K.K. SINGHAL & ORS.versusSTEEL STRIPS LTD.

•                  [2014] 11 S.C.R. 239


                   K.K. SINGHAL & ORS.                           A
                             v.
                    STEEL STRIPS LTD.
            (Criminal Appeal No. 2546 of 2014)
                   DECEMBER 09, 2014
                                                                 B
    [M.Y. EQBAL AND PINAKI CHANDRA GHOSE, JJ.]

     Code of Criminal Procedure, 1973: s.482 - Dishonour
of cheque - Criminal proceedings - Settlement between
parties to the effect that complainant would withdraw criminal   c
proceedings and appellant would make the payment -
Allegation of cheating against appellant on the ground that
appellant did not fulfill the terms of settlement - Summons -
Application for quashing of summons - Dismissed by High
Court - Challenged by appellant on the ground that               D
Chandigarh Court had no territorial jurisdiction since the
settlement between the parties was entered at Faridabad -
Held: The agreement was entered into at Chandigarh to
withdraw the criminal proceedings, the complainant having its
head office at Chandigarh and further nowhere the appellants     E
have made out a case that all the cheques were payable at
Faridabad - Therefore, question of jurisdiction is of no
consequence, which would be decided by the trial court -
Interference with the order of High Court not called for.

     Dismissing the appeal, the Court                            F

      HELD: It was contended for the appellant that
Chandigarh Court had no territorial jurisdiction since the
settlement between the parties was entered at Faridabad
and the appellant having place of business at Faridabad,         G
it is the court at Faridabad which would have jurisdiction.
The contention that the Court at Chandigarh had no
jurisdiction cannot be accepted. The agreement was
entered into at Chandigarh to withdraw the criminal
                             239                                 H
A
    240      SUPREME COURT REPORTS              [2014] 11 S.C.R.


  proceedings, the complainant having its head office at
                                                                   •
  Chandigarh and further nowhere the appellants have
  made out a case that all the cheques were payable at
  Faridabad. Therefore, the question of jurisdiction is of no
  consequence, which would be decided by the trial court.
B The second point, that the dispute is of civil nature,
  cannot be allowed to stand at this stage after taking into
  account the conduct of the appellants. [Paras 8 and 9]
  [242-C-D; 244-B-D]
      CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
C No. 2546 of 2014.
        From the Judgment & Order dated 27.05.2008 of the High
    Court of Punjab & Haryana at Chandigarh in Crl. Misc. No.
    35963-M/2001.
D        Dr. Rajeev Dhawan, Siddharth Mittal, Abhinav Mukerji for
    the Appellants.
        Nidhesh Gupta, Tarun Gupta, S.K. Verma for the
    Respondent.
E         The Judgment of the Court was delivered by
          PINAKI CHANDRA GHOSE, J. 1. Leave granted.
       2. This appeal is directed against an order passed by the
F High Court of Punjab and Haryana at Chandigarh in Criminal
  Misc. No. 35963-M of 2001, whereby the High Court dismissed
  the application filed by the appellants under Section 482 of the
  Code of Criminal Procedure for quashing the complaint filed
  under Sections 417, 418 and 420 read with Section 120-B of
  the Indian Penal Code and the summoning order dated
G 14.6.2001 passed by the Judicial Magistrate 1st Class,
  Cha~~a~.                                               ·
       3. The basis of the filing of the application relates to
  issuance of 33 cheques by the appellants during the course of
H its business aggregating to Rs.2,40,64,022.19 paise in
•           K.K. SINGHAL v. STEEL STRIPS LTD.
                [PINAKI CHANDRA GHOSE, J.]
                                                                241


    consideration of the payment against steel billets and rolled       A
    products supplied to them by the complainant/respondent. On
    presentation, all the cheques were dishonoured on different
    dates culminating in lodging of 26 complaints against the
    appellants for the commission of offence punishable under
    Section 138 of the Negotiable Instruments Act. Upon notice, the     B
    appellants filed an application under Section 482 of the Code
    of Criminal Procedure before the High Court for quashing the
    said complaints.
          4. The appellants on 22.7.1998 requested the complainant
    that he had material worth Rs. 1 crore for disposal in the shape    C
    of forging of steel flanges which he would dispose of and would
    make the payment of the amount to the complainant and
    requested the complainant to find out a customer. At the request
    of the complainant, M/s. Uma Shanker Khandelwal and
    Company Limited, New Delhi agreed to purchase the material          D
    from the appellants. The appellants agreed to pay the entire
    consideration to the respondent and in turn directed the said
    company to pay the consideration directly to the complainant
     against all the deliveries. The appellants further promised to
     clear the balance outstanding by arranging funds from its          E
     source. Relying upon such allurement and inducement of the
     appellants, the respondent agreed to withdraw all the complaints
     except one. It appears as per promise, the appellants supplied
     flanges to said Mis. Uma Shanker Khandelwal and Company
     for an amount of Rs.31,22,524/- only and directed that the         F
     amount be paid directly to the respondent.
         5. The appellants thereafter induced the respondent to
    withdraw the 25 complaints filed under Section 138 of the
    Negotiable Instruments Act, on the plea that the appellants
    would pay the entire consideration to the respondent. The G
    appellants also withdrew the said application filed under
    Section 482 of the Cr.P.C. from the High Court. However, after
    withdrawal of all the complaints by the respondent, the
    appellants neither took any step to pay the amount nor kept his
    commitment.                                                     .H
A
    242      SUPREME COURT REPORTS               [2014] 11 S. C.R.


