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Burden of proof – when the complainant not able to say the date when the amount was given

 IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION
 
                       CRIMINAL APPEAL NO.2043 OF 2013
                       (@ SLP (CRL.) No.9505 of 2011)
 
 
John K. Abraham                               …. Appellant
 
 
                                   VERSUS
 
 
 
Simon C. Abraham & Another                   …. Respondents
 
                               J U D G M E N T
 
 
Fakkir Mohamed Ibrahim Kalifulla, J.
 
   1. Leave granted.
 
   2. This appeal is directed against the judgment  of  the  High  Court  of
      Kerala at Ernakulam dated  15th  December,  2010  passed  in  Criminal
      Appeal No.452 of 2004.
 
   3. The issue involved in this appeal arises  under  Section  138  of  the
      Negotiable  Instruments  Act.  The  complaint  was  preferred  by  the
      respondent No.1 before the Chief Judicial  Magistrate,  Pathanamthitta
      alleging that appellant borrowed a sum of Rs.1,50,000/- from  him  and
      issued a cheque for  the  said  sum  on  20.06.2001  drawn  on  Indian
      Overseas Bank, Plankamon branch in discharge of the debt.  It  is  the
      further case of the respondent–complainant that when the  cheque  was
      presented for encashment through Pathanamthitta District  Co-operative
      Bank, Kozhencherry branch, the same was returned by the  bankers  with
      the endorsement ‘insufficient funds in the account  of  the  accused’.
      The respondent-complainant stated to have issued a lawyer’s notice  on
      14.07.2001, which was received by the appellant on 16.07.2001, but yet
      there was no reply from the appellant. Based on  the  above  averments
      alleged in the complaint, the case was  tried  by  the  learned  Chief
      Judicial Magistrate.
 
   4. The respondent herein was examined as PW.1 and Exhibits   P-1  to  P-6
      were marked. None was examined on the side of the  appellant.  In  the
      questioning of the appellant made under Section 313  of  Cr.P.C.,  the
      appellant took the stand that his son took the  cheque  from  him  and
      that if at all anything was to be recovered, it had to  be  made  from
      the son of the appellant, since the appellant  had  not  borrowed  any
      money.
 
   5. The learned Chief Judicial Magistrate after considering the  oral  and
      documentary evidence led on behalf of the respondent-complainant, held
      that the respondent-complainant was making a  prevaricating  statement
      as regards the issuance of the cheque, that he was not even  aware  of
      the date when the amount  was  said  to  have  been  borrowed  by  the
      appellant, that there was material alteration in the  instrument  and,
      therefore, the respondent failed to establish a case under Section 138
      of the Negotiable Instruments Act.  Consequently,  the  learned  Chief
      Judicial Magistrate found the appellant not guilty and  acquitted  him
      under Section 255(1) of Cr.P.C. The respondent preferred the appeal in
      the High Court of Kerala at Ernakulam and by the  impugned  order  the
      High Court  reversed  the  judgment  of  the  learned  Chief  Judicial
      Magistrate, convicted the appellant and imposed the sentence to pay  a
      fine of Rs.1,50,000/- as compensation under Section 357(1) of  Cr.P.C.
      In default of making the payment of the fine amount, the appellant was
      directed to suffer simple imprisonment for a period of three months.
 
   6. We heard Mr. Romy Chacko, learned counsel for the  appellant  and  Mr.
      Jogy Scaria, learned counsel for the 2nd respondent. We  also  perused
      the material papers placed before us, including the  judgment  of  the
      trial Court as well as the High Court. Having considered the above, we
      are of the view that the High Court was in error  in  having  reversed
      the judgment of the trial Court.
   7. When we examine the case of the  respondent-complainant  as  projected
      before the learned Chief Judicial Magistrate and the material evidence
      placed before the trial Court, we find that the trial Court had  noted
      certain vital defects in the case of the respondent-complainant.  Such
      defects noted by the learned Chief Judicial Magistrate were as under:
           a) Though the  respondent  as  PW-1  deposed  that  the  accused
              received the money at his house also stated that he  did  not
              remember the date when the said sum of Rs.1,50,000/- was paid
              to him.
 
