TMI Blog2022 (8) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered on account of the dishonour of the cheque, the existence of pressing circumstances which make the payment of the amount covered by the cheque the essence of the transaction between the parties, the circumstances in which the amount could not be paid within the grace period under clause c of the proviso to Section 138 of the Act, the proximity of the payment or offer of payment to the institution of the complaint and the element of the bona fide, are few of the factors which bear upon the decision to close the proceedings. The conspectus of discussion is that in the facts of the case at hand since the amount covered by the dishonoured cheques is indisputably paid, the Court would be justified in invoking the power under Section 143 read with Section 258 of the Code of Criminal Procedure to close the proceedings upon payment of interest and costs of proceedings - petition allowed. - CRIMINAL WRIT PETITION NO. 5208 OF 2017 WITH CRIMINAL WRIT PETITION NO. 5209 OF 2017 - - - Dated:- 3-8-2022 - N. J. JAMADAR, J. Mr. Sanjeev P. Kadam, a/w Ramdas Hake Patil, for the Petitioners. Mr. Mihir Gheewala, a/w Ali Kazmi, Sajid Sayed, i/b AAK Legal, for Respondent No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on 21th October, 2014. (c) It seems that there was failure on the part of accused No.1 to supply the molasses in accordance with the terms of the contract. Correspondence was exchanged between the parties. In lieu of seven cheques, referred to above, the accused No.1 had drawn four cheques for Rs. 50,00,000/-, each, payable on 15th January, 2015. Eventually, those four cheques were also dishonored on presentment on 10th April, 2015. Thereupon, the accused gave a proposal to settle the dispute by incorporating the terms and conditions in a letter dated 4th June, 2015 (the letter of settlement). The accused No.1, while acknowledging the debt of Rs.2,62,79,654/-, agreed to pay a sum of Rs.1,57,75,607/- towards the full and final settlement of the complainant's claim. Under the terms of the said settlement, the accused had drawn cheque bearing No.519921 for a sum of Rs.50,00,000/- payable on 20th June, 2015, cheque No-519922 for a sum of Rs.42,75,607/- payable on 10th July, 2015 and cheque No. 519923 for an amount of Rs.65,00,000/- payable on 31st July, 2015 on State Bank of India, Branch Indapur. The accused further agreed that in the event of default in payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adam, the learned Counsel for the petitioners canvassed a three-fold submission. Firstly, it was urged that the issue of process against the accused No.2 by invoking the provisions contained in Section 141 of the N. I. Act, 1881, is legally infirm. The accused No.2 is neither the drawer of the dishonoured cheques nor the signatory to the letter of settlement, issued on 4th June, 2015. The accused No.2 has been roped in only for being the chairman of the accused No. 1 society. However, the accused No.2 cannot be said to be in-charge of and responsible to the affairs of the accused No.1 - society. Secondly, the demand notice preceding the institution of the complaint is not valid as instead of the amount covered by the dishonoured cheques, the complainant made a demand of a sum of Rs.2,62,79,654/-. Thirdly, since the entire due amount under terms of the letter of settlement dated 4th June, 2015, was paid by 16th February, 2016, there was no subsisting liability. Hence, the learned Additional Sessions Judge was in error in rejecting the revision applications. 9. In opposition to this, Mr. Gheewala, the learned Counsel for the respondent No. 1 submitted that the grounds sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs and were also responsible for the conduct of the business of accused No. 1 - society. These averments are required to be considered in the light of the indisputable position that the accused No. 2 was the Chairman of accused No. 1 - society. 13. The reliance placed by Mr. Kadam on the judgment of the Supreme Court in the case of SMS Pharma Ltd V Nita Bhalla 2005 (8) SCC 89. does not seem to advance to cause of the accused No. 2 as in the case at hand the elements necessary to proceed against the accused No.2 by invoking Section 141 of the N. I. Act, 1881 appear to have been squarely made out. 14. The Second ground of challenge based on the demand of amount, which the complainant asserted the accused No. 1 was liable to pay, apart from the amount covered by the dishonoured cheques, in the demand notices dated 24th August, 2015 and 11th August, 2015 rendering those notices invalid also does not appear to be well merited. In the notice of demand dated 11th August, 2015 in respect of dishonoured cheque No.519922 drawn for an amount of Rs.42,75,604/-, there is a clear and categorical demand that amount of the said dishonoured cheque be paid within a period of 15 days from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque, the notice might well fail to meet the legal requirement and may be regarded as bad. 17. As indicated above, in the case at hand, there is a clear and unambiguous demand of the amounts covered by the dishonoured cheques. The said demand is severable from the demand of the total amount, which according to the complainant the accused were liable to pay on account of the default in payment of the amount covered by dishonoured cheques. 18. A revisit to the facts would facilitate a better appreciation of the third challenge on the ground that the entire liability has been duly discharged, which was strenuously urged by Mr. Kadam. On account of the default on the part of the accused in the delivery of the molasses, as per agreed schedule, and the dishonour of the cheques drawn for Rs.2 Crores, it seems, by a letter dated 8th April, 2015, the complainant called upon the accused to pay a sum of Rs.2,62,79,654/-. On 20th April, 2015, a statutory demand notice, post dishonour of the four cheques drawn for Rs.50,00,000/-, each, was issued and the accused were, inter alia, called upon to pay the amount covered by four dishonoured cheques aggregating to Rs.2 Crores plus the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odged the complaints. First complaint was lodged on 23rd September, 2015 and Second complaint was lodged on 5th October, 2015. 