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IN THE SUPREME COURT OF INDIA    REPORTABLE             CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1941 OF 2013 (@ Special Leave Petition(Crl) No. 1327 of 2011)

LAFARGE AGGREGATES & CONCRETE  INDIA P.LD          Appellant  

                VERSUS

SUKARSH AZAD & ANR                 Respondents

WITH  CRIMINAL APPEAL NO. 1942 OF 2013

(@ Special Leave Petition(Crl) No. 1145 of 2012)

O R D E R

1. Leave granted.  

2. The appellant herein has challenged the order  

passed by the High Court whereby it has allowed the  

petition filed by the respondents herein, who are  

the  Directors  in  a  company  known  as  M/s.  Ria  

Constructions  Ltd.  and  was  pleased  to  quash  the  

complaint  lodged  by  the  appellant  as  also  all  

consequential  proceedings  pending  before  the  

Magistrate in regard to the complaint lodged by the  

appellant for an offence under Section 138 of the  

Negotiable Instruments Act, 1881.    

3. Admittedly, the accused no. 2 in the complaint  

had issued the cheque in favour of the appellant for  

a  sum  of  Rs.2,50,000/-,  which  was  dishonoured  as  

there  was  instruction  of  'stop  payment'  by  the  

Managing Director.  This led to the lodgment of a

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complaint at the instance of the petitioner in which  

proceedings started.   

4. At this stage, the respondents herein filed a  

petition under Section 482 of the Code of Criminal  

Procedure,  1973  (“Cr.P.C.”  for  short)  praying  for  

quashing  of  the  complaint  and  all  consequential  

proceeding  wherein  the  respondents  had  offered  to  

tender  the  cheque  amount  of  Rs.2,50,000/-  to  the  

appellant who had lodged the complaint alleging that  

the stop payment instructions by the respondents was  

illegal which made the offence triable in a summary  

procedure before the Magistrate.  As already stated,  

the respondents offered to pay the cheque amount of  

Rs.2,50,000/-  which  had  been  dishonoured  due  to  

instructions of stop payment.   

5. The High Court allowed the petition filed by  

the  respondents  herein  for  quashing  of  the  

proceeding but the said order was passed ex-parte.  

The appellant, therefore, filed an application for  

recall  of  the  said  order  but  the  High  Court  

dismissed the application for recall on the ground  

that the averments in the complaint did not meet the  

test laid down by this Court in the matter of N.K.  

Wahi  Vs.  Shekhar  Singh  and  others,  2007  (9)  SCC  

481.  It is this order which is under challenge in

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this special leave petition at the instance of the  

appellant-complainant.  

6. We have heard counsel for the appellant as  

also the respondents and taking an overall view of  

the matter, we are of the opinion that this appeal  

is not fit to be entertained against rejection of  

the application for recall of the order by which the  

proceedings against the respondents herein had been  

quashed by  the High  Court.   Nevertheless, we  are  

conscious of the fact that the appellant should not  

be deprived of the amount for which the respondents  

had stopped payment which led to the lodgment of the  

complaint.   We,  therefore,  suggested  to  the  

respondents that they should honour the cheque which  

had been issued by them by making the payment along  

with the interest, which would be in the nature of  

compensation for stop payment instructions at their  

instance and that amount by way of lump sum amount  

including interest and compensation would be around  

Rs.5 lakhs.

7. The respondents have agreed to pay the said  

amount but the appellant has refused to accept the  

payment  and  insisted  that  the  appeal  against  

rejection  of  the  recall  application  should  be  

allowed by this Court.  Counsel for the appellant

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submitted   that  merely  because  the  accused  has  

offered to make the payment at a later stage, the  

same  cannot  compel  the  complainant-appellant  to  

accept  it  and  the  complainant-appellant  would  be  

justified in pursuing the complaint which was lodged  

under  the  Negotiable  Instruments  Act,  1881.   In  

support of his submission, counsel for the Appellant  

also relied on a citation of  Rajneesh Aggarwal Vs.  

Amit J. Bhalla (2001) 1 SCC 631.   

8. However, we do not feel persuaded to accept  

this  submission  as  the  appellant  has  to  apprise  

himself that the primary object and reason of the  

Negotiable  Instruments  Act,  1881,  is  not  merely  

penal in nature but is to maintain the efficiency  

and value of a negotiable instrument by making the  

accused honour the negotiable instrument and paying  

the  amount  for  which  the  instrument  had  been  

executed.   

