Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce case – Presumption u/s 139 of N.I. Act -- Dismissal of complaint – Appellant/complainant has averred that the amount of cheque is part of sale consideration which stands belied from the reading of registered sale deed -- Once on preponderance of probabilities the defence creates doubt, the onus shifts on the complainant to prove its case beyond shadow of reasonable doubt and the protective umbrella of Section 139 of the N.I. Act is no more available. Dismissal of complaint order, upheld. Rangappa’s case, (2010) 11 SCC 441 relied.

(Para 1,7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 -- Indian Evidence Act, 1872 (1 of 1872), Section 3 -- Complaint in cheque bounce case – Evidence of accused by way of affidavit – Permissibility of -- Accused, who is facing trial in complaint under the provisions of Negotiable Instruments Act, is not competent to tender his evidence through affidavit.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82 -- Cheque bounce case -- Proclaimed offender -- Order challenged after 4 years -- There may not be any reason to allow, however keeping in view the fact that the matter actually arises out of proceedings u/s 138 of the N.I. Act and petitioner undertakes to continue appearing before the trial Court on each and every date and also and a mother of two minor children (less than 10 years of age), impugned order set aside, upon the petitioner furnishing adequate bail bonds and surety bonds to the satisfaction of the trial Court.

(Para 1)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 219 -- Cheque bounce case – Four cheque bounced – One legal notice issued – Consolidation of trial -- There is no provision of consolidation of cases in the Code of Criminal Procedure – Only relief that can be granted, Trial Magistrate directed to fix all the four cases on one date so that it is convenient to both the parties to attend the hearing of all the four cases on one date.

(Para 3-5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 87, 138 – Blank Cheque -- Material alteration -- Filling in the blank shall not be always required to be treated as a material alteration -- Alteration in the common parlance is understood to mean, something already been written has been changed/altered subsequently -- Alteration is not synonymous to the word “filling up the unfilled column or space” -- Alteration is permissible, if it is made in order to carry out the common intention of the original parties.

(Para 24)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Quashing of complaint u/s 138 of NI Act -- Power u/s 482 Cr.P.C. can be exercised in favour of the petitioner only when the Court is certain that the continuation of the proceedings would be of no use and the Court is in a position to record from finding that continuation of such proceedings would result in abuse of the process of the Court -- Once there is a doubt or there are certain questions which need adjudication on appreciation of evidence, the High Court should not exercise powers under Section 482 Cr.P.C. to quash the complaint.

(Para 25)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143A – Code of Criminal Procedure, 1973 (2 of 1974), Section 421 -- Cheque bounce complaint – Interim compensation – Recovery of -- In case an accused, against whom an order to pay interim compensation u/s 143A of the Act is passed, fails or is unable to pay the amount of interim compensation, the process u/s 421 can be taken resort to which may inter alia result in coercive action of recovery of the amount of interim compensation as if the amount represented the arrears of land revenue – Extent and rigor of the procedure prescribed for such recovery may vary from State to State but invariably, such procedure may visit the person concerned with coercive methods.

(Para 12)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143A – Section 138, 143A – Cheque bounce complaint – Interim compensation – Whether Section 143A of the Act is retrospective in operation and can be invoked in cases where the offences punishable u/s 138 of the Act were committed much prior to the introduction of Section 143A – Section 143A held to be prospective in operation and that the provisions of said Section 143A can be applied or invoked only in cases where the offence under Section 138 of the Act was committed after the introduction of said Section 143A in the statute book.

(Para 14-24)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A, 148 – Cheque bounce case -- Directions to deposit certain percentage of compensation/fine – Adjustment of amount recovered under 'the SARFAESI Act' – Courts are well within their power to order adjustment -- Amount recovered under the SARFAESI Act shall be deemed to have been adjusted towards 20% of the compensation as ordered by the Court.

(Para 12-23)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Code of Criminal Procedure, 1973 (2 of 1974), Section 421 – Cheque bounce case – Interim compensation -- Non-deposit of – It is nowhere, specifically provided in the Act that if the payment as ordered has not been deposited, the bail granted shall be liable to be consequently cancelled – Recovery can be made of such defaulted amount as if it is a fine under Section 421 Cr.P.C. -- During the trial of the case, the Court should not cancel the bail already granted on this ground alone.

(Para 25)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Cheque bounce case -- Directions to deposit certain percentage of compensation/fine – Non-deposit of – Once the legislature or framers of the NI Act have not made any specific provision for automatic cancellation of the bail granted by the trial court or the appellate court on account of default of payment of interim compensation or certain percentage of compensation or fine, it would not be appropriate to hold it otherwise.

