Khoda Raja vs. M/S Kurung Kumey Enterprise

Held

The Court held that the petitioner had issued two post-dated cheques, and the Deed of Undertaking contained stipulations regarding their issuance. The Court noted that the Deed of Undertaking stipulated that the amounts were to be paid by the petitioner to the respondent as and when pending bills were cleared by the concerned authorities. The Court also observed that the Deed of Undertaking indicated that the two cheques were issued for specific amounts on the fulfillment of certain conditions. However, the Court found no ground to quash the proceedings or the cognizance taken by the learned Judicial Magistrate First Class. The Court reasoned that the issues and grounds raised by the petitioner appeared to be matters for trial before the competent court. Therefore, the Court was not inclined to invoke its inherent powers to quash the proceedings. The criminal petition was rejected and dismissed.

Facts

The petitioner, Khoda Raja, proprietor of M/S A.R Enterprise, entered into an agreement with the respondent, M/S Kurung Kumey Enterprise, represented by Rido Tabiu, to execute infrastructure development work. The petitioner was to raise running bills and deposit GST on behalf of the respondent. The respondent allegedly failed to regularize the petitioner's GST account, leading to a dispute. Subsequently, a Deed of Undertaking and Affidavit of Declaration was executed on September 6, 2022, stipulating that the petitioner would pay 10% GST on a bill payment of Rs. 9,63,00,000, with specific amounts to be paid to the respondent upon clearance of pending bills. The petitioner issued two post-dated cheques for Rs. 93,00,000 and Rs. 1,54,00,000. The respondent presented one cheque for Rs. 1,54,00,000, which was dishonored due to insufficient funds, leading the respondent to file a complaint under Section 138 of the Negotiable Instruments Act, 1881.

Key Issues

1. Whether the post-dated cheques issued by the petitioner, as per the Deed of Undertaking dated September 6, 2022, were intended as security and contingent upon the fulfillment of specific conditions, thereby vitiating the offence under Section 138 of the Negotiable Instruments Act, 1881? Petitioner's arguments: The petitioner contended that the Deed of Undertaking was not retrospective and that the cheques were issued as security, payable only upon clearance of future bills and reflection of 2% GST by the concerned authorities. Since the GST account was blocked and no GST was reflected, the respondent ought not to have deposited the cheque. The petitioner argued that the complaint petition and the cognizance taken by the trial court were bad in law as no offence was disclosed. Respondent's arguments: The respondent argued that the petitioner admitted issuing the post-dated cheques, and one cheque being dishonored due to insufficient funds clearly disclosed an offence under Section 138 of the N.I. Act. The respondent contended that any dispute raised by the petitioner was a matter for trial before the competent court, and thus, the proceedings and cognizance taken by the Magistrate were in accordance with law and did not require interference.