Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 438, 442 -- Cheque bounce case -- Compromise after conviction at revision stage – Acquittal – Complainant and the petitioner have amicably resolved the matter -- Judgment of conviction and order of sentence passed by the learned trial Court, as affirmed by the learned Appellate Court set aside -- Petitioner/ accused acquitted of all the charges framed against him.

(Para 7-9)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141, 145 – Indian Partnership Act, 1932 (9 of 1932), Section 25 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 200 – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 223 – Cheque bounce complaint – Non-impleadment of Partnership firm as accused – Maintainability of Complaint against Partner – Vicarious liability/ Joint and several – Since the liability is joint and several, even in the absence of a partnership firm being proceeded against by the complainant by issuance of legal notice as mandated u/s 138 of the Act or being made an accused specifically in a complaint filed under Section 200 of CrPC, (equivalent to Section 223 of the BNSS), such a complaint is maintainable.

(Para 7.21, 9.9)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 223 -- Cheque bounce complaint -- Offence by partnership firm – Partners personally, jointly and severally liable in the case of a partnership firm, when the offence has been proved against a partnership firm -- Partnership firm is only a compendious name for the partners of the firm, any offence committed u/s 138 read with Section 141 of the Act would make the partners of the firm jointly and severally liable with the firm.

(Para 9.10, 9.11)

C. Indian Partnership Act, 1932 (9 of 1932), Section 4, 5 -- Partnership firm – Whether a Separate Legal Personality -- A partnership firm, unlike a company registered under the Companies Act, does not possess a separate legal personality and the firm’s name is only a compendious reference for describing its partners -- This fundamental distinction between a firm and a company rests on the premise that the company is separate from its shareholders -- Even the registration of a firm does not mean that it becomes a distinct legal entity like a company -- Hence, the partners of a firm are co-owners of the property of the firm, unlike shareholders in a company who are not co-owners of the property of the company.

(Para 7.9, 7.10, 8)

D. Indian Partnership Act, 1932 (9 of 1932), Section 42 (c) -- Partnership firm and partners – Death of partner -- Perpetual Succession -- A partnership firm’s fundamental identity is contingent on the partners and undergoes a change with a change in partners, subject to contract -- Section 42(c) of the Partnership Act provides that subject to contract between the partners, a firm is dissolved by the death of a partner.

(Para 7.17)

E. Indian Partnership Act, 1932 (9 of 1932), Section 25, 26 -- Liability of Partners -- Liability of partners for the debts of the business is unlimited and they are jointly and severally liable for all business obligations of the partnership firm --  Any liability of a firm has the same effect of a liability against the partners -- Debt of the firm is the personal debt of a partner and the debt of the firm has to be incurred by each partner as a financial personal liability -- The liability of the firm for acts done by the partner would arise when such acts are done in the ordinary course of the business of the firm.

(Para 7.18-7.20, 7.22)

F. Indian Partnership Act, 1932 (9 of 1932), Section 25, 26 -- Liability of Partners – Penalty -- Since the firm by itself cannot transact any business, if a partner of the firm commits any breach, all the partners would become liable for the consequent penalties, just as the firm would be liable -- Further, if a penalty is imposed on a partnership firm for contravention of a statute, it amounts to levy of penalty on the partners also and there is no separate or independent penalty on the partners for the said contravention.

(Para 7.23)

G. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141, 145 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 223 – Cheque bounce complaint – Liability of Directors, manager, Secretary and other officer -- Director, manager, secretary or other officer of the company cannot be proceeded against per se by virtue of the position they hold in the company but can be proceeded against only when there is proof that the offence u/s 138 was committed by the company with their consent or connivance or due to negligence on their part -- Standard of proof is higher under sub-section (2) of Section 141 vis-à-vis the category of persons mentioned therein with regard to their specific role in the commission of the offence u/s 138 of the Act.

