Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Indian Penal Code, 1860 (45 of 1860), Section 406, 420, 120-B – Constitution of India, Article 142 – Cheque bounce complaint / FIR -- Compounding of offence – No consent of complainant – Quashing of criminal proceedings -- Initially, both sides agreed to compound at the appellate stage but the appellant could not pay the amount within the time – Now appellant has paid the entire amount with interest – Appellant in jail for more than 1 year before being released on bail – Now no purpose to keep the proceedings pending – Transaction between the parties was purely civil in nature which does not attract criminal law -- Even though complainant is unwilling to compound, proceedings must come to an end – While exercising powers under Article 142 of the Constitution, criminal proceedings in FIR and criminal appeals against conviction u/s 138 of the NI Act quashed and sentence awarded by the trial court set aside.

(Para 13-15)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bonce case – Quashing of complaint -- Though the prayer for quashing was made only as regards first and second respondents, by the impugned judgment, the complaint has been quashed in its entirety – Held, there was no reason for the High Court to quash the complaint in its entirety -- Impugned order modified.

 (Para 3-5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheque bounce complaint – Presumption as to liability – Rebuttal – Standard of proof -- Once execution of the cheque is proved/ admitted, the presumptions u/s 118(a) and 139 of the said Act would arise that it is supported by a consideration -- Such presumptions are rebuttable in nature and the accused can prove the non-existence of a consideration by raising a probable defence, and if the accused is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the complainant who will be obliged to prove it as a matter of fact and upon its failure to prove would dis-entitle him to the grant of relief on the basis of the negotiable instrument -- Standard of proof so as to prove defence on the part of an accused is 'preponderance of probabilities' and inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies.

(Para 6, 7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Void cheque – Alteration in cheque -- Amount written in cheque corrected in figures or in number without the knowledge and consent of maker of the cheque amounts to material alteration and also amounts cancellation -- The figure “2" was specifically inserted in cheque specifically without the knowledge of the drawer is a material alteration which makes the documents void -- Accused is not liable for any type of legal recoverable debt -- Nothing is on file to prove any type of transaction or debt to held the accused liable – Acquittal order upheld.

(Para 8-10)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint – Receipt issued on the letter pad of the shop of accused is also not proved the liability of the accused in any manner as no witness regarding the receipt is on the letter pad and without any witness the document did not prove any type of liability towards the accused.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Proprietorship Firm not impleaded as party – Neither it is the case of the petitioner/ accused that the amount in question had been advanced as loan to the firm nor the cross-examination of the complainant suggest any such stand of the petitioner -- Firm in question is a sole proprietorship firm of the petitioner/ accused and, as such, it cannot be said that the petitioner would not be responsible for the affairs of the said firm – Guilt of the petitioner/ accused upheld.

(Para 9)

A. “May” – “Shall” – Interpretation -- Word “may” ordinarily does not mean “must” -- Ordinarily, “may” will not be construed as “shall” -- But this is not an inflexible rule -- The use of the word “may” in certain legislations can be construed as “shall”, and the word “shall” can be construed as “may” -- It all depends on the nature of the power conferred by the relevant provision of the statute and the effect of the exercise of the power -- The legislative intent also plays a role in the interpretation of such provisions. Even the context in which the word “may” has been used is also relevant.

(Para 9)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A – Cheque bounce complaint – Interim compensation -- Clause (b) of sub-section (1) of Section 143A will apply only when the case is being tried as a warrant case -- In the case of a summary or summons trial, the power under sub-section (1) of Section 143A can be exercised after the plea of the accused is recorded.

(Para 10)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A – Code of Criminal Procedure, 1973 (2 of 1974), Section 421 -- Cheque bounce complaint – Interim compensation -- Recovery of -- By a legal fiction, the interim compensation is treated as a fine for the purposes of its recovery -- Section 421 of the Cr.PC deals with the recovery of the fine imposed by a criminal court while passing the sentence -- Thus, recourse can be taken to Section 421 of the Cr.PC. for recovery of interim compensation -- Interim compensation amount can be recovered treating it as fine -- Interim compensation amount can be recovered by the Trial Court by issuing a warrant for attachment and sale of the movable property of the accused -- If acquitted, he may get back the money along with the interest as provided in sub-section (4) of Section 143A from the complainant.

(Para 11, 12)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A(5) – Cheque bounce complaint – Non-payment of interim compensation – Right to defend -- Non-payment of interim compensation by the accused does not take away his right to defend the prosecution.

(Para 12)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A – Cheque bounce complaint – Interim compensation -- Power of Trial Court – It can be exercised even before the accused is held guilty -- Sub-section (1) of Section 143A provides for passing a drastic order for payment of interim compensation against the accused in a complaint u/s 138, even before any adjudication is made on the guilt of the accused.

