount to a criminal offence. In the instant case, complaint was filed for offences of cheating u/s 420 read with Section 34, RPC.

The facts of the case as delineated in the complaint as well as in the testimony of Maghar Singh employee of the complainant establish that there

was alleged inducement in the month of March 1986 to part with the goods manufactured by the complainant Textile Mills on credit basis and that

upto the year 1988 the transactions were going on. During this period there were payments of the cash credit also by the petitioners-accused. The

dispute started in the year 1988 when the alleged cheques were bounced. The facts do not establish that for the amount involved in the cheques

there was deception and dishonest inducement within the territorial limits of learned Chief Judicial Magistrate Kathua. Mere deception is not a

criminal offence. Mere dishonesty is not a criminal offence. To establish an offence of cheating the complainant was required to show not only that

he was induced to do or to omit to do a certain act but that this induced commission or omission on his part caused or was likely to cause him

some harm or damage in body, mind, reputation or property, which are presumed to be the four cardinal assets of humanity. On these facts, the

case in question is one of that type where if at all, the facts may constitute a civil wrong and the ingredients of criminal offences are wanting. It is an

abuse of the process of the Court to allow such proceedings to continue. Therefore, the criminal proceedings have to be quashed. In this view of

the matter, the petition is accepted and the proceedings initiated before the learned Chief Judicial Magistrate, Kathua in the complaint titled Chenab

Textile Mills v. Surya Pvt. Ltd. (complaint No. 166 of 1988) are quashed. The Registry is directed to send back the record of the trial court. The

accompanying CMP No. 21/89 stands also disposed of.