(Para 9.4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 372, 378(4) – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 413, 419(4) -- Acquittal in cheque bounce complaint – Leave to appeal – Right of appeal -- Scope and ambit of proviso to Section 372 Cr.P.C./413 BNSS are inherently broader and more accommodating when juxtaposed with the comparatively narrower confines of Section 378(4) of Cr.P.C., 1973/ 419(4) of BNSS, 2023 – Matter relegated to Session Judge :

-- The appeal, along with accompanying application(s) remitted to the learned Sessions Judge with a direction to treat the same as having been filed under Section 372 of Cr.P.C., 1973/ Section 413 of BNSS, 2023. The said learned Sessions Judge may entrust the appeal to himself or assign it to another Court of competent jurisdiction for its disposal, as per law.

-- The Registry directed to send, expeditiously, the complete records of the present appeal (including the paper-book) to the said learned Sessions Judge.

(Para 3, 4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 372, 378(4) – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 413, 419(4) -- Acquittal in cheque bounce complaint – Leave to appeal – Delay/ Limitation -- Appeal before Session’s Court -- Application u/s 378(4) Cr.P.C. disposed of by directing the learned Sessions Judge to treat the present leave to appeal as an appeal filed u/s 372 of the Cr.P.C. and entrust the same to any appropriate Court to try the same -- The concerned Court shall decide the appeal on merits as per law, as expeditiously as possible -- Concerned Appellate Court need not to adhere to the delay aspect, if any, involved in the case, for the purpose of considering the issue raised in the appeal and its disposal on merit.

(Para 5, 6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque bounce complaint – Vicarious liability of Director of company --  Role of Director – Pleadings in complaint – Requirement of -- Administrative role of each director would be within the special knowledge of the company or the director of the firm and it is for them to establish that they were not in charge of the affairs of the company -- There is no obligation on the complainant to plead in the complaint as to matters within the special knowledge of the company or the directors or firm about the specific role attributed to them in the company.

(Para 38)

A. Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 83, 84 – Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint – Proclamation – Attachment of property – Objections to attachment – Decisioning upon – Requirement of – Petitioner claiming to be the owner of the attached property – Magistrate framed an opinion that the objections of the petitioner would be considered only after attachment order is implemented on spot – Held, procedure adopted by learned trial Magistrate is not countenanced by law -- Impugned order set aside -- Learned trial Magistrate directed to proceed ahead and decide the objections filed by the petitioner to the attachment order most expeditiously after hearing the parties, without waiting for the compliance report of the Deputy Commissioner.

(Para 6-8)

B. Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 83, 84 – Proclamation – Attachment of property – Objections to attachment – Decisioning upon – Requirement of – Section 84 of Cr.P.C. does not bar raising of objection prior to the attachment -- Thus, if a third party raises an objection prior to the attachment of the property, the court has to decide the same and if the court comes to the conclusion that the property does not belong to the accused, the court can pass an order, either declining to attach the property or withdraw the attachment order.

(Para 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148 – Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389 -- Appeal against conviction in cheque bounce complaint -- Suspension of sentence – Condition of deposit of 20% of compensation amount – Challenge to -- Ld. Lower Appellate Court suspended the sentence of the petitioner subject to depositing 20% of the compensation amount within 03 months – Held, appellate Court was required to consider whether the case falls in the exception or not -- Imposition of the condition of depositing 20% of the compensation amount set aside – Matter remanded back to the learned Lower Appellate Court with a direction to decide the matter afresh in accordance with law in the light of judgment passed by the Hon'ble Supreme Court in Jamboo Bhandari's case 2013 (12) SCALE 611.

(Para 4-6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 397, 401 -- Conviction in cheque bounce complaint – Settled amount paid to bank -- Respondent-Bank shown no objection to compounding of offence -- Object and purpose of enactment is to provide a compensatory mechanism for expeditious recovery of money as opposed to punishing the accused -- Amendment carried out in the year 2002 in the NI Act intended to make the nature of offence u/s 138 of the NI Act as a civil wrong while making it compoundable -- Conviction and order of sentence quashed/ set aside -- Petitioner acquitted.

(Para 3, 5-8)

Indian Penal Code, 1860 (45 of 1860), Section 420 – Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Conviction in cheque bounce complaints – FIR u/s 420 IPC by accused against complainant party – Quashing of FIR – Finding recorded by the jurisdictional criminal court in 138 NI Act proceedings between the parties would be binding to both the parties in any subsequent proceedings involving the same issue – Respondent cannot maintain a prosecution on the basis of allegations which were precisely his defence in the earlier proceedings wherein he was an accused -- Criminal proceedings deserve to be quashed on this ground alone -- Impugned criminal proceedings instituted against the appellant for offences u/s 420 of the IPC, quashed.

