IMPORTANT POINT
Liability as to how much amount payable, matter to be considered in arbitration proceedings and that will not de-bar complainant from filing complaint for prosecution under S. 138 of NI Act, if complainant had case that cheque issued in partial discharge of admitted liability by accused.

K. Ramakrishnan, J.—This is an application filed by the petitioner who is the accused in S.T.No.50/2012 on the file of the Judicial First Class Magistrate Court, No-II, Ettumanoor challenging the order passed in Cri.M.P.No168/2013 of that court and Cri.R.P.No.21/2013 of Additional Sessions Judge No-IV, Kottayam and also to quash the proceedings under Section 482 of Code of Criminal Procedure.

2. It is alleged in the petition that petitioner is the accused in S.T.No.50/2012 on the file of the Judicial First Class Magistrate Court, No-II, Ettumanoor which was taken on file on the basis of a private complaint filed by the first respondent against the petitioner alleging offence under Section 138 of the Negotiable Instruments Act. The case of the complainant in the complaint was that, the accused had issued the disputed cheque for Rs.12,00,000 in partial discharge of his liability on the basis of an agreement entered into between the complainant and the accused in respect of some construction work and the cheque when presented was dishonoured for the reason ‘funds insufficient’ and inspite of notice issued, he had not paid the amount. So, he had committed the offence punishable under Section 138 of the Negotiable Instruments Act. It is also alleged in the petition that the complainant filed O.S.No.457/2012 before the Sub-Court, Kottayam for recovery of Rs.23,00,000 being the amount due as per the contract for the work done and the petitioner filed an application under Section 8 of the Arbitration & Conciliation Act stating that in the agreement, there is an arbitration clause and in such cases, no suit will lie and the remedy of the parties is to pursue their remedy by appointing an arbitrator and refer the matter for arbitration and accepting that contention, the suit was dismissed by the court. So, according to the petitioner, there is no legally enforceable debt and the cheque cannot be said to be issued for a legally enforceable debt as a liability has to be considered in the arbitration proceedings. The evidence of the complainant started and on the basis of the evidence, the petitioner filed Cri. M.C. No. 920/2013 before this court for quashing the proceedings. But, this court by Annexure 4 judgment held that since it has reached the stage of examination of the accused under Section 313 of Code of Criminal Procedure, the court cannot quash the proceedings, but, in case the petitioner files an application for discharge, that can be considered by the court below and dispose of the same in accordance with law. On that basis, petitioner filed Cri.M.P.No.168/2013 before the Judicial First Class Magistrate Court, No-II, Ettumanoor and the learned magistrate by Annexure 7 order, dismissed the application stating that the application for discharge is not maintainable at that stage. The petitioner preferred Cri.R.P.No.21/13 before the Sessions Court, Kottayam and the Additional Sessions Judge, No-IV Kottayam by Annexure 8 order dismissed the revision stating that it is an interlocutory order and as such no revision is maintainable. According to the petitioner, both the courts below were not justified in dismissing the applications and since the liability itself has to be considered by the arbitrator, the cheque if any given cannot be said to be in discharge of a illegally enforceable debt and as such the complaint under Section 138 of the Negotiable Instruments Act is not maintainable and this court has ample power to exercise the power under Section 482 of the Code of Criminal Procedure to quash the proceedings as continuance of the proceedings will amount to only abuse of process of court. So, the petitioner filed this petition seeking the following relief:

“To call for the records relating to Annexure 7 and Annexure 8 and to quash the same and to allow Annexure 5 or to allow such other relief which is this Hon’ble Court deems fit and necessary in the interest of justice.”

3. Heard the Counsel for the petitioner and the Counsel