Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Acquittal in – Accused demanded friendly loan of Rs.1,50,000/- -- Complainant stated that at the relevant time he was not having Rs.1,50,000/- and was having only Rs.1,35,000/-, rather has got Rs.1,35,000/- from his Mamaji by mortgaging the gold -- Petitioner-complainant could not tell the name of his Mamaji, from whom he has borrowed the money -- It shows that the story formulated by the petitioner is pulpably false -- Moreover, the petitioner has admitted the fact that the cheques issued by the accused were returned to him after receiving the payment from him – Acquittal order upheld.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Acquittal of accused – Leave to appeal -- Transaction pertains to the year 2002, however the cheque in question is dated 15.09.2008 – A complaint was also made to the police station with regard to non-return of cheque after clearance of debt -- Once the accused himself moved a complaint against the applicant/ complainant then the story of issuance of cheque is not sustainable -- Neither any receipt nor any authenticated document has been placed on record to substantiate the claim of the applicant – Finding of acquittal recorded by the trial Court cannot be said to be perverse or contrary to the material on record -- Leave to appeal stands declined.

(Para 6-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142(b) -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Complaint u/s 138 of NI Act within 15 days of notice of demand – Maintainability of – Quashing of -- Complaint was premature and not maintainable -- Impugned complaint and subsequent proceedings taken therein are quashed – Permission given to complainant to file fresh complaint within one month -- Delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the Act.

(Para 11-13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Complaint u/s 138 of NI Act -- Legal enforceable liability – Time barred debt -- Acquittal of accused – Leave to appeal -- Nothing on record to show that the applicant/ complainant had advanced the amount in question to the respondent /accused from his bank account or from any other source -- Neither any receipt nor any authenticated document has been placed on record to substantiate his claim -- It is highly improbable that he advanced an amount of Rs.3,86,000/- to the respondent without any receipt or pronote -- Moreover, the date, name and amount filled on the cheque does not tally with the specimen writing of the respondent -- Loan in the year 2000, however, the cheque in question pertains to the year 2008, therefore, the allegations of the applicant appears to be vague and barred by time -- Finding of acquittal recorded by the trial Court cannot be said to be perverse or contrary to the material on record -- Even if a second view on appreciation of evidence is possible, the Court will not interfere in the acquittal of the accused – Leave to appeal declined.

(Para 5-7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Acquittal of accused – Leave to appeal -- In the cases of acquittal, there is double presumption in his favour; first the presumption of innocence, and secondly the accused having secured an acquittal, the Court will not interfere until it is shown conclusively that the inference of guilt is irresistible.

(Para 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Loan of 32 lacs without any receipt or pronote – Acquittal of accused – Leave to appeal -- Nothing on record to show that the applicant had advanced the amount in question to the respondent from his bank account or from any other source -- In the absence of any document that the applicant had the alleged amount with him, it is highly improbable that he advanced an amount of Rs.32 lacs to the respondent without any receipt or pronote -- Finding of acquittal recorded by the trial Court cannot be said to be perverse or contrary to the material on record – Leave to appeal stands declined.

(Para 5-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Complaint against Directors of Company – Quashing of -- Averment in the complaint that accused nos. 3 to 10 were, in fact, in-charge of the day-to-day business of accused No. 1-company – High Court ought not to have quashed the proceedings against such directors -- Order of High Court set aside.

(Para 13-18)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 – Cheque bounce case – Revisional Court’s Power -- Scope and extent of revisional jurisdiction of the High Court in dealing with order passed by trial court and upheld by appellate court is limited and revisional jurisdiction should be exercised in exceptional cases where there was some glaring defect in the procedure or there was a manifest error on a point of law and consequently, there had been a flagrant miscarriage of justice.

(Para 8)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Legal enforceable liability – Presumption of -- Accused has categorically admitted issuance of cheque to complainant, which on presentation stood dishonoured -- There is a presumption that cheque was issued in discharging of his legal liability.

(Para 9)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Conviction u/s 138 of NI Act -- Reliance upon judgment of the Court -- No formula can be laid down with regard to the passing of an observation in one case by applying to the another case -- Each case has to be dealt with on its peculiar facts and circumstances and the evidence available on file.

(Para 9)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Dishonour of cheque – Complaint u/s 138 of NI Act -- Complaint u/s 138 of the Act can't be dismissed simply on the ground that complainant has failed to prove source of income or source of amount, which has been advanced.

(Para 10)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Misuse of cheque – Plea of -- Case of accused is that he had only borrowed a sum of Rs.6000/- from complainant when he issued a blank cheque but subsequently, the same has been converted to an amount of Rs.6 lac -- Amount of Rs.6000/- has also been allegedly repaid by accused to complainant but to the utter surprise, no receipt in this regard was obtained -- Even, no effort has also been made by accused to get the cheque returned from complainant -- Such a lapse and omission on the part of accused is suggestive of the fact that defence plea, which has been put by him is a concocted one.

(Para 10)

F. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque of 6 lacs – Dishonour of -- Punishment of -- Imposition of sentence for a period of two years in the case in hand appears to be on higher side and cannot be said to be adequate, just or proportionate and commensurative with the nature of the offence committed by the accused -- Court should strike a proper balance while awarding sentence keeping in view the nature and gravity of offence -- Imposition of sentence is modified from rigorous imprisonment of two years to rigorous imprisonment for one year.

(Para 14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Offence by Company/Directors – Notice u/s 138 to drawer/Company/ Directors – Requirement of law -- Notice u/s 138 is required to be given to “the drawer” -- No other person is contemplated by Section 138 as being entitled to be issued such notice -- Section 141 states that if the person committing an offence u/s 138 is a Company, every director of such Company who was in charge of and responsible to that Company for conduct of its business shall also be deemed to be guilty – Section 141 again does not lay down any requirement that in such eventuality the directors must individually be issued separate notices u/s 138 -- No notice is additionally contemplated to be given to such directors -- Opportunity to the ‘drawer’ Company is considered good enough for those who are in charge of the affairs of such Company -- If it is their case that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage in the trial and certainly not at the stage of notice under Section 138.