(Para 12, 20-25)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Financial capacity of Complainant --   Burden of proof -- Loan of Rs.22,00,000/- to accused – Cheque is dated 17.03.2010 -- Complainant is not required, at threshold, to prove his financial capacity unless accused specifically disputes it -- Complainant clearly stated that he had withdrawn amount from bank, accused did not seriously contest said claim – Presumption of High Court that it was obligatory on the part of the complainant to establish his case on the basis of evidence by giving the details of the bank account as well as the date and time of the withdrawal of the said amount and also the date and time of the payment made to the accused, including the date and time of receiving of the cheque is erroneous -- High Court erred in overturning the concurrent findings of guilt and consequential conviction by the Trial Court and the Appellate Court – Conviction restored -- Considering age, the accused may be only subjected to fine and not imprisonment – Sentence modified to only payment of a fine restricted to Rs.32,00,000/-

(Para 22, 23, 24)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 -- Cheque bounce complaint – Vicarious liability – Proclaimed person – Quashing of proceedings -- Complaints are silent qua any active role of the petitioner in the business of the company -- Petitioner was merely an Independent Director, had resigned prior to the issuance of most cheques, and was not a signatory to any of them -- Even for the limited period during which he rejoined the Board, there is no material brought forth or any material to suggest his involvement in the financial decisions of the company -- Complaints, summoning orders, and subsequent proceedings, including the declaration of the petitioner as a ‘Proclaimed Offender’/‘Proclaimed Person’ in the criminal complaints cannot be sustained in the absence of the foundational ingredients required u/s 141 of the Act – Proceedings quashed.

(Para 13, 17, 18)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 200 (223 BNSS), Section 482 (528 BNSS) – Complaint in cheque bounce case -- Suppression of facts -- Effect: Statutory notice u/s 138 NI Act was issued by the complainant’s advocate – Appellant/ accused’s advocate write twice within few days seeking supply of documents relied upon in the notice – Documents were not supplied – Complainant suppressed the reply letters sent by the accused in the complaint as well as in the statement on oath under Section 200 CrPC – As the complainant suppresses material facts and documents, he cannot be allowed to set criminal law in motion based on the complaint – It is nothing but an abuse of the process of law – Held, High Court ought to have interfered and quashed the complaint -- Impugned order of the High Court set aside -- Complaint and the order of cognizance quashed and set aside.

(Para 13-22)

B. Code of Criminal Procedure, 1973 (2 of 1974), Section 200 (223 BNSS) – Complaint – Examination of complainant/ witness -- After a complaint is filed u/s 200 of the CrPC, the learned Magistrate is duty-bound to examine the complainant on oath and witnesses, if any, present and reduce the substance of such examination into writing -- What is reduced into writing is required to be signed by the complainant and witnesses, if any.

(Para 9)

C. Code of Criminal Procedure, 1973 (2 of 1974), Section 200 (223 BNSS) – Complaint – Examination of complainant/ witness -- Recording the complainant's statement on oath u/s 200 of the CrPC is not an empty formality, object is to ascertain the truth -- Learned Magistrate is duty-bound to put questions to the complainant to elicit the truth -- Learned Magistrate has to apply his mind to ascertain whether there is sufficient ground for proceeding against the accused -- If he is satisfied, then the learned Magistrate has to issue a process in terms of sub-Section (1) of Section 204 of the CrPC (227 BNSS) -- Setting criminal law in motion is a serious matter.

(Para 10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 148 – Cheque bounce appeal -- Deposit of 20% of compensation – Mandate of -- Appellate court to determine financial condition directed the applicant/ appellant to submit ITR for the last 5 years -- Court has to consider that condition of deposit of 20% will not be unjust but also, the fact whether the imposing condition would amount to deprivation of the right of the appeal of the appellant -- No illegality in the impugned order.

