Holding

The Supreme Court held that the High Court may quash the criminal proceedings under Sections 406/420 IPC as an abuse of process and may exercise its jurisdiction under Section 482 CrPC even when a discharge application is pending.

Summary

The appellants, G. Sagar Suri and Shama Suri, were accused of obtaining a loan of Rs. 50 lakh from a finance company and issuing cheques that later bounced. A complaint under Section 138 of the Negotiable Instruments Act was filed, and concurrently a First Information Report under Sections 406 and 420 of the IPC was lodged against them. The appellants applied for discharge in the criminal case and also moved the High Court under Section 482 of the Criminal Procedure Code to quash the IPC proceedings; the High Court dismissed the petition. On appeal, the Supreme Court held that the High Court may exercise its inherent power under Section 482 even when a discharge application is pending, and that proceeding with the IPC charges would be an abuse of process because the matter was essentially a civil/commercial dispute already covered by the NI Act. Consequently, the criminal proceedings under Sections 406/420 IPC were quashed.

Issues considered

The High Court's power under Section 482 CrPC to quash criminal proceedings when a related civil/commercial case is pending.
Whether the filing of an application for discharge bars the High Court from exercising jurisdiction under Section 482.
Whether the criminal prosecution under Sections 406 and 420 IPC constitutes an abuse of process in view of the pending complaint under Section 138 NI Act.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 405, s. 406, s. 415, s. 420
Negotiable Instruments Act, 1881s. 138

Subjects

Section 482quash criminal proceedingsabuse of processNegotiable Instruments ActIPC 406IPC 420High Court jurisdictiondischarge application

Judgment

G. SAGAR SURI AND. ANR A
v.
STATE OF C.P. AND ORS.

JANUARY, 28, 2000

[S. SACJHIR AHMAD AND D. P. WADHWA, JJ.J
B

Criminal Procedure Code, 1973-Section 482-Jurisdiction of High
Court to quash criminal proceedin~-Criminal proceeding under Section
406/420 J.P. C. instituted while complaint under Section 138 Negotiable ln-
stmments Act pending-Application for discharge moved- High Court dis- C
missed petition to quash proceedings--On appeal Held, power of High Court
to be exercised with great care to see that civil proceedings not given cloak of
criminal offence-Criminal proceedings are no short cut to other proceedings
in law.

Petition filed during pendency of application for discharge-Held, High
D
Court can exercise jurisdiction to quash the proceedings.

Appellants along with five others were alleged to have approached
the Complainant Finance Company and obtained a loan for an
automobile company. The cheques issued in repayment of the said loan E
were dishonoured and proceedings under Section 138, Negotiable Instru-
ments Act were instituted against the Automobile Company and its
directors including the appellants. Meanwhile the complainant lodged
F.l.R. Criminal proceedings under Sections 406/420 l.P.C. were also
instituted against the directors including the appellants. F
The appellants applied for their discharge in the criminal proceed·
ings instituted under Sections 406/420 I.P .C. They also moved the High
Court under Section 482 Cr. P.C. for quashing of those proceedings. The
High Court dismissed the petition. Hence this appeal.
G
Allowing the appeal, this Court

HELD : 1.1. Jurisdiction under Section 482 Cr. P.C. has to be
exercised with great care. High Court is not to examine the matter
superficially, it is to be seen if a matter, which is essentially of civil H
417
418 SUPREME COURT REPORTS (2000J 1 S.C.R

A nature, has been given a cloalj: of criminal offence. Criminal proceedings
are not a short cut to other remedies available in law. Certain principles
have been laid down on the basis of which High Court is to exercise ib
jurisdiction under this section to prevent abuse of the process of any
Court or otherwise to secure the ends of justice. [424-G-H]
B 1.2. High Court can exercise its jurisdiction under Section 482 Cr.
P.C. even if an application for discharge has been filed. [424-D]

Papsi Foods ltd. & Anr. v. Special Judicial Magistrate & Ors., [1998]
5 SCC 749; Ashok Chaturvedr & Ors. v. Shitul H. Chanchani & Anr.,
C [1998] 7 SCC 698; State of Kamataka v. L. Muniswamy & Ors., A.I.R.
(1977) SC 1489 = (1977] 3 SCR 113; Kurukshetra University & Anr. v.
State of Haryana, AIR [1977] SCC 2229 =
[1977] 4 SCC 451 and
Chandrapal Singh v. Maharaj Singh, AIR (1982) SC 1238, relied on.