(Para 13-14)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 256 – Absence of complainant – Power of Magistrate -- Magistrate has discretion to dismiss the complaint if on any date fixed for hearing the complainant fails to appear in the Court and at the same time, if the Magistrate finds that there is some reason or that the presence of the complainant was not required, he in his discretion can adjourn the complaint -- However, the Magistrate while acting under the said proviso has to take into consideration that the powers vested therein have to be exercised in the interest of justice.

(Para 11)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 256 – Non-appearance of complainant – Dismissal of complaint for non-want of prosecution -- Plea of wrong noting of date appears to be genuine -- Bona fide of the complainant is established from the fact that its representative had been appearing on each and every date -- Complaint is restored to its original number.

(Para 12, 13)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 256 – Non-appearance of complainant – Case fixed for accused’s appearance – Dismissal of complaint for non-prosecution – Dismissal in default followed by restoration application unnecessarily delays the disposal of complaint on merits than simply adjourning the case for a date – Complaint was not listed for any particular purpose, rather it was fixed for presence of accused by way of notice and presence of appellant was not necessary on that date -- Merely on that account of non-appearance, the complaint should not have been dismissed in default -- Complaint is restored to its original number.

(Para 12, 13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Termination of loan agreement – Complaint u/s 138 of NI Act -- Acquittal of accused -- Once account of the accused stood closed much earlier, i.e. on 5.4.2005, there was no occasion for the accused to issue the alleged cheque in favour of the complainant as late as on 18.7.2005 – Ld. Trial court committed no error of law, while passing the acquittal order and the same deserves to be upheld.

(Para 1, 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Complaint u/s 138 of NI Act – Two views – Acquittal of accused -- Whenever two views are possible, the view which goes in favour of the acquittal is to be adopted by the courts.

(Para 12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Complaint u/s 138 of NI Act – Acquittal of accused -- Total loan amount was Rs.10,62,280/- -- Out of this loan amount, accused had paid Rs.10,50,030.82/- -- In such a situation, there was no scope for issuing the cheque in question for an amount of Rs.3 lacs by the borrower, in favour of the complainant -- Complainant failed to justify the liability of the accused, if any, after the termination of the loan agreement – Accused rightly acquitted -- Since the Trial court has arrived at a judicious conclusion, taking one of the possible views, the impugned order deserves to be upheld.

(Para 2, 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Termination of loan agreement – Complaint u/s 138 of NI Act -- Acquittal of accused – Loaned vehicle was repossessed and sold by the complainant, whereas the alleged cheque in question was of date thereafter -- Once the vehicle was repossessed and sold, the agreement stood terminated and there was no occasion for the accused to issue the cheque in question -- Acquittal order passed by the Trial Court is liable to be upheld.

 (Para 2, 11, 12)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Complaint u/s 138 of NI Act – Two views – Acquittal of accused -- It is the cardinal principle of law that whenever two views are possible, the view which goes in favour of the acquittal is to be adopted by the courts.

(Para 14)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Indian Evidence Act, 1872 (1 of 1872), Section 45 -- Complaint u/s 138 of NI Act – Denial of signature – Expert evidence -- Acquittal of accused -- Once the accused did not accept his signatures on the cheque, complainant did not make any effort to get the signature of the accused proved by examining any handwriting and fingerprint expert, it can be safely concluded that the learned trial court committed no error of law, while passing the acquittal order.

(Para 14)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Admission of cheque and signature – Legal enforceable debt – Presumption of – Rebuttal of -- Since the cheque as well as the signature has been accepted by the accused, the presumption u/s 139 would operate -- Thus, the burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability.

(Para 8-10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Admission of cheque and signature – Legal enforceable debt – Presumption of – Rebuttal of -- Accused has come up with a story that the cheque was given to the complainant long back in 1999 as a security to a loan; the loan was repaid but the complainant did not return the security cheque -- According to the accused, it was that very cheque used by the complainant to implicate the accused -- However, the cheque was dishonoured because the payment was stopped and not for any other reason -- This implies that the accused had knowledge of the cheque being presented to the bank, or else how would the accused have instructed her banker to stop the payment -- Thus, the story brought out by the accused is unworthy of credit, apart from being unsupported by any evidence -- Printed date …../…1999 on the cheque by itself, in absence of any other evidence, cannot be conclusive of the fact that the cheque was issued in 1999.

(Para 10-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 374 -- Conviction u/s 138 of NI Act – Suspension of sentence by Appellate Court -- When notice in the appeal has already been issued, the Appellate Court should have normally passed the order for suspension of sentence as the prayer to that effect was not declined -- Direction issued to the Appellate Court to pass specific order on the prayer for suspension of sentence.

(Para 6, 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 357(3) -- Payment of Cheque amount – Settlement of dispute – Acquittal of accused -- Cheque amount i.e. Rs.2,30,000/- has already been paid to complainant -- Complainant has admitted the said fact -- There remains no dispute between the parties, High Court is left with no other option but to allow the petition -- Orders of conviction and sentence passed by the both the Courts below are set-aside -- Petitioners have been acquitted of the charge framed against them.

(Para 5, 6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Complaint u/s 138 of NI Act – Evidence required against accused -- In the cases of offence u/s 138 of the NI Act, the complainant is not required to prove the case beyond reasonable shadow of doubt, nor it is the requirement of law, like in other criminal trials dealing with the offences under the IPC -- By leading his evidence on the facts available on record, complainant is required to make out a prima facie case of cheque bouncing against the accused -- Thus, it is an exception to the general rule -- Thereafter, onus would shift and the accused would have to rebut the statutory presumption against him, by bringing on record cogent evidence in his defence.

(Para 15, 16)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Complaint u/s 138 of NI Act – Petitioner has never disputed his existing financial liability and for discharging the same, he issued the cheque in question -- Accused did not lead any evidence in his defence – Held, courts below committed no error either on facts or in law, while passing the impugned judgments of conviction, as well as sentence.

 (Para 17, 18)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Complaint u/s 138 of NI Act -- Closure of Bank account – Effect of -- Cheque in question was dishonoured only because of closure of bank account and not because of insufficient fund – Held, closure of the bank account will not discharge the accused from his financial liability -- On the other hand, it makes offence more serious for the reason that malafide intention of the accused gets disclosed, particularly when there is no defence evidence available on record.