(Para 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148(1) – Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389 -- Conviction in cheque bounce complaint – Expedite decision on appeal – Suspension of sentence -- On joint request of the parties, petitioners exempted from depositing an amount of Rs.43,65,125/- i.e. 20% of the amount of compensation during the pendency of the appeal, before the Appellate Court -- Since the complaint was initially filed on 11.01.2018 and a period of 7 years has lapsed, after the institution of the complaint, the Appellate Court is directed to decide the appeal within a period of 04 months.

(Para 6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148(1) – Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389 – Conviction in cheque bounce complaint – Appeal – Suspension of sentence -- Deposit of 20% compensation – Requirement of -- Petitioners/ convicts directed to deposit 20% of the compensation amount awarded by trial Court by the Appellate Court -- No reason given by the Court while issuing directions -- Condition of depositing of 20% of compensation amount awarded by the trial Court imposed for the purpose of suspension of sentence, set aside -- Appellate Court directed to re-consider the same after giving opportunity of hearing to the parties and then to pass appropriate order in accordance with the law laid down in Jamboo Bhandari’s case (SC) 2024(2) L.A.R. 323 = (2023) Law Today Live Doc. Id. 18509 and till then not to take any coercive action against the petitioners.

(Para 7, 8)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148(1) -- Deposit of 20% compensation – Requirement of -- According to Section 148 NI Act, the requirement to deposit a minimum 20% of the fine or compensation during an appeal is not mandatory, instead, it is discretionary power vested with the appellate Court meaning the said Court can choose to waive the said deposit in certain exceptional circumstances depending on the facts of the case.

(Para 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 225 – Cheque bounce complaint – Enquiry u/s 225 BNSS – Requirement of -- Drill of Section 225 BNSS (erstwhile Section 202 Cr.P.C.) was not followed before issuance of process -- Intention is to ensure that sufficient grounds exist in order to proceed against an accused in a private complaint -- It is pertinent that the concerned Court passes an order indicating substantial compliance of the aforementioned provision, in view of the directions issued in In re: Expeditious Trial of Cases under Section 138 NI Act 1881 2021(2) L.A.R. 366 = (2021) Law Today Live Doc. Id. 16184 -- Matter remanded back to concerned Court to consider the matter afresh in accordance with law, by taking recourse to Section 225 BNSS.

(Para 4-10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Quashing of Cheque bounce complaint – Vicarious liability of Manager of company – Cheques were signed and issued by one of the directors -- Petitioner is neither signatory to the cheques in question nor he is drawer of the said cheques -- It is settled position of law that merely being a director or manager of a company is not sufficient to make the person liable u/s 141 of NI Act -- It is necessary to specifically aver in the complaint that the director or the concerned manager was incharge of, or responsible for the conduct of business of company -- In the absence of such averments, he cannot be vicariously held liable for the act/omission committed by the company --  Cheques in question were issued after the resignation of the petitioner was accepted by the Company -- Petitioner was having no connection with the affairs of the Company -- Criminal proceedings quashed.

(Para 18-23)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Acquittal in cheque bounce complaint – Proclaimed person -- Offence u/s Section 174A IPC – Quashing -- Appellant acquitted in main case which means that there is no case for which his presence is required to be secured -- Original offence pertains to the year 2010; the money subject matter of dispute stands paid -- All criminal proceedings, inclusive of the FIR u/s 174A IPC, closed -- Appellant’s status, as a ‘proclaimed person’ stands quashed.

(Para 9)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 82 – Indian Penal Code, 1860 (45 of 1860), Section 174A – Cheque bounce complaint – Proclaimed person -- Offence u/s Section 174A IPC – Nature of -- Section 174A IPC is an independent, substantive offence, that can continue even if the proclamation under Section 82, Cr.P.C. is extinguished -- It is a stand-alone offence.

(Para 8)

A. Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Inherent powers of High court – Change in law -- Second petition – Maintainability of -- Change of law can legitimately be regarded as a vital change in circumstance clothing the high court with the power, competence and jurisdiction to entertain the subsequent petition notwithstanding the fact that the earlier petition was withdrawn without obtaining any leave, subject to the satisfaction recorded by the high court that the order prayed for in the subsequent petition ought to be made, inter alia, either to prevent abuse of the process of any court or to secure the ends of justice.

