The Supreme Court last week ruled that when a complaint regarding dishonour of cheque for want of sufficient fund in the bank account is considered by the magistrate, he should examine whether it is of civil nature and whether there is a prima facie case for taking cognisance of the complaint. The apex court sent a case back to the Calcutta High Court where the magistrate did not consider the question and the high court dismissed the petition of the drawer of three cheques (Indeseam Services Ltd v Bimal Kumar Kejriwal).
A person who fails to get the payment can file a civil suit or a criminal complaint. The criminal complaint could broadly be under Section 138 of the Negotiable Instruments Act or for cheating under Section 420 of the Indian Penal Code. Sometimes, all these could be used to harass the rival. In this case, the complaint was that the cheques drawn by the officials of the company in favour of Kejriwal were dishonoured. Complaints under the Negotiable Instruments Act and Sections 420 (cheating) and 120B (conspiracy) were filed.
The magistrate considered the complaint and concluded that the dispute between the parties cropped up due to breach of contract between them and that the dispute was of a civil nature. The complainant appealed to the Calcutta High Court. It held that the magistrate was right in not taking cognisance of the offence under Section 138 of the Negotiable Instruments Act. It further stated that the magistrate should have taken cognisance of the offence under Section 420 IPC. The high court asked the magistrate to hold further enquiry into the complaint and pass an appropriate order.
On receipt of the high court order, the magistrate straight away proceeded with a case of cheating. The company moved the high court again. It dismissed the petition stating that since the high court had earlier ordered the magistrate to proceed with the cheating case, the magistrate was right in proceeding with the case. Therefore, the company moved the Supreme Court. It argued that there was no deceit in the deal and the dispute of a civil nature was turned into a criminal case to harass it by abusing the process of the court.
The Supreme Court found fault with the high court which had not considered the nature of the contract between the parties, the arrangement for payment of dues nor did it examine whether the ingredients of the offence of cheating had been made out.