D 2. There is no occasion for the complainant to prosecute the appel-
lants under Sections 406/420 IPC and doing so is clearly an abuse of the

!. 482. Saving of inherent powers of High Cuun • Nothing in this Code shall be deemed to
!imit or affect the inherent powers of the High Court to make such ordern a\ may be
nece~sary to give effect to any order under this Code, or to prevent abuse of the process
of any Court or otherwise to secure the ends of justice.
E 2. 405. Criminal breuch of trust - Whoever, ~eing in •ny manner entrusted with property,
or with any dominion <•Ver property, dishone.'itly mi:.,ppropriates or conVert. to hi• own
use that property, or dishonestly uses or dispo'e.' ,,f that property in violation of any
direction of Jaw pre~cribing the mode in which ~uch trust is to he discharged, or of any
legal conll'act, e<P"'"' or implied, which he has m"de touching the discharge of such
trust, or wilfully suffer:> any other person so to do. commits "crimin3.l breach of trust".
406. Punishment for criminal breach of trusL - Whoe>"r commits criminal breach of trust
F shall be punished with imprisonment of e>ther description for a term which may extend
to three years, or with fine, or with both.
415. Cheating. - Whoe,<r, by deceiving any person, frnudulently or dishonestly induces
the person :so deceived to dcli\ter .:iny property to any per.son, or to con!>ent that any
person <hall reta·:n any property, or intentionally induce> the person so deceived to do
or omit to do anything which he would ncot do or omit if he were not so deceived, and
G which act or omission causes or is likely to cause dam'1ge or harm to that person in
body mind, reputation or property i~ said to "cheat~.
1

420. Cheating and dishonestly inducing delivery ofpropeny. - Whoever cheats and therehy
dishonestly induces the pel'!ion deceived to deliver any property to any person, or to
make, alter or destroy the whole or any part of a -~1uable security, or anything which
is signed or seait:d, and which is capable of being converted into a valu~ble security,
shall be punished with impri,onment of either description for a tem1 which may extend
H to seven years, and shall also be liahle to fine.
G.S. SURI,,. STATE ;o.P. WADHWA,J.j 419

process of law. Criminal complaint under Section 138 of the ~egotiable A
Instruments Act is already pending against the appellants and other ac-
cused and they would suffer the consequences if offence is proved. The
prosecution of the appellants under Sections 406/420 l.P.C. is quashed.
[427-G-H)
CRIMINAL APPELLATE JCRISDICTION: Criminal Appeal No. B
91 of 2000.

From the Judgment and Order dated 6.5.99 of the Allahabad High
Court in Crl. M.A. No. 1312 of 1999.

Rakesh Dwivedi, Rao Ranjit and R.S. Hedge for the Appdlants. C
V.R. Lalit, Arjun Bhandari, Arun K. Sinha, T.N. Singh, A.S. Pundir,
j
Rakesh Singh arid B.K. Singh for the Respondents.

The Judgment of the Court was delivered by
D
D.P. WADHWA, J. Leave granted.