(Para 14)

F. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A – Cheque bounce complaint – Interim compensation -- Word “may” used in Section 143A, cannot be construed or interpreted as “shall”. Therefore, the power under sub-section (1) of Section 143A is discretionary.

(Para 14)

G. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A, 148 – Cheque bounce complaint – Interim compensation -- Tests applicable for the exercise of jurisdiction under sub-section (1) of Section 148 can never apply to the exercise of jurisdiction under sub-section (1) of Section 143A of the N.I. Act.

(Para 15)

H. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A, 148 – Cheque bounce complaint – Interim compensation – Financial distress -- Factors to be considered while exercising discretion -- When the court deals with an application u/s 143A of the N.I. Act, the Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the accused in the reply to the application under sub-section (1) of Section 143A -- Presumption u/s 139 of the N.I. Act, by itself, is no ground to direct the payment of interim compensation -- At this stage, the fact that the accused is in financial distress can also be a consideration –  Court will have to apply its mind to the quantum of interim compensation to be granted – Court will have to consider various factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant and the paying capacity of the accused -- If the defence of the accused is found to be prima facie a plausible defence, the Court may exercise discretion in refusing to grant interim compensation -- Factors set out are not exhaustive -- There could be several other factors, such as, the pendency of a civil suit, etc. -- While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all the relevant factors.

(Para 16)

I. Negotiable Instruments Act, 1881 (26 of 1881), Section 143A, 148 – Cheque bounce complaint – Interim compensation – Law summarised:

a. The exercise of power under sub-section (1) of Section 143A is discretionary. The provision is directory and not mandatory. The word “may” used in the provision cannot be construed as “shall.”

b. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors.

c. The broad parameters for exercising the discretion under Section 143A are as follows:

i. The Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the accused in the reply to the application. The financial distress of the accused can also be a consideration.

ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case.

iii. If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation.

iv. If the Court concludes that a case is made out to grant interim compensation, it will also have to apply its mind to the quantum of interim compensation to be granted. While doing so, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc.

v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated. The parameters stated above are not exhaustive.

(Para 19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Punjab Registration of Money Lenders Act, 1938 (3 of 1938), Section 3 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) -- Cheque bounce complaint – Acquittal – Money Lender’s license – Respondent/ accused is under no legally enforceable debt as the complainant-company has been advancing loans illegally -- It is imperative to possess a money lending licence as per the Money Lender’s Act -- Section 3 of the said Act provides that the suit or application for recovery of the loan shall be dismissed if the person claiming recovery does not hold a valid licence under the Act -- Thus, the debt becomes an unenforceable debt – Acquittal order upheld.

(Para 3-7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 406 -- Transfer of cheque bounce complaint -- Several complaint cases u/s 138 of the N.I. Act are pending in the Court at Gurugram, Haryana and it is a solitary case which was instituted in the Court at Dwarka – Parties to the proceedings are residents of Gurugram and the witnesses are also hailing from Gurugram – Complaint transferred from Dwarka Court, New Delhi to the Court of the Gurugram, Haryana.

(Para 3-6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Handwriting expert -- Defence set up by the petitioner/ accused is that the cheque in question had been issued not for the purpose of returning any loan, but for the purpose of making a donation to a Saint -- Mere fact that the body writing on the cheque in question is not of the accused or of the complainant and is in the hand of some 3rd person, would not have any bearing either on the case of the complainant or on the defence plea being set up by the accused – Application for examining Handwriting expert dismissed.

(Para 1, 5, 6)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Handwriting expert -- Accused would be required to prima facie show that the witness sought to be examined does have a relevance with the defence plea sought to be substantiated by the accused or has a potential to demolish the case of the complainant.

(Para 5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Quashing of complaint – Basic ingredients – Requirement of -- Submission that complaint does not contain date of presentation of cheque before the bank, the date of return of the cheque as unpaid from the bank, the date of issuing mandatory notice within 30 days and the date of service of such notice on the drawee – Held, complaint cannot proceed u/s 138 of the N.I. Act without the basic ingredients being mentioned therein – Proceedings of Complaint case quashed.

(Para 2, 5, 6)

Indian Penal Code, 1860 (45 of 1860), Section 420, 467, 406, 468 – Code of Criminal Procedure, 1973 (2 of 1974), Section 438 -- Anticipatory bail – Cheating -- Petitioner already facing prosecution u/s 138 of the NI Act -- Submitted that mere dishonour of cheque does not amount to cheating – Appeal allowed, in case of arrest petitioner be released on bail by the arresting/ investigating officer/ trial court.

(Para 1-4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148 – Code of Criminal Procedure, 1973 (2 of 1974), Section 389 -- Cheque bounce case -- Appeal against conviction -- Suspension of sentence – Pre-condition of deposit of 20% of compensation amount -- Appellate Court required to consider whether the case falls in the exception or not -- Appellate Court directed to re-examine the case.