(Para 24,25)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 357(2), 389 – Appeal against conviction u/s 138 of NI Act – Suspension of Sentence – Pre-condition of deposit 20% -- Power of -- Amended Section 148 of the N.I. Act confers power upon the Appellate Court to pass an order pending appeal to direct the Appellant-Accused to deposit the sum which shall not be less than 20% of the fine or compensation either on an application filed by the original complainant or even on the application filed by the Appellant-Accused under Section 389 of the Cr.P.C. to suspend the sentence.

(Para 9, 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 148 – Appeal against conviction u/s 138 of NI Act – Provision of 20% deposit – Mandatory or Directory -- Nature of -- Considering the amended Section 148 of the N.I. Act as a whole to be read with the Statement of Objects and Reasons of the amending Section 148 of the N.I. Act, though it is true that in amended Section 148 of the N.I. Act, the word used is “may”, it is generally to be construed as a “rule” or “shall” and not to direct to deposit by the appellate court is an exception for which special reasons are to be assigned – Such a purposive interpretation would be in furtherance of the Objects and Reasons of the amendment in Section 148 of the N.I. Act and also Sec 138 of the N.I. Act.

(Para 9)

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 – Proclaimed offender / person – F.I.R. u/s 174-A of IPC – Quashing of -- Petitioner has undergone substantive sentence in the proceedings u/s 138 of the N. I. Act -- Petitioner made the payment to the complainant who entered into a compromise with the petitioner after his claim was satisfied, sentence was reduced to the period already undergone by him – Both F.I.R.s registered u/s 174-A IPC are hereby quashed along with all the subsequent proceedings, however, subject to payment of costs of Rs.3,000/- to be deposited with the District Legal Services Authority.

(Para 9-10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce case -- DDR for misplace of cheque – Presumption u/s 139 of NI Act – Rebuttal of -- Acquittal of accused – Leave to appeal -- DDR Ex.DW.1/A dated 18.9.2012, recorded on the statement of accused, he has averred that his cheque book of account of HDFC Bank has been misplaced containing cheques of the serial Nos.220856 to 220865 -- Number of present cheque is 220861 -- DDR has been registered even before the advancement of loan as stated by the complainant -- Presumption u/s 139 of the NI Act has been duly rebutted – No ground to grant leave to appeal.

(Para 8-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case -- Loan of Rs. 2 lacs -- No documentation -- Complainant has not mentioned any date, month, year as to when the loan was advanced to the accused -- No receipt or security document was got executed while lending amount of Rs.2 lakhs to the accused -- Otherwise also, there are no particulars, that at which place, in whose presence the loan was advanced and what was the mode of giving the amount, whether by cheque or by cash nor there is anything that the amount was withdrawn from the bank or it was lying with the complainant at his home -- No document on record to show the loan transaction -- No income tax return has been produced to show the lending of the amount in question to the accused -- All these facts are fatal to the case of the complainant. Vijay’s case, 2013(1) RCR (Criminal) 1028 (SC) relied.

(Para 10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Indian Contract Act, 1872 (9 of 1872), Section 30 -- Cheque bounce case – Void agreement – Presumption u/s 139 of NI Act – Rebuttal of -- Statement of account is not pertaining to any loan raised by the accused but the same is regarding chit fund/lottery system run by the complainant -- Transaction comes under the agreement by way of wager, which is void as per Section 30 of the Contract Act -- Both the parties were involved in chit fund/lottery system -- Presumption u/s 139 of Act can be rebutted by raising probable defence – Accused raised probable defence – Acquittal order, upheld.

(Para 10-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case -- Loan of Rs. 7 lacs -- No documentation -- No receipt or security document was got executed while lending such a huge amount of Rs.7 lakhs to the accused – No particulars, that at which place, in whose presence the loan was advanced and what was the mode of giving the amount, whether by cheque or by cash nor there is anything that the amount was withdrawn from the bank or it was lying with the complainant at his home -- No document on record to show the loan transaction -- No income tax return has been produced to show the lending of the amount in question to the accused -- All these facts are fatal to the case of the complainant. Vijay’s case 2013(1) RCR (Criminal) 1028 (SC) relied.