(Para 20)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Complaint u/s 138 of NI Act -- Revisional Power – Source of advancement of money – Proof of -- Scope of revision is limited to the extent of illegalities or infirmities committed by a court while answering the controversy – Plea of the accused that the cheques were stolen and forged do not merit any consideration for the reason that no evidence was led – There is presumption in favour of complainant and it was for accused to discharge such onus -- Contention that the complainant failed to discharge the onus of showing sufficient amount with him at the time of advancement of loan -- Not a single question has been addressed to the complainant in this regard in cross-examination -- Such issues are matters of evidence and need to be addressed at the earliest – Conviction order upheld.

(Para 5-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Legal enforceable liability – Proof of -- In the complaint it is stated that the accused was on business terms with the complainant and used to borrow money from her from time to time, whereas during cross-examination she has deposed that she was not running any business and has no knowledge regarding the business of the accused – Complainant has failed to produce any accounts books or similar documents – Complainant has failed to establish any monetary liability of the accused towards her -- It is for the complainant to produce the statement of accounts, wherein transactions can be established between the complainant and the accused -- Interference in an appeal against acquittal would be called for only if the judgment under appeal is perverse or is based on misreading of evidence -- Complainant has failed to point out any misreading of evidence by the trial Court – Prayer for special leave to appeal is declined.

(Para 8-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 438 – Proclaimed offender in cheque bounce case – Anticipatory bail -- Point for determination is whether the petitioner has been rightly declared proclaimed offender -- Otherwise also, the offence u/s 138 of the Act is bailable in nature -- Petitioner has already given an undertaking that he would submit to the process of law and would furnish the bail bonds to the satisfaction of the trial Court – Direction given to the petitioner to appear before trial court and furnish bail bond has been complied with – Interim order is made absolute.

(Para 6-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Offence by Company – Vicarious liability of Director – Quashing of complaint:

(i)    In order to make the company liable u/s 138 of the Act vicariously, the Director can be prosecuted if there is specific recital that the Directors thereof were at the time when offence the offence committed, were responsible for the conduct and day to day business of the complaint -- Director, who had resigned long back before the cheque was presented cannot be prosecuted --  One of the Director in the array of accused was never Director of the company since its incorporation and still he has been arrayed as accused in the capacity of Director -- The certification to this effect is computerized information, which is perse admissible under Section 65-B of the Evidence Act, rather this document has not been denied with reference to any evidence to the contrary.

(ii)   Averments even if made in the complaint that the Director was in-charge, the same can be negated if the High Court comes across some unimpeachable/acceptable circumstance, which may lead to the conclusion that the Director could never have been in-charge of and responsible for the conduct of business of the company at the relevant time and therefore, making such Director as an accused to stand trial would be an abuse of process of law.

(iii)  It is mandatory in terms of Section 138 and 141 of the Act to specifically aver in the complaint that Director was in-charge of and responsible for the conduct of the business of the company at the relevant time, when the offence was committed and he was responsible for day to day functioning of the company -- Role of the Director in a company is a question of fact depending upon the nomenclature of the company and other circumstances prevailing therein -- There cannot be any universal application of the rule that a Director of company is in-charge of its day to day affairs.

(iv)   Section 141 of the Act is a penal provision creating criminal liability -- As per nature of the offence it has to be strictly construed -- It is not sufficient to make bald cursory statement in a complaint that Director/Directors is/are in-charge of and are responsible for the conduct of the business of the company without specifying anything more as to the role of the Director/Directors -- It is requirement of law that the complainant must spell out as to how and in what manner the accused are in-charge of the affairs of the company in the conduct of its business and thus responsible for the same.

(v)    Some times a Director is not the active Director and he may be non executive Director, who was no doubt a custodian of governance of the company, but at the same time was not involved in day to day affairs running of its business -- For making such a Director liable there must have been specific averment in the complaint as to how and in what manner such a Director was responsible for conduct of business of the company -- In the absence of such plea the Court can definitely come to rescue of such Director against whom the proceedings are nothing but a pure abuse of process of law.

(vi)   “no criminal proceedings shall be initiated against the Director/accused unless specific allegations should comeforth in complaint, earmarking unambiguous role in the context of charge and responsibility in discharge of day to functioning of the company so as to prevent embarking on a fishing expedition to try and unearth material against the Director.

Complaint is liable to quashed being abuse of process of law and is deficient in formulising vicarious liability of the petitioners in terms of Section 141 of the Act.

(Para 9-19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Compromise after conviction u/s 138 of NI Act – Quashing of FIR – Cheque amount and compensation awarded by Trial Court paid – 15% amount deposited in Legal Services Authority – Resultantly, impugned judgments and order of sentence are set aside and criminal complaint filed by the complainant is quashed.

(Para 5-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheques issued against alleged loss/damages -- Legally enforceable debt – Rebuttal of presumption -- Complainant failed to prove that he suffered any loss on account of alleged late supply of the machinery and was legally entitled to claim any damages from accused -- Even late supply of the machinery is not proved -- Therefore, accused has been successful in rebutting the presumption under Section 139 of the N.I. Act to prove that there was 'no legally enforceable debt', for which the cheques are stated to have been issued -- Disputed claim of damages, which are not determined by any authority cannot be called debt or legally recoverable debt – No offence u/s 138 of the Act – Accused acquitted.

(Para 14-17, 21)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 311, 313 -- Dishonour of cheque – Complaint u/s 138 of NI Act -- Additional evidence -- After complainant’s evidence, statement u/s 313 of the accused, case was fixed for arguments -- Petitioner/complainant want to summon and examine the concerned Clerk/Record Keeper of the office of Excise and Taxation Officer along with the record submitted before the office with regard to purchase of peddy by the accused/company – Held, evidence is based on the record of the office of the Excise and Taxation Officer which cannot be manipulated by the complainant -- So there is no question of filling any lacuna and the resultant prejudice to the respondents -- Rather it will assist the Court to arrive at the just decision of the case – Application for additional evidence allowed.