23. Laying emphasis on the fact that by 17th February, 2016, the entire amount covered by the dishonoured cheques came to be paid to the complainant, Mr. Kadam, the learned counsel for the petitioners, would urge that the learned Additional Sessions Judge committed an error in not interfering with the order passed by the learned Magistrate and, in the circumstances of the case, the proceedings in the complaints ought to have been interdicted. The learned Additional Sessions Judge, according to Mr. Kadam, was not justified in refusing to dismiss the complaints on the premise that the question as to whether the accused had incurred the liability to pay the entire amount in accordance with the terms of the settlement dated 4th June, 2015 was a question of fact, which warranted trial. 24. Mr. Kadam placed a very strong reliance on the judgment of the Supreme Court in the case of Meters and Instruments Private Limited and another Vs. Kanchan Mehta (2018) 1 Supreme Court Cases 560., wherein the Supreme Court had expounded the nature of the proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, the payment of the amount, as indicated above, Mr. Gheewala would urge that, on the one hand, there was no appropriation of payments and, on the other hand, the payment which was received by the complainant, post default, can be said to be towards the discharge of the entire liability which the accused incurred under the letter of settlement. The said payment, according to Mr. Gheewala, cannot be attributed towards the amount covered by the dishonoured cheques only. 28. Evidently, it does not appear that the accused had specifically indicated the debt towards which the amount was to be appropriated. Section 59 of the Indian Contract Act provides for appropriation of payments by the debtor. Where the debtor makes a payment either with express intimation, or under circumstance implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted must be applied by the creditor to that particular debt. Section 60 of the Indian Contract Act provides that where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it, at his discretion, to any la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the second cheque was presented for encashment. It is imperative to note, at that point of time no other debt was due and payable by the accused to the complainant. The debt of Rs.65,00,000/-, as covered by the third cheque, was admittedly payable on 31st July, 2015. 31. Undoubtedly, when the accused paid the sum of Rs.20,00,000/- on 20th August, 2015, the third cheque drawn for Rs.65,00,000/- had became due and payable. However, it needs to be appreciated that by the said payment of Rs.20,00,000/- on 20th August, 2018, the accused can be said to have paid the amount covered by the second cheque i.e. Rs.42,75,607/-, within the statutory grace period prescribed by Clause c of the proviso to Section 138 of the N.I. Act, 1881, as the demand notice was served on 12th August, 2015. It could be thus urged that on the date the complainant lodged the complaint in respect of the dishonoured cheque No.519922, drawn for Rs.42,75,607/- (Complaint No.8222/SS/2015), the amount covered by the said cheque was duly paid and, thus, the liability stood discharged. 32. As regards the third cheque drawn for Rs.65,00,000/-, evidently, the first payment of Rs.10,00,000/-, itself came to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the parties or the court. 18.3. Though compounding requires consent of both parties, even in absence of such consent, the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused. .. 19. In view of the above, we hold that where the cheque amount with interest and costs as assessed by the court is paid by a specified date, the court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 CrPC. As already observed, normal rule for trial of cases under Chapter XVII of the Act is to follow the summary procedure and summons trial procedure can be followed where sentence exceeding one year may be necessary taking into account the fact that compensation under Section 357(3) CrPC with sentence of less than one year will not be adequate, having regard to the amount of cheque, conduct of the accused and other circumstances. (emphasis supplied) 35. In the said case, the Supreme Court also adverted to the issue of the legality of the discharge of an accused after the plea of the accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under civil jurisdiction. 38. Undoubtedly the attendant circumstances of a given case are required to be taken into account while exercising the discretion to close the proceedings in exercise of the power under Section 143 of the N.I. Act read with Section 258 of the Code. The nature of the underlying transaction, the nature of the relationship between the parties; jural and otherwise, the special damages which the complainant suffered on account of the dishonour of the cheque, the existence of pressing circumstances which make the payment of the amount covered by the cheque the essence of the transaction between the parties, the circumstances in which the amount could not be paid within the grace period under clause c of the proviso to Section 138 of the Act, the proximity of the payment or offer of payment to the institution of the complaint and the element of the bona fide, are few of the factors which bear upon the decision to close the proceedings. 39. On the aforesaid touchstone, readverting to the facts of the case, as indicated above, the amount covered by second cheque drawn for Rs.42,75,607/- can be said to have been paid within the grace period provided by c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the barometer would be whether the amount covered by the cheques is paid or offered to be paid along with interest and costs. 41. The conspectus of aforesaid discussion is that in the facts of the case at hand since the amount covered by the dishonoured cheques is indisputably paid, the Court would be justified in invoking the power under Section 143 read with Section 258 of the Code of Criminal Procedure to close the proceedings upon payment of interest and costs of proceedings. 42. I am thus inclined to direct that the accused shall pay interest to the complainant at the rate of 18% per annum, as prescribed in Section 80 of the N.I. Act, 1881, for the period the amount covered by the respective cheques remained unpaid, and costs of the proceedings, as indicated below, within a stipulated period and upon such payment the complaints would stand disposed and accused discharged. Sr.No. Amount on which interest shall to be payable (in Rupees) Duration interest for which interest shall be payable at the rate of 18% p.a. 1. 10,00,000/- 1/7/2015 to 15/7/2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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