(Para 4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Settlement in cheque bounce complaint – Proclaimed person -- Quashing of FIR u/s 174A IPC -- Proceedings under the N.I. Act culminated in a settlement with the withdrawal of the complaint – F.I.R. u/s 174-A of IPC along with all subsequent proceedings quashed.

(Para 11-13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheque bounce complaint -- Legally enforceable liability -- Loan -- Money lending licence – Requirement of -- Complainant was involved in money-lending business without possessing any valid license -- Respondent/ accused used to borrow money from him -- Claim of the applicant/ complainant against the respondent is an unenforceable claim and thus, cannot be considered a legally enforceable liability u/s 138 of the NI Act.

(Para 4)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce complaint -- Acquittal by Trial court – Leave to appeal -- Power of the Appellate Court to unsettle the order of acquittal on the basis of re-appreciation of the evidence is subject to the settled law that where two views are possible and out of the two, one points towards the innocence of the accused, the view which favours the accused should prevail over the other pointing towards his guilt.

(Para 5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200, 406 -- Transfer of cheque bounce complaint -- Proprietor of the Complainant Company is working at Mumbai -- Yet the cheque was presented before the Bank at Darbhanga which led to the proceeding u/s 138 of the Act initiated before the Chief Judicial Magistrate, Darbhanga, Bihar -- Just because the respondent/ complainant who is a permanent resident of Darbhanga or has business interest in Bihar, may not justify filing of a case in another Court when all the transactions were in Mumbai -- Project site is at Maharashtra -- Complaint transferred to Mumbai.

(Para 4-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 -- Cheque bounce complaint -- Appellant was a mere employee, apart from being a lady, and was not the main accused -- Main accused was the sole proprietor, the allegations are primarily against him, who is no more -- No purpose would be served in continuing the proceedings against the appellant -- Impugned orders are set aside.

(Para 2-6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque bounce complaint – Quashing of – Resignation of Director – Effect of -- Whether a appellant/ Director who has resigned from such position and which fact stands recorded in the books as per the relevant rules and statutory provisions, can be held liable for certain negotiable instruments, failing realization – Complainant not placed any materials on record indicating complicity of the appellants in the alleged crime -- Appellants had no role in the issuance of the instrument -- After the appellants have severed their ties with the Respondent-Company and, therefore, can in no way be responsible for the conduct of business at the relevant time – All criminal proceedings pertaining to the appellants arising out of the complaints filed by the respondent quashed.

(Para 2-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 397, 482 – Conviction in cheque bounce complaint -- Enhancement of compensation u/s 482 Cr.P.C. -- Jurisdiction of High Court -- Revision against conviction -- Complainant filed an application u/s 482 of the Code primarily seeking enhancement of compensation – No jurisdictional error on the part of the High Court in passing the order after entertaining the application u/s 482 of the Code.

(Para 2, 3)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Quashing of cheque bounce complaint – Drawer of cheque – Requirement of -- Proceeding in the complaint u/s 138 of the NI Act was quashed vis-à-vis respondent No. 2 on the ground that he was not the drawer of the cheque -- Above view of the High Court cannot be faulted qua the second respondent – Special Leave Petitions dismissed.

(Para 3, 4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Quashing of conviction in cheque bounce complaint – Compounding of offence – Non-consent of complainant – Cheque amounting Rs.1,50,000/-, appellant deposited Rs.2,50,000/- with interest @ 6% p.a., further amount of Rs.1,00,000/- was deposited with the Trial Court as suggested by Court --  Respondent/ complainant ought to have come forward to compound the offence – Held, Court not appreciated the stand taken by the respondent, especially when the appellant has deposited a sum of Rs.2,00,000/- more than what was ordered to be paid by the Trial Court -- Conviction of the appellant quashed and set aside.

(Para 3-7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Amendment in title of complaint – Trial court allowed amendment of title of the complaint by replacing (Firm name) as the complainant with only (Name of Director) – Held, amendment is merely formal in nature and does not impact the heart of the case -- Moreover, no prejudice has been caused to the petitioner by the amendment allowed in the case title and he can still raise all pleas available to him.

(Para 4, 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148 – Code of Criminal Procedure, 1973 (2 of 1974), Section 389 -- Appeal in cheque bounce conviction – Suspension of sentence – Deposit of 20% compensation -- Appellate Court passed order in a mechanical manner without giving any reasons directing the petitioner to deposit 20% of the compensation amount awarded by the trial Court within 60 days – Direction to deposit 20% of compensation amount set aside, appellate Court directed to reconsider the application filed by the petitioner seeking suspension of sentence in the light of the law laid down by the Hon’ble Supreme Court in Jamboo Bhandari’s case 2023 (10) SCC 446 -- Till fresh orders are passed, no coercive steps shall be taken against the petitioner.