(Para 9-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142(b) -- Section 142(b) -- Delay of 4 days in filing of complaint – Cognizance stage – Interpretation of -- Complaint was filed on 18.8.2009 -- Magistrate took the cognizance and issued the process -- Notice of accusation was issued to accused on 14.2.2010 i.e. about six months later -- Case was then adjourned for the evidence of the complainant -- It was on 28.10.2011 i.e. nearly after one year and eight months of taking of cognizance of the complaint by the Court when the case was fixed for the evidence of the complainant, that an application for condonation of delay of four days was filed – Whether when the complaint is fixed for the evidence of the complainant, it is to be treated as the cognizance stage? -- The obvious reply is 'NO' -- Ld. Court below fell in error when he took a view that application for condonation of delay can be filed at any stage -- Stage of cognizance of the complaint was already over much earlier and therefore, the complainant could not take the shelter of proviso to Section 142(b) of the Act.

(Para 7-11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 139 -- Legally enforceable liability – Burdon of proof -- Provisions of the N.I.Act lay down that initially, the complainant has to prove the existence of debt and other liabilities and thereafter the burden shifts upon the accused to prove that the cheque was not issued towards discharge of a lawful debt but was issued by way of security or any other reason on account of some business transaction or was obtained unlawfully.

(Para 17)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Indian Evidence Act, 1872 (1 of 1872), Section 34 – Dishonour of cheque -- Legally enforceable liability – Account book entries – Bahi entries -- Account books/bahi entries are not the instruments of advancement of loan like pronote, bonds, or Bill of exchange etc. which can legally be enforced, as recognised in the N.I. Act -- Entries in account books are only relevant u/s 34 of the Indian Evidence Act, but such statements shall not alone be sufficient evidence to charge any person with liability.

(Para 20)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Punjab Registration of Money Lenders Act, 1938 (3 of 1938), Section 3, 4 – Commission agent-Farmers relationship -- Loan business – Dishonour of cheque – Criminal liability -- Case set up by the complainant is that he used to advance loan to agriculturalists, who sell or promise to sell their agricultural produce through him and interest was charged as per prevalent rate in the area of Mandi – Held, complainant was dealing in money lending business to the public at large, however, is not having the money lender's licence -- Without having the aforesaid licence, the advancement of loan by the complainant to the petitioner-accused is not only illegal, but at the same time, he can also be prosecuted – It is a legal issue and can be raised any stage – Accused acquitted.

(Para 21-26)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Commission agent-Farmers relationship -- Cheque for repayment of loan -- No disclosure about the date of demand of loan and giving of loan in the complaint -- Accused has taken the defence from the very beginning that blank cheque was given to the complainant as security which was later on misused by the complainant -- Cheque has been filled in with different inks and different hand writings, rather admission clearly indicates that it was taken well in advance – Complainant was in a dominating position and had been advancing loans after getting their signatures on blank papers/cheques -- In fact, this is the mode adopted by the commission agents to always keep farmers in their clutches -- Since the complainant has admitted his relationship with the petitioner as commission agent and farmer, the complainant has withheld the best evidence with regard to sale of agricultural produce of the year by the accused – Accused is liable to be acquitted.

(Para 25, 26)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) -- Complaint u/s 138 of NI Act – Dismissed for want of prosecution – Case called several times but none has appeared and on that account, the complaint was dismissed for want of prosecution -- Cheque amount is stated to be Rs.10 lacs -- Nobody should be condemned unheard – Impugned order stands set-aside -- Complaint stands restored to its original number -- Trial court is directed to conclude the trial expeditiously, preferably within six months from the date of receipt of this order.

(Para 3-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) --Complaint u/s 138 of NI Act – Agreement to sell property with sons of accused – Rs.8 lacs received by sons – No suit for specific performance filed by complainant – Complainant is in possession of property – Attorney of the complainant had admitted in his cross-examination that complainant had made a complaint to the police authorities, where a compromise was effected between the complainant and the respondent and in lieu of the said compromise, cheques in question had been issued by the accused – Compromise relied upon by the complainant was not duly proved on record -- Plea put-forth by the accused that the cheques in question had been got issued from him under fear and pressure, was believable -- Trial court rightly came to the conclusion that the cheques in question had not been issued for any existing liability – Acquittal order upheld.

 (Para 3-6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200, 204 -- Complaint u/s 138 of N.I. Act – Power of attorney – Cognizance by Magistrate – Power of -- Magistrate had taken cognizance of the complaint without prima facie establishing the fact as to whether the Power of Attorney existed in first place and whether it was in order – Complaint against the appellant was not preferred by the payee or the holder in due course and the statement on oath of the person who filed the complaint has also not stated that he filed the complaint having been instructed by the payee or holder in due course of the cheque – Held, it was not open to the Magistrate to take cognizance -- Proceedings in question against the appellant are quashed.

(Para 16, 19)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200, 204 -- Section 138 – Complaint u/s 138 of N.I. Act – Power of attorney – Cognizance by Magistrate – Power of -- Except mentioning in the cause title there is no mention of, or a reference to the Power of Attorney in the body of the said complaint nor was it exhibited as part of the said complaint -- In the list of evidence there is just a mere mention of the words “Power of Attorney”, however there is no date or any other particulars of the Power of Attorney mentioned in the complaint -- Even in the verification statement, there is not even a whisper that she is filing the complaint as the Power of Attorney holder of the complainant -- Even the order of issue of process does not mention that the Magistrate had perused any Power of Attorney for issuing process – Magistrate wrongly took cognizance in the matter and the Court below erred in putting the onus on the appellant rather than the complainant -- Proceedings in question against the appellant are quashed.

(Para 17-19)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Complaint u/s 138 of N.I. Act – Power of attorney – Complaint was filed by one claiming to be General Power of Attorney of the complainant company – Complaint was not signed either by Managing Director or Director of the Company -- PW-1/R gave evidence on behalf of company who is only the employee of the Company -- As per Resolution of the Company i.e. Ex.P3 Managing Director and Director are authorized to file suits and criminal complaints against the debtors for recovery of money and for prosecution and they were authorized to appoint or nominate any other person to appear on their behalf in the Court and engage lawyer etc. -- But nothing on the record suggest that an employee is empowered to file the complaint on behalf of the Company -- Managing Director and Director are authorized persons of the Company to file the complaint by signing and by giving evidence -- At best the said persons can nominate any person to represent themselves or the Company before the Court –Employee of the Company signed the complaint and the Deputy General Manager of the Company/ PW-1 gave evidence as if he knows everything though he does not know anything -- Nothing on the record to suggest that he was authorized by the Managing Director or any Director -- Magistrate rightly acquitted the appellant.

