Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 83 – Cheque bounce complaint -- Service of summons – Proclaimed person -- It is not borne out as to how the petitioners were duly served before initiating proceedings u/s 83 Cr.P.C. -- Such a recourse is not sustainable in law i.e. without recording satisfaction by learned Magistrate as contained u/s 82(3) Cr.P.C. to the effect that Court found that proclamation was duly published -- 30 days’ time, as mandated by Section 82 Cr.P.C. was not granted -- Impugned orders cannot be sustained -- Petition allowed, impugned orders quashed qua petitioner.

(Para 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Dishonour of cheque -- Maintainability of the complaint – Company not impleaded as party/ accused -- Complaint against Director in absence of the company – Held, for maintaining prosecution under Section 141 of the Act, the company must be joined as an accused -- The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself --  Trial court acquitted the accused -- Application for leave to appeal rejected.

(Para 2, 8, 9, 14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143(3) – Cheque bounce complaint – Speedy trial -- Complaint is still pending for the service of respondent despite the fact that the complaint was instituted five years back – It would be in the interest of justice that the trial Court be directed to decide the complaint in a time bound manner -- Court of learned ACJM, is lying vacant, therefore learned CJM directed to withdraw the case and to transfer the same to any other competent court who shall decide it as expeditiously as possible preferably within a period of six months.

(Para 4-6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 71, 73 -- Cheque bounce complaint – Non-bailable warrants -- Non-bailable warrant should normally not to be issued if presence of the accused could be secured -- Warrant could be issued when the person will not voluntarily appear in Court or police authorities are unable to find the person to serve him with a summon -- The Court should avoid issuance of non-bailable warrant in the first instance to secure presence of the accused and it should be applied as a last resort.

(Para 3)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 71, 73 -- Cheque bounce complaint – Non-bailable warrants – Bailable warrants -- Petitioners, who are the advocates, when came into knowledge with regard to issuance of non-bailable warrant, they immediately appeared before the concerned court requesting to convert the non-bailable warrant into the bailable warrant, for which the application was also preferred on the same day, however, the concerned court has not accepted the application on the ground that the complainant had not given “no objection” for the same – Held, non-bailable warrant deserves to be converted into bailable warrant -- Non-bailable warrant converted into bailable warrant – Conditions imposed.

(Para 1-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Cheque bounce complaint -- Compounding of offence without consent of complainant – Ld. Magistrate dismissed the application -- Sessions’ court has remanded the matter to decide it afresh as per law laid down in M/s Meters and Instruments Private Limited case, AIR 2017 Supreme Court 4594 -- Supreme Court has carved out a window in the existing scheme of things saying that the case can be disposed of without obtaining direct consent of the complainant under certain circumstances. The circumstances included :

-- offering an amount fair and acceptable which in the opinion of the court is appropriate for duly compensating the complainant. That is under certain circumstances the court can proceed in absence of direct consent.

-- the court is empowered to apply its discretion in terms of provisions of Section 258 Cr.P.C.

-- this matter is distinct and separate from compounding of the case where both the parties agree.

M/s Meters and Instruments Private Limited’s case has emphasized that where an appropriate amount has been offered/deposited, the trial court may consider to drop the proceeding -- Court has not lost its power of discretion in such matters -- Revision impugning Session Court’s order dismissed.

(Para 3-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 438 – Complaint for dishonour of cheque -- Absence from trial – Non-bailable warrants -- Anticipatory bail -- A person released on bail is already in constructive custody of law and if law requires him to come back to custody for specified reasons, application for anticipatory bail would not lie -- Petition dismissed being not maintainable.

(Para 7, 8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque bounce complaint – Account holder -- Joint liability – For an offence u/s 138 to be made out a cheque has to be issued by the account holder under his name and signature -- It is only the holder of the account on which the cheque is drawn can be made liable and such culpability cannot be extended to others except as provided u/s 141 N.I. Act.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Cheque bounce complaint -- Joint liability – Joint Account – Signatory of cheque – Requirement of -- In case of individual persons, a person other than a person who has drawn a cheque on an account maintained by him cannot be persecuted for an offence u/s 138 N.I. Act, unless the bank account is jointly maintained and that he was a signatory to the cheque.