(Para 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Acquittal in cheque bounce complaint – Demand notice – Trial court acquitted the accused -- Notice of demand given on behalf of the appellant/ complainant was not by the authorised person and, therefore, the necessary ingredients of Section 138 of the said act were not proved -- Basic ingredients that the cheque should have been drawn by the accused for discharge of any debt or liability, was also not proved by the appellant/ complainant -- High Court also, considering the said findings, dismissed the appeal – No illegality or infirmity or perversity – Appeal dismissed.

(Para 5-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 200 – Cheque bounce complaint – Quashing/ deletion of name of Director -- Complaint shows that the 2nd and the 5th accused had signed the cheque -- 2nd accused was one of the Directors and fifth accused was the authorized signatory of the company -- No allegation in the complaint that petitioner signed the cheque or had anything to do with the issuance of the cheque -- Petitioner is roped in only because she is a Director in the company on whose behalf, the cheque was issued -- Held, arraying of the petitioner as the 4th accused was un-justified -- Accordingly, her deletion from the proceedings ordered.

(Para 2-7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Two similar cheque bounce complaints – Two quashing petitions – In one case notice with protective order in favour of accused issued by High Court – Other Bench dismissed the other petition as devoid of merit – Order set aside, the matters are remitted back to the High Court for analogous consideration.

(Para 4-7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint -- A complaint u/s 138 of N.I. Act requires to contain  such factual averments as are necessary to satisfy the ingredients of the said provision, namely, that the cheque/money bill which has been dishonoured was issued to discharge full or partial pre-existing debt liability -- It is not be the pre-requisite of Section 138 of the N.I. Act to plead evidence in the complaint itself -- Once a specific plea has been taken, it can be later on substantiated by adducing evidence at an appropriate stage.

(Para 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Conviction in cheque bounce complaint – Settlement between parties – Quashing of proceedings – No one has put in appearance on behalf of the respondents, maybe for the reason that there has been a settlement -- Matter is pending since 2018 – Held, once the settlement has been arrived at and the complainant has signed the deed accepting a particular amount in full and final settlement of the default amount and the fine amount awarded by the Trial Court, the proceedings u/s 138 of the NI Act need to be quashed -- Appeal allowed and the proceedings u/s 138 of the NI Act, along with impugned orders passed, stand quashed.

(Para 1-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 397, 401 – Conviction in cheque bounce case – Settlement amount not paid – Cancellation of bail/ suspension of sentence – High Court took a firm stance against the appellant’s continued failure to fulfil his financial obligations, culminating in the cancellation of his bail and suspension of sentence – No infirmity in the impugned order -- Complainant has been litigating since 2007 almost 16 years -- Appeal dismissed with costs quantified at Rs. 5 lakhs to be paid to the Complainant.

(Para 2, 16-19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Constitution of India, Article 142 -- Conviction in cheque bounce complaint – Appeal dismissed   -- Matter was thereafter settled between the parties -- High Court rejected the application u/s 482 Cr.P.C. -- Held, since the matter has been amicably settled between the parties and since the original complainant himself is not interested in prosecuting the proceedings, it is a fit case for exercise of jurisdiction under Article 142 of the Constitution of India to give an end to the litigation between the parties -- Order of sentence and conviction set aside.

(Para 3-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 389 -- Conviction in cheque bounce complaint – Deposit of compensation of 20% amount – Exception to -- Suspension of sentence – Ld. Additional Sessions Judge directed to deposit 20% of the amount of compensation and further cancel the order of suspension of sentence of the petitioner for non-compliance of the said order – Held, Lower Appellate Court was required to consider whether the present case falls in the exception or not – Ld. lower Appellate Court directed to re-examine the case after granting an opportunity to the petitioner to make submissions regarding the exceptional circumstances and decide whether it is an appropriate case that warrants waiver of the requirement of deposit of 20% of the compensation awarded by learned trial Court – Matter remanded back.

(Para 1-5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case  -- Demand Notice -- If in a notice while giving the break-up of the claim the cheque amount interest, damages, etc. are separately specified and these additional claims would be severable, such demand would not invalidate the notice -- In a notice of demand made under the N.I. Act demand shall not be omnibus, there must be a clear demand for the cheque amount lest notice will be invalid.

(Para 6)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case  -- Invalid Demand Notice – Quashing of summoning order -- Omnibus demand for Rs.6,50,000/- was made in addition to the demand for interest @12 per annum since the date of returning of the cheque, Rs.50,000/- towards damages and Rs.5,500/- as notice charge -- Demand is omnibus as relates the amount of Rs.6,50,000/-, it is not the cheque amount – Notice of demand is invalid – Summoning order quashed.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 -- Cheque bounce complaint – Proclaimed person – Quashing of FIR u/s 174A IPC -- Proceedings under the Negotiable Instruments Act have culminated in a settlement with the withdrawal of the complaint – Order declaring the petitioner proclaimed person and the order for registration of FIR u/s 174-A IPC quashed.