(Para 20)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheque amounting to Rs.2.5 lakhs – Dishonour of cheque -- Legal enforceable liability – Presumption of – Rebuttal of -- No averment in the complaint to show when the loan was given by the complainant to the accused, in whose presence the loan amount was given and at which place – No evidence on the record that what amount has been given as loan and whether any interest etc. was to be paid or not -- No document on the record to show the liability and capacity of the complainant to lend such a huge amount -- No evidence on record that such a huge amount was withdrawn from the bank -- Further, this loan amount is not paid through negotiable instrument, as per provisions of the Income-Tax Act, such a huge amount cannot be paid in cash – Held, it is for the complainant to show that the cheque was issued for legally enforceable debt -- Presumption u/s 139 of the NI Act has been rebutted from the evidence of the complainant itself -- Reasonable doubt exists in the prosecution case and the Courts below have ignored all these facts and convicted the accused/petitioner -- Petitioner is acquitted.

(Para 7-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Complaint against Director of the Company – Partial quashing of Complaint – Petitioner is alleged to have issued cheque – Cheque placed on the file does not bear the signature of the petitioner – Form No.32 show that he had joined the said company as Director on 11.07.2009 and another Form No.32 to show that he resigned from the post of Director of the Company on 24.07.2009, which means that on the date of issuance of the cheque i.e. 29.12.2012, he had nothing to do with the said company – It being so, the complaint qua the petitioner along with the summoning order stands quashed.

(Para 2,3)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Offence u/s 138 of the NI Act -- Complaint through GPA – Hypothecated vehicle sold by Bank -- Ld. J.M.I.C., while acquitting the accused held that GPA were neither filed in original nor were duly registered, as such were not admissible in evidence – Court also held that when after the sanction of alleged loan, the Bank seized the vehicle and sold the same and adjusted the sale proceeds towards the amount repayable by the accused, then the accused/borrower was not guilty under an offence punishable u/s 138 of the Act for dishonour of post dated cheques – Held, findings given by learned JMIC, are correct, as per law and cannot be held as illegal or perverse.

(Para 7,8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Indian Evidence Act, 1872 (1 of 1872), Section 45 -- Signature on cheque – Expert evidence – Requirement of -- Cheque in question was dishonoured with the remarks “funds insufficient' – Accused has not examined an officer from her bank to prove that the bank officer did not verify signatures on the cheque – In absence of any plea by the accused during cross-examination of the complainant that the cheque does not bear her signatures and evidence of her banker that signatures on the cheque being not verified at the time of return of cheque with the remarks 'funds insufficient', there is no error in the order passed by the trial Court declining the prayer for examination of signature of accused on cheque by an expert.

(Para 7, 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 427 – Conviction in three complaints u/s 138 of N.I.Act -- Concurrent running of sentence -- Sentence qua imprisonment in two complaints filed by one complainant against the petitioner can be ordered to run concurrently -- Sentence in the complaint filed by other complainant forms a different transaction and the sentence qua imprisonment in the said case cannot be held to run concurrently – Concurrent running of sentence in two complaints shall be limited to the sentence qua imprisonment only and sentence which the petitioner has to undergo in default of payment of fine, shall not be effected by this direction and shall also not run concurrently.

(Para 7-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 311, 313 – Dishonour of cheque -- Complaint u/s 138 of NI Act – In defence, the accused examined Expert to prove cheque does not bear his signature -- Rebuttal evidence by complainant – Right of -- In cross-examination it was specifically put to the complainant that the Cheque does not bear the signature of accused – If the complainant knowing fully well that the accused has denied his signatures on the cheque did not opt to examine an expert, he cannot be allowed to examine an expert by way of rebuttal to defence evidence of a hand writing expert -- It cannot also be said to be an inadvertent mistake -- Section 311 Cr.P.C. is not intended to fill up the lacuna.

(Para 9-11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) -- Complaint u/s 138 of N.I. Act -- Dismissal of complaint for want of prosecution -- Dismissal of the complaint for want of prosecution has resulted in acquittal of the accused and, therefore, the petitioner was entitled to challenge the order by seeking leave to appeal under Section 378(4) of the Code of Criminal Procedure.

(Para 6)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Complaint u/s 138 of N.I. Act -- Dismissal of complaint for want of prosecution – Petition u/s 482 Cr.P.C. for setting aside order of dismissal or say it differently, restoration of the complaint dismissed in default – Absence of complainant from the proceedings was not willful or intentional but due to justifiable reason and proceedings were pending for securing presence of the accused – Ld. trial Magistrate neither examined nor recorded any reasons if personal appearance of the petitioner could not be dispensed with on that day – Complaint filed by the petitioner is ordered to be restored.

 (Para 7-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Dishonour of cheque -- Presumption of legal enforceable liability – Rebuttal of -- Accused had clearly come up with the defence that the complainant had got his signatures on the blank cheques and other papers but no loan amount was disbursed to him -- Therefore, it was mandatory for the complainant to produce the record to show the liability and the fact that loan was given of this amount, on this date and how many installments the accused had paid and what amount remains due payable regarding which the cheque was issued -- In the absence of this evidence, the accused has rebutted the presumption that cheque is not issued for legally enforceable debt.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Director of company – Resignation of – Dishonour of cheque – Liability of – Quashing of complaint -- One of the petitioner /accused / Director of company had resigned from the Company on 16.02.2013 and the Board of Directors have accepted her resignation on 18.02.2013 and the other had tendered his resignation on 21.02.2013 i.e before the cheque was issued -- Registrar of Companies was informed about resignation on 16.09.2013 and June, 2013 respectively -- This gap would not make the petitioners liable for dishonor of the cheques, which was presented on 27.05.2013 and was dishonored – Petitioners were not involved in day to day affairs of the company and no liability can be thus fastened upon them – Complaint and summoning order are quashed.