(Para 14)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Bank also summoned – Quashing of proceedings -- Petitioner/Bank has been made a party by the complainant where no role can be attributed to the bank -- Bank is only the custodian of the money of the customers and has to comply with the instructions of such customers -- In case of insufficiency of funds, the bank is only to report the same and as such, cannot by any stretch of the imagination be liable for any act of the customer who has issued the cheque which was later dishonoured – Proceeding as against the petitioner/ Bank set aside and quashed.

(Para 15-17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 -- Indian Penal Code, 1860 (45 of 1860), Section 420 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Dishonour of cheque – Compounding of offence – Consent of complainant -- An application for compounding of the offence moved by the petitioners stating that they were ready to pay the cheque amount – Application was contested by the respondent-complainant, dismissed by trial Court upheld by Appellate court – Held, without consent of the complainant, compounding cannot be permitted – Revision dismissed.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque dishonoured after its validity/ 3 months – Quashing of complaint -- Cheque in question was issued on 18.05.2018, which was ultimately dishonoured by Banker of the accused on 8.11.2018 -- In view of RBI circular dated 04.11.2011, maximum validity period for a cheque could be for 3 months only and even on the cheque in question it was specified that the same is valid for 3 months only – Substantive provision i.e. Section 138 of NI Act is that cheque be presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier – Petition allowed and complaint with all subsequent proceedings including summoning order quashed.

(Para 4-7)

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 482 -- Cheque bounce case – Proclaimed person – Quashing of FIR u/s 174A IPC-- FIR on account of absence of the petitioner which was subsequently regularized on his appearance after he was granted bail by the Court -- Continuation of the proceedings u/s 174-A of IPC shall be abuse of the process of the Court – Order declaring Proclaimed Person along with subsequent proceedings arising out of the same including FIR u/s 174-A of IPC quashed, subject to payment of Rs.25,000/-.

(Para 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138(b) – Dishonour of cheque – Demand notice – Demand of other amount than cheque – Legality of -- In a demand notice, if other amounts is mentioned with the cheque amount in a separate portion in detail, the said notice cannot be faulted in a legal term of the Section 138 (b) of the Act, 1881.

(Para 24)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Indian Evidence Act, 1872 (1 of 1872), Section 118(a) – Complaint for dishonor of cheque – Presumption – Rebuttal -- There is a difference between an ‘ordinary criminal case’ and a ‘complaint under Section 138 of NI Act’ -- In ordinary criminal case, presumption of innocence is in favour of accused, whereas in a case in complaint under NI Act, presumption is in favour of complainant with reverse onus upon the accused.

(Para 20)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 251, 258 – Complaint for dishonor of cheque – Notice of accusation – Discharge of accused – Quashing of criminal proceedings -- In case ingredients for filing complaint u/s 138 of NI Act are in existence, then presumption is there, as provided under law, and to rebut the same, definitely, evidence would be required, which would be possible only in the trial Court, but in case essential ingredients are lacking, then the trial Court, at the time of framing of charge/putting notice of accusation, can quash the criminal proceedings.

(Para 21)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Complaint for dishonor of cheque – Security Cheque -- Presumption is in favour of the complainant and against the petitioner/accused – No illegality or perversity in the order passed by the Magistrate for summoning the petitioner – Petitioner shall have every right to rebut the presumption by placing on record relevant material before the Trial Court at appropriate stage during trial -- Quashing petition dismissed.

(Para 22, 23)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Parole leave for filing appeal -- Conviction in 13 case u/s 138 of NI Act for 1 year each -- Applicant has undergone approximately 09 months incarceration -- Applicant directed to be released on parole leave in all the offences for a period of 30 Days – Prior to release, the applicant shall deposit an amount of Rs.10,000/- with the jail authorities -- In case the applicant surrenders in time, the said amount shall be refunded to the applicant.

(Para 3-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Cheque bounce case – Compromise after Conviction – Acquittal -- Since the revisionist and the complainant have settled the dispute, the offence u/s 138 of the Act gets compounded -- Consequently, the revisionist is entitled to acquittal from the charges as levelled against him -- Orders under challenge set aside -- Revisionist acquitted.