(Para 9-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 320, 397, 401 -- Cheque bounce complaint -- Conviction by trial Court affirmed by Appellate Court – Acquittal on compromise --  Once a settlement is being effected, then in terms of Section 147 of the Negotiable Instruments Act and Section 320 Cr.P.C., the accused ought to be acquitted as the offence stands compounded -- Revision petition allowed and the judgment of Appellate Court and judgment of conviction and order of sentence passed by the learned Trial Court set aside -- Petitioner acquitted.

(Para 8-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143A – Cheque bounce complaint -- Interim compensation -- The Court had wide discretion to grant the interim maintenance, which could vary from 1% to 20% -- Trial Court granted the interim compensation in very casual and routine manner – No reasons recorded for granting 20% of the amount of the cheque in question as interim compensation – Matter remanded back to the trial Court to reconsider the issue regarding the payment of interim compensation.

(Para 9, 10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 7, 138 – Cheque bounce complaint – Prosecution of -- Drawer of cheque – Joint account -- Though, the cheque has been drawn on a joint bank account of the petitioner and her husband, but the cheque in question has been signed by her husband only and the liability regarding the dishonour of the cheque can be fastened on the drawer of the cheque -- Mere fact that the petitioner happens to be the spouse of the co-accused is hardly sufficient to condemn her as co-accused with him – Complaint and summoning order quashed qua the petitioner/ wife.

(Para 8-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148 – Code of Criminal Procedure, 1973 (2 of 1974), Section 389 -- Conviction in cheque bounce complaint -- Suspension of sentence in appeal – Deposit of 20% compensation amount – Deposit of minimum 20% amount is not an absolute rule, not accommodating any exception -- When Appellate Court considers the prayer u/s 389 of the Cr.P.C. of an accused, it is always open for the Appellate Court to consider whether it is an exceptional case, which warrants grant of suspension of sentence without imposing the condition of deposit of 20% of the fine/ compensation amount -- In case, the Appellate Court comes to the conclusion that it is an exceptional case, the reasons for coming to the said conclusion must be recorded.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 320, 397, 401 – Cheque bounce complaint -- Compromise after conviction at revisional stage – Acquittal of accused -- Waiver of cost of 15% -- Imposition of costs would be a matter of discretion of the Court -- Petitioner is a poor person, 15% of the cheque amount towards cost(s) of litigation can be waived off in the interest of justice -- Petition allowed, impugned judgments/order(s) set aside and petitioner acquitted.

(Para 9-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Directors of Company -- High Court quashed the criminal proceedings as against respondent nos. 2 and 3 on the ground that they were not the Directors of the Company in default, on the date when the cheques were issued for encashment – Submission that they were Directors of the Company on the date of issue of cheques and further that they had signed the cheques as authorised signatories of the Company not disputed – Trial Court to decide the pending trial expeditiously, preferably within a period of six months -- Impugned order passed by High Court set aside.

(Para 3-10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 -- Cheque bounce complaint – Proclaimed person – Quashing of FIR u/s 174A IPC -- Proceedings under the Negotiable Instruments Act have culminated in a settlement with the withdrawal of the complaint -- FIR and all other subsequent proceedings arising out of the FIR quashed.

(Para 9-13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138 – Cheque bounce complaint – Presumption – Rebuttal -- Presumptions u/s 118 and 139 of the Act in favour of the holder of the cheque are rebuttable -- Rebuttal of presumption is not to the extent of proving beyond reasonable doubt but has to be on principle of probabilities and preponderance -- On rebuttal of the presumption, the onus shifts on the complainant.

(Para 7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce complaint – Acquittal – Leave to appeal -- Defence by the accused was that the cheques were misused and there was no enforceable debt due from him -- Defence was substantiated by deposition of witnesses and exhibiting application C-5 written to the bank stating that the cheques were lost -- Onus shifted upon the applicant/ complainant to prove existence of legally enforceable debt -- As per the case set up, applicant had given the loan at the rate of 24% per annum, no documents, books of account or evidence was adduced for proving advancing of loan – Acquittal order, upheld.

(Para 9-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce complaint – Acquittal by trial court – Leave to appeal -- Cheque book lost complaint on 7.4.2014 whereas the cheques were presented in August, 2014 -- Applicant failed to give details of month and year when loan was given -- Complainant except making a bald statement that he had advanced the loan, miserably failed to prove existence of legally enforceable debt – Signatures on the cheques not disputed, will in itself be not sufficient for conviction of the respondent – Cheque was returned not only for the reason that payment was stopped but also for material alteration having not been signed by the drawer -- View taken by the court is plausible one – Application for leave to appeal dismissed.

