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D. Raj Arora & Another v. R. Viswanathan & Another
Factual and Procedural Background
This is an application to quash the proceedings in C.C. No. 396/87 before the X-Metropolitan Magistrate, Secunderabad. The petitioners are the accused; the first respondent is the complainant. The complaint, filed under section 417 I.P.C., alleges that the complainant (Works Manager of Bharat Metal Box Company, Hyderabad) procured orders for the first accused's company and worked from 17-3-1986. The complainant submitted bills; on 4-5-1987 the accused gave a cheque of Rs. 20,000/- as part payment, which, after presentation in Andhra Bank, was dishonoured on instructions of the first accused. The petition seeks quashment of the criminal proceedings for alleged cheating.
Legal Issues Presented
- Whether issuance of a cheque subsequently dishonoured constitutes the offence of cheating under section 417 I.P.C.
- Whether the proceedings in C.C. No. 396/87 should be quashed at the stage of this petition.
Arguments of the Parties
Petitioners' Arguments
- The ingredients of cheating are not made out merely by issuance of a cheque that is later dishonoured; issuing a dishonoured cheque does not automatically amount to cheating.
- The creditor-debtor relationship remained despite dishonour of the cheque, so criminality is not established.
- Reliance on precedents: Nagesh Pal v. P. S. Shanmughanathan and P. Eshwar Reddy v. State of Andhra Pradesh (and related references in Madras and Kerala High Court decisions) to support that dishonoured cheque alone may not constitute cheating.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Nagesh Pal v. P. S. Shanmughanathan1 | Relied upon to support the proposition that issuance of a cheque which is subsequently dishonoured may not by itself constitute cheating. | The court noted reliance but held such authorities do not establish a universal rule; applicability depends on facts and allegations of dishonest intention. |
| P. Eshwar Reddy v. State of Andhra Pradesh2 | Relied upon for the same proposition that dishonour of a cheque does not automatically amount to cheating in every case. | The court treated it as relevant authority but observed that where facts allege dishonest intention at the time of issuance, those precedents may not apply. |
| Chidambaram Chettiar v. Shanmugham Pillai3 | Referenced (via the above decisions) as part of supporting material for the proposition that a dishonoured cheque does not inevitably cause damage constitutive of cheating. | Used as part of the jurisprudential background; the court emphasised factual distinctions may remove the applicability of such decisions. |
| K. Surendran v. P. Ramachandran Nair4 | Contains Mathew, J.'s observation: "Can it be said that this act has caused any damage to the complainant's body, mind, reputation or property? I think not..." — relied on to show that mere dishonour may leave the complainant's position unchanged. | The court cited this observation but held that the proposition is fact-dependent; in the present case there are specific allegations of dishonest intention and inducement making the precedent inapplicable on the facts. |
Court's Reasoning and Analysis
The court considered the petitioners' submission that a dishonoured cheque alone does not constitute cheating and that the creditor-debtor relationship remained. It examined the authorities relied upon which support that a dishonoured cheque may not cause the damage required for cheating. The court explained the correct approach: the question is fact-dependent—if at the time of issuance the accused had dishonest intention not to pay and the act caused damage (to mind, body, reputation or property), it may amount to cheating.
Applying this to the present matter, the court referred to paragraph (4) of the complaint/judgment which, it stated, alleges that while drawing the cheque on 4-5-87 at Valsad, on instructions of accused No.1, accused No.2 lacked any intention to make payment, and both accused fraudulently induced the complainant to receive the cheque knowing no payment would be made. Given these allegations, the court found it premature to hold that no offence was made out and concluded that evidence should be allowed to be adduced at trial. The court clarified that its observations would not influence the trial.
Holding and Implications
DISMISSED. The criminal petition to quash the proceedings in C.C. No. 396/87 is dismissed.
