Supreme Court Directs Joint Trial in Cheque Dishonour and Forgery Case: Pareshbhai Amrutlal Patel vs. State of Gujarat (28 February 2020)

Introduction

Date of the Judgment: 28 February 2020

Citation: Not Available

Judges: D.Y. Chandrachud, J., Hemant Gupta, J.

Can two criminal cases, one for cheque dishonour and another for forgery, be tried together if they involve the same cheque? The Supreme Court of India recently addressed this question in a case where the parties were in dispute over the issuance and validity of a cheque. The core issue was whether a criminal case for forgery should be tried separately or jointly with a case of cheque dishonour, when both cases stemmed from the same cheque. The Supreme Court, in this judgment, directed that both cases be heard together to avoid contradictory judgments. The bench consisted of Justices D.Y. Chandrachud and Hemant Gupta, with the judgment authored by Justice Hemant Gupta.

Case Background

The case revolves around a dispute concerning a cheque for Rs. 4,50,000. The appellants claimed that the cheque was issued to them on 25th November, 2002, because the company failed to issue shares for which they had paid. The cheque was dated 1st March, 2005. The cheque was presented for payment, but it was dishonoured with the remarks that the account was closed on 28th May, 2005. Subsequently, the appellants filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, against the respondent No. 2, alleging the dishonour of the cheque.

Respondent No. 2, on the other hand, alleged that the cheque, along with two other cheques, letterheads, and rubber stamps, were misplaced from their office. They claimed the appellants fraudulently used one of the misplaced cheques, leading to its dishonour. Based on this, respondent No. 2 filed a complaint against the appellants under Sections 420, 406, 419, 467, 468, 379, 465, 475, 120-B and 114 of the Indian Penal Code, 1860, alleging forgery and other related offences.

Timeline:

Course of Proceedings

The appellants initially filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, in the Court of Judicial Magistrate, Surat, on 26th July, 2005, after the cheque was dishonoured. Subsequently, on 17th October, 2007, respondent No. 2 filed a complaint against the appellants, alleging offences under Sections 420, 406, 419, 467, 468, 379, 465, 475, 120-B and 114 of the Indian Penal Code, 1860. The Magistrate forwarded this complaint to the police under Section 156(3) of the Code of Criminal Procedure, 1973, leading to the registration of FIR No. 3 of 2007. The appellants then filed a petition under Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the FIR, which was dismissed by the High Court of Gujarat on 11th December, 2017.

Legal Framework

The case involves the following legal provisions:

• Section 138 of the Negotiable Instruments Act, 1881: This section deals with the dishonour of cheques for insufficiency of funds in the account. It states that if a cheque is dishonoured due to insufficient funds, the drawer of the cheque can be prosecuted.
• Sections 420, 406, 419, 467, 468, 379, 465, 475, 120-B and 114 of the Indian Penal Code, 1860: These sections pertain to offences such as cheating, criminal breach of trust, impersonation, forgery of valuable security, forgery for the purpose of cheating, theft, forgery, possessing counterfeit currency and criminal conspiracy.
• Section 156(3) of the Code of Criminal Procedure, 1973: This section empowers a Magistrate to order an investigation by the police into a cognizable offence.
• Section 482 of the Code of Criminal Procedure, 1973: This section deals with the inherent powers of the High Court to prevent abuse of the process of any court or to secure the ends of justice.

Arguments

The arguments presented by both sides are as follows:

• Appellants’ Arguments:
  • The appellants contended that the cheque was issued to them on 25th November, 2002, because the company had not issued shares for which they had paid Rs. 4,50,000.
  • They argued that the cheque was issued as a refund since the shares could not be issued, and therefore, the cheque was payable after a long period.
  • They relied on the said cheque in a complaint for an offence under Section 138 of the Negotiable Instruments Act, 1881.
• Respondent No. 2’s Arguments:
  • The respondent alleged that three cheques, including the one in question, along with letterheads and rubber stamps, were misplaced from their office.
  • They claimed that the appellants fraudulently used one of the misplaced cheques, which was subsequently dishonoured.
  • They argued that the appellants should face prosecution for the offences mentioned in the FIR, including forgery and cheating.