(Para 1, 7-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 320, 482 – Cheque bounce complaint – Compounding of offence after conviction – Acquittal of accused -- Offence u/s 138 of the NI Act can be compounded at any stage and overrides the effect of Section 320(9) of the Cr.P.C. -- Section 147 of the NI Act was inserted by way of an amendment to a special law and the section commences with a non obstante clause -- Consequently, in light of the compromise Petition filed before High Court, compounding of the offence allowed -- Order of conviction handed out to the petitioners set aside -- Petitioners are consequently acquitted of the offence under Section 138 of the NI Act.

(Para 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 320(1) -- Compounding after conviction u/s 138 of NI Act -- Total cheque amount received by the complainant and the complainant has given consent for compounding the offence -- Keeping in mind the object of Section 147 of the NI Act, which is an enabling provision which provides for compounding the offence inserted by way of amendment towards special law, would give overriding effect to sub-section (1) of Section 320 of Cr.PC, matter considered as compounded -- Judgment and order of conviction and sentence quashed and set aside.

(Para 4-6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Amendment of loan amount in complaint and affidavit of evidence -- Wrong amount of loan mentioned in demand notice/ complaint as Rs. 6,60,000/- instead of Rs.7,20,000/- -- Affidavit also adduced for wrong amount --  Complainant was cross-examined on such statement on oath -- Again in cross-examination he admitted to have stated that he had given Rs.6,60,000/- to the accused -- Loan amount cannot undergo a change because the same forms the very basis of the complaint -- This would certainly change the very nature and character of the case – Held, complainant cannot be permitted to change the very foundation of his case midway during trial.

(Para 3-8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Amendment of complaint -- Curable infirmity or defect can be removed by amending the complaint.

(Para 19)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Amendment of complaint -- Amendment cannot be allowed to change the basic core, crux and tenor of the complaint.

(Para 19)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Amendment of complaint -- Amendment, which results in prejudice to the other side, cannot be allowed -- Amendment sought for to the complaint, if does not cause prejudice to the other side, the same can be allowed.

(Para 19)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Amendment of complaint -- Addition of name of company/ firm  -- When the amendment application pertains to addition of company or firm as a principal offender, after taking cognizance of the offence mentioned in the complaint by the Magistrate, company or firm cannot be added.

(Para 19)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 --  Maintainability of Complaint -- Company/ Firm not impleaded as party – Vicarious liability of Director/ Partner -- If the cheque is drawn on the account of company or firm, then the principal offender is the company or firm and therefore, in the absence of the company or firm being arraigned as accused in the complaint, the prosecution against the Directors or Partners cannot be maintained.

(Para 19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Contempt of Courts Act, 1971 (70 of 1971), Section 12 -- Cheque bounce complaint -- Contempt of Court – MoU between the parties during the pendency of Complaint u/s 138 of NI Act -- MoU was filed before the Trial Court, wherein, the Respondent/ accused gave an undertaking to the Trial Court that the entire settlement amount shall be paid on or before 29.02.2020 and it was further stated that in case of default, he would become liable for contempt of Court – Respondent/ accused has only paid a sum of Rs. 42 lakhs and has failed to pay the balance of Rs. 2,40,84,782.14 as per the undertaking – Respondent held guilty of contempt for wilful breach of terms of the MoU and the undertakings given – Contemnor, ordered to undergo two (02) months imprisonment along with a fine of Rs. 2,000 -- In default of payment of the fine, he shall further undergo fifteen (15) days simple imprisonment.

(Para 1, 2, 13-14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Compromise/ Compounding of offence after conviction -- Agreed amount deposited -- 5% of agreed amount deposited in High Court Legal Services Authority – Offence u/s 138 of NI Act compounded u/s 147 of Act -- Criminal Revision allowed, the judgments of the trial Court and the Appellate Court set aside and the accused is acquitted from the charges levelled against him.

(Para 1-4)

A. Indian Penal Code, 1860 (45 of 1860), Section 174A -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – FIR u/s 174A IPC – Punishment -- Accused will be liable to be punished under the first part of Section 174A IPC, i.e. up to three years' imprisonment or with fine or with both; and not under second part of Section 174A IPC.