(Para 19)

B. May – Shall – Interpretation of -- Use of the verbs ‘may’ and ‘shall’ in a statute is not a sure index for determining whether such statute is mandatory or directory in character -- The legislative intent has to be gathered looking into other provisions of the enactment, which can throw light to guide one towards a proper determination -- While the general impression is that ‘may’ and ‘shall’ are intended to have their natural meaning, it is the duty of the court to gather the real intention of the legislature by carefully analysing the entire statute, the section and the phrase/expression under consideration.

(Para 24)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 148 – Appeal – Conviction in Cheque bounce complaint – Suspension of sentence Since the self-same section, read as a whole, reveals that ‘may’ has been used twice and ‘shall’ thrice, it must be presumed that the legislature was well and truly aware of the words used which form the skin of the language -- Reading and understanding the words used by the legislature in the literal sense does not also result in manifest absurdity and hence tinkering with the same ought to be avoided at all costs -- Therefore, read ‘may’ as ‘may’ and ‘shall’ as ‘shall’, wherever they are used in Section 148.

(Para 27)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Insolvency and Bankruptcy Code 2016 (31 of 2016), Section 7, 14 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce complaint – Quashing of – Insolvency proceedings – Effect of -- Cheques were dated 15.01.2020 and 15.03.2020 and the Interim Resolution Professional/ IRP was appointed on 31.10.2019, prior to these dates -- Account was blocked due to the order issued by the NCLT -- As a result of the NCLT’s order, the authority and control of the account holder over the account ceased to exist – Cheques were dishonoured for the reason ‘Drawer Signature to operate account not received’ – Offence occurred post imposition of moratorium -- Petitioners cannot be held vicariously responsible for dishonour of cheque – Summoning order along with consequential proceedings quashed.

(Para 1, 10-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 -- Cheque bounce complaint – Proclaimed person --  Petitioner is keen to join the proceedings -- Petition disposed of and the impugned order set aside subject to payment of Rs.10,000/- as costs to be paid to the complainant – On surrender of the petitioner with cost of Rs.10,000/- within 10 days, the Court concerned directed to admit him to bail subject to its satisfaction and decide the application for revival of the complaint in accordance with law.

(Para 4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 256 – Cheque bounce complaint – Dismiss in default -- Complaint was filed on 18.12.2020 and thereafter, the appellant/ complainant was regularly appearing before the Trial Court, however, on 23.08.2024 the appellant could not appear as wrong date was noted by the counsel, complaint was ordered to be dismissed for non-prosecution -- Held, Magistrate has discretion to dismiss the complaint, however, if the Magistrate finds that there was some valid reason for non-appearance of the complainant or the presence of the complainant was not required during the Court proceeding, he can very well exercise his discretion to adjourn the complaint -- While exercising the jurisdiction u/s 256 Cr.P.C., the Court has to take into consideration that the powers vested in it have to be exercised judiciously and in the interest of justice -- Impugned order set aside and the complaint is ordered to be restored to its original number.

(Para 11-14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 446, 482 – Cheque bounce complaint – Absence of accused -- Forfeiture of bail bond – Presence of accused – Requirement of – Presence of an accused, where proceedings are semi-criminal/ civil in nature, should ordinarily not be insisted upon, if an application is moved for a particular hearing, unless the trial court needs to either examine the under-trial or his statement is to be otherwise recorded for proceeding further in the matter -- Impugned order directing the forfeiture of the bail-bonds of the petitioner accused and initiating proceedings against his surety u/s 446 Cr.P.C. set aside.

(Para 1, 7-10)

Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389 – Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148A -- Conviction in cheque bounce complaint -- Appeal -- Suspension of sentence – Pre-deposit of 20% of compensation -- Looking at the financial condition of the petitioner, directing her to deposit 20% of the amount as per impugned order shall result in jeopardizing her appeal being dismissed on account of non-compliance of the condition of deposit -- Condition of pre-deposit of 20% of interim compensation set aside, Ld. Sessions Judge ordered to proceed with hearing of the appeal without insisting for pre-deposit and dispose of the same in accordance with law.

