LI Network
Published on: November 30, 2023 at 13:18 IST
The Punjab & Haryana High Court addressed the issue of whether initiating proceedings under Section 138 of the Negotiable Instruments Act (“NI Act”) for the dishonor of a cheque would preclude subsequent charges under Section 420 and 406 of the Indian Penal Code (IPC).
This question arose during the hearing of a plea seeking the quashing of an FIR under IPC sections 406 and 420.
Justice Anoop Chitkara, referencing the Supreme Court’s position in Sangeetaben Mahendrabhai Patel v. State of Gujarat & Anr, emphasized that while there might be some factual overlap between the cases, the essential elements of the offenses differ, allowing for a subsequent case.
The court noted that launching a criminal prosecution and simultaneously filing an FIR under the IPC for the same set of allegations, especially when invoking Article 20(2) of India’s Constitution, would be a violation. The court underscored the importance of avoiding simultaneous prosecutions under Section 138 of the NIA and IPC, stressing that such actions would infringe on constitutional provisions.
However, the court clarified that its stance would not have legal and binding force, as the matter had been referred to a larger bench in J. Vedhasingh v. R.M. Govindan.
The case in question involved two complaints under Section 138 of the NI Act and an FIR under IPC sections 406 and 420, all relating to the same amount of Rs.1.59 crores.
The complainants argued that the case extended beyond cheque dishonor, involving a breach of trust with mens rea, justifying the IPC charges. The accused countered that cheque dishonor did not imply an intention to cheat or a malicious act.
Addressing the argument that the offenses under Section 420 IPC required fraudulent and dishonest intent, the court maintained that once prosecution under Section 138 of the NIA had been initiated, parallel proceedings under IPC sections 420 and 406 would amount to double jeopardy, violating constitutional principles.
The court stressed that the Indian Contract Act governed the entrustment against a promise to pay, and allowing parallel prosecutions would undermine the stringent provisions of Section 138 of the NIA.
Highlighting the need for adherence to the earliest judgment of the largest bench on conflicting issues, the court disposed of the plea with the liberty to file a fresh petition after the decision of the larger bench of the Supreme Court.
