In a recent decision by the Rajasthan High Court the accused petitioners, through a miscellaneous petition under Section 482 of the Criminal Procedure Code (Cr.P.C.), have sought the quashing of ongoing criminal proceedings against them in the court of the learned Special Judicial Magistrate (N.I. Act Cases) Ajmer, Rajasthan. The case revolves around allegations related to the dishonor of a cheque and subsequent legal actions.

The petitioners, a construction company, and its directors are accused of dishonoring a cheque issued in favor of the complainant, who had booked a flat in one of the company's projects. The complainant booked Flat No.403 in Lakhani's Skyways, Plot No.7, Sector 5 Ulwe, Navi Mumbari and a total payment of Rs.85,00,000/- was allegedly made by him. According to the petitioners' counsel, the complainant canceled the booking and requested a refund, which the petitioners accepted.

A settlement note was executed, wherein it was agreed by both the parties that after deducting taxes of Rs.2,40,000/-, an amount of Rs.78,19,367/- would be the final amount to be paid to the complainant. In lieu of the aforesaid payment, the petitioners issued two cheques of Rs.15,00,000/- and Rs.63,19,367/-. The petitioner contends that a cheque bearing No.000685 dated 21.04.2021 drawn on Bank of Baroda, Vashi, Navi Mumbai Branch for a sum of Rs.63,19,367 was issued in favor of the complainant. However, on presentation of the cheque, it got dishonored on account of 'funds insufficient'.

In response to the dishonored cheque, the complainant filed a complaint under Section 138 of the Negotiable Instruments Act (N.I. Act). The petitioners argue that they had already made the entire agreed payment via RTGS, and the complainant's action is a misuse of legal processes. The complainant, on the other hand, asserts that the trial court rightly took cognizance of the offense under Section 138.

After hearing both parties, the court examined the material available on record. The court noted that the complainant had admitted receiving the first installment through RTGS but denied receiving the second installment in the complaint filed before the trial court. However, evidence showed that both payments were made via RTGS on different dates.

The court emphasized the quasi-criminal nature of Section 138 proceedings, stating that while it arises from a civil wrong, it imposes criminal penalties. Referring to a Supreme Court judgment Damodar S. Prabhu vs Sayed Babalal H : reported in (2010)5SCC663, the court highlighted the compensatory aspect of the remedy and the encouragement of parties to settle disputes amicably.

Based on its analysis, the court exercised its powers under Section 482 Cr.P.C. and quashed the entire proceedings arising from the complaint filed by the complainant. The court considered the early payment made by the petitioners and the compensatory nature of Section 138 proceedings, emphasizing the need for early resolution to avoid protracted litigation.

Case: Lakhani Builders Pvt. Ltd & Ors vs State of Rajasthan & Ors,

S.B. Criminal Miscellaneous (Petition) No. 7269/2021.

Click to read/download judgment.