This appeal is directed against the judgment dated May 6, 1999 of
Allahabad High Court dismissing the application of the appdlants filed
under Section 4821 of the Code of Criminal Procedure (for short, the E
'Code'). By this application the appellants had sought quashing of the
criminal proceedings pending against them under Section 406/4202 of the
Indian Penal Code (for short the 'IPC') in the Court of Chief Judicial
Magistrate, Ghaziabad and arising out of Case No. 674 of 1997 of Police
Station Noida, District Gautam Budh Nagar. F
The First Information &eport (FIR No. 517 dated August 17, 1997)
was filed against seven persons including the two appellants by Mr. P .K.
Sen Gupta (respondent No. 2), General Manager, M/s. Phoenix Interna-
tional Finance Ltd., NOIDA (for short, the 'Finance Company'). He al-
leged that Ashwani Suri, G. Sagar Suri (the first appellant) and Sukhvinder G
Singh contacted his company on telephone in the first week of June, 1996
with intention to cheat and commit fraud on him. They had stated that they
along with Shalini Suri, Shama Suri (the second appellant), Charanjit Singh
and M.L. Kampani were the Directors of M/s. Ganga Automobiles Ltd.
and that they would come later for a meeting personally. They had also H
420 SUPRFME COURT REPORTS (20COl l S.C.R.
A told that their company Ganga k1tomobiles Ltd. was doing good business
and that if complainant's wmpany could give a loan of Rs. 50,00,000
(Rupees fifty lakh only) to M/s. Ganga Automobiles Ltd. the loan would
be repaid with interest by September 13, 1996. The complainant then
alleged that the ;'above said accused persons turn by turn continued visiting
B the applicant's office" for making reqm:st for gnmt of loan. Relying on their
persuasion but without realising their malafide and fraudulent intentions,
the Finance Company gave Rs. 50,00,000 by means of cheque No. 375453
dated June 19, 1996 drawn on the Punjab & Sind Bank, New Delhi.
Complainant then said ''the accused persons issm:d two cheqm:s to the
applicant company for repayment of above said money bearing No. 08-4049
C and 84450 both dated 13.9.96 for rupees fifty lakhs towards payment of
principal sum and Rs. 86625 towards payment of interest respectively and
drawn on Corporation Bank". When these cheques were pn:sented for
payment, these were returned dishonoured with the remarks that sufficient ·•
funds were not available. The Finance Company again contacted the
D accused persons many times on telephone as well as by writing letters and
asked them to make payment but they failed to do so and even started
avoiding the complainant. However, the accused persons again came to the
office of the Finance Company on January 2, 1997 and asked the Finance
Company six months further time for the payment of the amount as they
E said "a mishappening took place with them as a result of which they are
suffering financial constraint". The complainant said he believed their
wordings and the accused again issued two cheques on July 2, 1997 for Rs.
50,86,625 towards principal and Rs. 9,40,G08 towards interest. This time
these cheques were drawn on the Grindleys Bank, Connaught Place, New
Delhi and again when presented for payment were returned dishonoured
F with the endorsement "insufficient funds". Complainant thus said in his
report that the aforesaid acts of the accused persons were fraudulent and
committed with the common object to cht:at the Finance Company. They
did not want to refund the money in any way. He, therefore, requested for
legal action against the accused persons. On the basis of the First informa-
G tion Report, the Police registered the case against seven persons, namely,
Ashwani Suri, U. Sagar Suri (the frrst Appellant), Sukhvinder Singh, Shalini
Suri, Shama Suri (the second appellant), Charanjit Singh and M.L. Kam-
pani. After the investigation, the Police submitted charge sheet dated June
4, 1998 in the court of the Chief Judicial Magistrate against four persons,
H namely, U. Sagar Suri (the first petitioner) Shama Suri (the second
G.S. SIJRI v. STATE [D.P. WADHWA, J] 421

petitioner), Ashwani Suri and Shalini Suri describing all of them as Direc- A
tors of M/s. Ganga :,:itumubiles Ltd. It l'id' stdt..d in the charge sheet that
investigation was still pending against charanjit Singh, M.L. Kampani and
Mukender Singh.