 
           b) As regards the source for advancing the sum of Rs.1,50,000/-,
              the respondent claimed that the same was from and out of  the
              sale consideration of his share in the family property, apart
              from a sum of Rs.50,000/-, which he availed by  way  of  loan
              from the co-operative society of the  college  where  he  was
              employed. Though the respondent stated before the Court below
              that he would be in a position to produce  the  documents  in
              support of the said stand, it was  noted  that  no  documents
              were placed before the Court below.
 
           c) In the course of  cross-examination,  the  respondent  stated
              that the cheque was signed on the date when the  payment  was
              made, nevertheless he stated that he was  not  aware  of  the
              date when he paid the sum of Rs.1,50,000/-.
           d)  According  to  the  respondent,  the  cheque  was   in   the
              handwriting of the accused himself and the very  next  moment
              he made a contradictory statement that the cheque was not  in
              the handwriting of the appellant and  that  he  (complainant)
              wrote the same.
 
 
           e) The respondent also stated  that  the  amount  in  words  was
              written by him.
 
           f) The trial Court has also noted that it was not  the  case  of
              the respondent that the writing in the cheque and filling  up
              of  the  figures  were  with  the  consent  of  the   accused
              appellant.
 
 
   8. In light of the  above  evidence,  which  was  lacking  in  very  many
      material particulars, apart from the contradictions therein, the trial
      Court held that the appellant was not guilty of  the  offence  alleged
      against under Section  138  of  the  Negotiable  Instruments  Act  and
      acquitted him.
 
   9. Keeping the above factors  in  mind,  when  we  examine  the  judgment
      impugned in this appeal, we find  that  the  High  Court  committed  a
      serious illegality in reversing the judgment of learned Chief Judicial
      Magistrate. While reversing the judgment  of  the  trial  Court,  what
      weighed with the learned Judge of the High Court was that in  the  313
      questioning, it was not the case of the appellant that a blank  signed
      cheque was handed over  to  his  son  and  that  even  in  the  cross-
      examination it was not suggested to  PW-1  that  a  blank  cheque  was
      issued. The High Court  was  also  persuaded  by  the  fact  that  the
      appellant failed to send any reply to the lawyer’s notice,  issued  by
      the respondent. Based on the above conclusions, the  High  Court  held
      that the presumption under Sections 118  and  139  of  the  Negotiable
      Instruments Act could be easily drawn and that the appellant failed to
      rebut the said presumption. On that single factor, the  learned  Judge
      of the High Court  reversed  the  judgment  of  the  trial  Judge  and
      convicted the appellant. It has to be stated that in order to draw the
      presumption under Section 118 read along with 139  of  the  Negotiable
      Instruments Act, the burden was heavily upon the complainant  to  have
      shown that he had required funds for having advanced the money to  the
      accused; that the issuance of  the  cheque  in  support  of  the  said
      payment advanced was true and that the accused was bound to  make  the
      payment as had been agreed while issuing the cheque in favour  of  the
      complainant.
 
  10. Keeping the said statutory requirements in mind, when we  examine  the
      facts as admitted by the respondent-complainant, as rightly  concluded
      by the learned trial Judge, the respondent was not even aware  of  the
      date when substantial amount of Rs.1,50,000/- was advanced by  him  to
      the appellant, that he was not sure as to who wrote the  cheque,  that
      he was not even aware when exactly and where exactly  the  transaction
      took place for which the cheque came to be issued  by  the  appellant.
      Apart from the said serious lacuna in the evidence of the complainant,
      he further admitted as PW.1 by stating once in the course of the cross-
      examination that the cheque was in the handwriting of the accused  and
      the very next moment taking a diametrically opposite stand that it  is
      not in the handwriting of the accused and that it was written  by  the
      complainant himself, by further reiterating that the amount  in  words
      was written by him. We find that the various defects in  the  evidence
      of respondent, as noted by the trial Court, which we have set  out  in
      paragraph 7 of the judgment, were simply brushed  aside  by  the  High
      Court without assigning any valid reason. Such a serious lacuna in the
      evidence of the complainant, which strikes at the root of a  complaint
      under Section 138, having been noted by the learned trial Judge, which
      factor was failed to be examined by the High Court while reversing the
      judgment of the trial Court, in our considered opinion  would  vitiate
      the ultimate conclusion reached by it. In effect,  the  conclusion  of
      the learned Judge of the High Court would amount  to  a  perverse  one
      and, therefore,  the  said  judgment  of  the  High  Court  cannot  be
      sustained.
 