(Para 9)

B. Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 468, 482 -- Indian Penal Code, 1860 (45 of 1860), Section 174A – Negotiable Instruments Act, 1881 (26 of 1881) , Section 138 – Cheque bounce case – FIR u/s 174A IPC – Limitation of 3 years -- Quashing of FIR -- Cognizance of an offence punishable under first part of Section 174A IPC cannot be taken after the expiry of three years -- Though the petitioner was declared proclaimed person vide order dated 02.07.2018 but the FIR in question u/s 174A IPC registered on 09.08.2022 i.e. much beyond the period of limitation of three years -- Court will be debarred from taking cognizance of such an offence u/s 174A IPC --  FIR u/s 174-A IPC and all the subsequent proceedings arising therefrom, quashed.

(Para 10-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Legally enforceable liability – Presumption – Rebuttal – Petitioner/ accused  borrowed a sum of Rs.1,80,000/- from complainant and issued two post-dated cheques on the date of borrowing itself – Petitioner/ accused defence that LIC Policy Premium cheques has been misused -- Respondent/ complainant in cross-examination stated that for paying premium, D.D. has to be taken in the name of L.I.C and not in the complainant/ respondent's name -- Premium amount of L.I.C is known and the contention of the petitioner/ accused that he had issued the cheque without filing the amount is not acceptable – Respondent/ complainant categorically discharged his initial burden -- Both the Courts below rightly convicted the petitioner -- Trial Court directed to take steps to secure the petitioner/accused to serve the remaining period of sentence.

(Para 3-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Cheque bounce case – Revision against conviction – Capacity to pay -- Signature on cheque found to be genuine in forensic examination – A presumption arose in favour of the complainant u/s 139 of the Act -- Defence of the accused is that his cheque book had been fraudulently obtained by the complainant by forging his application proven to be wrong by the witness from the bank who has deposed that other cheques from the same cheque book had been issued by the accused and had been honoured – Submissions that the complainant did not prove his capacity to pay a huge amount nor did he prove the actual payment thereof are meaningless – Revision dismissed.

(Para 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 56, 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 – Cheque bounce complaint -- Legally enforceable liability – Part payment of cheque amount -- Indorsement of part of sum due on cheque – Requirement of -- Cheque must be issued in discharge of any debt or other liability either in whole or in part -- After issuing the cheque, the drawer of the cheque made a payment of certain amount -- A sum of Rs. 6036.83/- was paid by the drawer of the cheque against bill No. 3537 on 3rd April, 1995 after the cheque was drawn on 29th March, 1995 and before it was returned on 24th April, 1995 – Held, the entire cheque amount cannot be said to be legally enforceable debt -- Accused persons cannot be said to have committed any offence within the meaning of Section 138 of the N.I. Act – Ld. appellate Court was not justified in affirming the order of conviction in view of Section 56 of the N.I. Act – Impugned judgment is liable to be set aside.

(Para 8, 9)

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

(Para 10, 11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Cheque bounce complaint -- Presumption – Rebuttal -- Account closed – Defence that accused misused the security cheque by filling up the name of wife -- Cheque was written and signed by the accused -- Return memo indicates that on the date when the cheque drawn, the bank account already closed -- Complainant caused notice, which was received by the accused -- In the cross examination it is elucidated from the complainant that her husband and sons are running business in wax printing and they have business transaction with the accused – Held, this fact is no way rebut the presumption enumerated under Section 139 of N.I.Act -- Accused cannot take a plea that the said cheque was given as a security for the transaction, which took place four years ago.

(Para 14-16)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Cheque bounce complaint -- Presumption – Rebuttal -- Capacity to pay -- As far as the source of income, the complainant in the cross examination has indicated her source and also though she is an house wife, her husband and son being the earning members, it cannot be ruled out that she has no wherewithal to lend Rs.5,00,000/- to the accused – Contention that subject cheque was given only as a security and the complainant has no wherewithal to advance Rs.5,00,000/-, both factually not proved even by preponderance of probability -- While there is a statutory presumption, mere denial or adducing evidence which does not shake the foundational fact proved by the complainant, can be taken as a probability.

(Para 17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Cheque bounce complaint -- Revision – Sentence of cheque amount – While suspending the sentence High Court imposed a condition that the petitioner shall deposit a sum of Rs.1,00,000/- -- Further, imposed condition that the petitioner shall deposit another sum of Rs.1,50,000/- within a period of four weeks after immediately coming out on bail – Both the conditions were duly complied with by the petitioner – Petitioner ready and willing to settle the remaining cheque amount within the stipulated time fixed by this Court – Conviction confirmed, sentence set aside on condition that the petitioner shall deposit the remaining cheque amount namely a sum of Rs.2,50,000/- on or before 29.05.2023.

