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2019 Supreme(Mad) 881
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.K. ILANTHIRAIYAN, J.
M/s. Kalika Cements Limited and Others – Petitioners
Versus
M/s. Gimpex Limited and Another – Respondents
Crl. O.P. Nos. 21731 to 21737, 25398 of 2018, Crl. M.P. Nos. 11888 to 11901, 14464, 14465, 14632, 14633, 14635 to 14639 of 2018
Decided On : 10-04-2019
For the Petitioners: M. Ravi, M/s. Rugan & Arya.
For the Respondent: A. Abdul Hameed.
The main legal point established in the judgment is that the validity of a deed of compromise and its impact on proceedings under the Negotiable Instruments Act must be carefully considered. The court clarified that complaints arising from cheques issued before a compromise may not be sustainable, while those arising from cheques issued after a challenged compromise may be quashed.
Headnote:
Negotiable Instruments Act - Quashing of Proceedings - Sections 138 and 141 - Summary of Acts and Sections: The court discussed the validity of the deed of compromise and its impact on the proceedings initiated under the Negotiable Instruments Act. It considered the issuance of two sets of cheques, one before and one after the deed of compromise, and the implications of the compromise on the liability of the petitioners. The court referred to the judgments in Venkatesh Dutt vs. Shoes East Limited and Lalit Kumar Sharma and Another vs. State of U.P. and Another to analyze the legal principles governing the simultaneous prosecution of cheques issued before and after a compromise.
Fact of the Case:
The petitioners issued cheques for a sum of Rs. 9 crores towards reimbursement of customs duty and wharfage charges. The respondent initiated proceedings under Section 138 of the Negotiable Instruments Act. Subsequently, a deed of compromise was entered into, and 15 fresh cheques were issued in full settlement of all claims. The petitioners challenged the validity of the compromise and sought to quash the proceedings.
Finding of the Court:
The court found that the complaints arising from the cheques issued before the deed of compromise were not sustainable, as the compromise reduced the liability to Rs. 10 crores as a full and final settlement. However, the complaints arising from the cheques issued after the deed of compromise were quashed, as the deed of compromise itself was challenged in a suit, and the cheques were not issued for discharging the liability.
Issues: The court considered whether simultaneous prosecution of cheques issued before and after a compromise can be sustained, and which set of proceedings should be maintained when the deed of compromise is challenged.
Ratio Decidendi: The court held that the complaints arising from the cheques issued before the deed of compromise were not sustainable, as the compromise reduced the liability. However, the complaints arising from the cheques issued after the deed of compromise were quashed, as the deed of compromise itself was challenged in a suit, and the cheques were not issued for discharging the liability.
Final Decision: The Criminal Original Petitions were dismissed, and the Fast Track Court was directed to complete the trial within three months. The proceedings in C.C. No. 389 of 2017 were quashed.
1. The petitions in Crl. O.P. Nos. 21731 to 21737 of 2018 have been filed to quash the proceedings in C.C. Nos. 3326 to 3329 of 2012, 99 to 101 of 2013, respectively, pending on the file of the Fast Track Court No. IV, George Town, Chennai arising out of the offence punishable under Sections 138 and 141 of Negotiable Instruments Act.
2. The learned counsel for the petitioners submitted that the respondent supplied coal to the petitioners and towards the reimbursement of customs duty, wharfage charges etc. the petitioners are liable to pay a sum of Rs. 36,51,61,525/- to the respondent. After deducting the payments made by the petitioners a sum of Rs. 13,07,75,009/- was due and payable by them. In partial discharge of said liability, the petitioners issued 18 cheques for a sum of Rs. 9 crores. The said cheques were presented for collection and the same were returned dishonoured for the reason that ‘insufficient funds’. Therefore, the respondent initiated proceedings under Section 138 of Negotiable Instruments Act by seven complaints as against which the petitioner filed quash petition in Crl. O.P. Nos. 21731 to 21737 of 2018. The learned counsel for the petitioners submitted that the petitioners have already filed quash petitions before this Court in Crl. O.P. Nos. 5494, 5497 to 5500 of 2017 to quash the very same proceedings initiated by the respondent before this Court and the same were dismissed by common order dated 24.11.2017 by this Court. As against the said order, the petitioners preferred Special Leave Petition before the Hon’ble Supreme Court of India by an order dated 18.05.2018, the Hon’ble Supreme Court of India observed that this Court has not been looked into the point that the compromise entered between the petitioners and the respondent under coercion pursuant to which the petitioners had issued 15 fresh cheques in full settlement of all claims of the respondent. Therefore, the petitioners were granted liberty to approach this Court once again to take up this plea.
2.1. Further, the Hon’ble Supreme Court observed that the High Court has to deal with the issue on its own merits and it is for the High Court to take its own view. With the above observations, the Special Leave Petition was disposed of. Thereafter, the petitioners filed these petitions to quash the proceedings. While, pending the quash petitions on 01.02.2013, the respondent filed the false complaint before the Central Crime Branch against the petitioners and the same was registered in Crime No. 21 of 2013 for the offences under Sections 409, 506 (i) I.P.C. on the allegation that the respondent had paid customs duty and wharfage charges to the extent of Rs. 6,96,74,666/- to the Port Authorities and despite the promise to repay the sum the petitioners refused to pay the same and also threatened the respondent with dire consequences. Pursuant to the said complaint, the third petitioner was arrested and remanded to judicial custody. Thereafter, he filed a petition for bail and while it was pending, the third petitioner was granted police custody for four days for enquiry. During the police custody, he was intimidated and threatened with dire consequences and as such he has no other option than to succumb to such threat and finally yielded to the police pressure and agreed to pay a sum of Rs. 10 crores on condition to withdraw all the cases and suits pending against the petitioners. A deed of compromise entered between the petitioners and the respondent dated 12.03.2013. Accordingly the parties agreed for a sum of Rs. 10 crores as full and final settlement in which a demand draft for a sum of Rs. 3 crores and 15 post dated cheques totalling to Rs.7 crores were issued by the third petitioner. Thereafter he was released on bail.
2.2. He further submitted that as such the entire proceedings are vitiated by fraud and by the fabricated three High Se
