Madhya Pradesh HC  Mens Rea Requirement-Not Needed for Section 138 of NI Act, But Required for Section 420 of IPC.

The Madhya Pradesh High Court has ruled that mens rea (the intention to commit a crime) at the time of issuing a cheque is not required to be proven under Section 138 of the Negotiable Instruments Act (NI Act), but is required under Section 420 of the Indian Penal Code (IPC). The decision was made by Justice Anjuli Palo while hearing an appeal against an order passed by the Second Additional Sessions Judge in a criminal revision case. The case involved a complaint filed by the respondent under Sections 420, 467, 468, 471, and 34 of the IPC, alleging that the applicants had entered into a sale agreement for agricultural land that they could not materialize due to the mortgage and sale of the land to others.

The respondent subsequently filed a complaint under Section 138 of the NI Act, which was later compromised. However, the Additional Chief Judicial Magistrate refused to issue directions under Section 156(3) of the Criminal Procedure Code (Cr.P.C) to register an FIR against the applicants and directed the police to submit information regarding the enquiry conducted on earlier complaints. The respondent filed a revision before the First Additional Sessions Judge, alleging that the trial court had wrongly rejected the application under Section 156(3) of the Cr.P.C, even though there were sufficient grounds to call for a report.

The High Court noted that applicant No.2 had executed a sale agreement in favour of the complainant for a sale consideration of Rs.10 lacs, receiving Rs.9 lacs and a balance of Rs.1 lac to be given at the time of registration. The bench further noted that there was an allegation against applicant No.1 that he mortgaged the land in favour of State Bank, Waraseoni on 06.11.2013. The High Court also noted that the allegations against applicant No.2 were that she sold her land to someone else on 23.10.2013 and subsequently entered into a sale agreement with the respondent. The necessary factors for cheating were thus available in the case, as the applicants were aware of the mortgage and previous sale deeds, and they executed a sale agreement with the complainant and his mother, receiving a total sale consideration of Rs.17 lacs.

The High Court further stated that while the mens rea is not required to be proved in a prosecution under Section 138 of the NI Act, it can be relevant in a prosecution under Section 420 of the IPC. The High Court noted that the ingredients of offences under Section 420 of the IPC and Section 138 of the NI Act are entirely different, with deception being the essential ingredient of the former offence. The High Court also stated that the dispute between the parties was not purely of civil nature, and hence, the case laws cited by the applicants were not applicable. The High Court dismissed the appeal.

Swapnil Sohane v. Sunil Arora