(Para 11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 139 -- Signature not denied on cheque -- Legally enforceable liability – Presumption of – Rebuttal of – Presumption of Complainant being holder of cheque and the signature on the cheque having not been denied by the accused, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability – Presumption u/s 139 is a rebuttable presumption.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 139 -- Legally enforceable liability – Presumption of – Rebuttal of – Law summarised in following manner:-

(i)      Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

(ii)     The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

(iii)    To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

(iv)    That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

(v)     It is not necessary for the accused to come in the witness box to support his defence.

(Para 23)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 139 -- Legal enforceable liability – Financial capacity – Onus of proof – Acquittal of accused -- During cross-examination, when financial capacity to pay Rs.6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant -- Evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts – Order acquitting the accused by Trial Court, upheld.

(Para 24-29)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 139 -- Legal enforceable liability – Financial capacity – Onus of proof – Acquittal of accused -- During the period from 2009 to November, 2011, amount of Rs.18 lakhs was given by the complainant to different persons including the accused, which put a heavy burden to prove the financial capacity when it was questioned on behalf of the accused -- It was incumbent on the complainant to have explained his financial capacity -- Court cannot insist on a person to lead negative evidence -- Order acquitting the accused by Trial Court, upheld.

(Para 25-28)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 138, 139 -- Acquittal of accused in cheque bounce case – Setting aside of -- Jurisdiction of Appellate Court -- Ordinarily, the Appellate Court will not be upsetting the judgment of acquittal, if the view taken by Trial Court is one of the possible views of matter and unless the Appellate Court arrives at a clear finding that the judgment of the Trial Court is perverse, i.e., not supported by evidence on record or contrary to what is regarded as normal or reasonable; or is wholly unsustainable in law -- Such general restrictions are essentially to remind the Appellate Court that an accused is presumed to be innocent unless proved guilty beyond reasonable doubt and a judgment of acquittal further strengthens such presumption in favour of the accused -- Same rule with same rigour cannot be applied in a matter relating to the offence u/s 138 of the NI Act, particularly where a presumption is drawn that the holder has received the cheque for the discharge, wholly or in part, of any debt or liability -- Appellate Court is certainly entitled to examine the evidence on record in order to find if preponderance indeed leans in favour of the accused.

(Para 11.1)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 138, 139 -- Legally enforceable liability – Presumption of – Rebuttal of – Onus of proof -- Accused-appellant could not deny his signature on the cheques in question -- It is required to be presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e., the complainant received the same in discharge of an existing debt -- Onus, therefore, shifts on the accused-appellant to establish a probable defence so as to rebut such a presumption.

(Para 14)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 138, 139 -- Legally enforceable liability – Rebuttal of presumption – Probable defence -- On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist.

(Para 16)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 138, 139 -- Legally enforceable liability – Presumption of – Source of fund for loan – Requirement of law – After purportedly drawing the presumption u/s 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused -- This approach of the Trial Court had been at variance with the principles of presumption in law -- After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant.

(Para 17)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 138, 139 -- Legally enforceable liability – Presumption of – Rebuttal of – Creation of doubt is not sufficient -- Trial Court proceeded to pass the order of acquittal on the mere ground of 'creation of doubt' -- Trial Court appears to have proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the appellant had successfully rebutted the presumption as envisaged by Section 139 of the NI Act -- In the scheme of the NI Act, mere creation of doubt is not sufficient.

(Para 20)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Agreement to sell – Payment by cheque – Dishonour of – Legal enforceable liability -- Though an agreement to sell does not create any interest in immoveable property, it nonetheless constitutes a legally enforceable contract between the parties to it -- A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purposes of Section 138.

(Para 13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Offence by Company – Liability of Director – Quashing of Complaint by High court -- Law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence was committed – High Court, in deciding a quashing petition u/s 482, Cr.P.C., must consider whether the averment made in the complaint is sufficient or if some unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time -- High Court must exercise its power u/s 482, Cr.P.C. when it is convinced, from the material on record, that allowing the proceedings to continue would be an abuse of process of the Court.

(Para 9)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Object of Section 138 of NI Act -- Object of Section 138 of the Negotiable Instruments Act is to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions -- Penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same.

(Para 9)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque presented two times – Complaint after second default – Permissibility of -- Prosecution based on a second or successive default in payment of the cheque amount is not impermissible simply because no statutory notice had been issued after the first default and no proceeding for prosecution had been initiated.

(Para 10)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Conviction of accused – Revisional Jurisdiction of High court -- It is well settled that in exercise of revisional jurisdiction, the High Court does not, in the absence of perversity, upset concurrent factual findings -- It is not for the Revisional Court to re-analyse and re-interpret the evidence on record.

