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2008 Supreme(Mad) 3707
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K. MOHAN RAM
M.O. Hasan Kuthoos Maricar Ltd., A Company Registered under the Companies Act & Others
Versus
Agate Madras International Finance Ltd., Now changed into Agate Finance Ltd., A Company registered under the Companies Act & Others
Crl. O.P. No.4032 of 2008, M.P.Nos.1 and 3 of 2008
Decided On : 14-10-2008
For the Petitioners:G.R. Swaminathan, Advocate.
For the Respondents:Sai Krishnan, R1, Sai Bharath & Ilan, Advocates.
The acceptance and encashment of demand drafts in full and final settlement of a complaint, followed by a refusal to return the amounts, can constitute an abuse of process of law and warrant the quashing of further proceedings.
Headnote:
Negotiable Instruments Act - Quashing of Proceedings - Section 138 of the Negotiable Instruments Act, 1881 - Summary of Acts and Sections: Section 138 of the Negotiable Instruments Act, 1881 - The court discussed the legal provisions of Section 138 of the Negotiable Instruments Act, 1881 and its interpretation in light of the facts of the case. The court emphasized the importance of the complainant's acceptance and encashment of demand drafts in full and final settlement of the complaint, and the implications of such actions on the continuation of criminal proceedings. The court also referred to relevant case law to support its decision.
Fact of the Case:
The accused filed a petition seeking to quash the proceedings in a case where they were prosecuted for an offence under Section 138 of the Negotiable Instruments Act, 1881. The accused had sent demand drafts in full and final settlement of the complaint, which were accepted and encashed by the complainant. The accused sought to quash the proceedings based on the acceptance of the demand drafts.
Finding of the Court:
The court found that the acceptance and encashment of the demand drafts by the complainant in full and final settlement of the complaint constituted an abuse of process of law. The court emphasized that the complainant's actions indicated a lack of honesty and fairness, and therefore, quashed all further proceedings in the case.
Issues: The issues involved the acceptance and encashment of demand drafts in full and final settlement of the complaint, and the complainant's subsequent attempt to continue with the proceedings.
Ratio Decidendi: The court's decision was based on the principle that the complainant's acceptance and encashment of the demand drafts in full and final settlement of the complaint, followed by a refusal to return the amounts, amounted to an abuse of process of law. The court also extended the benefit of quashing the proceedings to all co-accused, even if they had not sought it.
Final Decision: All further proceedings in the case were quashed, and the petition was allowed.
The above Criminal Original Petition has been filed by the petitioners, who are the accused (A-1 to A-3) on the file of the learned VII Metropolitan Magistrate, Egmore, Chennai. The first respondent herein is the complainant and the second respondent is the fourth accused in the said case. Apart from the aforesaid four accused, two other accused were also arrayed in the case initially and all of them are prosecuted for an offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the Act”). Earlier the fifth and sixth accused namely Mrs.U.Nargis and Mrs.F.Yasmin filed Criminal Original Petition No.20972 of 1998 seeking quashing of the case as against them and a learned Judge of this Court by an order dated 012. 2000 quashed the proceedings as against them in C.C.No.7842 of 1998 on the file of the VII Metropolitan Magistrate, George Town, Chennai. The second petitioner and the second respondent herein also filed a quash petition in Criminal Original Petition No.20971 of 1998 sought for quashing the proceedings as against them contending that they are not incharge of and responsible for the conduct of the business of the first accused/company, but the said contention was rejected and the quash petition was dismissed by an order dated 30.10.2000. Thereafter the third petitioner herein filed a petition seeking discharge but the same was dismissed by the learned Magistrate and the said order of dismissal was challenged before this Court in Crl.R.C.No.1499 of 2004 but the revision was also dismissed by an order dated 112. 2007 with a direction to the trial court to expedite the trial and to complete the same as expeditiously as possible and more particularly within a period of five months from the date of receipt of a copy of that order.
2. While so the first petitioner sent a letter dated 19.01.2008 to the first respondent enclosing the following two demand drafts:-
“1. I.O.B. D.D. No.288095 dated 19.01.2008 for Rs.5,93,750/-
2. I.O.B. D.D.No.288098 dated 19.01.2008 for Rs.5,93,750/-”
In the said letter the first petitioner had stated that in spite of the sincere efforts taken to settle the dispute in an amicable manner the first respondent had refused to come to the settlement and the demand drafts are specifically paid in lieu of cheque Nos.858124 dated 25.07.1998 for Rs.5,93,750/- and 858125 dated 25.08.1998 for Rs.5,93,750/- in full and final settlement of the complaint filed by the first respondent. It is further stated in the letter that they are paying interest at nine percent on the cheque amounts from the date of cheques till that date by separate demand drafts as follows:-
“1. I.O.B. D.D.No.288094 dated 19.01.2008 for Rs.5,06,860/-
2. I.O.B. D.D.No.288093 dated 19.01.2008 for Rs.5,02,458/-
The letter was followed by a telegram dated 21.01.2008 and in the said telegram it has been specifically stated that the demand drafts are being sent in full and final settlement of the first respondents complaint in C.C.No.7842 of 1998 on the file of the VIII Metropolitan Magistrate Court, Chennai. The said demand drafts and the communications were received by the first respondent and as evidenced by a communication of the Indian Overseas Bank, Pondicherry Main Branch, dated 14.02.2008, the said four demand drafts have been encashed by the first respondent on 23.01.2008. Thereafter the first respondent sent a reply dated 05.02.2008 acknowledging the receipts of the letter enclosed with the enclosures, but stated that they have received the same without prejudice to their right and interest to pursue the transaction pending before the VII Metropolitan Magistrate, George Town, Chennai, in C.C.No.7842 of 1998 and other remedies. In such circumstances, the above Criminal Original Petition has been filed seeking to quash the proceedings in C.C.No.7842 of 1998 in so far as petitioners 2 and 3 herein are concerned.”
3. The above Criminal Original Petition was admitted and interim stay has been g
