Cheque Fraud and Legal Dispute: Supreme Court Transfers Proceedings for Fair Trial

The case of Shri Pareshbhai Amrutlal Patel & Ors. vs. The State of Gujarat & Anr. revolves around a cheque dispute that escalated into allegations of fraud and criminal misconduct. This legal battle involves the interplay between a complaint under the Negotiable Instruments Act (NI Act) and criminal charges under various sections of the Indian Penal Code (IPC). The Supreme Court’s decision to transfer the proceedings to ensure a fair and consistent judgment highlights the importance of procedural fairness in financial disputes.

The appellants had initially filed a complaint under Section 138 of the NI Act after a cheque for Rs. 4,50,000, issued by respondent No. 2, was dishonored due to the closure of the account. This led to the registration of a private criminal case in the Court of Judicial Magistrate, Surat, in 2006.

However, respondent No. 2 countered by filing a criminal case against the appellants under sections 420, 406, 419, 467, 468, 379, 465, 475, 120-B, and 114 of the IPC. This case alleged that the cheque in question, along with two others, was misplaced from the company’s office and was fraudulently used by the appellants. The case was forwarded to the police, leading to FIR No. 3 of 2007.

Arguments by the Petitioner

The appellants argued that the cheque was issued to them in exchange for an investment of Rs. 4,50,000, as the company failed to provide the promised shares. They contended that the criminal case filed by respondent No. 2 was a retaliatory measure aimed at countering their legal action under the NI Act.

Arguments by the Respondent

Respondent No. 2 claimed that the cheque was among documents that had gone missing from the company’s office. They alleged that the appellants had misused the cheque, leading to a criminal offense, and justified the registration of an FIR against them.

Supreme Court’s Key Observations

The Supreme Court, after examining both cases, noted:

• Both legal proceedings were centered on the same cheque.
• The appellants’ complaint under the NI Act was filed before the criminal case initiated by respondent No. 2.
• To avoid contradictory judgments, both cases should be tried together.

As a result, the Supreme Court did not quash the FIR but transferred the case to the Court of Judicial Magistrate, Surat, where the NI Act proceedings were already ongoing. The Court held:

“Since the issue in both the cases revolves around the same cheque, therefore, we find that instead of quashing the FIR No. 3 of 2007, the ends of justice would meet if proceedings arising out of FIR No. 3 of 2007 are transferred to the Court of Judicial Magistrate, Surat.”

Final Verdict

The Supreme Court directed that both cases be heard together in Surat to ensure a unified and just resolution. It set March 16, 2020, as the date for further proceedings.

This judgment underscores the judiciary’s role in balancing civil and criminal disputes in financial matters, ensuring that litigants do not misuse legal provisions to their advantage.

Petitioner Name: Shri Pareshbhai Amrutlal Patel & Ors..
Respondent Name: The State of Gujarat & Anr..
Judgment By: Justice D.Y. Chandrachud, Justice Hemant Gupta.
Place Of Incident: Mehsana, Gujarat.
Judgment Date: 28-02-2020.

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