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Invoking S.138 Of NI Act Does Not Bar Registration Of Crime Under Sections 406, 420 IPC: In Karnataka High Court

The Karnataka High Court has ruled that proceedings under Section 420 of the Indian Penal Code are maintainable even if a complaint under Section 138 of the Negotiable Instruments Act has been filed. 

In the case of Rashmi Tondon vs State of Karnataka (Criminal Petition No.6638 OF 2021), a single judge bench led by Honourable Justice M Nagaprasanna stated, “What must be noted in a case under the Act is whether it is for a legally enforceable debt and a fine is imposed. A sentence of seven years can be imposed for an offence involving the same instrument under Sections 406 or 420 of the IPC, and the element mens rea is what is required to be seen in a case for offence of cheating under Section 420 of the IPC, among other things.” 

The petitioners approached the court, questioning the proceedings registered on 22-07-2021 for the offence punishable under Section 420 of the IPC based on a private complaint filed by one SOMASHEKAR B. 

The petitioners were the Directors of Headwin Exim Private Limited (abbreviated “the Company”). They approached the second respondent/complainant for financial assistance in order to meet immediate financial needs in its business. The financial assistance was provided between July and September 2015, and the Company issued five cheques in total. The checks were returned. The complainant then initiated proceedings under the Negotiable Instruments Act of 1881. The matter is currently being heard by the appropriate Court. 

Furthermore, on the same instrument of issuance of cheques for which proceedings were initiated under Section 138 of the Act, the complainant filed a private complaint under Section 200 of the Cr.P.C. alleging cheating under Section 420 of the IPC on the part of the Company and its Directors. Following the filing of the said private complaint, the learned Magistrate orders an investigation under Section 156(3) of the Cr.P.C. The Police, in accordance with the aforementioned direction and Section 156(3) of the Cr.P.C. The Police registers a FIR in response to the aforementioned direction under Section 156(3) of the Cr.P.C. 

Petitioners stated, “The complainant could not have registered a complaint for cheating after invoking the jurisdiction of the competent criminal Court by filing a complaint alleging an offense punishable under Section 138 of the Act. It would be the same as filing two complaints for the same offense.” 

Furthermore, the private complaint filed for the offence punishable under Section 420 IPC contradicts the Supreme Court’s decision in the case of PRIYANKA SRIVASTAVA V. STATE OF U.P., reported in (2015) 6 SCC 287. 

According to respondents, “Invoking Section 138 of the Act does not prevent the complainant from registering a crime for an offense punishable under Section 406 or 420 of the IPC because it amounts to cheating and inducement on the part of the accused. It is a trial, and the petitioners must come clean and seek dismissal of the petition.” 

The bench cited the Supreme Court’s decision in the case of SANGEETABEN MAHENDRABHAI PATEL V. STATE OF GUJARAT & ANR (2012) 7 SCC 621, in which the court considered whether a petition under Section 420 of the IPC would be maintainable during the pendency or even after conviction under Section 138 of the Act. The Supreme Court ruled that the two work in different fields. 

“The Apex Court holds that there can be no question of it being in violation of Article 20(2) of the Constitution of India or Section 300(1) of the Cr.P.C. because it does not amount to double jeopardy,” it said. As a result, the learned counsel appearing for the petitioners’ submission that a proceeding for an offence punishable under Section 420 of the IPC is unconstitutional once the complainant invokes Section 138 of the Act is unacceptable. It is up to the petitioners to come clean during the trial.” 

Furthermore, the court stated, “A perusal of the impugned complaint would clearly indicate that the complaint is in compliance with the mandate of the judgment in the case of PRIYANKA SRIVASTAVA as the complainant in the complaint narrates the efforts taken for registration of a crime before the Police and the affidavit accompanies the complaint.” 

“Therefore, the complaint registered is also not in violation of the Apex Court’s judgment in the case of PRIYANKA SRIVASTAVA,” it concluded. As a result, the petition was denied. 

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