(Para 5-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce complaint -- Validity of cheque – Quashing of complaint – Dishonor of cheque with the remarks “Insufficient Funds” -- It was not mentioned on the cheque that the same is valid for 3 months -- Controversy involved is totally a disputed question of facts and the same is to be appreciated by the learned Trial Court on the basis of evidence led by both the sides regarding the contentions raised that whether the cheque is valid for 3 months or not -- Petition for quashing dismissed.

(Para 1, 5, 6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Quashing of complaint -- Loss of cheques – Plea of – Inherent power u/s 482 Cr.P.C. -- FSL Report proving signatures on cheques -- Two cheques issued to repay debt – Petitioner did not deny the fact of execution of any deed of agreement on payment of such amount – Signature in the deed of agreement and two cheques are found to be similar – FSL report reveals that the signatures of the accused/petitioner in two cheques and in deed of agreement are similar in nature – Disputed question of facts cannot be adjudicated upon in a petition u/s 482 Cr.P.C.

(Para 11)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounced complaint -- Account Closed – Presumption -- Both the cheques were issued by the accused/ petitioner after closing of his account -- It transpires that the petitioner had knowledge regarding closer of his bank account and in spite of that he issued the cheques in favour of the respondent No.2/claimant -- Under such backdrop, it can be assumed that the presumption u/s 139 N.I. Act will come into play at this stage.

(Para 13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Vicarious liability -- Vicarious liability is a specific species and assumes critical importance, particularly when there is criminal liability involved and therefore, cannot be taken lightly -- If such an extension of principle of vicarious liability were to remain, it would go against the very grain and texture.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Officer in Company -- Vicarious liability – Merely holding a designation or office in a company not sufficient for liability under section 141.

(Para 15)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Vicarious liability – Bald averment against petitioner – Some accused dropped -- Bald averments against Accused No. 3-8 being directors of Accused-Company and in-charge of and responsible for the conduct, affairs and business of the company -- No specific averment made that this was so at the time of the commission of the offence -- Signatory of the cheque was also the Managing Director of the Company would be deemed to be in-charge, it was not as if the complainant was remediless -- Considering that Accused No.4 to 8 were dropped by the complainant, there was no reason for the complainant to have continued with proceedings against Accused No.3.

(Para 18)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Incharge of Company – Vicarious liability – Letter head of company – Reliance upon -- Merely the mention of the name of Accused No.3 on the letter head as being the Head of the Group, does not ipso facto or ipso jure make him in-charge of and responsible for the affairs and business of the company at the time the offence was committed.

(Para 19)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Vicarious liability – Non-Executive Director – Non-executive director may be the custodian of governance of the Company but are not involved in the day-to-day affairs of running its business and only monitor executive activities of the Company -- Phraseology used in Section 141 of the Act of being in charge and responsible to the Company for the conduct of the business of Company is a reference to an “executive activity” which imports an element of running day-to-day affairs of the Company and would not be extended to a role which is essentially supervisory, policy oriented, of oversight or regulatory i.e. non-executive in character.

(Para 21)

F. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141, 142 -- Companies Act, 1956 (1 of 1956), Section 175 – Companies Act, 2013 (No. 18 of 2013), Section 104, 203 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Non-executive Co-chairman – Managing Director and executive directors are appointed for a company to ensure that all executive decisions – Non Executive Directors are to advice or oversight of the functioning of the company -- Even the role of ‘Chairman’/ ‘Chairperson’ is not typically of an executive nature -- Creeping up an escalating liability to Chairpersons of large conglomerates/ companies for cheques issued in day-to-day affairs of the business of a company would unfairly and unnecessarily expand the provisions of vicarious liability under the provisions of the Negotiable Instruments Act – No prejudice is caused to the complainant as the signatory of the cheque, the Managing Director is already arrayed as accused -- Proceedings quashed qua the petitioner.