(Para 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Conviction in cheque bounce complaint – Compromise quashing of conviction and sentence – Back-out from compromise – Effect of -- As per compromise, the petitioner has already paid Rs.3,00,000/- to the complainant and the complainant pleaded no objection -- Held, resiling from the compromise by the complainant is immaterial and the continuation of the case would be an abuse of the process of the Court -- Petition allowed, complaint alongwith the judgment of conviction and order of sentence quashed on the basis of compromise.

(Para 5-8)

A. Code of Criminal Procedure, 1989 (XXIII of 1989), Section 190, 203 – Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint -- Summon of accused -- Dropping of proceedings -- Once the Magistrate takes the cognizance and issues the process against the accused, then the Magistrate cannot put the clock back and drop the proceedings – Revisional Court was not right in returning the finding that the trial court had wrongly dismissed the application for dropping of the proceedings filed by the respondent/ accused.

(Para 12)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Account frozen -- Whether the complaint for dishonour of cheque due to the reason ‘account frozen’ is maintainable under section 138 of the Act? -- Complaint u/s 138 of the Act is maintainable even if the cheque is dishonoured due to reason ‘Account frozen’.

(Para 13, 14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Principal amount – Interest thereupon – Repayment of loan – Ground of -- If the rate of interest of 3% instead of 1.8% per month has been added on the principal amount and the amount in the cheques reflects the same, it cannot be said that the cheques were not for repayment of the principal amount -- When the respondent/ accused does not dispute that he has handed over the cheques or signed on them, it was incumbent upon him, the moment he claims the amount(s) were repaid to the appellant/ complainant to have either taken back the cheques or instructed the bank concerned to not honour the concerned cheques -- Closure of the bank accounts within a few weeks of issuance of the cheque raises serious questions about the conduct and intent of the respondent/ accused – Conviction  by trial court, upheld.

(Para 16)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 7, 138, 141, 143A -- Drawer – Cheque bounce complaint – Interim compensation u/s 143A of NI Act -- Liability of Directors of Company -- Interpretation of -- High Court's interpretation accurately identified the "drawer" as the individual who issues the cheque -- Drawer u/s 143A refers specifically to the issuer of the cheque, not the authorized signatories -- Primary liability rests on the drawer, emphasizing the drawer's responsibility for maintaining sufficient funds -- Section 141 of the NI Act extending liability to the company's officers for the dishonour of a cheque -- Appellants' attempt to extend this principle to Section 143A, to hold directors or other individuals personally liable for interim compensation, is unfounded -- Authorized signatories act on behalf of the company but do not assume the company's legal identity.

(Para 28-30)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 7, 138, 143A -- Drawer – Cheque bounce complaint – Interim compensation u/s 143A of NI Act -- Liability of Directors of Company – Interpretation of -- When statutory language is clear and unambiguous, it should be given its natural and ordinary meaning -- Legislative intent, as discerned from the plain language of the statute, aims to hold the drawer accountable -- Appellants' argument for a broader interpretation to include authorized signatories u/s 143A contradicts this principle and would lead to an unjust extension of liability not supported by the statutory text.

(Para 31)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Indian Penal Code, 1860 (45 of 1860), Section 174A, 420 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Withdrawal of complaint -- Quashing of FIR u/s 174A IPC -- Proceedings u/s 138 and 142 of the N.I. Act read with Section 420 IPC have culminated in a settlement with the withdrawal of the aforesaid complaint -- Petition allowed subject to a deposit of Rs.25,000/- as costs -- FIR u/s 174-A IPC and all other subsequent proceedings arising therefrom are quashed.

(Para 12, 13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint – Examination of Handwriting expert – Application for -- Holder in due course -- Burdon of proof -- A burden lies heavy on the person issuing the cheque particularly the accused who does not dispute the authenticity of the signatures to furnish a justifiable explanation as to how such cheque came into the hands of the complainant -- Mere fact that body writing on the cheque in question has not been made by the accused would not offer any kind of defence to the accused – Trial court declined application --  No infirmity in the impugned order,  and the same is upheld.

(Para 1, 11, 12)

A. Code of Criminal Procedure, 1973 (2 of 1974), Section 311 -- Scope and object of the Section 311 Cr.P.C. – Provision is to enable the Court to determine the truth and to render a just decision after discovering all relevant facts and obtaining proper proof of such facts to arrive at a just decision of the case -- Power is to be exercised judiciously and not arbitrarily -- Such a power is to be exercised, provided that the evidence that is likely to be adduced by the concerned witness is relevant to the issue involved -- Application could not be rejected on the sole ground that the case has been pending since long.

