Phoolpati vs State of Haryana

Rekha Mittal, J.—This order will dispose of the aforementioned petitions as identical questions of law and facts are involved, for adjudication. For the facility of reference, the facts are being taken from CRM-M-52480-2007.

Satpal son of Rangi Ram (respondent) filed the complaint u/s 138/143 of the Negotiable Instruments Act 1881 (in short ''the Act'') on the premise that the accused namely Smt. Phoolpati wife of Raj Singh and Raj Singh son of Prithi Singh purchased agriculture land measuring 26 kanals 8 marlas for a sale consideration of Rs. 38,61,000/- vide registered sale deed bearing Vasika No. 753 dated 02.08.2006 from the complainant and his co-sharers namely Surjan and Krishan. At the time of execution of sale deed, Phoolpati and Raj Singh paid only an amount of Rs. 19,61,000/- out of total sale consideration of Rs. 38,61,000/-. They agreed to pay the balance amount of Rs. 19 lacs in near future as they could not arrange for the amount since they have also purchased another parcel of land measuring 53 kanals 12 marlas @ Rs. 11,70,000/- per acre. The accused on 30.05.2007 handed over 2 demand drafts (on demand pay) dated 29.05.2007 bearing TEU 848509 and TEU 848510 for an amount of Rs. 9.5 lacs each issued by the Punjab National Bank, Sector 14, Sonepat (Haryana). The complainant presented the drafts in Co-operative Bank at village Ahar and the said bank sent the drafts to Central Co-operative Bank, Panipat for collection. The complainant on 09.06.2007 received information with a report ''Lost''; the accused failed to pay the amount of drafts despite receipt of legal notice dated 06.06.2007.

Counsel for the petitioners, Mr. J.S. Bedi, Senior Advocate contends that Phoolpati petitioner purchased land vide 3 separate sale deeds dated 02.08.2006, 02.08.2006 and 26.09.2006 from Surjan, Satpal, Krishan, Ramphal and Satbir sons of Rangi Ram. A recital in the sale deeds categorically states that the entire payment has already been made to the vendors. On the basis of sale deeds, mutation was duly sanctioned in the name of Phoolpati and she has been recorded in possession of land as per entries in the khasra girdawari. It is argued with vehemence that as Phoolpati had already paid the entire sale consideration before execution of sale deeds in the months of August and September 2006, there is no question of the petitioners having issued the drafts in dispute to discharge their liability qua the sale deeds executed about 10 months prior to the date on which the drafts were got prepared. It is further submitted that as a matter of fact, the drafts in question were got prepared as the complainant and his brother Ramphal agreed to sell the remaining land measuring 29 kanals to the petitioners and they received a sum of Rs. 4 lacs as earnest money in the presence of Shamsher and the remaining sale consideration was agreed to be paid at the time of registration of the sale deeds on 30.05.2007. Two sale deeds were duly prepared on 30.05.2007 and four drafts dated 29.05.2007 bearing Nos. TEU 848509, TEU 848510, TEU 848511 and TEU 848512 for a sum of Rs. 9.5 lacs each were prepared from the account of Ramphal son of Prithi. The vendors and the vendees went before the Sub Registrar Israna and asked the petitioners to show the four drafts and the complainant party snatched the drafts and ran away from the Tehsil premises without completing the sale deeds (Annexures P10 & P11). According to counsel, as the drafts in dispute were got prepared by the petitioners to pay the sale consideration qua the sale deeds which were yet to be executed by the vendors in their favour, there was no subsisting and enforceable liability and the drafts in dispute were illegally and forcibly taken away by the complainant. Further argued that in the absence of any existing liability qua the drafts in dispute, the petitioners cannot be prosecuted for committing offence punishable u/s 138 of the Act.

Another submission made by counsel is that the drafts were got prepared from the account of Ramphal son of Prithi and even if the drafts in dispute were not encashed, at best, Ramphal son of Prithi can be prosecuted for committing offence u/s 138 of the Act. In support of his contention, he has relied upon judgment of the Hon''ble Supreme Court of India in P.J. Agro Tech Limited and Others Vs. Water Base Limited,

Counsel for the petitioners further contends that a civil suit has been filed by Sonu and Suresh sons of Surjan, Rajesh and Azad sons of Satpal, Dharambir and Sanjay sons of Krishan challenging the sale deeds bearing Vasika No. 752 dated 02.08.2006 (Annexure P1) and 753 dated 02.08.2006 (Annexure P2) on the ground of being null and void for want of consideration. It is argued that as the civil litigation is already pending between the parties involving the same question if the sale deeds in favour of Phoolpati petitioner were executed/registered without any consideration, pending disposal of the civil suit, the criminal proceedings initiated by the complainant on the same set of allegations are liable to be stayed.

Counsel for respondent No. 2, on the contrary, contends that the disputed questions of fact raised by the petitioners cannot be decided in proceedings u/s 482 Cr.P.C. particularly in the circumstances when they require the parties to lead evidence for its adjudication. To controvert the plea of the petitioners, it is submitted that the vendors executed the sale deeds in favour of Smt. Phoolpati under a bonafide belief that the remaining sale consideration would be paid by the vendee(s) as promised. It is further submitted that the respondent and his brother Ramphal son of Rangi Ram never entered into any transaction for the sale of remaining land, received a sum of Rs. 4 lacs towards earnest money or agreed to get sale deeds registered on 30.05.2007. It is further argued that draft sale deeds dated 30.05.2007 (Annexure P10 & P11) have been prepared by the petitioners in order to create evidence in their favour, to be used in the proceedings u/s 138 of the Act pending in the trial Court as well as to create ground for assailing those proceedings by invoking jurisdiction u/s 482 Cr.P.C.

