JUDGMENT

SHEKHER DHAWAN, J. --

CRM-A-538-MA-2016

CRM-A-663-MA-2016

Heard.

Leave to appeal granted.

Registry is directed to assign number to the main appeals.

Main Appeals

Present appeals are directed against the order/judgment date dated 2.1.2016 passed by learned Sub Divisional Judicial Magistrate, Kharar whereby, Inderjit Kaur, respondent herein was acquitted of charge under Section 138 of Negotiable Instruments Act, 1881 (for short, “the Act”). As the common questions of law and facts are involved in both these appeals, these are being taken up together and disposed of by this common order.

2. For facility of reference facts are being taken from CRM-A-536-MA-2016, Sucha Singh Vs. Inderjit Kaur, that khair trees standing on the land were sold to the respondent on 17.10.2010 for consideration of Rs.1.00 Crores. For that purpose, the Parch Forest Development and Management Society (Regd.) (hereinafter referred to as “the Society”) and one Gurdial Singh (since deceased) who was also member of the Society, had drawn cheque No. 687915 dated 10.06.2003 of Rs.21,00,000/- in order to discharge the partial liability and the said cheque was returned by the banker with the remarks “Insufficient funds”. The complainant got issued legal notice which was duly responded by the accused-person without any relevant plea and as such, proceedings under Section 138 of the Act were initiated against her.

3. Learned Magistrate passed the order for summoning of accused-person and the accused put in appearance and after trial, learned Sub Divisional Judicial Magistrate, Kharar dismissed the complaint and the accused-person were acquitted of the charge and her bail bonds were discharged vide impugned order dated 2.1.2016.

4. The main grounds for acquittal of the accused person are that the matter was compounded as provided under Section 147 of the Act and the complainant failed to bring any material on the record that any appeal was filed or any objections were filed against the arbitral award dated 19.11.2004 before the Court of competent jurisdiction and as such the said award had attained finality. The other grounds taken for acquittal of the accused were that the cheques were issued for the purchase of khair trees standing at the shamlat masatarka land. The same were to be purchased for a sum of Rs.1.00 Crore and out of that Rs.62,66,500/- was to be paid in three equal installments by post dated cheques dated 10.05.2003, 10.06.2003 and 10.07.2003 as detailed in the agreement, Ex. D9. In the said agreement, it was also mentioned that in case of any dispute between the parties, the matter in controversy was to be resolved by alternate dispute resolution (ADR) system precisely by way of arbitration proceedings in accordance with the Code of Arbitral Practice and Procedure 2003. That way, it was incumbent upon the complainant to prove that the accused has lifted the entire produce i.e., 14810 Khair trees as referred to in clause 11 of the agreement, Ex. D9 and the accused had failed to make payment of Rs.62,66,500/-. The said agreement has been withheld by the complainant for the reasons best known to him.

5. Learned counsel for the petitioners has contended that the issuance of cheque against existing liability has been duly admitted by the respondent and learned trial Judge has completely ignored to consider this aspect that in case, the issuance of cheque is admitted by the other side, Section 139 of the Act shall come into picture and the onus would lawfully shift upon the other side to discharge that the cheque was issued for existing liability but that has not been done. To support his arguments, reliance has been placed upon the judgments from Hon`ble Apex Court in Yogendra Pratap Singh Vs. Savitri Pandey and another, 2014 (4) R.C.R. (Criminal) 321; Don Ayengia Vs. State of Assam an Anr., 2016 (1) R.C.R. (Civil) 991 and Kishan Rao Vs. Shankargouda, 2018 (3) R.C.R. (Criminal) 746.

6. More so, even if arbitration proceedings have taken place, that cannot be a bar to the continuation of proceedings under Section 138 of the Act. On this point, reliance was placed upon the decision of Hon`ble Apex Court in M/s Sri Krishna Agencies Vs. State of A.P. & Anr. 2009 (1) RCR (Civil) 6.

7. Learned counsel for the respondent contended that learned trial Judge has rightly considered all these aspects and dismissed the complaint because the cheque was not issued for discharge of legal liability and the same was issued as a security cheque which could not be encashed till the entire khair trees were actually lifted as per the agreement, Ex. D9 and the matter had already been settled in Arbitral proceedings.