Implications: The proceedings against the accused will continue and the matter should proceed to trial where evidence on the pleaded allegations (including alleged dishonest intention at the time of issuance of the cheque) may be led. The court did not lay down a new general rule; its decision turns on the facts alleged and does not establish a universal precedent.
JAYACHANDRA REDDY, J.
(1) THIS is an application to quash the proceedings in C. C. No. 396/87 on the file of the X-Metropolitan Magistrate, Secunderabad. The petitioners are the accused in the said case. First respondent herein is the complainant. The complaint was filed for the offence of cheating under section 417 I. P. C. The allegations are that the complainant is working as the Works Manager of Bharat Metal Box Company in Hyderabad. The 1st accused is the Managing Director and the 2nd accused is the Director of Omega Packaging Private Limited, Valsad, Gujarat State. The 1st accused is doing his business in Hyderabad. The Complainant procured orders from the Company of A-i on commission being given. The 1st accused visited Hyderabad and finalised the terms of the working of the complainant for his company. As per the procurement orders, the complainant commenced to work from i7-3-i986. During the course of his work the complainant submitted various bills to A-i. On 1-4-87 A-i instructed the complainant setting the amount in regard to his outstanding bills. The complainant went to Valsad and stayed there for some days. On 4-5-87 A-i promised to give draft for the full amount. But, he gave a cheque for Rs. 20,000/- towards part payment. The complainant returned to Hyderabad and presented the cheque in Andhra Bank. A few days after presentation of the cheque, A-i instructed the Bank to stop payment. Consequently, the cheque was dishonoured. Therefore, the accused have committed the offence of cheating.
(2) THE learned counsel for the petitioners submits that the ingredients of the cheating have not been made out, in as much as, issuing of the cheque which is subsequently dishonoured, is not at all cheating. However, by deceiving any person, fraudulently or dishonestly induces the persons, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or its is likely to cause damage or harm to that person in body, mind, reputation or properly, so deceived to deliver any property to any person, is said to cheat. It is submitted that the relationship of creditor and debtor remained even though the cheque was dishonoured. Reliance is placed on judgments of this court in Nagesh Pal v. P. S. Shanmughanathan1 and P. Eshwar Reddy v. State of Andhra Pradesh2. In both these cases there is a reference to the decision of the Madras High Court in Chidambaram Chettiar v. Shanmugham Pillai3 and of Kerala High Court in K. Surendran v. P. Ramachandran Nair4. In the latter decision Mathew, J. Observed thus: Can it be said that this act has caused any damage to the complainant's body, mind, reputation or property? I think not. His position after taking the cheque and its dishonour was the same as it was before. It cannot, therefore, be said that by taking the cheque the complainant sustained any damage to his body, mind, reputation or property. There are no allegations in the complaint that by taking the cheque on the faith of the complainants implied representation of the accused, the complainant sustained any damage in his mind, body, reputation or property. If that be so, the complaint does not disclose the elements necessary to constitute the offence of cheating. Therefore, the learned counsel's general submission that in all cases even if the cheque is dishonoured it does not amount to an offence cannot be universally accepted. It depends on the facts of each case. If there are allegations to the effect that the accused had dishonest intention not to pay even at the time of issuance of the cheque and the act of issuing a cheque which was dishonoured has caused damage to his mind, body or reputation it amounts to cheating. In instant case in the paragraph (4) of the judgment it is clearly mentioned that while drawing the cheque on 4-5-87 at Valsad on the instructions of the accused No. 1, the accused No. 2 did not have any intention to make the payment to the complainant and that both the accused Nos. 1 and 2 fraudulently and dishonestly induced the complainant to receive the cheque for Rs. 20,000/- knowing fully well that no payment will be made to the complainant under the said cheque. Therefore, the case cited by the learned counsel for the petitioners may not apply. It is difficult to say at this stage that no offence is made out. If the allegations are accepted some evidence has to be let in. However, the observations made herein do not in any manner influence the trial. Accordingly, the criminal petition is dismissed.
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