(Para 27, 28)

A. Indian Evidence Act, 1872 (1 of 1872), Section 34 – Bahi entries – Evidential value -- Bahi entries are not the instruments of advancement of loan like pronote, bonds or Bill of exchange etc., which can legally be enforced, as recognized in the NI Act -- These entries are only relevant u/s 34 of The Indian Evidence Act, 1872, that too, in case, the same were kept regularly in the course of business -- At the same time, such Bahi entries must be kept in conformity with some known system of accountancy, either in the official language or customary language well known to the parties and not otherwise -- Where the books produced in a case are merely ledgers, these are not supported by any daybook or roznama, do not contain entries of transactions and there is no daily opening or closing balance, the same are meaningless -- Therefore, such Bahi entries cannot and indeed should not be taken to be account book regularly kept in the course of business, as provided u/s 34 of The Indian Evidence Act.

(Para 11)

B. Indian Evidence Act, 1872 (1 of 1872), Section 34 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Bahi entries – Evidential value -- Maintainability of complaint u/s 138 of NI Act -- Bahi entries are not negotiable instruments of advancement of loan, such as, pronote, bonds and Bill of exchange etc., which can legally be enforceable, as contemplated by the NI Act -- Entry in the Bahi Khata merely is an admission by its maker in his own favour and it is only admissible in evidence if it is accepted by the opposite side (loanee) and not otherwise -- Such entries shall alone be not sufficient to charge any person with liability -- Commission agents used to obtain such blank/undated cheques from the Farmers as a security in good faith, not in lieu of any legal liability, to which, the court can take judicial notice of it -- Complainant cannot adhere to initiate the criminal prosecution against the respondent u/s 138 of the NI Act.

(Para 12-17)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Punjab Registration of Money Lenders Act, 1938 (3 of 1938), Section 3,4 -- Maintainability of complaint u/s 138 of NI Act -- Complainant used to lend money on credit basis to different persons, but he did not possess any money lender's licence -- Punjab Registration of Money-lender's Act, 1938 is applicable to the State of Haryana -- Section 4(2) postulates that no money lender shall carry on the business of advancing loans unless he gets himself registered under sub-section (1) -- Likewise, Section 3 of the Act posits that a suit by a money-lender for the recovery of a loan or an application by a moneylender for the execution of a decree relating to a loan, shall be dismissed, unless the money-lender is registered and holds a valid license – Having a money lender's license is a condition precedent to advance the loan to the Farmers – Complainant cannot adhere to initiate the criminal prosecution against the respondent u/s 138 of the NI Act.

(Para 14-17)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Legal enforceable debt – Time barred debt – Maintainability of complaint u/s 138 of NI Act -- In case a cheque is issued for time barred debt and it is dishonoured, then, it cannot be termed to have been issued, in lieu of legal enforceable liability/debt within the meaning of section 138 of the NI Act.

(Para 16)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Acquittal u/s 138 of N.I. Act – Leave to appeal -- Judgment of acquittal, containing valid reasons, cannot possibly be interfered with by High Court, in exercise of limited jurisdiction u/s 378(4) Cr.PC, unless and until, the same is illegal, perverse and without jurisdiction.

(Para 18)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Dishonour of cheques issued by Company – Vicarious liability of Directors -- So far as Directors who are not signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is necessary to aver in the complaint filed u/s 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company -- This is a basic requirement -- There is no deemed liability of such Directors -- It is the basic and essential averment which persuades the Magistrate to issue process against the Director.

 (Para 26, 27)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Quashing of complaint u/s 138 of NI Act – High Court may quash the complaint despite the basic averment – It may come across some unimpeachable evidence or acceptable circumstances which may in its opinion lead to a 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 and therefore making him stand the trial would be abuse of the process of court as no offence is made out against him.

(Para 29)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Offence against Director of Company -- Quashing of complaint u/s 138 of NI Act – When in view of the basic averment process is issued the complaint must proceed against the Directors -- But, if any Director wants the process to be quashed on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling uncontrovertible material or acceptable circumstances to substantiate his contention -- He must make out a case that making him stand the trial would be abuse of the process of court -- He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial -- Quashing of a complaint is a serious matter -- Complaint cannot be quashed for the asking -- For quashing of a complaint it must be shown that no offence is made out at all against the Director.

(Para 30)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Offence against Director of Company – Issuance of process – Quashing of Complaint -- Supreme Court summarized the law as follows:

a)    Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director;

b)    If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director.

c)    In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed;

d)    No restriction can be placed on the High Court’s powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.

(Para 33)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Pre-mature complaint – Complaint within 15 days of notice – Maintainability of – No complaint can be maintained against the drawer of the cheque before the expiry of 15 days from the date of receipt of notice because the drawer/accused cannot be said to have committed any offence until then – Complaint u/s 138 of the NI Act filed before the expiry of 15 days of service of notice could not be treated as a complaint in the eye of law and criminal proceedings initiated on such complaint are liable to be quashed.

(Para 1, 39, 40)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Pre-mature complaint – Complaint within 15 days of notice – Dismissal of – Second complaint – Maintainability of – Condonation of delay -- Payee or the holder in due course of the cheque may file a fresh complaint within one month from the date of decision in the criminal case and, in that event, delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the NI Act.

(Para 1, 42)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 427 – Conviction u/s 138 of N.I. Act in two complaints -- Concurrent running of sentences – Accused convicted in two separate complaints for 1 year R.I. in each case – Both the complaints were decided by same Ld. C.J.M. on same day – Both the revision petitions are dismissed, but the sentences are ordered to run concurrently.

(Para 7, 8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138(b), 142(b) – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Dishonor of cheque – Delay in filing complaint – Condonation of delay -- Quashing of complaint by High court – Two communications, one a handwritten note and the other a formal legal notice issued by the advocate, were served on the accused calling upon him to pay the Cheque amounts – Before the Trial Court, the accused did not raise the issue of ‘limitation’ -- Issue was raised for the first time before the High Court in Section 482, Cr.P.C. proceedings -- High Court, considering the handwritten note sent by the appellant as ‘notice’ u/s 138 of the Act, came to the conclusion that the complaint is barred by limitation – Held, High Court was not right in quashing the complaint merely on the ground that complaint is barred by limitation -- High Court ought to have remanded the matter to the Trial Court for deciding the issue of limitation – Matter remanded back to Trial Court – Liberty given to Complainant file application for condonation of delay.