  11. Having regard to our above conclusion, this appeal stands allowed. The
      order impugned is set-aside, the conviction and  sentence  imposed  on
      the appellant is also set aside.
 
                                                     ………….……….…………………………..J.
                                    [Surinder Singh Nijjar]
 
 
 
 
 
 
                                                    ………….…….………………………………J.
                                  [Fakkir Mohamed Ibrahim Kalifulla]
 
 
 New Delhi;
 December 05, 2013.

filing Suit & application by unregistered Money Lender is barred

Crl. L.P. Nos.491-513/2011 Page 1 of 15
* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 13th
March, 2013
Pronounced on: 8
th
April, 2013
+ CRL.L.P. 491/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 492/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 493/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
Crl. L.P. Nos.491-513/2011 Page 2 of 15
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 494/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 495/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 496/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
Crl. L.P. Nos.491-513/2011 Page 3 of 15
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 497/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 498/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 499/2011

VIRENDER SINGH ….. Petitioner
Crl. L.P. Nos.491-513/2011 Page 4 of 15
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 500/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 501/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 502/2011

Crl. L.P. Nos.491-513/2011 Page 5 of 15
VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 503/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 504/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
Crl. L.P. Nos.491-513/2011 Page 6 of 15
+ CRL.L.P. 505/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 506/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 507/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Crl. L.P. Nos.491-513/2011 Page 7 of 15
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 508/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 509/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates
+ CRL.L.P. 510/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus
Crl. L.P. Nos.491-513/2011 Page 8 of 15
DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates

+ CRL.L.P. 511/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus

DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates

+ CRL.L.P. 512/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus

DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates

Crl. L.P. Nos.491-513/2011 Page 9 of 15

+ CRL.L.P. 513/2011

VIRENDER SINGH ….. Petitioner
Through Mr.Medhanshu Tripathi, Mr.Harish
Sharma & Mr.Manoj Sehgal, Advocates
versus

DEEPAK BHATIA ….. Respondent
Through Mr.Randhir Jain, Mr.Dhananjai Jain &
Ms.Ruchika Jain, Advocates

CORAM:
HON’BLE MR. JUSTICE G.P.MITTAL

J U D G M E N T

G. P. MITTAL, J.
1. Leave granted.
2. The Leave Petitions be registered as Criminal Appeals
No.461/2013 – 483/2013.
3. These Appeals arise out of 23 separate judgments of even date whereby
23 complaint cases under Section 138 of the Negotiable Instruments Act,
1881(the Act) were dismissed by the learned Metropolitan
Magistrate(MM) primarily on the ground that the Petitioner was in the
Crl. L.P. Nos.491-513/2011 Page 10 of 15
business of advancing loan; he did not possess any money lending licence
and thus the complaint was barred under Section 3 of the Punjab
Registration of Money-lender’s Act, 1938 (the Act of 1938). The learned
MM opined that although the cheques were issued in discharge of
liability or debt, yet in view of the provisions of the Act of 1938, the
debts were legally not recoverable. Thus, the learned M.M. dismissed the
complaints and acquitted the Respondent.
4. In the 23 complaint cases, various cheques have been issued which are
extracted hereunder:

Crl.L.P. No. Cheque No. Date of Cheque Amount(in `)
491/2011 000048
000047
002375
10.12.2008
14.12.2008
01.09.2008
10,000/-
1,00,000/-
42,000/-
492/2011 000001
000002
000003
09.08.2008
08.09.2008
10.09.2008
30,000/-
18,000/-
18,000/-
493/2011 002423
007582
120184
24.09.2008
24.09.2008
26.11.2008
44,000/-
24,000/-
6,667/-
494/2011 000032
000050
14.11.2008
26.12.2008
7,500/-
10,000/-
495/2011 121334 06.01.2009 10,000/-
Crl. L.P. Nos.491-513/2011 Page 11 of 15
121335
121336
121340
207659
10.01.2009
14.01.2009
02.01.2009
05.10.2008
10,000/-
10,000/-
1,00,000/-
26,700/-
496/2011 000039
000041
000049
08.11.2008
02.12.2008
18.10.2008
1,00,000/-
10,000/-
10,000/-
497/2011 000033
000034
000035
000036
21.11.2008
28.11.2008
11.11.2008
26.11.2008
7,500/-
7,500/-
7,500/-
7,500/-
498/2011 002419 16.09.2008 12,000/-
499/2011 000044
000045
000046
21.11.2008
28.11.2008
07.12.2008
1,00,000/-
1,00,000/-
1,00,000/-
500/2011 007583
007584
007585
25.09.2008
28.09.2008
27.09.2008
24,000/-
48,000/-
30,000/-
501/2011 002412
002413
002411
04.09.2008
06.09.2008
05.09.2008
40,000/-
40,000/-
40,000/-
502/2011 000007
000008
000009
12.09.2008
13.09.2008
17.09.2008
48,000/-
12,000/-
12,000/-
Crl. L.P. Nos.491-513/2011 Page 12 of 15
503/2011 207697
207698
007581
15.12.2008
25.12.2008
26.11.2008
10,000/-
10,000/-
36,000/-
504/2011 000004
000004
000004
09.09.2008
10.09.2008
11.09.2008
48,000/-
48,000/-
36,000/-
505/2011 000025
000042
000043
03.10.2008
07.11.2008
14.11.2008
7,500/-
1,00,000/-
1,00,000/-
506/2011 002424
207677
207696
25.09.2008
24.10.2008
28.12.2008
40,000/-
16,500/-
10,000/-
507/2011 000018
000026
000027
000037
28.10.2008
11.10.2008
20.10.2008
20.11.2008
7,500/-
7,500/-
7,500/-
7,500/-
508/2011 000010
000012
000014
18.09.2008
25.10.2008
26.10.2008
18,000/-
11,000/-
14,000/-
509/2011 002418
002422
002420
15.09.2008
23.09.2008
19.09.2008
12,000/-
40,000/-
24,000/-
510/2011 007591
007593
007594
20.09.2008
03.10.2008
02.10.2008
10,000/-
40,000/-
40,500/-
Crl. L.P. Nos.491-513/2011 Page 13 of 15
511/2011 007586
007587
007588
28.09.2008
09.09.2008
01.10.2008
30,000/-
42,000/-
30,000/-
512/2011 000019
000021
000023
30.10.2008
03.11.2008
08.10.2008
30,000/-
16,500/-
1,00,000/-
513/2011 007595
216765
216776
008778
01.10.2008
04.10.2008
11.10.2008
26.09.2008
40,000/-
21,000/-
10,500/-
24,000/-

5. To analyse whether the complaints under Section 138 were barred under
the provisions of the Act, it will be apposite to extract the provisions of
Section 3 of the Act of 1938, which reads as under:

“3. Suits and applications by money-lenders barred, unless
money-lender is registered and licensed. Notwithstanding
anything contained in any other enactment for the time
being in force, a suit by a money-lender for the recovery of a
loan, or an application by a money-lender for the execution
of a decree relating to a loan, shall after the commencement
of this act, be dismissed, unless the money-lender-
(a) at the time of the institution of the suit or presentation of
the application for execution; or
(b) at the time of decreeing the suit or deciding the
application for execution-
(i) is registered; and
Crl. L.P. Nos.491-513/2011 Page 14 of 15
(ii) holds a valid licence, in such form and manner as may
be prescribed; or
(iii) holds a certificate from a Commissioner granted under
section 11, specifying the loan in respect of which the suit is
instituted, or the decree in respect of which the application
for execution is presented; or
(iv) if he is not a registered and licensed money-lender,
satisfies the Court that he has applied to the Collector to be
registered and licensed and that such application is
pending; provided that in such a case, the suit or application
shall not be finally disposed of until the application of the
money-lender for registration and grant of license pending
before the Collector is finally disposed of.”