(Para 5)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 311 – Cheque bounce complaint -- Re-examination of complainant/ witness – FIR by complainant for same transaction as well -- Complainant’s cross-examination was completed on 21.11.2019 -- However, challan in criminal case was filed in year 2022 – It is the case of the petitioner that certain new facts having bearing on the present case, surfaced in the said report submitted by the police u/s 173 Cr.P.C and it is necessary to put the said new facts to the complainant in his cross examination -- Application u/s 311 Cr.P.C. allowed subject to cost of Rs.5,000/-.

(Para 3, 6, 7)

Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 148A -- Cheque bounce complaint -- Appeal against conviction – Suspension of sentence – Condition to deposit 20% of compensation amount -- Appellate Court was required to consider whether the case falls under exception or not – Impugned order set aside, Ld. Appellate Court directed to pass the order afresh, after granting opportunity to the parties with regard to, whether the petitioner is able to make out a ground that his case falls under exceptional category which warrants grant of suspension of sentence without imposing the condition of deposit of 20% of the fine/compensation amount or whether the petitioner is liable to pay less amount of compensation.

(Para 6-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 397 – Conviction in cheque bounce complaint – Compromise thereafter – Quashing of conviction/ sentence – Trial court convicted and sentenced the petitioner to undergo simple imprisonment for a period of eight months and pay compensation to the tune of Rs.2,25,000/- to the complainant – Appellate court affirmed the same -- Matter ordered to be compounded and impugned judgments of conviction and sentence quashed and set aside -- Petitioner-accused acquitted subject to deposit of 10% of the Cheque amount with the HPSLSA.

(Para 1, 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 -- Conviction in cheque bounce complaint – Compromise – Acquittal --  Entire amount of compensation agreed to be paid to the respondent-complainant and respondent has no objection in compounding the offence -- No impediment in accepting the prayer for compounding of offence while exercising power u/s 147 of the Act even after recording of conviction by the courts below – Matter compounded, impugned judgments of conviction and sentence quashed and set aside. Damodar S. Prabhu’s case (2010) 5 SCC 663 = (2010) Law Today Live Doc. Id. 15231 relied.

(Para 9-10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Presumption – Rebuttal of presumption -- Witness very categorically stated that the documents had been executed by the petitioner and identified the signatures of the petitioner on the documents – Petitioner was at liberty to get her signatures compared through some handwriting & finger print expert, however, she did not do so – Held, cheque has been issued by the petitioner in discharge of her legal liability and she has failed to rebut the presumption as exists as per Section 118 read with Section 139 of the N.I. Act – Revision against conviction dismissed.

(Para 1, 16-18)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounce complaint – Acquittal -- Huge amount of Rs.5 lacs was allegedly given to the respondent-accused in cash -- Complainant failed to provide any documentary evidence in support of the advancement of loan, raising doubts about the credibility of the said transaction – Absence of specific dates regarding the loan advancement and issuance of cheque further weakens the case of the complainant -- Concealment of facts by the complainant including his involvement in a case of fraud and also depositing money into unrelated party’s accounts further undermines the credibility of the case brought-forth by the complainant against the respondent-accused – Acquittal order upheld.

(Para 5-8)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounce complaint – Presumption for legally enforceable liability -- Huge amount of Rs.5 lacs was allegedly given to the respondent-accused in cash -- In order to draw presumption u/s 118 read with Section 139 of the Act, the burden was heavily upon the complainant to prove his case against the accused.

(Para 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 91 – Cheque bounce complaint – Production of Bank Account statement of complainant from Bank – Locus standi of accused -- Trial Court dismissed the application by observing that power to summon any document on file is vested with the Court or the Officer In-charge of the Police Station and thus, the application moved at the instance of petitioner-accused could not be entertained -- Held, power u/s 91 of CrPC can be exercised either by the Court on its own or even on an application moved by either of the parties to the trial – Impugned order set aside, matter remanded back to trial court to adjudicate afresh.