During the course of investigation, statement of the complainant
was again recorded on ffi'1rch 25, 1998 by the Investigating Officer. Now
B
his version was difkrent. He said that in the first week of June 1996
Ashwani Kumar Suri and Mukendcr Singh contacted his company with
the intention to chi.:at and play fraud. They told him that they and
Shalini Suri, Shama Suri, Charanjit Singh and M.L. Kampani were the
Directors and arranged conversation with them over the telephone. c
Ashwani Suri and Mukender Singh then said that they would come later.
Complainant said they stated that they would refund the entire amount
with interest by September 13, 1996 and thereafti.:r they kept on visiting
the Finance Company turn by turn and kept on ri.:questing for the loan
for their company M/s. Ganga Automobile Ltd. which they said was
running a good business and that their company would earn more profit D
if a loan of Rs. 50,00,000 was given to their company. Relying on these
fraudulent promises and without knowing their malafide intention, an
amount of Rs. 50,00,000 by means of cheque was given to them after
completing necessary formalities. For repayment of the loan, the ac-
cused issued two cheques towards principal and inten:st. These cheques
when presented for payment were returned dishonoured. The Finance E
Company then contacted the accused persons of the Ganga
Automobiles Ltd., telephoned them and also wrote letters asking to
refund the money. The accru,ed, however, failed to refund the money
and started "hiding" themselves and avoided any contact. Again the
accused came to the office of the Finance Company on January 2, 1997 F
and wanted six months further time for them to make repayment.
Complainant then said that the money of the Finance Company had
been blocked and since there were financial constraints he was again
compellt:d to believe the accused who gave two cheques dated July 2,
1997. These cheques were also returned dishonoured when presented
for payment. The complainant then stated that the accused persons had G
committed this fraudulent act with common consent with the intent to
cheat and grab the money of the Finance Company. Again he confirmed
the contents of the First information Report lodged by him.

Before lodging of the First Information Report for offences under H
422 S~PREME COllRT REPORTS l2COO] l S.C.R.
A Section 406/420 IPC, the complainant, P.K. Sengupta, hacl already in-
stituted a complaint under Section 1383 of the Negotiable Instruments Act
in the Court of the Additional Chief Judicial Magistrate, Ghaziabad. He
had named eight accused. namely, (1) Mis. Ganga Automobiles Ltd., (2)
B Ashwani Suri, \'1anaging Director, (3) Shalini Suri, w/o Ashwani Suri, (4)
G. Sagar Suri, Director, (5) Shama Suri w/o G. Sagar Suri, (6) Muk.:n~.;r
Singh, (7) Charanjit Singh and (8) M.L. Kampani, the accused 4 tu 8 also
being shown as Directors of Mis. Ganga Automobiles Ltd. In this com-
C plaint the cast set out is that accused 2 to 8 came to the office of the
Finance Company in the month of June 1996 and wanted loan for M/s.
Ganga Automobiles Ltd. for Rs. 50,00,000 which they promised to repay
with interest. On their representation' the Finance Company gave them a
D loan of Rs. 50,00,000 by means of a cheque after the accused executed
promissory note and agreement to n:pay the principal amount with interest
by September 13, 1996. By getting thh loan M/s. Ganga Automobiles Ltd.
started earning profits after investing the amount in its business. The
E accused issued two cheques for repayment of the principal amount and the
interest. Both these cheques when presented for payment were returned
dishonoured. After the return of the cheques unpaid, the Finance Com-
pany contacted the accused by telephone and also sent letters and wanted
F repaymen: of its money but the accused failed to pay the same and in fact

3. 138. Dishonour of cheque for insulficienc>:, ecc, of funds in the account - Where any
cheque drawn by a pen;on on an account maintained by him with a banker for payment
of any amount of money to another person from out of that account for the disharge,
G io whole or in part, of any debt or other liilbility, is returned by the bank unpaid either
because of the amount of mon<!y standing to the credit of that account is insufficient
to honour the cheque or that it exceeds the amount arranged to be paid from that
account by an agreement made with that bank, such pen;on shall be deemed to have
committed an offence and shall without prejudice to any other provision of thus Act,
H be punished '.1th imprisonment for a term which may extend to one year, or with fine
which may extend to twice the <imount of the cheque, or with both.