6. Thus, Section 3 of the Act of 1938 starts with a non-obstante clause and
makes the filing of any Suit or any Application for recovery of loan or
execution of a decree relating to a loan by a money lender to be not
maintainable unless the money lender is registered under the Act and
possessed a licence for the same.
7. The loan as defined in Section 2(8) of the Act of 1938 specifically
excludes an advance made on the basis of a negotiable instrument as
defined in the Negotiable Instruments Act, 1881, other than a promissory
note. The instant cases relate to an advance made by the Petitioner to the
Respondent on the basis of the cheque which admittedly is a negotiable
instrument. Thus, the bar of Section 3 of the Act of 1938 is not attracted
to a loan given on the basis of a negotiable instrument, like a cheque. I
am supported in this view by a judgment of the Supreme Court in
Gajanan & Ors. v. Seth Brindaban, 1971(1) SCR 657. Thus, the learned
MM fell into error in dismissing the complaints and acquitting the
Crl. L.P. Nos.491-513/2011 Page 15 of 15
Respondent solely on the ground that the complaint was barred under the
provisions of the Act of 1938.
8. The impugned orders, therefore, cannot be sustained; the same are
accordingly set aside.
9. The cases are remanded back to the Court of MM concerned for its
decision in accordance with law.
10. Parties are directed to appear before the learned MM concerned on
30.04.2013.
11. Trial Court record be returned immediately.
12. A copy of the order be transmitted to the Trial Court.
13. Pending Applications stand disposed of.

(G.P. MITTAL)
JUDGE
APRIL 08, 2013

Negotiable Instruments Act, 1881 – ss. 138 and 142 – Complaint under – Without signature – But verified by the complainant – Maintainability

SUPREME COURT REPORTS [2012] 13 S.C.R.

