Bindhu.A.V. v. Sree Gokulam Chit and Finance Co. (P) Ltd. and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **FRIDAY, THE 17TH DAY OF JANUARY 2020 / 27TH POUSHA, 1941** ## **Crl.MC.No.3177 OF 2019(F)** **AGAINST STC 1836/2017 OF JUDICIAL MAGISTRATE OF FIRST CLASS, MATTANNUR** ## **PETITIONER/ACCUSED:** **BINDHU.A.V., AGED 40 YEARS S/O. W/O. JITHESH,MANNOOR HOUSE, CHUNNGAKKUNNU (PO), KELAKAM,KANNUR DISTRICT** **BY ADVS. SRI.P.V.KUNHIKRISHNAN SRI.P.V.ANOOP** ## **RESPONDENTS/COMPLAINANT & STATE :** **1 SREE GOKULAM CHIT AND FINANCE CO. (P) LTD. IRITTY BRACH , REPRESENTED BY ITS POWER OF ATTORNEY HOLDER, MRS. P.M. RAJANI, W/O. C.V. RAJEEV KUMAR, 36 YEARS, LEGAL CLERK, FATHIMATH SHAMSHEENA COMPLEX, IRITTY** **2 STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, KOCHI-682 031** **R1 BY ADV. SRI.MAHESH V RAMAKRISHNAN SRI.C.K.PRASAD PP** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 13-01-2020, THE COURT ON 17-01-2020 PASSED THE FOLLOWING:** Crl.M.C.No.3177/2019 2 ## **“CR”** ## **R.NARAYANA PISHARADI, J** ************************ Crl.M.C.No.3177 of 2019 ---------------------------------------------Dated this the 17[th] day of January, 2020 ## **O R D E R** The petitioner is the accused in the case S.T.No.1836/2017 on the file of the Court of the Judicial First Class Magistrate, Mattannur. 2. The aforesaid case is one instituted upon the complaint (Annexure-A) filed against the petitioner by the first respondent (hereinafter referred to as 'the complainant') for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act'). 3. The material averments in Annexure-A complaint are as follows : The complainant is a company conducting chitty business. Mr.M.L.George was the subscriber of four chitties conducted by the complainant company. Mr.George had bid the chitties for Rs.18,75,000/- each and the amount was paid to him. Crl.M.C.No.3177/2019 3 Thereafter, he failed to repay the balance chitty amount of Rs.45,27,242/- to the complainant company. The accused was the surety of Mr.George in the chitty transactions. She agreed to repay the amount and issued a cheque dated 20.04.2017 for Rs.45,27,242/- to the complainant in discharge of the liability. The complainant presented the cheque in the bank. It was returned unpaid on 09.05.2017, for the reason that there was no sufficient amount in the account of the accused. On 27.05.2017, the complainant sent a lawyer notice to the accused demanding payment of the amount of the cheque. The accused received the notice on 29.05.2017. She did not send any reply. She did not pay the amount of the cheque. 4. This petition under Section 482 Cr.P.C is filed by the accused for quashing the proceedings initiated against her on the basis of Annexure-A complaint, on the ground that the complainant has initiated arbitration proceedings against her and Mr.George. 5. Heard learned counsel for the petitioner and the first respondent/complainant. Crl.M.C.No.3177/2019 4 6. Learned counsel for the petitioner submitted that, subsequent to the institution of Annexure-A complainant against the petitioner, the complainant has initiated arbitration proceedings for realisation of the amount allegedly due from the subscriber of the chitty and also the petitioner in the chitty transactions. Learned counsel for the petitioner contended that, the questions whether the petitioner owes any amount to the complainant company and if so, what is the amount owed by her, could be decided only after the disposal of the arbitration cases. 7. Annexure-A complaint contains necessary averments to attract an offence punishable under Section 138 of the Act. There is no merit in the contention of the petitioner that the averments in Annexure-A complaint do not constitute the ingredients of the offence punishable under Section 138 of the Act. 8. There is also no merit in the contention of the petitioner that the initiation of the arbitration proceedings at the instance of the complainant affects the maintainability of the complaint filed against her for an offence punishable under Crl.M.C.No.3177/2019 5 Section 138 of the Act. 9. It is elementary that the civil proceedings or arbitration proceedings for recovery of money and the criminal proceedings under Section 138 of the Act are based on independent cause of action (See **Guracharan Singh v. M/s Allied Motors Limited : (2005) 10 SCC 626** ). Merely because there is an arbitration clause in the agreement, that cannot prevent criminal prosecution against the accused, if an act constituting a criminal offence is, prima facie, made out (See **Palanitkar v. State of Bihar : AIR 2001 SC 2960** ). 10. In **M/s Sri Krishna Agencies v. State of A.P : AIR 2009 SC 1011** , the High Court quashed the proceedings under Section 138 of the Act on the ground that the complainant had taken recourse to arbitration proceedings. The Supreme Court set aside the order of the High Court and restored the complaint to file holding as follows: _“We are also of the view that there can be no bar to the simultaneous continuance of a criminal proceeding and a civil proceeding if the two arise from separate causes of action”._ Crl.M.C.No.3177/2019 6 ## 11. In **Trisuns Chemical Industry v. Rajesh Agarwal :** **AIR 1999 SC 3499** , it was held that merely because an act has a civil profile is not sufficient to denude it of its criminal outfit. The Apex Court further held as follows: _“We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to an offence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down the complaint at the threshold itself”._ 12. The decisions referred to above constitute authority for the proposition that arbitration proceedings and criminal proceedings against a person, based on the same transaction, can be conducted or continued simultaneously. 13. The other factual disputes involved in the complaint filed against the petitioner cannot be decided in a petition filed Crl.M.C.No.3177/2019 7 under Section 482 Cr.P.C (See **HMT Watches Limited v. M.A.Abida : (2005) 11 SCC 776** ). 14. In the aforesaid circumstances, the prayer for quashing the proceedings against the petitioner in the case based on Annexure-A complaint cannot be allowed. The petition is liable to be dismissed. Consequently, the petition is dismissed. ## **R.NARAYANA PISHARADI, JUDGE** jsr Crl.M.C.No.3177/2019 8 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** ## **ANNEXURE-A** **TRUE COPY OF THE COMPLIANT WHICH IS NOW PENDING AS S.T.C. NO.1836/2017 ON THE FILE OF JUDICIAL FIRST CLASS MAGISTRATE, MATTANNUR** ## **ANNEXURE-B** **TRUE COPY OF THE APPLICATION FOR REFERENCE OF A DISPUTE TO ARBITRATION, WHICH IS NUMBERED AS A.R.C.NO.742/2018 PENDING BEFORE THE ARBITRATION FOR CENTRAL CHENNAI CHIT FUNDS COURT** ## **ANNEXURE-C** **TRUE COPY OF THE APPLICATION FOR REFERENCE OF A DISPUTE TO ARBITRATION,WHICH IS NUMBERED AS A.R.C.NO.8746/2018 PENDING BEFORE THE ARBITRATOR FOR CENTRAL CHENNAI CHIT FUNDS COURT** **RESPONDENTS' EXHIBITS : NIL** TRUE COPY PS TO JUDGE