Mahindra F.S.Ltd.& ANR Vs. Rajiv Dubey  INSC 2090 (4 December 2008)
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1966 OF 2008
(Arising out of SLP (Crl.) No.4957 of 2006) Mahindra & Mahindra Financial
Services Ltd. and Anr. ...Appellants Rajiv Dubey ..Respondent
Dr. ARIJIT PASAYAT,
in this appeal is to the judgment of a learned Single Judge of the Orissa High
Court declining to interfere with the order passed by learned SDJM,
Bhubaneshwar in ICC 210 of 2000 taking cognizance of offence punishable under
Sections 406 and 420 of the Indian Penal Code, 1860 (in short the `IPC'). In
the complaint it was inter-alia alleged as follows:
The complainant as
the Managing Director of Team Finance Company Pvt. Ltd., Janpath Tower,
Bhubaneswar had availed hire purchased finance from Mahindra & Mahindra
Financial Services Limited, accused appellant No.1 with the consent and
knowledge of its Managing Director, accused appellant No.2 in respect of a
vehicle for a sum of Rs.1,89,000,00. He had given seven blank cheques drawn on
Canara Bank, Main Branch Bhubaneswar in favour of accused-appellant No.1 in the
1994 when the
agreement had been executed between the parties with mutual understanding that
the said cheques would not be presented for encashment by the
accused-appellant, but then payments would be made through demand drafts
regularly till the entire amount was repaid.
According to the
complainant, in consonance with the said understanding the entire dues were
repaid by him through demand drafts and after repayment he wrote a letter to
accused-appellant No.l for returning the blank cheques to him. However, without
doing so, the accused appellants mischievously and with ulterior motive
presented the cheques in the bank, a fact he learnt after receiving
communication from the concerned Bank, that as sufficient money was not
available in his account. The cheques were presented in bank by the
accused-appellants even though their entire amount had been repaid by the
complainant. This was done with a motive to cheat and harass the complainant
and makes out offences under Sections 406 and 420 IPC. The court below after
recording the initial statement of the complainant under Section 200 of the
Code of Criminal Procedure, 1973 (in short the `Code') perusing the materials
produced before him and being prima facie satisfied about commission of the
aforesaid offences took cognizance thereof.
of the appellants before the High Court was that the complaint was nothing but
abuse of the process of the law. It was as a counter blast to the proceedings
initiated under Section 138 of the Negotiable Instruments Act, 1881 (in short
the `Act'). The High Court found that it is not a case for interference under
Section 482 of the Code.
counsel for the appellants, inter-alia, submitted as follows:
Pursuant to the
minutes of meeting dated 23.6.1995 it was agreed to enter into a tripartite
Agreement between the appellant No.1-Company, the Respondent's company Team
Finance Corporation Pvt. Ltd. and the customers availing the loan and buying
the vehicle whereby appellant No.1 agreed to extend loans under hire and
purchase/lease directly to customers with Team Finance Co. Pvt. Ltd. being the
guarantor for disbursal of the said loans to the customers for which the
Respondent was given a margin of 3-4% to market the loan scheme. As per clause
(e) of the said minutes of the meeting and as per clause (f) the respondent had
to open a separate bank account and deposit all the post dated installment
cheques received from the customers in the said account which was required to
be remitted to the appellant Company on minimum balance basis in its Bombay
account by way of Telegraphic Transfer and as per clause (g) the respondent was
required to send reports and statements on monthly basis to the appellant
company. As per clause (h) for any customer once defaults in payment reached a
figure of 3, the respondent had to reimburse the said defaulted installment to
the appellant Company. This understanding was further reinforced as per the
minutes of discussions held between the appellant and respondent on 18-07.1996
and certain additional conditions were imposed on the respondent by the
appellants whereby a limit of Rs.20 lakhs was fixed for extending finance per
month by the respondent.
such several tripartite loan agreements were signed and loan disbursed to the
customers directly by the appellants with the Respondent being a guarantor and
as on 25th March 2000, the total outstanding against respondent Team Finance
Corporation Pvt. Ltd. stood at Rs.2,39,73,795/- the said amount being unpaid
despite several reminders to settle the outstanding amount.
appellants presented 7 cheques on 29-03-2000 bearing numbers and amounts as
Cheque No. Amount
Dated 7891578 1655516/- 29-03-2000 7891579 2526794/- 29-03-2000 7891580
1477323/- 29-03-2000 7891581 722419/- 29-03-2000 7891582 19631031/- 29-03-2000
7891583 1942609/- 29-03-2000 7891584 4712236/- 29-03-2000
appellants presented 3 cheques on 2-08-2000 against the discharge of the
remaining outstanding payments bearing the number and amounts as follows:
Cheque No. Amount Dated 7891585 3515726/- 2.8.2000 7891586 3530903/- 2.8.2000
7891587 1927166/- 2.8.2000
these cheques were returned by the Bank to the appellants with the endorsement
that the account is not valid and insufficient funds.