2012] 13 S.C.R. 129 130
INDRA KUMAR PATODIA & ANR.
v.
RELIANCE INDUSTRIES LTD. AND ORS.
(Criminal Appeal No. 1837 of 2012 etc.)
NOVEMBER 22, 2012
[P. SATHASIVAM AND RANJAN GOGOI, JJ.]
Negotiable Instruments Act, 1881 – ss. 138 and 142 –
Complaint under – Without signature – But verified by the
complainant – Maintainability – Held: The complaint without
signature is maintainable, when such complaint is verified by
the complainant and process is issued by the Magistrate after
due verification – The complaint is required necessarily to be
in writing and need not be signed – Legislative intent was that
‘writing’ does not pre-suppose that the same has to be signed
– ‘Signature’ within the meaning of ‘writing’ would be adding
words to the Section, which the legislature did not contemplate
– Code of Criminal Procedure, 1973 – ss. 2 (d) – General
Clauses Act, 1897 – ss. 3(56) and 3(65) – Interpretation of
Statutes.
Interpretation of Statutes – Interpretation of non-obstante
clause – Held: While interpreting non-obstante clause, the
Court is required to find out the extent to which the legislature
intended to exclude a provision and the context in which such
clause is used.
Words and Phrases – ‘Complaint in writing’ – Meaning
of, in the context of s. 142(a) of Negotiable Instruments Act,
1881.
The question for consideration in the present
appeals was whether the complaint u/s.138 of Negotiable
Instruments Act, 1881, without signature of the
complainant is maintainable, when such complaint is
verified by the complainant and the process is issued by
the Magistrate after verification.
Dismissing the appeals, the Court
HELD: 1.1 The complaint u/s.138 of Negotiable
Instruments Act, 1881, without signature, is maintainable,
when such complaint is verified by the complainant and
the process is issued by the Magistrate after due
verification. The prosecution of such complaint is
maintainable. [Para 19] [147-E-F]
1.2 A non obstante clause has to be given restricted
meaning and when the section containing the said clause
does not refer to any particular provisions which intends
to over-ride, but refers to the provisions of the statute
generally, it is not permissible to hold that it excludes the
whole Act and stands all alone by itself. There requires
to be a determination as to which provisions answers the
description and which does not. While interpreting the
non obstante clause, the Court is required to find out the
extent to which the legislature intended to do so and the
context in which the non obstante clause is used. [Para
12] [141-E-G]
1.3 Section 2(d) Cr.P.C. provides that the complaint
needs to be oral or in writing. The non obstante clause
in Section 142 of the Act, when it refers to Cr.P.C, only
excludes the oral part in such definition. Thus, the non
obstante clause in s. 142(a) is restricted to exclude two
things only from Cr.P.C. i.e. (a) exclusion of oral
complaints and (b) exclusion of cognizance on complaint
by anybody other than the payee or the holder in due
course. [Paras 12 and 13] [141-G-H; 142-A]
1.4 Section 190 Cr.P.C. provides that a Magistrate can
take cognizance on a complaint which constitutes such
an offence irrespective of who had made such complaint 129 SUPREME COURT REPORTS [2012] 13 S.C.R.
A
B
C
D
E
F
G
H
A
B
C
D
E
F
G
H
INDRA KUMAR PATODIA v. RELIANCE INDUSTRIES 131 132
LTD.
or on a police report or upon receiving information from
any person other than a police officer or upon his own
knowledge. Non obstante clause, when it refers to the
core, restricts the power of the Magistrate to take
cognizance only on a complaint by a payee or the holder
in due course and excludes the rest of Section 190
Cr.P.C. In other words, none of the other provisions of
the Cr.P.C. are excluded by the said non obstante clause,
hence, the Magistrate is therefore required to follow the
procedure under Section 200 Cr.P.C., once he has taken
the complaint of the payee/holder in due course and
record statement of the complainant and such other
witnesses as present at the said date. Here, Cr.P.C.
specifically provides that the same is required to be
signed by the complainant as well as the witnesses
making the statement. [Para13] [142-A-D]
1.5 Mere presentation of the complaint is only the first
step and no action can be taken unless the process of
verification is complete and, thereafter, the Magistrate has
to consider the statement on oath, that is, the verification
statement under Section 200 Cr.P.C. and the statement of
any witness, and the Magistrate has to decide whether
there is sufficient ground to proceed. Section 203 Cr.P.C.
provides that the Magistrate if is of opinion that there is
no sufficient ground for proceeding, he shall dismiss the
complaint. A person could be called upon to answer a
charge of false complaint/perjury only on such verification
statement and not mere on the presentation of the
complaint as the same is not on oath and, therefore, need
to obtain the signature of the person. Apart from the above
Section, the legislative intent becomes clear that “writing”
does not pre-suppose that the same has to be signed.
Various sections in Cr.P.C. viz. Sections 61, 70, 154, 164
and 281, when contrasted with Section 2(d) clarify that the
legislature was clearly of the intent that a written complaint
need not be signed. [Para 13] [143-B-G]
1.6 The legislature has made it clear that wherever it
required a written document to be signed, it should be
mentioned specifically in the section itself, which is
missing both from Section 2(d) Cr.P.C. as well as Section
142 of the Act. The General Clauses Act, 1897 too draws
a distinction between writing and signature and defines
them separately. Section 3(56) defines signature and
Section 3(65) defines writing. Writing as defined by
General Clauses Act requires that the same is
representation or reproduction of “words” in a visible
form and does not require signature. “Signature” within
the meaning of “writing” would be adding words to the
Section, which the legislature did not contemplate. [Para
13 & 14] [145-B-D, G]
1.7 In the present case, the complaint was presented
in person and on the direction by the Magistrate, the
complaint was verified and duly signed by the authorized
officer of the Company-the complainant. No prejudice
has been caused to the accused for non-signing the
complaint. The statement made on oath and signed by
the complainant safeguards the interest of the accused.
In view of the same, the requirements of Section 142(a)
of the Act is that the complaint must necessarily be in
writing and the complaint can be presented by the payee
or holder in due course of the cheque and it need not be
signed by the complainant. If the legislature intended that
the complaint under the Act, apart from being in writing,
is also required to be signed by the complainant, the
legislature would have used different language and
inserted the same at the appropriate place. The correct
interpretation would be that the complaint under Section
142(a) of the Act requires to be in writing as at the time
of taking cognizance, the Magistrate will examine the
complainant on oath and the verification statement will
be signed by the complainant. [Para 15] [146-A-D]

Complaint through POA is perfectly legal and competent.