(Para 3-6)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143A – Cheque bounce complaint – Interim compensation -- Trial Court passed the impugned order and awarded maximum of the permissible compensation of 20% of the cheque amount by invoking provisions of Section 143-A under the impression that the said provision is mandatory in nature -- Impugned order set aside, direction given to learned trial Court to decide the matter afresh in consonance with the provision of Section 143-A NI Act as is explained and clarified by the Hon’ble Supreme Court in Rakesh Ranjan Srivastava Vs. State of Jharkhand & Anr., 2024(2) RCR(Crl.) 279 =  2024 INSC 205 = (2024) Law Today Live Doc. Id. 19277.

(Para 6, 7)

A. Code of Criminal Procedure, 1973 (2 of 1974), Section 311 – Additional evidence -- Section 311 Cr.P.C. confers wide power, the said power is to be exercised only for strong and valid reasons with great caution and circumspection.

(Para 8)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Indian Evidence Act, 1872 (1 of 1872), Section 65, 65B – Code of Criminal Procedure, 1973 (2 of 1974), Section 311  -- Screen shots of mobile – Secondary evidence -- Copies of the  screen shots being secondary evidence is admissible in evidence subject to requirement of certificate as per provisions of Section 65-B of the Evidence Act -- Electronic documents ordered to be admitted in evidence subject to provisions of Section 65-B of the Evidence Act with liberty to the petitioner to cross-examine the complainant -- Evidentiary value and relevancy of the said electronic documents will be adjudicated by the learned trial Court at the time of final disposal of the case.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 406 – Cheque bounce complaint – Transfer of case -- Agreement executed at Pune, petitioner/accused is resident of Pune -- Cheques which were dishonoured are also issued on Bank at Pune -- In the agreement, the jurisdictional clause provide that the Court where the bank has provided loan facility will have a jurisdiction to entertain dispute between the parties -- Cheque was presented in the respondent’s Branch at Calcutta – Entire cause of action has arisen at Pune and only in order to harass the petitioner the complaints have been filed at Calcutta by manipulating the jurisdiction – Complaint transferred from Calcutta to Pune.

(Para 6-11)

A. Code of Criminal Procedure, 1973 (2 of 1974), Section 256 -- Acquittal/ Dismissal of complaint for want of prosecution -- Power of the Magistrate u/s 256 Cr.P.C to acquit an accused should be exercised judicially, based on a definite conclusion that the complainant no longer desires to prosecute the complaint -- Judicious course would be to direct the complainant to appear for the hearing, if it is imperative, and decide whether the drastic step of acquittal is to be passed in case he fails to appear.

(Para 15)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 256, 378(4) -- Cheque bounce complaint – Absence of complainant -- Dismissed for want of  prosecution -- Neither the complainant was present for trial nor any order directing complainant to remain present was passed on the earlier occasion – Ld. Magistrate ought to have adjourned the complaint to a later date directing the complainant to positively remain present on the next date -- Held, learned Magistrate was not justified in straight away dismissing the complaint and ordering acquittal of the accused respondents on mere non-appearance of the complainant -- Impugned order quashed and set aside -- Proceedings restored to its original number.

(Para 18-20)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 389 – Conviction in cheque bounce complaint -- Suspension of sentence – Condition to deposit  20% of compensation -- Petitioner directed to deposit 20% of the compensation amount awarded by trial Court, while passing the said direction, the Appellate Court has not referred to the ratio laid down by Hon’ble Supreme Court in Jamboo Bhandari’s case (2023) Law Today Live Doc. Id. 18509 and no reason given by the said Court – Condition of deposit set aside, Appellate Court directed to decide afresh.

(Para 4)

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

(Para 13-15)

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

 (Para 3-5)

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

(Para 6, 7)

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

(Para 8-10)

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

(Para 9)

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

(Para 9)

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

(Para 9)

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

(Para 10)

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

(Para 11, 12)

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

(Para 12)

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

(Para 14)

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

(Para 14)

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

(Para 15)

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

(Para 16)

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

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

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

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

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

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

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

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

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

(Para 19)

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

(Para 3-7)

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

(Para 3-6)

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

(Para 1, 5, 6)

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

(Para 5)