The dishonour of a cheque constitutes an independent offence under Section 138 of the Negotiable Instrument Act, 1881, and the pendency of an arbitration proceeding or a civil suit does not bar the initiation of criminal proceedings for such dishonour.

Ashim Kumar Banerjee, J.

1. PARTIES being the petitioner and the respondent No.1 entered into an agreement under which the respondent No.1 extended financial assistance to the petitioner to the extent of rupees thirty four lakhs vide loan agreement dated August 29, 2007. The petitioner contended that at the time of sanction of the loan the respondent No.1 got blank papers signed by him as well as his parents and brother. He also executed a deed of mortgage in respect of his properties. It was agreed that in case of dispute the parties would resolve such dispute through arbitration. Under the agreement the loan was to be repaid along with interest at the rate of 14.25 per cent per annum by payment of one hundred eighty monthly instalments at the rate of rupees forty five thousand eight hundred and fifty two payable on and from October 5,2007. The petitioner paid fifteen instalments. The respondent No.1, however, wrongfully adjusted the said instalments against interest, that too at the rate of forty eight percent per annum. Dispute arose which resulted in arbitration proceeding. The petitioner challenged the venue. The respondent No.1 inflated claim to the extent of rupees forty lakhs forty-one thousand four hundred and three together with interest at the rate of eighteen per cent and hidden interest at the rate of forty eight per cent per annum. The arbitrator published his award dated March 30, 2010 which is under challenge before this Court in its original side.

2. AT the time of sanction of the loan, the petitioner issued blank cheques drawn on ICICI bank, Howrah branch. The respondent No.1 got those cheques dishonoured by depositing those in the account of the petitioner and initiated proceeding under section 138 of the Negotiable Instrument Act, 1881 which was pending before the Court of learned Metropolitan Magistrate, 10th Court, Calcutta. The petitioner came up before this Court challenging the said proceeding being case No.3029 of 2010, inter alia, on the ground that the proceeding pending before the learned Magistrate was not maintainable as the subject controversy was covered by the ex parte award.

Mr. Ananto Kumar Lala, learned Counsel appearing for the petitioner, contended that the learned Magistrate did not have jurisdiction to entertain the petition in view of the dispute being civil in nature and that too covered by the arbitration award dated March 30, 2010. Mr. Lala contended in the alternative that the drawer bank was at Howrah. Hence, the learned Magistrate at Kolkata could not have entertained the said application. The proceeding was also vitiated by suppression of material fact that the subject controversy was covered by the arbitration award which was obtained by the respondent No.1. The cheque was allegedly dishonoured in 2008 whereas the complaint was lodged after about ten months. Hence, the proceeding was vitiated by delay. Mr. Lala relied on the decision in the case of B. Suresh Yadav vs. Sharifa Bee and Anr. reported in 2007, Volume-XIII Supreme Court Cases Page-107.

3. MR. Sandipan Gangully, learned Counsel appearing for the respondent No.1 on the other hand contended that the agreement under which the loan was advanced contained an arbitration clause. Dispute arose due to non-repayment of loan. The respondent approached the arbitral Tribunal for recovery of the loan amount. This would have no bearing with the offence committed by the petitioner under section 138 as he failed to honour the cheque issued by him in repayment of the loan. He further disputed the contention made by MR. Lala on jurisdiction. According to him, since the cheque was deposited in the bank of the respondent No.l at Chowrangee within the territorial jurisdiction of the learned Magistrate the proceeding was maintainable. He relied on the following decisions :-

i) 1998 Supreme Court Cases (Criminal) Page-1723 (State of Madhya Pradesh vs. Harsh Gupta)

ii) 2002 Calcutta Criminal Law Reporter (Calcutta) Page-438 (M/s. Essar