A.C. Narayanan Vs. State of Maharashtra & ANR.

[Criminal Appeal No. 73 of 2007]

Shri G. Kamalakar Vs. M/s. Surana Securities Ltd. & ANR.

[Criminal Appeal No. of 2013 arising out of S.L.P. (CRL.) No.2724 of 2008]

P. Sathasivam, CJI.

This appeal is filed against the final common judgment and order dated12.08.2005 passed by the High Court of Judicature at Bombay in Criminal Application Nos. 797, 798, 799, 801, 802 and 803 of 2002 whereby the High Court dismissed the applications filed by the appellant herein against the order of issuance of process against him for the offence punishable under Sections 138 and 142 of the Negotiable Instruments Act, 1881 (in short ‘the N.I. Act) by the IXth Additional Chief Metropolitan Magistrate at Bandra, Mumbai in Complaint Case Nos. 292/S/1998, 293/S/1998, 297/S/1998,298/S/1998, 299/S/1998 and 300/S/1998.

Brief facts :

a. The appellant is the Vice-Chairman and Managing Director of the Company by name M/s Harvest Financials Ltd. having its registered office at Bombay. Under a scheme of investment, the appellant collected various amounts from various persons in the form of loans and in consideration there of issued post-dated cheques either in his personal capacity or as the signatory of the Company which got dishonoured.

b. On 16.12.1997, Mrs. Doreen Shaikh, Respondent No.2 herein, the Powerof Attorney Holder of six complainants, namely, Mr. Yunus A. Cementwalla, Smt. Fay Pinto, Mr. Mary Knoll Drego, Smt. Evelyn Drego, Mr. Shaikh AnwarKarim Bux and Smt. Gwen Piedade filed Complaint Case Nos. 292/S/1998,293/S/1998, 297/S/1998, 298/S/1998, 299/S/1998 and 300/S/1998 respectively against the appellant herein under Sections 138 and 142 of the N.I. Act before the IXth Metropolitan Magistrate at Bandra, Mumbai. On 20.02.1998,Respondent No. 2 herein verified the complaint in each of these cases as Power of Attorney Holder of the complainants. Vide order dated 04.04.1998,the Additional Chief Metropolitan Magistrate, issued process against the appellant under Section 204 of the Code of Criminal Procedure, 1973 (in short ‘the Code’) for the offences punishable under Sections 138 and 142 of the N.I. Act.

c. Being aggrieved of the issuance of the process, on 13.01.2000, the appellant herein moved an application for discharge/recall of process in each of the complaints. Vide common order dated 29.11.2000, the Additional Chief Metropolitan Magistrate, IXth Court, Bandra, Mumbai dismissed the applications filed by the appellant herein.

d. Being aggrieved of the said order, the appellant herein preferred applications being Criminal Application Nos. 797, 798, 799, 801, 802 and803 of 2002 before the High Court for quashing of the complaints. By impugned order dated 12.08.2005, the said applications were dismissed by the High Court.

e. Against the said order, the appellant has preferred this appeal byway of special leave before this Court. Criminal Appeal…………../2013 @ S.L.P.(Crl.) No. 2724 of 2008:Leave granted. This appeal is directed against the judgment and order dated 19.09.2007passed by the High Court of Judicature, Andhra Pradesh at Hyderabad in Criminal Appeal No. 578 of 2002 whereby the High Court allowed the appeal filed by M/s Surana Securities Ltd.-Respondent No.1 herein (the complainant) against the judgment and order dated 30.10.2001 passed by the Court of XVIII Metropolitan Magistrate, Hyderabad in C.C. No. 18 of 2000dismissing the complaint and acquitting the accused for the offence under Section 138 of the N.I. Act.