(Para 17-24)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138(b) – Dishonour of cheques -- Handwritten notice – Validity of -- Act does not prescribe any specific form of notice, but mandates that it should be issued in writing – Handwritten notice contains the details the subject amount, details of Cheque numbers and dates of issue with amounts and particulars of Bank, Returning of Cheques by the banker dishonouring them on the ground of ‘Stop Payment’ by the accused, a demand for immediate repayment of the amount; and a caution to the accused that in case of failure on the part of respondent, the appellant would initiate legal proceedings – Held, the Handwritten note fulfilled the mandatory requirements under clause (b) of proviso to Section 138 and could be said to be a valid ‘notice’.

(Para 18)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 142(b) – Complaint u/s 138 of N.I. Act -- Condonation of delay -- At the time of filing the complaint, the Magistrate has to take cognizance of the complaint when it is within limitation and in case of delay in filing the complaint, the complaint has to come up with the application seeking condonation of delay.

(Para 21)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Dishonour of cheques -- Legal Notice with wrong cheques number – Validity of -- Typographical error in the legal notice regarding cheques number -- Such typographical error if any, does not meet the compliance of the mandatory provisions of Section 138 of the N.I. Act and the only course left for the complainant was to give a fresh legal notice to the accused – Fresh notice was not given – Held, the complaint is not maintainable.

(Para 8)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Acquittal of accused – In view of discrepancy in statements of witnesses regarding authenticity of Bill for which the alleged cheque in question was issued by the accused to the complainant for discharge of its debt; being under a cloud – Statement that cheques might have been issued against previous transaction, apparently lends credence to the defence of the accused that the blank cheque was collected by the complainant company as security at the time of starting the business -- Trial Court rightly acquitted the accused.

(Para 9-12)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Blank cheque – Security cheques – Dishonour of – No offence u/s 138 – Blank cheque was handed over to the complainant as a security cheque and was not meant for enforcement of a debt -- Object of Section 138 of the Act is to avoid malignant trade practice of indiscriminately issuing cheques without sufficient funds -- Cannot be construed and brought within the gamut attracting the provisions of Section 138 of the Act.

(Para 11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 177 -- Dishonour of cheque – Place for Commission of offence – Territorial jurisdiction to file complaint -- A reading of Section 138 N.I. Act in conjunction with Section 177, Cr.PC leaves no manner of doubt that the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed -- Held, the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank, is located -- Offence contemplated therein stands committed on the dishonour of the cheque, and accordingly the JMFC at the place where this occurs is ordinarily where the Complaint must be filed, entertained and tried -- Place of the issuance or delivery of the statutory notice or where the Complainant chooses to present the cheque for encashment by his bank are not relevant for purposes of territorial jurisdiction of the Complaints.

(Para 16-19)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 177 – Indian Penal Code, Section 420 -- Dishonour of cheque – Place for Commission of offence –Territorial jurisdiction -- Remedies available to payee – Relief introduced by Section 138 of the N.I. Act is in addition to the contemplations in the IPC -- It is still open to such a payee recipient of a dishonoured cheque to lodge a FIR with the Police or file a Complaint directly before the concerned Magistrate -- If the payee succeeds in establishing that the inducement for accepting a cheque which subsequently bounced had occurred where he resides or ordinarily transacts business, he will not have to suffer the travails of journeying to the place where the cheque has been dishonoured -- All remedies under the IPC and Cr.PC are available to such a payee if he chooses to pursue this course of action, rather than a Complaint u/s 138 of the N.I. Act – Payee can always file a suit for recovery wherever the cause of action arises dependent on his choosing.

(Para 18)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139, 140 – Dishonour of cheque – Commission of offence -- Mens-rea -- It is trite that mens rea is the quintessential of every crime -- Objective of Parliament was to strengthen the use of cheques, distinct from other negotiable instruments, as mercantile tender and therefore it became essential for the Section 138 NI Act offence to be freed from the requirement of proving mens rea -- Offence is committed no sooner the drawee bank returns the cheque unpaid.

(Para 15)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145(2), -- Dishonour of Cheque – Territorial jurisdiction to file complaint – Pending complaints – Effect of -- Direction given that :

(i)   Only those cases where, post the summoning and appearance of the alleged Accused, the recording of evidence has commenced as envisaged in Section 145(2) of the Negotiable Instruments Act, 1881, will proceeding continue at that place.

(ii)   Regardless of whether evidence has been led before the Magistrate at the pre-summoning stage, either by affidavit or by oral statement, the Complaint will be maintainable only at the place where the cheque stands dishonoured.

(iii)  Complaint cases where proceedings have gone to the stage of Section 145(2) or beyond shall be deemed to have been transferred from the Court ordinarily possessing territorial jurisdiction, as now clarified, to the Court where it is presently pending.

(iv)  All other Complaints (obviously including those where the accused/respondent has not been properly served) shall be returned to the Complainant for filing in the proper Court, in consonance with our exposition of the law.

(v)   If such Complaints are filed/refiled within thirty days of their return, they shall be deemed to have been filed within the time prescribed by law, unless the initial or prior filing was itself time barred.

(Para 20)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Objective of Section 138 of NI Act -- Objectives of the proceedings of Section 138 of the Act are that the cheques should not be used by persons as a tool of dishonesty and when cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he must face the criminal trial and consequences.

(Para 6)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Dishonor of cheque – Summoning of accused – Payment of Cheque amount -- Once the Court issues summons and the presence of the accused is secured, an option be given to the accused whether, at that stage, he would be willing to pay the amount due along with reasonable interest and if the accused is not willing to pay, Court may fix up the case at an early date and ensure day-to-day trial.