The innovativeness of the argument lies in the fact that the appellants are relying on the same cheque for their claim of dishonour, while the respondent claims that the same cheque was fraudulently used by the appellants.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issue the court dealt with was:

• Whether the proceedings arising out of FIR No. 3 of 2007 should be transferred to the Court of Judicial Magistrate, Surat, where the proceedings of complaint under Section 138 of the Negotiable Instruments Act, 1881, are pending, so that both cases can be heard and decided together.

Treatment of the Issue by the Court:

Authorities

The Court considered the following legal provisions:

• Section 138 of the Negotiable Instruments Act, 1881: This provision was considered because the appellants had filed a complaint under this section for the dishonour of the cheque.
• Sections 420, 406, 419, 467, 468, 379, 465, 475, 120-B and 114 of the Indian Penal Code, 1860: These provisions were considered because the respondent No. 2 had filed a complaint against the appellants for these offences.
• Section 156(3) of the Code of Criminal Procedure, 1973: This provision was considered because the Magistrate forwarded the complaint to the police under this section.
• Section 482 of the Code of Criminal Procedure, 1973: This provision was considered because the appellants had filed a petition under this section seeking to quash the FIR.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that both the complaint under Section 138 of the Negotiable Instruments Act, 1881, and the FIR under the Indian Penal Code, 1860, arose from the same cheque. The Court recognized that if these cases were tried separately, there was a risk of contradictory judgments. The Court also noted that the issues in both cases were common, and a joint trial would facilitate a comprehensive resolution.

The Court did not delve into the merits of either case but focused on the procedural aspect of ensuring that both cases are heard together. The Court’s decision was aimed at promoting judicial efficiency and avoiding conflicting outcomes.

The Supreme Court observed:

“Since the issue in both the cases revolves around the same cheque, therefore, we find that instead of quashing the FIR No. 3 of 2007, the ends of justice would meet if proceedings arising out of FIR No. 3 of 2007 are transferred to the Court of Judicial Magistrate, Surat , where the proceedings of other complaint under Section 138 of the NI Act are pending so that the complaint filed by the appellants and the proceedings arising out of FIR alleged by respondent No. 2 are decided together to avoid contradictory judgments and to facilitate the issues which are common in both.”

The Court further stated:

“Consequently, the appeal is disposed of with the direction that the proceedings arising out of FIR No. 3 of 2007 PS Mehsana shall stand transferred to the Court of Judicial Magistrate, Surat where the proceedings of complaint No. 33537 of 2006 is pending. Both the cases shall be heard and decided together.”

The Court also directed the parties to appear before the Court of Judicial Magistrate, Surat, on 16th March, 2020, for further proceedings.

Key Takeaways

• When multiple cases arise from the same set of facts or involve the same disputed instrument, a joint trial is preferred to avoid contradictory judgments.
• The Supreme Court has the power to transfer cases from one court to another to ensure that justice is served efficiently.
• The decision emphasizes the importance of considering the commonality of issues in related cases to facilitate a comprehensive and consistent resolution.
• The parties must appear before the Court of Judicial Magistrate, Surat, on 16th March, 2020, for further proceedings.

Directions

The Supreme Court directed that:

• The proceedings arising out of FIR No. 3 of 2007 PS Mehsana shall stand transferred to the Court of Judicial Magistrate, Surat.
• Both the cases shall be heard and decided together.
• The parties are directed to appear before the Court of Judicial Magistrate, Surat on 16th March, 2020, for further proceedings in accordance with law.

Development of Law

The ratio decidendi of this case is that when two cases arise from the same set of facts and involve the same instrument, a joint trial is necessary to avoid contradictory judgments and facilitate a comprehensive resolution. This decision reinforces the principle that courts should prioritize efficiency and consistency in judicial proceedings. There is no change in the previous position of law, but the judgment clarifies the procedure to be followed in such cases.

Conclusion

In conclusion, the Supreme Court directed that the proceedings arising out of FIR No. 3 of 2007 be transferred to the Court of Judicial Magistrate, Surat, to be heard together with the complaint under Section 138 of the Negotiable Instruments Act, 1881. This decision aims to avoid contradictory judgments and ensure a comprehensive resolution of the dispute arising from the same cheque. The Court emphasized the importance of judicial efficiency and consistency in cases with overlapping issues.