Dispute Resolution & Arbitration Monthly Update | December 2023 - Trials & Appeals & Compensation

Payal Malhotra v. Sulekh Chand

Delhi High Court | W.P. (CRL) 1366/2023 and CRI. M.A. 12888/2023

Background facts

Sulekh Chand (Respondent) had instituted a complaint under Section 138 of the Negotiable Instruments Act, 1881 (Act) against Payal Malhotra (Petitioner) in respect of non-payment against one dishonored cheque amounting to for the amount of INR 5,82,217 issued by the Petitioner in favor of the Respondent. Thereafter, the Metropolitan Magistrate vide an Order dated March 03, 2023 issued summons under Section 138 of the Act requiring the Petitioner to attend the Court.
Being aggrieved, the Petitioner filed a petition before the Hon'ble Delhi High Court of Judicature at Delhi, New Delhi (HC) invoking its jurisdiction under Section 482 of the Code of Criminal Procedure, 1972 (CrPC).
The Petitioner's Counsel argued that on November 21, 2014, a cheque was given to the Respondent Petitioner from the firm of Petitioner Respondent and that the impugned blank cheque was issued to the Respondent for the purpose of security, not in discharge of any legally recoverable debt or liability as alleged by the Respondent. He submitted that the said cheque was misused by the Respondent and further contended that the said amount had been duly paid by the Petitioner, which was evident from the bank statements as well as the ledger account maintained by the Petitioner during the course of regular business.
Additionally, questions were also raised as to the difference in handwriting in the issued cheque in question.
Lastly, it was averred that the Respondent was demanding a total sum of INR 5,82,217 which included INR 2,38,602 against the alleged supply of materials along with INR 3,43,613 towards the interest amount at 24% p.a. from the date of cheque being due till the actual realization of the sum, which was completely illegal and unjustified.

Issue at hand?

Whether an offence under Section 138 of the Act is made out and whether the High Court can exercise its powers and jurisdiction under Section 482 of the CrPC in the present case?

Decision of the Court

At the outset, the HC noted that a cheque given for security, when dishonored, forms part of the offence under Section 138 of the Act. The HC in its reasoning stated that in various landmark judgements, the Supreme Court has time and again held that the scope of Section 138 of the Act is wide and must be interpreted in a liberal manner so as to achieve the object for which the said provision has been enacted.
With regards to the contention of the Petitioner that blank cheque was issued by the Petitioner for the purpose of security, the HC held that it has absolutely no substance since it is trite law that when a cheque given for the purpose of security is dishonored, Section 138 of the Act will be attracted. The HC then went on to hold that not only the cases of dishonor of cheques on account of insufficiency of funds or exceeding arrangement but the cases involving dishonor of cheques on account of 'payment stopped' and 'account closed' have also been brought within the ambit of the offence under the aforesaid provision. While reiterating this position of the law, the HC laid emphasis on the landmark judgement of the Supreme Court in the case of NEPC Micon Ltd & Ors v. Magma Leasing Ltd¹ .
Moreover, the HC respected the jurisdiction of the Trial Court and held that the contentions of the Petitioner's counsel regarding the civil suit which has been filed by the Petitioner against the Respondent for the recovery of amounts is an issue which could not be looked into at the current stage and is a matter of trial.
Further, the HC held that a great deal of caution must be exercised in the use of the power conferred on High Courts under Section 482 of the CrPC. Accordingly, the HC held that it could not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of the High Court under Section 482 of the CrPC. Thus, the HC did not find any ground for quashing the criminal complaint filed by the Respondent under Section 138 of the Act, nor any flaw or infirmity in the proceedings pending before the Trial Court.
In view of the above, the HC declared the prayers to be untenable in law and accordingly, dismissed the Petition and the subsequent Criminal Miscellaneous Application.

Bharat Petroleum Corporation Ltd & Anr v. ATM Constructions Pvt Ltd

Supreme Court of India I 2023 SCC Online SC 1614

Background facts

The Respondent is presently the absolute owner of the property in dispute. The said property was originally owned by T. Padmanabhan, T. Sethuraman and T. Gopinath. At that time, Burma Shell Oil Storage and Distribution Company of India Ltd had taken the property on lease for a period of 20 years by entering into a lease deed dated January 08, 1958. The said company was the predecessor-in-interest of the Appellant.
The said property was put to public auction owing to default in repayment of loan availed by the owners after which the Respondent purchased the property. Finally, the lease in favor of the Appellants expired on December 31, 1997.
Thereafter, the Respondent issued a notice to the Appellants demanding surrender of possession of the said property which was not complied with. Thereafter, the first suit was filed by the Respondent in the year 2006 which was decreed on October 30, 2010.
During the pendency of the first suit, the Appellants sought to invoke Section 9 of the Tamil Nadu City Tenants Protection Act, 1921 claiming the right to purchase the property but failed in that process. In the first suit filed by the Respondent, the prayer was only for seeking possession of the property.
Further, during the pendency of the first suit, the present suit was filed claiming liquidated damages for a period from January 01, 1998 till December 31, 2019 along with interest and future damages of INR 30,50,000 per month from January 01,2020 onwards till the date of handing over the vacant possession of the suit property.
It is in the aforesaid suit that the Appellants filed an application for rejection of the plaint under Order VII Rule 11(d) of the Civil Procedure Code (CPC). The application was on the ground that occupation of the property in dispute for which a suit of possession was filed earlier without claiming any damages for use and occupation will not be maintainable in terms of Order II Rule 2 of CPC. The same has been dismissed by the Chennai High Court.

Issues at hand?

Whether the Respondent can file a subsequent suit for damages for use and occupation while a prior suit for possession is pending wherein such relief was not claimed.
Whether the application filed by the Appellants under Order VII Rule 11(d) CPC in the suit maintainable.

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Footnote

1. (1999) 4 SCC 253

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