Case Note & Summary
The petitioners, Nirman Raltors and Developers Ltd. and two individuals, filed a writ petition challenging an order dated 06.09.2018 passed by the Judicial Magistrate First Class at Karjat issuing process against them in Criminal Miscellaneous Application No. 150 of 2016 (now C.C. No. 124 of 2018). The dispute originated from a development agreement executed on 04.04.2008 between the petitioners and respondent No. 1, Amrutlal Premji Patel, along with one Ishwarbhai Valji Velani. Under the agreement, the respondent was entitled to 10,500 sq. ft. of built-up area. When the petitioners failed to hand over the area, the respondent filed Civil Miscellaneous Application No. 72 of 2012 under Section 9 of the Arbitration and Conciliation Act, 1996 in the District Court at Raigad, Alibaug. Subsequently, the parties entered into consent terms, and an alternate site was offered by the petitioners, which was initially accepted but later rejected. Another civil application was filed, and the matter reached the High Court, where an arbitrator was appointed and the matter was settled by consent terms requiring the petitioners to pay Rs. 2,81,00,000/-. The respondent alleged that the cheques issued pursuant to the consent terms were dishonoured, leading to the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. The petitioners argued that the dispute was purely civil and the criminal proceedings were an abuse of process. The court, after hearing both sides, quashed the criminal proceedings, holding that the dispute was civil in nature and the criminal complaint was not maintainable.
Headnote
A) Criminal Law - Quashing of Criminal Proceedings - Abuse of Process - The court considered whether criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be sustained when the underlying dispute was civil in nature and the cheques were issued as part of consent terms in a civil suit. Held that the dispute was essentially civil and the criminal complaint was an abuse of process, warranting quashing. (Paras 1-9) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Civil vs Criminal - The court examined the distinction between civil and criminal liability in cheque dishonour cases. It held that where the dispute arises from a development agreement and consent terms, and the complainant has already initiated civil proceedings, the criminal complaint under Section 138 is not maintainable. (Paras 3-8)
Issue of Consideration
Whether the issuance of process under Section 138 of the Negotiable Instruments Act, 1881 against the petitioners for dishonour of cheques issued pursuant to consent terms in a civil dispute is sustainable.
Final Decision
The court allowed the writ petition and quashed the order dated 06.09.2018 issuing process against the petitioners in Criminal Miscellaneous Application No. 150 of 2016 (C.C. No. 124 of 2018).
Law Points
- Criminal process quashed
- civil dispute not criminal
- consent terms breach not criminal
- Section 138 NI Act not attracted
- abuse of process of court