Provided that nothing contained in thi,; •ection shall apply unle"1i ••
(a) the cheque h•s been presented to the bank within a period of >ii< months from the
date on which it is drawn or within the period of its validity, whichever is earlier.
(b) the payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the 'aid amouot of money by giving a notice. in writing, to
the drawer of the cheque, within fifteen doys of the receipt of information by him from
the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money
to the payee or, as the c~.se n1ay be, to the holder in due course uf the cheque. within
fifteen days of the receipt of thi:: said notice.
U.S. Sl!Rlv. STATE ;o.P. WADHWA.J.] 423

started avoiding themselves. On January 2, 1997 the aci::used again came A
to the office of the Finance Company and said that some mishappening
had occurred with them and >ix months more time might be given to them.
The Finance Company was compcl!t:d to believe their statement and after
mutual consideration, the accused gav.: two cheques dated July 2, 1997 fur
the principal amount and the interest. Again the cheques wcore rdurned
dishonoured when presented for paymrnt. The Financc Company sent a
B
notice to the accuscd on July 17, 1997 for repayment of the amount within
LS days and in spite of that no payment was made. It was, thus, alleged that
the accused comrnittd an offencc under Section 138 of the ;'l;egotiable
instruments Act. Whi!t: describing the accused 2 to 8 as Managing Director
and Directors of M/s Ganga Automobiks Ltd., the complainant stated that c
they wcre ''directly responsible and liable for all the activities and affairs
of the company and carry out and execute all the affairs in normal course
of business with mutual consultation and participate in each and every work
of the company". Obviously, it was necessary to state to make all the
accused 2 to 8 liable for offence under Section 138 of the Negotiable D
Instruments Act. Aftt:r examining the complainant, learned Additional
Chief Judicial Magistrate was of the opinion that thert: was prim a f acie case
made out against the accused persons fur an offence under Section 138 of
the Negotiable Instruments Act and by his order dated August 27, 1997
ordered summoning them all.
E
In the Investigation of FIR No. 517 of 1997 it was found that both
G. Sagar Suri and his wife Shama Suri were not the Din::ctors of M/s.
Ganga Automobiles Ltd. in thc counter affidavit filed by L. V. Singh styling
himself as authorised signatory on behalf of the second respondent P .K.
Sengupta, the complainant, it is admitted that the appcllants arc not the F
Directors of Ganga Automobiles Ltd. It is, however, stated that G. Sagar
Suri is not only the authorised signatory on behalf of Ganga Automobilt:s
Ltd. but he is also authoriscd to sign cheques on behalf of that company
and further that G. Sagar Suri is the major shareholder of the company. It
was submitted that the chcques which bounced were signed by G. Sagar
Suri as authorised signatory of Ganga Automobiles Ltd. in the counter G
affidavit !ikd by B.S. Chandel, Sub-inspcctor on behalf of the first respon-
dent it is stated that both G. Sagar Suri and his wife Shama Suri are the
parents of Ashwani Kumar Sur~ Managing Director of Ganga Automobiks
Ltd. and 'they have: full control over tht: day to Jay affairs of the company'.
As to how tht: later part of this statcment has been made, nothing b.as been H
424 SUPREME COURT REPORTS (2000[ 1 S.C.R.
A said. This counter-affidavit is als.o silent as to why charge sheet was filed
only against 5 persons, namely, Ashwani Kumar Suri, Managing Director,
his wife Shalini Suri and his partner G. Sagar Suri and Shama Suri and why
other Directors were left out and why investigation against the left out
Directors is still pending and at what stage and particularly when common
B ro!e is assigned to all of them. From this it would appear that foor persons
have been roped m, in order to c:oerce on them to refund the money to the
Finance Company. Charge Shec:t also does nut >how if the investigating
agency looked into the complaint filed under Section 138 of the Negotiable
instruments Act.