9. The object of bringing Sections 138 to 142 of  

the Negotiable Instruments Act on statute appears to  

be  to inculcate faith in the  efficacy  of banking  

operations and credibility in transacting business  

of negotiable instruments.  Despite several remedy,  

Section  138  of  the  Act  is  intended  to  prevent  

dishonesty on the part of the drawer of negotiable

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instrument to draw a cheque without sufficient funds  

in  his  account  maintained  by  him  in  a  bank  and  

induces the payee or holder in due course to act  

upon it.  Therefore, once a cheque is drawn by a  

person of an account maintained by him for payment  

of any amount or discharge of liability or debt or  

is  returned  by  a  bank  with  endorsement  like  (I)  

refer to drawer (ii) exceeds arrangements and (iii)  

instruction for stop payment and like other usual  

endorsement,  it  amounts  to  dishonour  within  the  

meaning of Section 138 of the Act.  Therefore, even  

after issuance of notice if the payee or holder does  

not make the payment within the stipulated period,  

the  statutory  presumption   would  be  of  dishonest  

intention exposing to criminal liability.  

10. But  in  the  instant  case,  the  negotiable  

instrument which admittedly is a cheque was issued  

by respondent no. 2 who is the managing director and  

the contesting respondents herein against whom the  

proceedings have been quashed are not the director  

of  the  company  in  a  statutory  capacity  and,  

therefore, the payments towards cheque in any case  

could  not  have  been  made  by  them  and  it  was  

respondent  no.  2  who  was  liable  to  honour  the  

cheque.  Nevertheless,  the  respondents  offered  to

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make the payment to the appellant/complainant, yet  

the  appellant  refused  to  accept  the  payment  and  

pursued the complaint which was quashed by the High  

Court  on  which  date  the  appellant  had  failed  to  

appear without sufficient cause.  Thereafter, if the  

High Court refused to recall that order, we do not  

consider  that  there  were  sufficient  grounds  

necessarily  to  recall  the  order  quashing  the  

complaint.  

11. However, in the interest of equity, justice  

and fairplay, we deem it appropriate to direct the  

respondents to make the payment to the appellant by  

issuing a demand draft in their favour for a sum of  

Rs.5  lakhs,  which  would be  treated  as  an overall  

amount including interest and compensation towards  

the cheque for which stop payment instructions had  

been issued.  If the same is not acceptable to the  

appellant,  it is their choice  but that would  not  

allow them to prosecute the respondents herein in  

pursuance to the complaint which they have lodged  

implicating these two respondents.

12. Besides this, the appellant also ought to take  

note of the fact that these appeals are not directed  

against the order by which the complaint had been  

quashed  insofar  as  these  two  respondents  are

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concerned but it is directed against the order of  

the High Court by which it refused to recall the  

order by which the complaint had been quashed. The  

appellant had failed to offer any sufficient cause  

for  their  non-appearance  on  the  date  when  the  

complaint  had  been  quashed  and  if  we  were  to  be  

driven  to  merely  taking  a  technical  view  of  the  

matter, these appeals could have been rejected even  

on  the  ground  of  non-sufficiency  of  material  

furnished by the appellant in the High Court against  

refusal  to  recall  the  order  in  which  case  the  

petitioner  cannot  realise  even  the  amount  towards  

the cheque issued in their favour. But considering  

the  fact that the  appellant  would be  deprived  of  

their due amount of Rs.2,50,000/-, we delved into  

the  factual  details  and  considered  just  and  

appropriate to direct the respondents to make the  

payment for the sake of substantial justice to the  

complainant-appellant  as  also  in  view  of  the  

analogous appeal, arising out of SLP(Crl)No. 1145/  

2012 directed against the order dated 10th September,  

2010 passed in Crl.Misc.No.20203 of 2010 whereby the  

High  Court  had allowed the  petition  filed by  the  

respondents herein under Section 482 of the Code of  

Criminal Procedure, 1973 and was pleased to quash

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the  proceedings  against  them.   It  was  in  this  

context that we thought it appropriate to direct the  

respondents to make the payment towards the cheque  

in which stop payment instructions had been issued.  

Besides this, the appeal is time barred by 359 days  

for which also we see no justification.  On the one  

hand, the appellant has sought to impress upon this  

Court  to  take  a  technical  view  of  the  matter  by  

urging that the respondents had not made the payment  

during the 15 days notice period, even though that  

had been offered at a later stage, but ignoring his  

own  conduct  he expects this  Court to  condone  the  

huge delay of 359 days in filing the appeal, which  

is fit to be rejected outright.    

13. Hence, appeal arising out SLP(Crl) No. 1327 of  

2011 is dismissed on merit and appeal arising out of  

SLP(Crl) No. 1145 of 2012 is dismissed on the ground  

of delay as also on merits subject to the direction  

of payment to the appellant by the respondents.

     ........................J.       (GYAN SUDHA MISRA)

     ........................J. (PINAKI CHANDRA GHOSE)

NEW DELHI SEPTEMBER 10, 2013