The petitioners got prepared the drafts to discharge their liability qua the sale deeds already executed/registered in August 2006. As the drafts were got prepared by the petitioners, it is irrelevant if the same were prepared from the account of somebody else. It is further argued that a draft can be got prepared from the bank by making payment in cash or an adjustment from an account. The petitioners cannot escape their liability for non-encashment of the drafts, the payment whereof was stopped by the petitioners by raising a false plea that the drafts got lost. According to counsel, the judgment relied upon by counsel for the petitioners P.J. Agro Tech Limited and Others'' case (supra) has got no bearing on the facts of the case in hand because in the instant case the instrument in question is a draft and not a cheque though the respondent has elected to treat the instrument as a bill of exchange i.e. a cheque in exercise of the option to the holder in view of the provisions of Section 17 of the Act.

The last submission made by counsel is that pendency of civil litigation at the behest of sons of the respondent and their co-plaintiffs cannot become the basis for stay of criminal proceedings.

I have heard counsel for the parties and perused the records.

Indisputably, the disputed questions of fact are not amenable to adjudication in proceedings u/s 482 Cr.P.C. The contentions raised by the petitioners that the drafts in question do not relate to payment of sale consideration towards sales already completed in August 2006 or the same were prepared for payment of sale consideration in respect of sale deeds to be executed on 30.05.2007 cannot be appreciated in the present proceedings and the same are to be decided by the trial Court on the basis of evidence to be led by the parties. The petitioners, therefore, cannot be permitted to raise factual dispute u/s 482 Cr.P.C.

Much stress has been laid by counsel for the petitioners that as the drafts were got prepared from the account of Ramphal son of Prithi, the petitioners cannot be prosecuted u/s 138 of the Act even if the drafts were not encashed by the bank from which it were got issued.

Section 138 of the Act deals with dishonour of cheque for insufficiency of funds in the account. The draft is a bill of exchange and so also a cheque. The Hon''ble Supreme Court of India in 2001 (3) ACR 2774 (SC) held in para 11, quoted hereunder:-

"77. Even if it is possible to construe the draft either as a promissory note or as a bill of exchange, law has given the option to the holder to treat it as he chooses. This can be discerned from Section 17 of the Act which says:-

"17. Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either, and the instrument shall be thenceforward treated accordingly. "

This means once the holder, which in this case is the complainant Bank, has elected to treat the instrument as a cheque, it cannot but be treated as a cheque thereafter This is an irretrievable corollary of exercising such an election by the holder himself "

In view of enunciation of law laid down by the Hon''ble Apex Court, the holder of a draft can exercise his option u/s 17 of the Act to treat it either as a promissory note or a bill of exchange. It is further held that once the holder has elected to treat the instrument as a cheque, it cannot but be treated as a cheque thereafter and thus the non-payment of a draft attracts the penal provisions of Section 138 of the Act. As has been rightly argued by counsel for the respondent, a draft can be got prepared from a bank either by making payment in cash or by adjustment of an account being maintained in the said bank. In Black''s Law Dictionary 7th Edition of 1990, the definition of drawer has been given. As per the definition of "drawer" given on page 150, the drawer means "one who directs a person or entity usually a bank to pay a sum of money stated in an instrument for example a person who writes cheque, the maker of a note or draft".

Now the question arises if the judgment in P.J. Agro Tech Limited and Others'' case (supra) substantiates the plea of the petitioners that as the drafts have been got prepared from the account of Ramphal son of Prithi, the petitioners are exonerated of their liability u/s 138 of the Act and it is Ramphal aforesaid who can be prosecuted for non encashment of drafts. The answer, at the outset, appears to be in the negative. In order to attract provisions of Section 138 of the Act for dishonour of a cheque, the cheque which is dishonoured will have to be drawn by a person on an account maintained by him with the banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part of any debt or other liability. It is only such a cheque if dishonoured would attract the provisions of Section 138 of the Act against the drawer of the cheque. The draft, though can be treated as a cheque by its holder in exercise of his option by invoking Section 17 of the Act but it is not true that the draft is necessarily drawn by a person on an account maintained by him with the banker. As has been noticed earlier but for the sake of repetition, the draft can be got prepared by a person by making payment in cash or by adjustment of an account being maintained in the issuing bank. The petitioners have fairly conceded, in view of averments in paras 3 & 4 that the drafts in dispute came in the custody of the complainant when the petitioners and the vendors met each other. The allegation that the drafts had been snatched by the complainant is a question of fact to be decided by the trial Court. They have further admitted that it was the petitioners who requested their bank namely Punjab National Bank, Sector 14, Sonepat to stop payment of the drafts. In this view of the matter, I find myself unable to accept the submissions made by the petitioners that the petitioners cannot be prosecuted for committing offence u/s 138 of the Act or it is Ramphal son of Prithi who can be so held liable to face the criminal proceedings as the drafts have been prepared from the account maintained by him in the issuing bank.

The plea of the petitioners that pending adjudication of the civil litigation initiated by Sonu and others, the criminal proceedings are liable to be stayed, is misconceived and merits outright rejection. The judgment passed by the Civil Court is not binding upon the criminal Court. In this context, reference can be made to the judgment of the Hon''ble Supreme Court of India in Kishan Singh (D) through LRs. Vs. Gurpal Singh and Others, As the civil and criminal proceedings are to be decided independently, the contention of the petitioners that the criminal proceedings are liable to be stayed is untenable.

In view of what has been discussed hereinabove, finding no merit, the petitions are dismissed leaving the parties to bear their own costs. However, any observations made for disposal of the petitions do not reflect on the merits of allegations, which obviously is a matter of trial.