(Para 10-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389, 397, 401 – Cheque bounce complaint – Appeal against conviction -- Suspension of sentence – Condition to deposit of 20% of compensation – Exception to -- Where the Appellate Court is satisfied that the condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of the right of appeal of the appellant, exception can be made for the reasons specifically recorded -- Both the Sessions Courts and the High Court have proceeded on the erroneous premise that deposit of minimum 20% amount is an absolute rule which does not accommodate any exception – Orders passed  by High Court set aside, revision petition restored.

(Para 6-12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 391 – Cheque bounce complaint – Additional evidence at appellate stage -- Cheque dishonoured as drawer had closed the account and not on account of the difference in signature of the drawer -- Petitioner/ accused did not respond to the legal notice – Signature not disputed in statement u/s 313 Cr.P.C. – Thereafter 6 opportunities to lead defence evidence but he did not produce any witness – Defence evidence closed on the statement of the counsel for the petitioner and not by a Court order – Application for additional evidence by examining fingerprint and handwriting expert dismissed by Appellate Court -- No illegality or impropriety in the order – Revision dismissed.

(Para 7)

B. Code of Criminal Procedure, 1973 (2 of 1974), Section 391 – Additional evidence at appellate stage -- Section 391 Cr.P.C. vests a discretion in the Appellate Court to permit additional evidence, if it is necessary, in order to enable it to give a correct finding -- Test is that such evidence should be necessary for the just and proper decision of the case -- Provision is not intended to remedy the negligence or latches of a party -- Not desirable to exercise power u/s 391 Cr.P.C. to enable the petitioner to fill in the lacunae.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce complaint – Retirement of partner – Public notice -- Quashing of summoning order and complaint -- Premises owned by the appellants was taken on rent by the respondent no.3/firm – Issuance of cheques for rent -- High Court quashed the summoning order and complaints against respondent no.1 accepting the plea that he had retired from the partnership firm – Held, plea not tenable, it would be a matter of evidence to be proved before the trial Court, as to whether any Retirement Deed was issued and a public notice concerning the same was issued, before the complaints were filed -- Not the case set up by the respondent no.1 that in the Partnership Deed he was a sleeping partner in the firm -- Retirement Deed could not be taken on its face value, and treated as clinching evidence to quash the complaints -- Order passed by High Court set aside -- Complaints revived.

(Para 14-21)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Code of Criminal Procedure, 1973 (2 of 1974), Section 82(4), 482 -- Quashing of FIR u/s 174A – Cheque bounce complaint – Proclaimed offender – Quashing of FIR u/s 174A IPC -- Complaint u/s 138 of N.I.Act was for an offence other than aforesaid offences specified in sub section (4) of the section 82 of CR.P.C. – Order passed by learned Chief Judicial Magistrate declaring the petitioner a proclaimed offender was/ is not legal -- Said order is the basis of the registration of the FIR u/s 174A IPC against the petitioner and is, therefore, fatal to the FIR in question -- Moreover, petitioner already been acquitted by the trial Court -- Impugned FIR and all subsequent proceedings emanating therefrom are liable to be quashed -- FIR alongwith all consequential proceedings arising there from against the petitioner quashed.

(Para 2.3, 7.2-9)

A. Indian Penal Code, 1860 (45 of 1860), Section 174A – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 195 – Constitution of India, Article 21 – FIR u/s 174A of IPC -- Section 195 of the Code of Criminal Procedure (CrPC), in its present form, encompasses Section 174-A of the Indian Penal Code (IPC) within its purview.

(Para 12.13-12.16)

B. Code of Criminal Procedure, 1973 (2 of 1974), Section 82 -- Proclaimed person/ Proclaimed offender – Procedure -- Courts meticulously adhere to the statutory requirements in letter and spirit both, duly reflecting their compliance on the record prior to pronouncing an individual as a proclaimed person or offender and invoking criminal liability.

(Para 13.1)

C. Code of Criminal Procedure, 1973 (2 of 1974), Section 82 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Proclaimed person/ Proclaimer offender – FIR u/s 174A IPC – Mandate of -- There is no mandatory prescription in the Code of Criminal Procedure requiring the Court to invariably initiate separate criminal proceedings for the offence under Section 174-A IPC in every instance where an individual fails to appear as summoned by way of proclamation -- Courts should act judiciously and exercise circumspection before embarking on the stringent path of instituting criminal proceedings u/s 174-A of IPC.

(Para 13.4)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82 – Cheque bounce complaint -- Proclaimed person/ Proclaimer offender – FIR u/s 174A IPC – Order declaring the petitioner as proclaimed person is wholly silent as to when the proclamation u/s 82 Cr.P.C. against the petitioner was issued; what was the date specified therein for the petitioner to appear in Court; when the proclamation was actually published; whether it was publicly read in some conspicuous place of the town or village in which the petitioner ordinarily resided; whether it was affixed to some conspicuous part of the house or homestead in which the petitioner ordinarily resided or to some conspicuous place of such town or village; whether a copy thereof was also affixed to some conspicuous part of the court-house -- Further, the order does not contain a statement by the Court to the effect that the proclamation was duly published on a specified day and in the manner specified in clause (i) of Sub-Section (2) -- These facts were not even noticed in the order passed by the Court – Order is totally non-speaking and does not at all show that while passing it, the Court had applied its mind to the relevant facts and circumstances and taken any conscious decision that it was a fit case to invoke criminal liability of the petitioner for offence u/s 174-A of IPC -- It was/is cryptic, non-speaking and mechanical order sans any reasons or application of mind – Order declaring proclaimed person and FIR Quashed.