(Para 19)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 118(a), 138, 139 -- Post-dated cheque – Rebuttal of presumption -- Onus to rebut the presumption u/s 139 that the cheque has been issued in discharge of a debt or liability is on the accused -- Fact that the cheque might be post-dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.

(Para 36)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 20,87,138,139 -- Cheque signed by drawer – Cheque filled by other – Effect of -- It is immaterial that the cheque may have been filled in by any person other than the drawer -- If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.

(Para 37)

F. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Blank signed cheque – Subsequent filing of cheque by other – Effect of --Rebuttal of presumption – Onus of proof -- Payee may fill up the amount and other particulars, this in itself would not invalidate the cheque -- Onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence -- Subsequent filling in of an unfilled signed cheque is not an alteration.

(Para 38, 42)

G. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Fiduciary relation -- Legally enforceable liability – Presumption of – Rebuttal of -- Existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption u/s 139 of the Act, in the absence of evidence of exercise of undue influence or coercion.

(Para 39)

H. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Blank cheque leaf -- Legally enforceable liability – Presumption of – Rebuttal of -- Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption u/s 139 of the Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.

(Para 40)

I. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Friendly loan without receipt – Effect of -- Fact that the loan may not have been advanced by a cheque or demand draft or a receipt might not have been obtained would make no difference.

(Para 41)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Constitution of India, Article 141 -- Cheque bounce case – Stare Decisis -- Accused’s evidence by way of affidavit – Permissibility of – Accused, while appearing as his own witness in defence does not have any right to lead the evidence by way of affidavit – Held, even if the judgment of the Supreme Court in case of Indian Bank Association 2014 (2) RCR (Criminal) 598 is taken to be suggesting contrary to the judgment of the Supreme Court rendered in Mandvi Co-op Bank Ltd., 2010(1) JT 259, then also, it is the Judgment rendered by the Supreme Court in Mandvi Co-op Bank Ltd., which shall hold the field, being earlier in point of time and having been delivered by a Bench of equal strength.

(Para 10)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Legally enforceable liability – Rebuttal of presumption -- Standard of proof for rebuttal of the presumption u/s 139 of the Act is guided by a preponderance of probabilities.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Loan of Rs.15 lacs -- Legal enforceable liability – Presumption of -- Rebuttal of -- Defence was that the cheque was issued to the complainant on an assurance of a loan which would be obtained from a financial institution – Entire amount alleged to have been paid without obtaining a receipt or document evidencing the payment of the amount – Complainant failed to establish the source of funds -- Nothing was stated by the complainant in regard to the fate of the earlier two cheques which were allegedly issued by the accused -- Non-disclosure of the facts pertaining to the earlier two cheques, and the steps, if any, taken for recovery was again a material consideration which indicated that there was a doubt in regard to the transaction – Presumption stands rebutted -- Order of acquittal passed by the first appellate court was justified.

(Para 13-15)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque by company – Quashing of complaint -- Cheque singed by Director of company – Demand notice to Director – Complaint against Director – Company not impleaded as party/ accused -- Maintainability of complaint – Held, in the absence of the company being arraigned as an accused, a complaint against the appellant was not maintainable – In the absence of a notice of demand being served on the company and without compliance with the proviso to Section 138, the High Court was in error in holding that the company could now be arraigned as an accused – High Court was in error in rejecting the petition u/s 482 of the Cr.P.C. – Appeal allowed, Complaint quashed.

(Para 14-18)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) -- Acquittal in cheque bounce case -- Complainant is not aware about the business of the accused for which the alleged loan was advanced -- Complainant further testified that the amount in question was obtained from friends and relatives in order to give it to the accused for his business -- No source of income has been proved by the complainant -- DW1, Tax Assistant from Income Tax Office has proved the income tax return of the complainant, which do not contain the amount advanced as loan to the accused – Finding that cheque in question was not issued towards any debt or legal liability is based on correct appraisal of the evidence and a possible view had been adopted – Appeal dismissed.

(Para 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Second statutory notice – Complaint thereafter – Maintainability of -- Cheques were presented twice and notices were issued on 31.08.2009 and 25.01.2010 -- Complaint filed based on the second statutory notice is not barred.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) – Cheque bounce case – Acquittal of accused – Leave to appeal -- Nothing on record that amount was demanded back from accused -- No document to prove that complainant is doing joint business with accused – Accused produced DDR regarding loss of cheque – Trial Court acquitted the accused -- Nothing on record to show that findings are against evidence and law – No ground to grant leave to appeal.