(Para 13, 22-26)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389, 482 -- Cheque bounce case -- Appeal against conviction – Suspension of sentence -- Non-appearance of accused on date fixed – Cancellation of bail – Ground taken that Car of petitioner stuck in heavy rain on the date fixed -- One opportunity granted to the petitioner to mend his ways – Petitioner ordered to surrender within three weeks and Court ordered to be released upon his furnishing fresh surety bonds/bail bonds subject to payment of cost of Rs. 10,000/- to be deposited in the concerned District Legal Services Authority.

(Para 9-11)

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 174-A – Cheque bounce case – Quashing of Proclaimed person order/ FIR u/s 174-A IPC – Since the petitioner has joined the trial, order declaring proclaimed person has lost its significance -- Petitioner is no longer a proclaimed person and thus, continuing with the FIR would be oppressive -- Accordingly quashed.

(Para 1, 2)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Dishonour of cheques -- Demand notice -- Three cheques for an amount of Rs.14,00,000/- -- Legal notice to pay the cheque amount and in case of legal action, to bear the entire cost of the proceeding, interest on the amount besides legal fee – It is not a case that the opposite party demanded an amount more than the cheque amount of Rs.14,00,000/- -- Impugned notice cannot be said to be not in conformity with law.

(Para 4-7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Dishonour of cheques -- Demand notice with additional claim – Legality of -- Defect in notice cannot invalidate the proceeding when the demand is only for the cheque amount with additional claim towards the miscellaneous expenses.

(Para 8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounce case – Presumption of legal enforceable debt --  Complaint by Financier/ money lender – A presumption u/s 118 read with Section 139 of the N.I. Act cannot be rebutted on this count alone as the signature on the cheque stands admitted and there is no principle of law as per which a financier cannot initiate a complaint u/s 138 of the N.I. Act.

(Para 17)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounce case – Presumption of legal enforceable debt -- Financial capacity of the complainant -- There is no requirement that the complainant must show the necessary financial capacity to advance the loan in question to an accused -- Once the signatures are admitted, a statutory presumption arises that the cheque has been issued for the discharge of legally enforceable debt -- Nothing substantial has been brought on record to rebut the said presumption -- No reason to interfere in reasoned judgments of the Trial Court as well as the Appellate Court – Revision dismissed.

(Para 18)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint – Legal notice -- Service of -- Postal authorities made several attempts to serve legal notice on the accused on several days, as the door was locked it was returned -- Complainant also sent a legal notice under certificate of posting -- If the registered notice was sent to the correct address of the accused with proper postage and when the accused was not available at his house without any instructions to the inmates, it can be taken as a proper service.

(Para 19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint -- Quashing of complaint against partner/ wife – Vicarious liability – Partnership firm -- Cheque from personal account of husband -- Petitioner is not a signatory to the cheque and the said cheque was issued on personal account of accused No.1/ husband – Though the petitioner is a partner in the partnership firm and amounts were taken from the finance firm, it would not be proper for the complainant to prosecute the petitioner, who is not a signatory to the said cheque – Petitioner is not vicariously liable u/s 138 of Negotiable Instruments Act -- Petition allowed.

(Para 3-6)

Insolvency and Bankruptcy Code 2016 (31 of 2016) Section 14, 31, 38, 39, 40, 41 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Moratorium under IBC -- Approval of resolution plan – Approval of claims – Effect on proceedings u/s 138 of NI Act – Signatory/ Promoter/ Managing Director of Company – Criminal liability :

-- Nature of proceedings which have to be kept in abeyance do not include criminal proceedings, which is the nature of proceedings u/s 138 of the N.I. Act – Proceedings u/s 138 of the N.I. Act are not recovery proceedings, they are penal in character.

-- It cannot be said that the process under the IBC whether under Section 31 or Sections 38 to 41 which can extinguish the debt would ipso facto apply to the extinguishment of the criminal proceedings – Appellant has been roped in as a signatory of the cheque as well as the Promoter and Managing Director of the Accused company, which availed of the loan -- Loan agreement was also signed by him on behalf of the company.

Criminal liability and the fines are built on the principle of not honouring a negotiable instrument, which affects trade -- This is apart from the principle of financial liability per se -- Plea that if proceedings against the company come to an end then the appellant as the Managing Director cannot be proceeded against, not accepted.