C It was submitted by Mr. Lalit, learned counsel for the second respon-
dent, that the appellants have already filed an application in the Court of
Additional Judicial Magistrate for their discharge and that this Court
should not interfere in the criminal proceedings which are at the threshold.
We do not think that on filing of any application for discharge, High Court
D cannot exercise its jurisdiction under Section 482 of the Code. In this
connection, reference may be made to two decisions of this Court in Pepsi
Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors., [1998] 5 SCC 749
andAshok Chaturvedi & Ors. v. Shitul H. Chanchani & Anr., !1998) 7 SCC
698, wherein it has been specifically hdd that though the Magistrate trying
a case has jurisdiction to discharge the accused at any stage of the trial if
E he considers the charge to be groundless but that does not mean that the
accused cannot approach the High Court under Section 482 of the Code
or Article 227 of the Constitution to have the proceeding quashed against
them when no offence has been made out against them and still why must
they undergo the agony of a criminal trial.
F
Jurisdiction under Section 482 of the Code has to be exercised with
a great care. In exercise of its jurisdiction High Court is not to examine
the matter superficially. It is t<> be seen if a matter, which is essentially of
civil nature, has been given a cloa.!:. of criminal offence. Criminal
proceedings are not a short cut of other remedies available in law.
G Before issuing process a criminal court has to exercise a great deal of
caution. For the accused it is a serious matter. This Court has laid
certain principles on the basis of which High Court is to exercisi: its
jurisdiction under Section 482 of the Code. Jurisdiction under this
Section has to be exercised to prevent abuse of the process of any court
H or otherwtse to secure the ends of justice.
G.S. SURI v. STATE [D.P. WADHWA, JI 425

In State of Kamataka v. I.. Muniswamy and Others, AIR ( 1977) SC A
1489 = [1977) 3 SCR 113, this Court said that in the exercise of the
wholesome power under Section 482 of the Code High Court is entitled to
quash a proceeding if it comes to the conclusion that allowing the proceed-
ing tu continue would be an abuse of the proces> of tht: Court or that th;;;
ends of justice rt:quin: that the proceedings are to be 4uashed.
B
In Kurnkshatra University and Another v. State of Haryana, AIR
(1977) SC 2229 = (1977] 4 SCC 451 High Court in exercise of its powt:rs
under Section 482 of the Code 4uashed the first information Report when
police had not t:Ven commenced inwstigation into the complaint. This
Court >aid that inhen:nt powers do not confer an arbitrary jurisdiction on c
the High Court to act according to whim or caprice and that statutory
power has to be exercised sparingly, with circumspection and in the rarest
of rare cases. In the case First Information Report was lodged by Warden,
Kurukshatra UDiversity. Acting on that report the police registered a case
undt:r Sections 443 and 452, IPC against one Vinay Kumar, who filed a
petition in the High Court praying that FIR be quashed. High Court D
without issuing notice to the University quashed the FlR. Not only that
High Court directed the State of Haryana to pay a sum of Rs. 300 by way
of cost to Vinay Kumar. High Court even made observations concerning
... the University's power to enforce disciplinto in the Campus. This Court
observed that the High Court seemed to fail that outsiders can with E
impunity flout the University rule that no outsider shall stay in a university
hostel. It said that such a view is plainly calculated to subvert discipline in
a sphere where it is most needed. This Court said that High Court ought
not to have made these observations without, at least, giving a hearing to
the University. This Court set aside the judgment of the High Court and
allowed investigation to proceed. F

ln Chandrapal Singh and Others v. Maharaj Singh and Another, AIR
(1982) SC 1238, tht: judgment started as under :-

'A frustrated landlord after having met his waterloo in the
hierarchy of civil courts, has further enmeshed the tenant in a G.
frivolous criminal prosecution which prim a f acie appears to bt: an
abuse of the process of law. The facts when stated are so,, klling
that the furtht:r discussion may appear to be superfluous."'

This Court said :- H

,.
426 SUPREME COURT REPORTS [2CC0] 1 S.C.R.

A "We see some force in the submission but it is equally true that
chargrined and frustratt:d litigants should not be permitted to give·
vent to their frustration by cheaply invoking jurisdiction of the
criminal court. Complainant hernin is an Advocate. He lost in both
courts in the rent control proctedings and has now rushed to the
criminal court. This itself speak~ volumes. Add to this the fact that
B another suit between the parties was pending from 1975. The
conclusion is inescapable that invoking the jurisdiction of the
criminal court in this background is an abuse of the process of law
and the High Court rather glossed over this important fact while
declining to exercise its power under Section 482 Cr. P.C."
c
This Court said that the Chief Judicial Magistrate, Secunderabad
ought not to have taken cognizance of the proceedings. It said it considered
it to be a fit case to involve jurisdiction under Section 482 of the Code.