(Para 8-10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Arbitration and Conciliation Act, 1996 (26 of 1996), Section 8 -- Cheque bounce case – Arbitration proceedings – No bar to proceed u/s 138 -- Even if arbitration proceedings have taken place, that cannot be a bar to the continuation of proceedings under Section 138 of the Act -- If the arbitration proceedings have been finalized and award has been pronounced, the Court deciding the matter under Section 138 of the Act would certainly look into the aspect whether there exists some legal liability for issuance of cheque or not.

 (Para 6-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque by husband – Criminal liability -- Liability was of M/s Karan Traders which is Sole Proprietorship – Cheque was issued by Husband of the Sole Proprietor – Held, there was no legal liability on the part of husband – Complaint rightly dismissed by Trial court.

(Para 2-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) – Loan of Rs.8 lacs – Cheque bounce case – Presumption of – Rebuttal of -- In the complaint, it has been simply stated that the loan of Rs.8 lakhs was advanced to the accused in the month of March 2015 -- No specific date has been mentioned -- No other particulars have been given -- No security document had been obtained from the accused -- Complainant had also not taken any receipt of the loan -- There is no document on record to show the loan transaction -- There is no date as to when the loan was demanded back -- In the cross-examination, the complainant stated that he does not know accused and his family personally he knows them through brother-in-law of the accused -- Complainant admits that a sale deed was executed in his favour by the mother of the accused and further three cases were withdrawn by him -- All this evidence supports the defence version raised by the accused -- Presumption under Section 139 of the NI Act has been rebutted by the accused by raising probable defence -- Leave to file appeal dismissed.

(Para 8,9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 –Loan of Rs.3 lacs – No document case – Presumption – Rebuttal of -- No date, month and year has been mentioned in the complainant as to when liability arose -- No document to show the loan transaction -- No receipt or security document was got executed while lending a huge amount of Rs.3 lakhs to the accused – Complainant is also doing business of shuttering and might be maintaining account books but he has also not produced any account books to show this loan transaction -- Complainant himself has stated that he could not tell exact date of advancement of loan of Rs.3 lakhs but stated in cross-examination that it was in the month of October 2012 – Presumption u/s 139 rebutted.

 (Para 14-21)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Acquittal of accused -- Complainant has not mentioned any date, month, year as to when the loan was advanced to the accused -- No receipt or security document was got executed while lending huge amounts to the accused -- Otherwise also, there are no particulars, that at which place, in whose presence the loan was advanced and what was the mode of giving the amount, whether by cheque or by cash nor there is anything that the amount was withdrawn from the bank or it was lying with the complainant at his home -- When the first complaint regarding dishonour of the cheque is already pending in the Court, then complainant will not lend such a huge amount again to the same accused -- Accused acquitted.

(Para 10-13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce case – One more complaint pending – Effect of – Rebuttal of Presumption – Complaint for dishonour of the cheque already filed in November 2011 – It is not explained, why again amount of Rs.2 lakhs were lent in June 2012 and that too without any document -- No ordinary person will do this -- Presumption has been rebutted.

 (Para 12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141  -- Code of Criminal Procedure, 1973 (2 of 1974), Section 397, 482 – Cheque bounce case -- Summoning of accused – Quashing of summoning order and complaint – Maintainability of petition u/s 482 Cr.P.C. -- Revisional Jurisdiction -- Alternative remedy available – Objection of -- Held, in exercise of revisional power, Court of Sessions or the High Court is not vested with the power of quashing a criminal complaint -- This power is available to the High Court alone under Section 482 Cr.P.C., whereunder the High Court, in exercise of its inherent powers, can pass orders to prevent abuse of process of any Court or to secure the ends of justice -- Thus, the prayer made in this petition could not have been granted by the revisional Court and, therefore, it cannot be said that the petitioner had an alternative remedy before the Court of Sessions in the first instance.

(Para 5)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Cheque bounce case – Offence by Company -- Liability of Ex-officio Director -- Every person who was incharge of the business of the Company and responsible to the Company for the conduct of its business is vicariously liable apart from the Company itself -- Such a person may be somebody other than a 'Director' so long as he is an officer of the Company -- However, an Ex-officio Director is not liable.