       6. In these circumstances, after recording the preliminary
                                                                       •
  evidence, the trial court by an order dated 12.6.2001 issued
  summons against the appellants as accused for commission
  of offence under Section 420 of the Indian Penal Code. The
  appellants filed an application for quashing of the said
B summons under Section 482 of the Cr.P.C.

        7. Dr. Rajeev Dhawan, learned senior counsel appearing
  in support of this appeal first contended that the Judicial
  Magistrate, Chandigarh had no territorial jurisdiction since the
C agreement between the parties was entered into on 24.7.1998
  at Faridabad. He further contended that the appellants having
  its place of business at Faridabad, it is the Court at Faridabad,
  which would have jurisdiction. His basic structure of the
  submission was that the dispute is nothing but a civil dispute
0 and   thereby jurisdiction lies at Faridabad. Secondly, he
  contended that since the dispute is of civil nature, the offence
  of cheating cannot be attracted in the facts of this case.
  According to him, there is no intention to deceive, therefore,
  the essential ingredients of the offence of cheating was not
E present in this case. Thirdly, he submitted that it is based on
  breach of contract between the parties on the ground that the
  agreement was not performed. Therefore, it attracts the breach
  of contract and nothing else. Lastly, he contended that the
  appellant No.3 is an old man of 85 years, being the father of
F appellant No.1 and further he had no involvement in the
  functioning of the company, which would be evident from his
  non-appearance at the time of agreement entered into between
  the parties on 24.7.1998.

       8. On the contrary, Mr. Nidhesh Gupta, learned senior
G counsel appearing for the complainant/respondent drew our
  attention to the facts of the case and pointed out that right from
  the beginning, the appellants had the intention to induce the
  respondent to enter into a compromise despite the fact that they
  approached the Board of Directors, who passed the resolution
H on 3.7.1998, and came to the conclusion that net worth of the
                                                                       •'--
  •         K.K. SINGHAL v. STEEL STRIPS LTD.
                [PINAKI CHANDRA GHOSE, J.]
    company has been eroded and has become a sick industrial A
                                                              243



    company within the meaning of Section 3(1 )(0) of Sick Industrial
    Companies (Special Provisions) Act, 1985 and passed a
    resolution only to by-pass their liability. Furthermore, the
    company unit was declared as sick on the one hand; on the
    other hand, they entered into a compromise dated 24.7.1993 B
    and assured the complainant/respondent that they had the stock
    worth Rs. 1 crore. He contended that the said fact would attract
    Section 415 of the Indian Penal Code, 1860 which would show
    that the intention of the appellants is to cheat the respondent.
    He further pointed out that a complaint under Section 138 of C
    the Negotiable Instruments Act against the company
    proceedings cannot be stayed since Section 22 or Section 22A
    of the Sick Industrial Companies (Special Provisions) Act has
    nothing to do with the criminal prosecution. He further pointed
    out that it was not the case of the appellants that the cheques, D
    which were bounced, were payable at Faridabad only. Further,
    all the complaints were filed by the complainant under Section
    138 of the Negotiable Instruments Act at Chandigarh, for the
    reason that the head office of the company is at Chandigarh
    and the compromise was also arrived at Chandigarh. On the E
    basis of the compromise, the complaints under Section 138 of
    the Negotiable Instruments Act were withdrawn from the Court
    at Chandigarh. Therefore, according to him, the question of.
    jurisdiction as raised by the appellants, is of no consequence
    and the same will be decided by the trial court during the trial. F
    He further pointed qut that the motive and conduct of the
    appellants was mala fide and hence he narrated that the
-t> appellants tried to deceive the complainants in a planned way,
  ' to get rid of the criminal liability and decided to move to BIFR
    under Sick Industrial Companies Act thereby avoiding civil G
    liability. Each and every steps of the appellants is nothing but
    calculated and wit~ an intent to deceive the respondent/
    complainant. Hence, ne submitted that the High Court correctly
    dismissed the petition filed under Section 482 of Cr.P.C.
                                                                     H
    244       SUPREME COURT REPORTS             [2014] 11 S.C.-


A       9. Having heard the learned counsel for the parties and
  after weighing the material placed before us, we cannot accept
  the contention of Dr. Dhawan that the Court at Chandigarh had
  no jurisdiction. It appears that on the question of territorial
  jurisdiction, the submissions made on behalf of the respondent/
B complainant have substance. In our opinion, the agreement was
  entered into at Chandigarh to withdraw the criminal
  proceedings, the complainant having its head office at
  Chandigarh and further nowhere the appellants have made out
  a case that all the cheques were payable at Faridabad.
c Therefore, we do not have any hesitation to hold that the
  question of jurisdiction is of no consequence, which would be
  decided by the trial court. The second point, which was urged
  by Dr. Dhawan that the dispute is of civil nature, cannot be
  allowed to stand at this stage after taking into account the
D conduct of the appellants.

       10. We do not find any reason to accept the contention of
  Dr. Dhawan on the ground that the intention of the appellants
  is absolutely clear from their actions, which they followed to
E allure the complainant to withdraw the 25 complaints filed by
  them under Section 138 of the Negotiable Instruments Act. We
  do not wish to express our views further, but we are not in a
  position to accept such contention of Dr. Dhawan and further
  the question of non-performance of the contract tentamounts to
  breach of contract as sought to be stated by Dr. Dhawan, also
F cannot be accepted in the teeth of the facts placed before us
  at this stage.

       11. Accordingly, we do not find any reason to interfere with
  the orders passed by the High Court. We find no merits in the
G appeal. The appeal is dismissed. The Trial Court shall decide
  the matter in question without being influenced, in any manner
  whatsoever, by the observations made by us.

    Devika Gujral                                  Appeal dismissed.

H