(Para 15-17)

E. Code of Criminal Procedure, 1973 (2 of 1974), Section 82 – Proclaimed person/ Proclaimed offender -- Guidelines framed:

Issuance of proclamation :

i. Preceding the issuance of the proclamation under section 82 Cr.P.C., the Court must deliberate upon its previous efforts to secure the presence of the through other legally permissible means. These efforts encompass the issuance of summons, the execution of bailable and/or non-bailable warrants against the accused. The Court must thoroughly document the results stemming from these endeavours, accompanied by pertinent facts and comprehensive details. It is incumbent upon the Court to satisfactorily ascertain that the individual in question has indeed absconded or is concealing himself to evade execution of warrant of arrest.

ii. The phrase "reason to believe," as articulated in Section 82 of the Code of Criminal Procedure, signifies that the Court must derive its belief from the available evidence and materials that the concerned person has absconded or is concealing himself to evade execution of warrant of arrest.

iii. Furthermore, in the proclamation, it must be set forth as to where and when the concerned individual must present himself. A designated location and time must be stipulated. Importantly, the specified date and time for appearance should not be less than a thirty-day from the date of publication of the proclamation.

Publication of proclamation–

iv. The publication of a proclamation, as outlined in Section 82(2) of the Code of Criminal Procedure, mandates adherence to all three prescribed modes, namely:

(a). The public reading of the proclamation in a conspicuous location within the town or village where the individual ordinarily resides.

(b). The affixation of the proclamation at a prominent spot at the individual's house or homestead.

(c). The display of the proclamation at a prominent location within the precincts of the court house.

v. All the aforesaid three modes of publication of a proclamation have to be adhered to. Failure to follow all or any of them renders the proclamation invalid in the eyes of the law. This is because the three sub-clauses (a) to (c) are mutually exclusive.

vi. If the Court so feels, in addition to the aforementioned trio of methods for securing the accused's presence, it may, at its discretion, also direct the publication of a copy of the proclamation in a daily newspaper circulating within the geographical area where the said individual ordinarily resides.

vii. If the Court, in its discretion orders publication of proclamation in newspaper, it shall also direct that the newspaper agency, upon the publication of the proclamation in the newspaper, shall dispatch a copy thereof to the accused's address, as is the procedure observed in civil matters, in terms of Order 5 Rule 10 of the Code of Civil Procedure. In essence, this supplementary measure ensures that the accused is duly apprised of the legal proceedings against him.

Declaration as “proclaimed person” or “proclaimed offender:

viii. Prior to the declaration of the concerned individual as a "proclaimed person" or "proclaimed offender," the Court shall pass a speaking order stating relevant facts and record its satisfaction that the proclamation has been duly and properly published in the prescribed manner.

ix. Furthermore, it must ensure that a period of not less than thirty days has expired between the date of publication of the proclamation and the date indicated in the proclamation for the individual's appearance. If the interval between the proclamation's publication and the date specified therein for appearance falls short of thirty days, such a publication of the proclamation cannot serve as the foundation for designating the individual in question as a "proclaimed person" or "proclaimed offender."

x. A person can be declared “Proclaimed offender” only where the proclamation published under sub-section (1) of section 82 Cr.P.C. is in respect of any of the offences as per table given below :-

xi. If person accused of the above offences fails to appear at the specified place and time required by the proclamation, the Court may, after making such inquiry as it thinks fit, pronounce him a proclaimed offender and make a declaration to that effect.

xii. In all other alleged offences, the concerned person can and shall be declared as a “proclaimed person”.

Invoking criminal liability for the offence under section 174-A of IPC:

xiii. It is imperative to bear in mind that the primary purpose behind the issuance and publication of proclamations under Section 82, as well as the attachment and sale of an individual's property, is the securing/compelling the appearance of the concerned person, to facilitate the expeditious trial of criminal cases by obviating the often protracted delays which impede their disposal.

xiv. It is noteworthy that the Code of Criminal Procedure does not prescribe an automatic or obligatory invocation of further criminal liability under Section 174-A of the Indian Penal Code, in every case where an individual fails to appear pursuant to he being declared as ‘proclaimed person’ or ‘proclaimed offender’ after the publication of the proclamation under subsection (1) of Section 82 of the Code.