(Para 8)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Cheque bounce case – Offence by Company -- Ex-officio-Director of the Company -- Petitioner-Director had resigned and cheque in dispute had been issued much later -- For imposing vicarious liability upon the petitioner, as a person responsible for the business of the company, it was necessary to make specific averments in the complaint regarding his role in the conduct of the business of the Company -- No such averment having been made, the Magistrate was not justified in summoning the petitioner.

(Para 21)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case – Summoning of accused -- At the stage of summoning of an accused person, the trial Court/Magistrate must be satisfied on the basis of material produced before it that prima facie the accused persons have committed an offence.

(Para 21)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482  -- Cheque bounce case – Offence by Company – Liability of Director of the Company – Quashing of Complaint and summoning order -- Averment made in the legal notice “You address No. 3 being Chairman/Director of addressee No. 1 are also being incharge and being responsible person of address No. 1 company for conduct to the business of the Company are also liable for the punishment prescribed under the Act ibid.” – Held, averments made in the legal notice u/s 138 of the Act cannot be construed to be averments made in the complaint -- Even the averments made in the legal notice, do not fulfill the requirement of law -- Summoning orders as well as Complaints alongwith consequential proceedings having arisen therefrom, are quashed qua the petitioner.

(Para 25-27)

F. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 204 – Cheque bounce case – Offence by Company -- Summoning of Directors of the Company -- Held in order to reduce litigation it would be appropriate for the concerned Magistrates to seek copies of Form No. 32 and the latest Annual Return filed by the Company so that only those persons who are Directors on the date of commission of the offence are summoned – Directions given that in all cases where the accused is a 'Company', before issuing summons to the accused persons the trial Court/Magistrate shall direct the complainant to produce a copy of Form No. 32 and the annual Return filed by the Company in order to determine the persons, who were Directors on the date of commission of the offence -- In cases where the accused–Director is the Chairman or Managing Director or Joint Managing Director or authorized signatory of the cheque, they may be summoned without any averment regarding their role in the conduct of the affairs of the Company -- For summoning of any other Director or officer of the Company the necessary averment regarding their role in the conduct of the business of the Company, must be insisted upon -- In respect of whole time Directors, mere reproduction of the words of Section 141 of the Act would be sufficient.

(Para 28, 29)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case -- Conviction in – Compromise – Setting aside of conviction and sentence -- As per settlement, the petitioner has paid a sum of Rs. 4 lacs against the disputed amount as full and final settlement -- When the parties have amicably settled their dispute, the conviction and sentence of the accused, u/s 138 of the N.I. Act, can be set aside -- Judgment of conviction and order of sentence as well as judgment passed by the lower appellate Court, are set aside. Sri Ashish Subba’s case 2018 (1) R.C.R. (Criminal) 971 relied.

(Para 3,4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cross-examination of complainant – Opportunity of -- After a lapse of more than seven months, the complainant has not been cross-examined, rather, the complainant has been made to suffer to attend the Court on each and every date of hearing -- Held, though the petitioner does not deserve any further opportunity, however, in the interest of justice, one more opportunity is granted to the petitioner-accused considering his plea that he was confined to bed subject to payment of Rs.20,000/- as costs to complainant.

(Para 2,3)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 --Cheque bounce case – Presumption of – Rebuttal of -- Presumption u/s 139 arises when the cheque is in favour of holder of the cheque which was issued by the accused but the accused can rebut the presumption by raising probable defence.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 --Cheque bounce case – Acquittal in -- Presumption of – Rebuttal of -- Cheque has not been issued by the accused nor it was from his account -- Document Expert, has been examined to show that cheque- Ex.C2 was not signed by the accused -- No expert, in rebuttal, has been examined by the complainant --- Therefore, case of the complainant qua the cheque-Ex.C2 is doubtful -- Otherwise also, as this cheque was not from the account of the drawer, therefore, one of the necessary ingredient also goes -- Accused-respondent has been rightly acquitted.

(Para 11-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 --Cheque amounting more than liability – Acquittal in -- Presumption of – Rebuttal of -- Cheque amount of Rs.2,36,290/- -- All the documents of the complainant pertain to alleged transactions of the accused and if the amount is calculated, remaining amount of receipts comes to Rs.1,73,179/- only, which is less than the cheque amount -- DW-1 stated that amount of Rs.1,79, 070/- is only outstanding against the accused as per Ex.D1 -- Complainant has given legal notice to pay an amount of Rs.2,36,290/- qua which there was no liability outstanding against the accused – Trial Court held presumption has been duly rebutted, the cheque amount was not due and legal notice is of more amount than actually payable -- Accused-respondent has been rightly acquitted.