D In the circumstances of the case in hand conclusion is inescapable
that invoking the jurisdiction of criminal court for allegedly having com-
mitted offences under Sections 406/420 IPC by the appellants is certainly
an abuse of the process of law. In the counter affidavit filed on behalf of ..
the complainant it is now admitted that none of the two appellants is a
E Director of Ganga Automobiles Ltd. Only in respect of the first appellant
it is stated that he is the authorised signatory of that company and that in
fact he had signed the cheques which were returned dishonoured. Apart
from making the omnibus statement that the first appellant with dishonest
intentions and misrepresentations got loan of Rs. 50,00,000 from the com-
p plainant company for Ganga Automobiles Ltd. there "is nothing said as to
what were those misrepresenltations and how the complainant company was
duped. The only part attributed to the second appellant is that the first
appellant along with Ashwani Suri, Managing Director and Mukender
Singh, Director approached the complainant in June, 1996 and had repre-
sented that they and Shalini Suri, Shama Suri (Appellant No. 2), Charanjit
G Singh and M.L. Kampani were the Directors of Ganga Automobiles Ltd.
There is nothing stated in tht: counter affidavit about the role, if any, played
by the second appellant. A 'complaint under Section 138 of the Negotiable
Instruments Act has already been filed by the complainant. There is no
allegation of any corrupt practice by any of the accused as if they duped
H the Finance Company in parting with the amount of Rs. 50,00,000. As
G.S. SURI v. STATE [D.P. WADHWA, J.) 427

normally understood business of a finance company is to invite deposits, A
pay interest on that and also to give loans and earn interest. A finance
company also advances short term loans. ln that case it is essentially a
commercial transaction. After first two cheques were dishonoured two
cheques were again issued, which again were dishonoured resulting in filing
of complaint under Section 138 of the Negotiable Instruments Act. None
B
of the respondents has been able to explain as to why offences under
Sections 406/420 IPC were not added in the complaint filed under Section
138 of the Negotiable Instruments Act and why resort was had to filing of
a separate First Information Report. Certain motive has been attributed to
the investigating officer but we think we need not go into that. There is
also no answer as to why investigation against three other directors was still
c
stated to be pending when same role is assigned to all the accused In the
FIR it is Sukhvender Singh, who first approached the complainant, but
later it is Mukcnder Singh. There is no answer as to why there are two
different names. as to who are the Directors of Ganga Automobiles Ltd.
could have been easily found by the complainant after going through the D
records of Registrar of Companies and also about its status. As noted
above, in the subsequent statement by the complainant he does not assign
any role to the first appellant. The allegation that in the first instance three
persons contacted the complainant company, who told the complainant of
other Directors with whom the complainant conversed on telephone ap- E
pears to be rather improbable.

We agree with the submission of the appellants that the whole
attempt of the complainant is evidently to rope in all the members of the
family particularly who are the parents of the Managing Director or Ganga F
Automobile Ltd. in the instant criminal case without regard to their role
or participation in the alleged offences with a sole purpose of getting the
loan due to the Finance Company by browbeating and tyrannizing the
appellants of criminal prosecution. A criminal complaint under Section 138
of the Negotiable instruments Act is already pending against the appellants
and other accused. They would suffer the consequences if offence under G
Section 138 is proved against them. In any case there is no occasion for the
complainant to prosecute the appellants under Sections 406{420 IPC and
in his doing so it is clearly an abuse of the process of law and prosecution
against the appellants for those offences is liable to be quashed, which we
do. ' H
428 SUPREME COURT Rl:iPORTS (20001 l S.C.R.
A The appeal is allowed and judgment of the High Court dated May
6, 1999 is set aside and prosecution of the appellants under Sections
406/420 IPC in Criminal Case No. 674/97 (now Criminal Case No. 6054/98)
and pending the ( :ourt of Chief Judicial Magistrate, Ghaziabad is quashed.

A.O. Appeal allowed.
B

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