the meanwhile, in order to pre-empt the impending proceeding under sec 138 of
the Act, the respondent filed a criminal complaint CC No. 210 of 2000 against
the appellants under Sections 406, 420, 294, 506, 34 IPC before SDJM
Bhubneshwar on 11-05-2000, inter-alia, claiming that the cheques issued by
respondent were towards an outstanding amount of Rs.1,89,000/- and the said
payment has already been made by the Respondent by way of a Demand Draft of
which no number, date or any other details are provided in the complaint. The
appellants became aware of institution of such a case only later when the
process was issued on 18.04.2001 and the same was received by the appellants.
02-08-2000 the appellants filed Case No.753/S/2000 U/s 138 of the Act read with
section 34 of IPC before ACMM, Esplanade, Bombay.
respondent in the meanwhile kept on representing that he will clear the
payments and vide letter dated 8-11-2000 made an offer to the appellants to
agree for the full and final settlement of the outstanding dues for a mere sum
of 25,00,000/- against a balance of 2,39,73,795/-.
18.04.2001, the Learned Court of SDJM, Bhubaneshwar in ICC 210 of 2000 issued
process against the appellants under Section 406/420 IPC.
to the appellants the ingredients of Section 405 are not present. In any event,
the plea of the respondent filing the petition mala fide is clearly borne out.
counsel for the respondent on the other hand submitted that the appellants have
not come to this Court with clean hands.
appellants have introduced a fabricated letter dated 24.6.1995. It is their
stand that the entire amount was paid and, therefore, on receiving the full
payment, the appellants ought to have returned the cheques which were held only
as a collateral security.
is not in dispute that the proceedings under Section 138 are pending. That
being so, the question of proceeding for alleged breach of trust does not
is interesting to note that the respondent does not dispute issuance of
cheques. Even a casual reading of the complaint does not show that the
ingredients of Section 406 IPC are in any event made out. It is also not
understandable as to how Section 294 has any application to the facts of the
case much less Section 506 IPC. In addition to this, perusal of the complaint
apparently shows the ulterior motive. It is clear that the proceeding initiated
by the respondent clearly amounted to abuse of the process of law. In State of
Haryana v. Bhajan Lal (AIR 1992 SC 604), it was, inter-alia, observed as
"108. In the
backdrop of the interpretation of the various relevant provisions of the Code
under Chapter XIV and of the principles of law enunciated by this Court in a
series of decisions relating to the exercise of the extraordinary power under
Article 226 or the inherent powers under Section 482 of the Code which we have
extracted and reproduced above, we give the following categories of cases by
way of illustration wherein such power could be exercised either to prevent
abuse of the process of any court or otherwise to secure the ends of justice,
though it may not be possible to lay down any precise, clearly defined and
sufficiently channelised and inflexible guidelines or rigid formulae and to
give an exhaustive list of myriad kinds of cases wherein such power should be
(1) Where the
allegations made in the first information report or the complaint, even if they
are taken at their face value and accepted in their entirety do not prima facie
constitute any offence or make out a case against the accused.
(2) Where the
allegations in the first information report and other materials, if any,
accompanying the FIR do not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1) of the Code except under
an order of a Magistrate within the purview of Section 155(2) of the Code.
(3) Where the
uncontroverted allegations made in the FIR or complaint and the evidence
collected in support of the same do not disclose the commission of any offence
and make out a case against the accused.
(4) Where, the
allegations in the FIR do not constitute a cognizable offence but constitute
only a non- cognizable offence, no investigation is permitted by a police
officer without an order of a Magistrate as contemplated under Section 155(2)
of the Code.
(5) Where the
allegations made in the FIR or complaint are so absurd and inherently
improbable on the basis of which no prudent person can ever reach a 9 just
conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an
express legal bar engrafted in any of the provisions of the Code or the
concerned Act (under which a criminal proceeding is instituted) to the
institution and continuance of the proceedings and/or where there is a specific
provision in the Code or the concerned Act, providing efficacious redress for
the grievance of the aggrieved party.
(7) Where a criminal
proceeding is manifestly attended with mala fide and/or where the proceeding is
maliciously instituted with an ulterior motive for wreaking vengeance on the
accused and with a view to spite him due to private and personal grudge."
case at hand falls under category (7).
in view of what has been stated in Bhajan Lal's case (supra), the proceedings
in ICC 210 of 2000 before learned SDJM, Bhubaneswar stand quashed. The appeal
(Dr. ARIJIT PASAYAT)