(Para 11-13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Cheque bounce case – Presumption of – Rebuttal of -- Presumption under Section 139 of the Negotiable Instruments Act can be rebutted by raising probable defence.

(Para 11)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Cheque bounce case – Acquittal in -- Presumption of – Rebuttal of -- Copy of the civil suit filed by accused against complainant, which is Ex.D5, shows that civil suit has been filed on 19.12.2009 i.e. well before the date of cheque -- If the accused, in the year 2008 and 2009, has stated that he has returned the money and blank signed cheques are not being returned by the complainant and has filed complaint to SSP and also filed civil suit, then there is no question to issue cheque on 03.02.2010 -- Rather, it is nowhere the case of the complainant that a post-dated cheque was given to him by the accused -- Furthermore, the cheque was dishonoured with the remarks 'no such account' on 09.02.2010 -- When there was no account at the time of issuance of cheque, then where is the question of issuing cheque by the accused to the complainant -- Defence raised by the accused is probable one, which is supported and corroborated by defence evidence and presumption has duly been rebutted.

(Para 11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Complaint through attorney – Maintainability of – Mother of the Applicant-complainant appeared as his general attorney after due permission from the Court on acceptance of her application to permit her to file complaint and pursue the same as attorney -- Maintainability of the complaint is well-proved on the record.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Admission of signature on cheque – Effect of -- Since the respondent-accused has not denied his signature on the cheque in question, nor led any evidence in defence to this effect, therefore, applicant is granted leave to file the instant appeal -- Respondent is held guilty for commission of offence u/s 138 of the Act -- Matter is referred back to the trial Court to afford an opportunity of hearing to the respondent on the quantum of sentence.

 (Para 12, 13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 320, 401, 482 -- Conviction u/s 138 of the NI Act – Compounding at Revisional stage -- Conviction by Ld. JMIC upheld by Ld. ASJ -- Parties are allowed to compound the offence, consequently, judgment of conviction and order of sentence passed by the Ld. JMIC and judgment passed by the Ld. Additional Sessions Judge stand set aside.

(Para 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Discrepancy in statement of witness -- Once the factum of giving money to the accused is proved by the eye witness then; merely because the transaction of loan happens to be subsequent to the date alleged when the money is stated to have been given to the petitioners is totally irrelevant – Witness was deposing after 7-8 years, therefore, such kind of minor discrepancy cannot discredit the entire case of the prosecution.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Cheque bounce case – Compounding of – Conviction – Setting aside of -- Considering the fact that the parties have amicably settled their dispute before the Mediation and Conciliation Centre and no other litigation is pending between them, the permission granted to compound the offence under the provisions of Section 147 of the N.I. Act -- Judgment of conviction and order of sentence passed by the trial Court, as well as judgment passed by the lower appellate Court, are set aside.

(Para 12-14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) -- Cheque bounce case – Acquittal of accused – Leave to appeal -- Complainant admitted that the accused had taken a loan from the finance company and he has returned the same and, thereafter, again he had taken loan of Rs. 11,000/- and returned the same – Complainant has failed to explain in his complaint and the legal notice as to when and for what purpose, the amount of Rs.70,000/- was taken by the accused, specially when in the complaint neither any date, month, year nor the purpose is mentioned – Trial Court acquitted the accused -- Leave to appeal against the judgment is declined.

(Para 9-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) -- Legal enforceable liability – Presumption of – Rebuttal of -- No document to show the loan transaction -- No particulars at which place and in whose presence the amount was given; whether it was given in cash or through cheque -- Nothing on record as to when the demand was raised; whether any security document was obtained -- Father of the accused filed a written complaint against the complainant to take action for breaking the glass of the car etc. -- When the relations between complainant and accused families were strained and the complaint was filed against the complainant and that was pending, it is improbable that the complainant will give a loan of Rs.3,63,000/- to the accused without even getting any receipt or security document -- Presumption u/s 139 of the NI Act can be rebutted by raising probable defence and the accused had raised a probable defence and the presumption was rebutted.

 (Para 11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 311 -- Affidavit in evidence – Wrong date of cheque mentioned – Re-examination of -- Application u/s 311 Cr.P.C. is allowed -- Complainant allowed to appear as a witness and submit a fresh affidavit.