(Para 16-18)

Indian Penal Code, 1860 (45 of 1860), Section 174-A -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 – Cheque bounce case -- Proclaimed person – Quashing of FIR u/s 174-A of IPC – Surrender and bail – Effect of -- Petitioner was declared proclaimed person, however, surrendered before the Trial Court and after noticing that he had not appeared earlier and since the offence in question is bailable, he was admitted to regular bail -- Later on, FIR u/s 174-A IPC was registered against the petitioner on the basis of the order declaring him proclaimed person -- FIR and all the consequent proceedings arising out of the same quashed. Rahul Dureja’s case, 2022(1) R.C.R.(Criminal) 248 relied.

(Para 2-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 251 -- Cheque bounce complaint – Substance of accusation – Personal appearance of accused – Requirement of -- Since the petitioner/ accused being represented by a duly authorized pleader, his duly authorized pleader can be examined u/s 251 Cr.P.C. -- Personal appearance of the petitioner/ accused at the stage of Section 251 Cr.P.C. examination is not required.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 397 -- Revision against conviction – Maintainability of -- Judgment and order passed is appealable before the court of the Session Judge or Additional Session Judge, thereafter, if aggrieved, the party may move the High Court on an application for revision u/s 397 Cr.P.C. -- Petitioner has forgo one forum and has directly approached this Court which is not proper -- Petition is deemed not maintainable -- Petitioner may approach the competent court and considering the fact that the issues raised deserved to be heard on merits, the time period consumed while pursuing the matter before High Court condoned.

(Para 16-21)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque by Company – Vicarious liability of person responsible – Pleadings -- In order to make a person vicariously liable for an offence committed by company u/s 138 of the NI Act, the first and foremost pre-condition is that the said person should either be a signatory of the cheque or should be holding a position in the company and should also be responsible for the conduct of the business of the company while holding such designation -- Complainant also has to plead the exact role and the manner by which the said person is alleged to be responsible for the commission of the alleged offence.

(Para 12-14)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheques by Partnership Firm – Quashing of complaint -- Petitioner is not an authorised signatory -- Cheques were handed over by other partner -- Only allegation against the petitioner is that she had participated in the negotiations along with other partner and was also responsible for conduct of the business and accused company was working through the petitioner -- It is, however, not mentioned that in what capacity, the petitioner was working -- Petitioner is the wife of other partner in the accused firm -- On the date when the alleged offence was committed, the petitioner was not a partner – Holding a Trial against the petitioner u/s 138 read with Section 141, is utmost abuse of the process of law and the Ld. Trial Court has passed the summoning order without any application of mind – Impugned order and complaint in relation to the petitioner is quashed.

(Para 16-23)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce complaint – Quashing – Inherent power of High Court u/s 482 Cr.P.C -- High Court is not to conduct a mini trial by considering the defence of the accused or holding an inquiry into the merits of the matter -- However, if, on the face of the documents which are beyond suspicion or doubt, the accusations against the petitioner are found to be frivolous, in order to prevent the injustice and abuse of the process of law, it is incumbent that appropriate relief is granted by exercising power under Section 482 of the Cr.P.C. -- Where ingredients of an offence are lacking against an accused, it is the duty of the Court to discharge such accused.

(Para 20-22)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case -- Handwriting expert – Comparing the writing filled in the body of the cheque -- Once the signature on the cheque is admitted by the accused-respondent, it is immaterial as to who had filled in the details in the cheque and therefore, no purpose is going to be served by allowing the application for appointing the handwriting expert.

(Para 4, 12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 406 – Transfer of complaint u/s 138 of NI Act – Notwithstanding the non obstante clause in Section 142(1) of the Act of 1881, the power of Supreme Court to transfer criminal cases u/s 406 Cr.P.C. remains intact in relation to offences u/s 138 of the Act of 1881.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142(2) – Jurisdiction to try complaint u/s 138 of NI Act -- Section 142(2)(a) of the Act of 1881 vests jurisdiction for initiating proceedings for an offence under Section 138 in the Court where the cheque is delivered for collection, i.e., through an account in the branch of the bank where the payee or holder in due course maintains an account.