(Para 14)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Dishonour of cheque – Complaint u/s 138 of NI Act – Evidence of Complainant – Procedure of -- Complainant can give his evidence by way of an affidavit and such affidavit shall be read in evidence in any inquiry, trial or other proceedings in the Court, which makes it clear that a complainant is not required to examine himself twice i.e. one after filing the complaint and one after summoning of the accused -- Affidavit and the documents filed by the complainant along with complaint for taking cognizance of the offence are good enough to be read in evidence at both the stages i.e. pre-summoning stage and the post summoning stage -- In other words, there is no necessity to recall and re-examine the complaint after summoning of accused, unless the Magistrate passes a specific order as to why the complainant is to be recalled -- In summary trial, after the accused is summoned, his plea is to be recorded under Section 263(g) Cr.P.C. and his examination, if any, can be done by a Magistrate and a finding can be given by the Court under Section 263(h) Cr.P.C. and the same procedure can be followed by a Magistrate for offence of dishonour of cheque since offence under Section 138 of the Act is a document based offence -- If the proviso (a), (b) & (c) to Section 138 of the Act are shown to have been complied with, technically the commission of the offence stands completed and it is for the accused to show that no offence could have been committed by him for specific reasons and defences.

(Para 14-16)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Constitution of India, Article 21 -- Dishonour of cheque -- Complaint u/s 138 of the NI Act – Speedy disposal of cases -- Directions given that :

(1)    Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons.

(2)    MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken.

(3)    Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest.

(4)    Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re-calling a witness for cross-examination.

(5)    The Court concerned must ensure that examination-in-chief, cross-examination and re-examination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross-examination as and when there is direction to this effect by the Court.

All the Criminal Courts in the country dealing with Section 138 cases to follow the above-mentioned procedures for speedy and expeditious disposal of cases falling under Section 138 of the Negotiable Instruments Act.

(Para 21, 22)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Advance payment cheques – Dishonour of – Criminal liability -- If at the time of entering into a contract, it is one of the conditions of the contract that the purchaser has to pay the amount in advance and there is breach of such condition then purchaser may have to make good the loss that might have occasioned to the seller but that does not create a criminal liability u/s 138.

(Para 19)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Advance payment cheques – Subsisting debt – Nature of -- For a criminal liability to be made out u/s 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheques -- View that issuance of cheques towards advance payment at the time of signing contract has to be considered as subsisting liability and dishonour of such cheques amounts to an offence under Section 138 of the N.I. Act is not acceptable -- If a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, the cheque cannot be said to have been drawn for an existing debt or liability.

(Para 19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 –Dishonour of Cheque of the Company -- Vicarious liability – It is necessary  for a complainant to state in the complaint that the person accused was in charge of and responsible for the conduct of the business of the company -- Although, no particular form for making such an allegation is prescribed but a reading of the complaint should show that the substance of the accusation discloses that the accused person was in charge of and responsible for the conduct of the business of the company at the relevant time -- There is no specific or even a general allegation made against the appellants -- Complaint against the appellants deserves dismissal. 

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 9, 85(2), 138 – Self cheque -- Bearer cheque – Maintainability of complaint u/s 138 of NI Act -- Holder in due course -- There a presumption in favour of the holder in due course that the instrument was drawn for consideration, unless the contrary is proved -- Bank is bound to make payment to the bearer -- Dishonour of the cheque was for the reason that the account of the petitioner did not carry sufficient funds -- Plea that the cheque being a self cheque would not attract Section 138 of the NI Act, is not tenable.

(Para 5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint -- Account closed – Payment stopped – Referred to drawer -- Signature do not match – Image is not found -- Expression “amount of money …………. is insufficient” appearing in Section 138 of the Act is a genus and dishonour for reasons such “as account closed”, “payment stopped”, “referred to the drawer” are only species of that genus – Dishonour on the ground that the “signatures do not match” or that the “image is not found”, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act.

-- Question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration.

(Para 15)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Payment Stopped -- Dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract the provisions of Section 138.

(Para 16)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint -- Fraud – Allegations of fraud and the like are matters that cannot be investigated by a Court under Section 482 Cr.P.C. and shall have to be left to be determined at the trial after the evidence is adduced by the parties.

(Para 17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Indian Penal Code, 1860 (45 of 1860), Section 420 -- Constitution of India, Article 20(1) -- Code of Criminal Procedure, 1973 (2 of 1974), Section 300(1) -- Double jeopardy – Conviction u/s 138 of NI Act – Trial and punishment under Section 420 IPC – Permissibility of – Section 300(1) of Cr.P.C. is wider than Article 20(2) of the Constitution -- While, Article 20(2) of the Constitution only states that 'no one can be prosecuted and punished for the same offence more than once' -- Section 300(1) of Cr.P.C. states that no one can be tried and convicted for the same offence or even for a different offence but on the same facts – Held in the case although the offences are different but the facts are the same -- Hence, Section 300(1) of Cr.P.C. applies -- Consequently, the prosecution u/s 420, IPC was barred by Section 300(1) of Cr.P.C.

(Para 7, 8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 -- Cheque bounce complaint – Cognizance by Magistrate – Evidence of complainant – Affidavit of complainant in evidence -- For the purpose of issuing process u/s 200 of the Cr. P.C., it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint u/s 138 of the NI Act, 1881 and the Magistrate is not obliged to call upon the complainant to remain present before the Court, nor to examine the complainant or his witnesses upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the Negotiable Instruments Act, 1881.

-- It is only if and where the Magistrate, after considering the complaint under Section 138 of the Negotiable Instruments Act, 1881 and the documents produced in support thereof and the verification in the form of affidavit of the complainant, is of the view that examination of the complainant or his witness is required, that the Magistrate may call upon the complainant to remain present before the Court and examine the complainant and/or his witness upon oath for taking decision whether or not to issue process on the complaint under Section 138 of the Negotiable Instruments Act, 1881.

(Para 59)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 -- Cheque bounce complaint – Cognizance by Magistrate – Evidence of complainant -- Affidavit of complainant in evidence -- Nothing wrong with filing the affidavit in support of the complaint in a format indicating all the essential facts satisfying the ingredients of Section 138 of the NI Act, 1881 for the purpose of enabling the Magistrate to decide whether or not to issue process on the complaint u/s 138 of the NI Act, 1881.

(Para 59)