(Para 2-8)

Negotiable Instruments Act, 1881 (26 of 1881). Section 138, 139 – Legal enforceable liability – Presumption of – Rebuttal of -- Complainant proved the issuance of cheque which contained signatures of the accused and on presentation of the cheque, the cheque was returned with endorsement “insufficient funds” -- Bank official-witnesses proved that the cheque was not returned on the ground that it did not contain signatures of the accused rather it was returned due to insufficient funds – Trial court as well as the Appellate Court found that cheque contained the signatures of the accused – Defence that cheque was stolen complainant – No evidence led by accused -- Defence taken that cheque was stolen rejected by the two courts below – No basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability.

(Para 15-22)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Substantive sentence -- Conviction by Trial Court for three months and compensation of Rs.2,45,000/- -- Compensation amount and additional amount of Rs.1,00,000/- deposited by the accused -- Interest of justice would be subserved if the Sentence of three months is modified and in lieu thereof, additional compensation amount of Rs.1,00,000/- is directed to be payable to complainant.

(Para 2, 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 – Cheque bounce case – Conviction of accused – Compromise/Compounding of offence -- Accused is acquitted from all the charges framed against him, in view of Section 320(6) of Cr.P.C., which provides that a High Court or Court of Session acting in the exercise of its powers of revision under Section 401 may allow any person to compound any offence which such person is competent to compound under this Section.

(Para 4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 391 – Cheque bounce case -- Additional evidence -- Expert-examination – Application for additional evidence, which was filed for examination of a Hand-writing Expert to compare the writing on the body of the cheque, which has been asserted by the petitioner to have not been written by him does not have any material significance especially when the signatures on the cheque have been admitted by the petitioner.

(Para 7)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Advocate Client relationship – Issuance of cheque by client – Dishonour of – Complaint u/s 138 of NI Act -- Mere issuance of cheque by the client may not debar him from contesting the liability -- If liability is disputed, the advocate has to independently prove the contract.

(Para 18)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 --Advocate Client relationship – Professional misconduct -- Issuance of cheque by client as percentage – Dishonour of – Complaint u/s 138 of NI Act – Maintainability of -- Claim based on percentage of subject matter in litigation cannot be the basis of a complaint u/s 138 of the Act -- Claim of the respondent advocate being against public policy and being an act of professional misconduct, proceedings in the complaint filed by him have to be held to be abuse of the process of law and have to be quashed -- Issue of professional misconduct is left to be dealt with at the appropriate forum.

(Para 18-20)

C. Advocates Act, 1961 (25 of 1961), Section 35 – Constitution of India, Article 39A -- Advocate Client relationship – Professional misconduct -- Can justice be secured with the legal professionals failing to uphold the professional ethics? -- Commercialization to the extent of exploiting the litigant and misbehavior to the extent of browbeating the Court, breach of professional duties to the court and the litigant on the part of some members of the legal profession, affecting the right of the litigants to speedy and inexpensive justice, need to be checked – Court hoping that the concerned authorities in the Government will take cognizance of the issue of introducing requisite legislative changes for an effective regulatory mechanism to check violation of professional ethics and also to ensure access to legal services which is major component of access to justice mandated under Article 39A of the Constitution.

(Para 23-31)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143 -- Cheque bounce case – Sentence for simple imprisonment of one year and also to pay a fine of Rs.11,50,000/-, in default, to suffer further simple imprisonment for six months -- Parties amicably settled their dispute -- Parties to abide by the terms and conditions as contained in the Memorandum of Settlement without fail -- Impugned order passed by the High Court set aside and sentence imposed upon the appellant quashed.

(Para 2-6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138 -- Issuance of cheque – Non-reply/Refusal of legal notice – Meaning of -- Petitioner/accused did not respond to the legal notice served by the respondent/complainant to him, rather the same was refused as per report, which amounts to his admission of issuance of cheque in question to the respondent-complainant.

(Para 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Indian Penal Code, 1860 (45 of 1860), Section 174-A – Code of Criminal Procedure, 1973 (2 of 1974), Section 82 -- Cheque bounce case – Proclaimed person – Quashing of FIR-- Non-appearance of the petitioner before Ld. Trial Court is justified for the reason that he was not served at the given address -- After passing of the order, the petitioner has been granted anticipatory bail -- Matter compromised, complainant has withdrawn the complaint u/s 138 of the NIA Act -- Continuation of criminal proceedings against the petitioner under Section 174-A IPC would amount to abuse of process of law – Order declaring proclaimed person and subsequent FIR quashed.

 (Para 1, 7,8)