8. Having considered the submissions made by learned counsel for the parties in the light of above facts and perusal of record of this case, this Court is of the considered view that there is no dispute on the point that cheques were actually issued by respondent herein. In fact, the cheques were issued as per the agreement, Ex. D9 itself which lays down all the terms and conditions regarding liability of the parties and time was also mentioned when the liability was to arise. The execution of agreement, Ex. D9 is not disputed by either of the parties, though, the same was not produced before the Court by the appellant herein. The said agreement, Ex. D9 was executed on 5.5.2003 between the Parchh Forest Development & Management Society (Regd.) through its President (first party) and Smt. Inderjit Kaur wife of Shri A.S. Kang (second party). The relevant clauses of the agreement are being extracted here below:-

“3.   That the First Party is the absolute owner of the total Jumla Mushtarka Malkan Land of village Parchh measuring about 2026 acres situated in Hadbast No. 349.

4.    That Khair Trees standing in the said land (only eligible for felling) were sold by the First Party to the Second Party on 17.10.2000.

5.    That on behalf of the First Party, Second Party got prepared all the documents from Revenue Deptt, obtained the permission for felling 14810 Khair Trees (as per marking list) from the Punjab Govt.

6.    That Second Party made all the expenses on marking of trees and in addition to the marking fee, deposited a sum of Rs.16,33,500/- by way of FDR favouring DFO Ropar as security amount for obtaining Permit.

7.    As a result of these efforts, the First Party received the Felling Permit and hands over to the same to the Second Party for its execution as per conditions laid therein.

8.    The Second Party agrees to pay a total sum of Rs.1,00,00,000/- (One Crore Only) for (14810) trees of Khair wood.

9.    Out of this sum, the Second Party has already paid a sum of Rs.16,33,500/- by way of security deposit in the name of the First Party and another sum of Rs.21.00 Lac has been paid on 31.3.2003, and the First Party acknowledges the receipt of same.

10.   The security deposit shall be credited to the account of the First Party after execution of the work. The Second Party shall get the security amount released from DFO, Ropar and shall also compensate the First Party if any deductions are made by DFO due to any lapses in performance of the felling permit on part of the Second Party.

11.   The balance amount of Rs.62,66,500/- shall be paid to the First Party in three equated instalments by post-dated cheques (dated 10.5.2003, 10.6.2003 and 10.7.2003). If there is any delay in payment made by the Second Party to the First Party, the First Party shall be entitled to secure the payment with interest i.e. @ 18% p.a. from the Second Party for the number of days in default.”

9. Perusal of above clauses of agreement, Ex. D9 makes it amply clear that the total payment of Rs.1,00,00,000/- was to be made against 14810 Khair trees and against that a sum of Rs.16,33,500/- was as a security deposit in the name of the First Party and another sum of Rs.21,00,000/- was paid on 31.03.2003. The security deposit was to be credited to the account of the First Party only after the execution of the work. The balance amount of Rs.62,66,500/- was to be paid to the First Party in three equated installments by post-dated cheques.

10. As per clause 17 of the agreement, Ex. D9 in case of any dispute, the matter was to be referred to the A.D.R. Arbitration in accordance with the Code of Arbitral Practice and Procedure 2003. As per the award of the Artibtrator, as the liability was against delivery of 14810 khair trees, there was no legal liability of the accused in respect of Cheque No. 687915, which was a security cheque. More so, the matter has been settled before the permanent Arbitral Tribunal of India, New Delhi vide award dated 19.11.2004 (Ex. D12) under Section 30 of the Arbitration and Conciliation Act, 1996 (for short, “1996 Act”).

11. In the light of the above detailed facts and terms and conditions as laid down in the agreement , Ex. D9, and there being no such case by the appellant that any objections were filed against the arbitral award (Ex. D12) or any appeal was preferred against the said award, the award (Ex. D12) under Section 30 of the 1996 Act has attained finality and as such, there was no legal liability as the matter had already been compounded. More so, the payment of Rs. 62,66,500/- was to be made in three equated installments by post-dated cheques only against lifting of entire khair trees wood and there is nothing on record that the said khair trees were actually lifted. Considering all these facts, learned trial Judge has rightly dismissed the complaint.

12. This Court has also considered the facts in the light of judgments referred to and relied upon by learned counsel for the appellant. As regards to judgment of Hon`ble Apex Court in M/s Sri Krishna Agencies's case (supra) and Yogendra Pratap Singh, Don Ayengia and Kishan Rao's cases (supra), there is no dispute on the law point that there cannot be any bar to proceed under Section 138 of the Act if the arbitration proceedings are going on, but if the arbitration proceedings have been finalized and award has been pronounced, the Court deciding the matter under Section 138 of the Act would certainly look into the aspect whether there exists some legal liability for issuance of cheque or not and that fact has happened in this case.

13. Resultantly, there is no merit in present appeals and the same stand dismissed in the above terms.

Appeals dismissed.

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