xv. Consequently, it follows that even subsequent to the formal declaration of an individual as a "proclaimed person" or "proclaimed offender," the Court still retains the discretion to determine whether it is judicious to initiate the rigorous criminal proceedings under Section 174-A of the IPC, being mindful that the offence carries a punishment of imprisonment for up to seven years, coupled with a fine.

xvi. In arriving at such a pivotal decision, the Court should exercise due circumspection, once more apply its mind to the facts and circumstances of each case considering the majesty of law vis-a-vis the nature and gravity of the offence that triggered the publication of the proclamation under subsection (1) of Section 82 of the Cr.P.C.; the potential impact of said offence on the victim or society at large; steps, if any, taken for the attachment and sale of property of the person concerned and the result thereof; the stage/status of the ongoing trial, any mitigating factors that may favor the proclaimed person or offender, and conversely, any aggravating factors against them. It is thereafter, that the Court should pass a speaking and reasoned order for initiating criminal proceedings against the proclaimed person or offender for the offense under Section 174-A of the IPC.

xvii. Once the Court decides to proceed against the petitioner for an offence under Section 174-A of the IPC, it is imperative to institute a formal written complaint in the competent jurisdictional court. This imperative arises from the prevailing provision of Section 195 of the Code of Criminal Procedure, which mandates that no Court shall take cognizance of any offence punishable under Sections 172 to 188 (both inclusive) of the Indian Penal Code except on the complaint in writing of the public servant concerned or of some other public servant to whom he is administratively subordinate.

(Para 19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 202 -- Cheque bounce complaint -- Accused residing beyond jurisdiction – Enquiry under Section 202 Cr.P.C -- High Court set aside the order issuing process for non-compliance with the mandate of Section 202 of the CRPC, however no further direction was issued to the learned Judicial Magistrate to hold an inquiry u/s 202 of the CRPC -- Impugned judgment modified, Trial Court directed to proceed from the stage of Section 202 of the Cr.PC – While doing so, the learned Magistrate will be guided by the direction issued by the Constitution Bench, Re : Expeditious Trial of Cases Under Section 138 of N.I.Act, 1881, 2021 SCC OnLine SC 325 = 2021(2) L.A.R. 366 = (2021) Law Today Live Doc. Id. 16184, clause (3) of paragraph 24. "3) For the conduct of inquiry under Section 202 of the Code, evidence of witnesses on behalf of the complainant shall be permitted to be taken on affidavit. In suitable cases, the Magistrate can restrict the inquiry to examination of documents without insisting for examination of witnesses."

(Para 3-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 311, 311A – Cheque bounce complaint -- Expert evidence in rebuttal -- Respondent/ accused disputed his signatures on the cheque from the very beginning -- If the complainant knowing fully well that the accused has denied his signatures on the cheque, did not choose to examine an expert, he cannot be permitted to examine such expert by way of rebuttal to defence evidence – Application dismissed by Trial court – Order upheld.

(Para 1, 8-10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Insolvency and Bankruptcy Code 2016 (31 of 2016), Section 14 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Quashing petition -- Whether during the pendency of the proceedings under the IBC, the proceedings under the Negotiable Instrument Act can continue simultaneously or not – Recovery proceedings barred u/s 14 of the IBC are primarily civil in nature, whereas the proceedings u/s 138 of the NI Act are criminal in nature, and both have a different set of purpose -- By operation of the provisions of the IBC, the criminal prosecution initiated against the natural persons u/s 138 read with 141 of the NI Act would not stand terminated – Quashing petition dismissed.

(Para 6-10)

Code of Criminal Procedure, 1973 (2 of 1974), Section 397, 401 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Conviction in cheque bounce complaint -- Criminal Revision – Absence of counsel/ party – Revision dismissed without consideration on merit – Held, even in the absence of a party or his counsel, a revision petition calls for consideration on merits in accordance with the parameters for consideration of a revision petition – Matter remanded to be considered anew -- Interim bail granted would continue to remain in force and would be subject to the outcome of the revision petition.

(Para 6-8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Directors of company – Non-signatory to cheque – Vicarious liability – Quashing of complaint -- Complainant alleged that the appellants/ accused were liable for transactions of the company and that they were fully aware of the issuance of the cheques and dishonour of the cheques – Most important averment required is that the directors were in charge of, and were responsible for the conduct of the company – Appellants/ accused are neither the signatories to the cheques nor are whole-time directors -- Statutory notice was admittedly not served to the accused -- Complaint quashed qua appellants/ accused.

(Para 9-11)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque bounce complaint – Directors of company – Vicarious liability -- Incharge of the company – Responsible for conduct of business of company -- Only by saying that a person was in charge of the company at the time when the offence was committed is not sufficient to attract sub-section 1 of Section 141 of the NI Act -- Words "was in charge of" and "was responsible to the company for the conduct of the business of the company" cannot be read disjunctively and the same ought be read conjunctively in view of use of the word "and" in between.

(Para 19-21)