PATNA HIGH COURT
S.K.Chattopadhyaya, J.
Lucky Medicine Distributors And Another
Versus
State Of Bihar
Criminal Miscellaneous No. 19503 of 1999 ;
Decided On : JUNE 30, 2000
Cheating - Business Transaction - Secs. 406, 420 of the Penal Code - Sec. 138 of the Negotiable Instrument Act - Sec. 415 of the Penal Code - Sec. 138 of the Negotiable Instruments Act - Sec. 420 of the Indian Penal Code - Article 20(2) of the Constitution
Fact of the Case:
The complainant alleged that the petitioners purchased medicine worth Rs. 11 lakh on assurance of payment through cheques, which were later dishonoured. The petitioners made part payment but Rs. 6 lakh remained unpaid. The petitioners argued that the business transaction did not constitute cheating.
Finding of the Court:
The court found that the petitioners' conduct indicated a dishonest intention after the dishonour of cheques, and the allegations made out a case of cheating. The court held that the intention of the accused need not be proved since the inception of the transaction, and the matter should be decided at the trial stage.
Issues: Whether the business transaction constituted cheating under Sec. 420 of the Penal Code and Sec. 138 of the Negotiable Instrument Act.
Ratio Decidendi: The court held that the petitioners' conduct after the dishonour of cheques indicated a dishonest intention, and the intention of the accused need not be proved since the inception of the transaction. The matter should be decided at the trial stage.
Final Decision: The court dismissed the application and refused to quash the criminal prosecution, stating that the matter should be decided at the trial stage.
S.K.Chattopadhyaya, J.
1. The entire criminal prosecution initiated against the petitioners including the order talcing cognizance of the offence under Secs. 406 and 420 of the Penal Code are sotight to be quashed in this application as prayed for by the petitioners.
2. The complainant-company is manufacturer of medicine and allied products and also marketing the same. It is alleged in the complaint petition that it sold medicine worth Rs. 11 lakh 74 thousand and odd to the petitioners on assurance that the petitioners would make payment through cheque. Detail of invoices, by which medicines were sold as well as the amount, has been given in the complaint-petition. On 11.1.96, 17.1.96 and 6.2.96, three cheques were issued by the petitioners for the said amount but all the cheques were dishonoured by the Bank concerned due to insufficiency of amount in the account of the petitioners. On 23.2.96, the company informed the petitioners regarding such dishonoured of cheques and requested for payment of the same. In reply petitioner No. 2 wrote to the company on 11.3.96 that the entire payment would be made by 19.3.96. Up to October, 1996, though the petitioners made part payment through Pay Orders but thereafter no payment was made to the complainant and, as such, Rs. 6 lakh 20 thousand and odd are remained unpaid.
3. On such complaint being filed, the Judicial Magistrate examined the complainant on oath in which he has reiterated his allegation made in the complaint-petition. The learned Magistrate after perusing the allegations and the statements of the complainant and witnesses took cognizance of the offence and issued processes against the petitioners.
4. Mr. B.P. Pandey, learned Counsel appearing on behalf of the petitioners, has contended that the allegations made in the complaint do not make out any case of cheating inasmuch as it is an admitted fact that this business transaction was going on for several years and even after alleged dishonour of cheques the same is still continuing. Elaborating his argument, learned Counsel urged that for constituting an offence of cheating the complainant must show that an intention of cheating of accused was from the very inception. In support of his contention that business transaction will not come under any of the provisions of Section 420 of the Penal Code, he has relied on the decision in the case of Sri Shcuikar Lal Baheti and Anr. V/s. The State of Bihar and Anr. reported in 1999 (1) PCCR 89. and in the case of Smt Chandrika G. Shah V/s. Sunil Kumar Singh. 1989 BLJ 352. and also in the case of T.K. Kanungo and Ors. V/s. State of Bihar and Ors. 1988 BLJR 449. His second contention is that mere allegation of dishonour of cheque will not amount to offence of cheating but at best it can be an offence under Section 138 of the Negotiable Instrument Act. For this proposition, he has relied on the decision in the case of Chandan Kumar V/s. The State of Bihar and Anr. reported in 2000 (1) PCCR 17.
5. Countering the argument, Mr. P.N. Pandey, Senior Advocate, contended that illustration (d) of Sec. 415 of the Penal Code will cover the case of the petitioners inasmuch as there was inducement by the petitioners for getting the medicines from the complainant on assurance that the amount of such medicine would be paid by cheques. Thus, when cheques were dishonoured and in spite of written request by the complainant, the petitioners did not make the full payment, a case of cheating is made out. and the High Court will not quash the proceeding merely on the ground that the dispute was of some business transactions.
6. At a first glance, the argument of Mr. B.P. Pandey appears to be attractive but considering the facts and circumstances of the present case, in my view, the submission of the Counsel that the allegations made by the complainant does not make out any offence of cheating is not sustainable. The complainant has specifically averred that on understanding that the petitioners would
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