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Reportable

IN THE SUPREME COURT OF INDIA  

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 2546 OF  2014 [Arising out of SLP (Crl.) No. 6033 of 2008

K.K. Singhal & Ors.                                …Appellants

:Versus:    Steel Strips Ltd.                                                          ...Respondent

J U D G M E N T

Pinaki Chandra Ghose, J.

1. Leave granted.

2. This appeal is directed against an order passed by the 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 14.6.2001 passed by  

the Judicial Magistrate Ist Class, Chandigarh .  

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3. The basis of the filing of the application relates to issuance  

of 33 cheques by the appellants during the course of its business  

aggregating  to  Rs.2,40,64,022.19 paise  in  consideration  of  the  

payment against steel billets and rolled 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 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 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  

from the appellants.   The appellants  agreed to  pay  the  entire  

consideration  to  the  respondent  and  in  turn  directed  the  said  

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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 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  

M/s.  Uma Shanker  Khandelwal  and Company for  an amount of  

Rs.31,22,524/- only and directed that the 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 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.  

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  

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offence  under  Section  420  of  the  Indian  Penal  Code.   The  

appellants filed an application for quashing of the said 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  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 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 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  

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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 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 on  

3.7.1998,  and  came  to  the  conclusion  that  net  worth  of  the  

company  has  been  eroded  and  has  become  a  sick  industrial  

company within the meaning of Section 3(1)(O) 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  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  

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intention of the appellants is to cheat the respondent.  He further  

pointed out that a complaint under Section 138 of 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,  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  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.  He further pointed out that the  

motive and conduct of the appellants was mala fide and hence he  

narrated that the 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  

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avoiding civil liability.  Each and every steps of the appellants is  

nothing  but  calculated  and  with  an  intent  to  deceive  the  

respondent/complainant.   Hence,  he  submitted  that  the  High  

Court correctly dismissed the petition filed under Section 482 of  

Cr.P.C.   

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/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.  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 conduct of the appellants.  

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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 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 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 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.  

…………………………………..J.                    (M.Y. Eqbal)

…………………………………..J.                                                            (Pinaki Chandra Ghose) New Delhi;             

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December 09, 2014.

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