(Para 12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Complaint through authorised representative of attorney holder -- Maintainability of – General power of attorney holder cannot delegate his powers to another person but the same can be delegated when there is a specific clause permitting sub-delegation – The use of the words “to appoint counsels or special attorneys” would not mean that he was authorised only to appoint counsel or special counsel for the purpose -- Power of attorney holder was authorised to appoint special attorney other than the counsel for the purposes for conducting and prosecution of cases on behalf of the appellant-company -- The said power of attorney do provide for the sub-delegation of the functions of the general power of attorney holder and thus the filing of the complaint on behalf of the appellant company through its authorised representative of attorney is not at all illegal or bad in law.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case -- Affidavit of GPA – Capacity to depose -- Personal affidavit stating that he is general power of attorney holder of the appellant company and that since he is also a director, he is fully conversant with the facts of the case and hence is competent to pursue the litigation on behalf of the appellant company -- As the power of attorney holder is said to be having due knowledge about the transactions, he has the capacity to depose.

(Para 14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Cheque bounce case -- Interim compensation – Trial court directed accused to deposit 20% of cheque amount – Challenge to -- Trial Court found the case appropriate wherein cheque of Rs.10 lakh was issued by the accused-petitioner to the complainant, however, the same was dishonored on its presentation -- Trial Court has not exceeded the upper limit of 20% -- Weighing the facts and circumstances on the anvil of the law settled, court found no merit in the petition and the same is accordingly dismissed.

(Para 1, 9, 10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Acquittal of accused -- Legal enforceable liability -- No direct transaction between the complainant and the accused-petitioner -- Entire story runs around the mother of the complainant, who is a vital witness, but she has not been produced and examined as a witness before the trial Court -- During obtaining loan from the bank, involvement of a third party witness was spoken by the complainant, but said person has not been examined as witness – Held, disputed question of facts and crucial persons like mother of the complainant and third party witness not being examined, conviction based on sole deposition of PW-1, the complainant, cannot be appreciated -- Complainant failed to establish "legally enforceable debt" -- Revision allowed, impugned judgment and order of sentence quashed.

(Para 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce case – Quashing of complaint and summoning order – Cheque was issued by brother of petitioner no.2 -- Said cheque was not issued by him as an authorized signatory of the petitioner-firm -- Petitioners admittedly are neither signatory to the cheque in question, nor was it drawn from their bank account -- Petitioners cannot be prosecuted for an offence u/s 138 of the NI Act -- Even if the loan amount had been deposited in the bank account of petitioner No.2, it would still not be sufficient enough ground to fasten his liability u/s 138 of the NI Act – Petition allowed, complaint and summoning order quashed qua the petitioners.

(Para 6,7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 311, 313, 482 – Legal Services Authorities Act, 1987 (39 of 1987), Section 12 -- Cheque bounce case – Handwriting expert – Closure of defence evidence -- Delay substantially attributable to the procedural formalities within the office of State Legal Services Authority for seeking production of handwriting expert – Even impugned orders shall cause serious prejudice to the rights of the petitioner, amounting to denial of fair trial -- Two effective opportunities granted -- State Legal Services Authority requested to take decision for the purpose of granting necessary financial assistance at the earliest so that the petitioner be able to avail her chance to defend herself.

(Para 7, 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138(b) -- Demand notice – Nature of -- Notice contains a clear demand but in a soft and unconventional language which is in conformity with the object of statute -- Statute does not indicate ‘clear’, ‘specific’ and ‘unambiguous’ demand of payment of dishonoured cheque – Ld. Appellate Court had taken the pains of rewriting a statute by importing the words like ‘clear’, ‘specific’ and ‘unambiguous’ demand which is contrary to all rules of construction to read words into an act which are not there unless it is absolutely necessary.

(Para 27-29)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Cheque bounce case – Compounding after conviction -- Quashing of conviction and sentence after backout from compromise – In revision double of the cheque amount was accepted by the complainant in terms of a settlement and it was agreed that an application u/s 147 of the N.I. Act for compounding of the offences shall be moved -- However, complainant reneged from the compromise -- Not only does the complainant choose not to appear but his counsel too has chosen not to appear in Court despite this matter having been adjourned on two earlier occasions -- This conduct is reprehensible to say the least – Conviction and order of sentence and all proceedings against the petitioner quashed.

(Para 8-15)