Brief facts

a. Respondent No.1 herein-the complainant is a limited company carrying on the business of trading in shares. The appellant herein is a client of the respondent-Company and used to trade in shares. During the course of business, the appellant became liable to pay an amount of Rs. 7,21,174/-towards the respondent-Company. The appellant, in order to discharge the said liability, issued six cheques amounting to Rs.1,00,000/- each and another cheque for Rs.1,21,174/- drawn on Andhra Bank on different dates. When the first six cheques were presented for encashment on 18.09.1997, the same got dishonoured with an endorsement ‘funds insufficient’. Upon receiving the said information, the respondent-Company issued a legal notice to the appellant calling upon him to pay the amounts due but he did not pay the same.

b. The Board of Directors of the respondent-Company, by a resolution, authorized its Managing Director to appoint an agent to represent the Company. Pursuant thereto, one Shri V. Shankar Prasad was appointed as an agent by executing a General Power of Attorney. Later, he was substituted by one Shri Ravinder Singh under another General Power of Attorney.

c. Respondent-company filed a complaint under Section 138 of the N.I.Act being CC No. 1098 of 1997 in the Court of XIth Metropolitan Magistrate, Secunderabad. Subsequently, vide order dated 03.05.2000, the said complaint was transferred to the Court of XVIII Metropolitan Magistrate, Hyderabad and was registered as C.C. No. 18 of 2000. By order dated30.10.2001, the Metropolitan Magistrate dismissed the complaint filed by the respondent-Company under Section 138 of the N.I. Act.

d. Aggrieved by the said order, respondent-company filed an appeal being Criminal Appeal No. 578 of 2002 before the High Court of Judicature, Andhra Pradesh at Hyderabad. By impugned order dated 10.09.2007, learned single Judge of the High Court allowed the appeal and set aside the order dated30.10.2001 passed by the XVIII Metropolitan Magistrate, Hyderabad and convicted the appellant herein under Section 138 of the N.I. Act.

e. Being aggrieved by the order passed by the High Court, the appellant has filed this appeal by way of special leave.

f. By order of this Court dated 07.04.2008, this appeal was tagged with the Criminal Appeal No. 73 of 2007 arising out of S.L.P. (Crl.) Nos. 6703-6708 of 2005. Hence, we heard both the appeals together.

6. Heard Ms. Indu Malhotra, learned senior counsel and Mr. Annam D.N.Rao, learned counsel for the appellants and Mr. Shankar Chillarge, Mr. Saurabh Kumar Tuteja, and Mr. Mayur R. Shah, learned counsel for therespondents.

7. On 04.01.2007, a Division Bench of this Court, on 04.01.2007, while considering Criminal Appeal No. 73 of 2007 (arising out of Special Leave Petition (Crl.) Nos. 6703-6708 of 2005) with regard to the inter pretation of Section 142(a) of the N.I. Act observed that in view of the difference of opinion among various High Courts as also the decisions of this Court in M.M.T.C. Ltd. and Anr. vs. Medchl Chemicals and Pharma (P) Ltd. and Anr.,(2002) 1 SCC 234 and Janki Vashdeo Bhojwani and Anr. vs. Indus ind Bank Ltd.and Ors., (2005) 2 SCC 217, the matter should be considered by a larger Bench in order to render an authoritative pronouncement.

In view of the same, it is desirable to extract the entire order of reference which reads as under:- “Delay in filing counter affidavit is condoned. Leave granted. Interpretation and/or application of Section 142(a) of the Negotiable Instruments Act, 1881, (“NI Act”) is in question in this appeal which arises out of a judgment and order dated 12.8.2005 passed by a learned Single Judge of the High Court of Judicature at Bombay. The basic fact of the matter is not in dispute. Several cheques on different dates were issued by the appellant herein which were dishonoured. The complainant executed a Special Power of Attorney on or about 28.11.1997, in favour of one Smt. Doreen Shaikh. She filed complaint petitions in the Court of Additional Chief Metropolitan Magistrate, Bandra, Mumbai.

The complaint petitions were filed in the name of the respective payees of the cheques. She also filed affidavits in support of the averments made in the said complaint petitions. Cognizance of offence under Section 138 of the NI Act was taken against the appellant. Summons were issued. Questioning the order issuing summons by the learned Magistrate in exercise of his power under Section 204 of the Code of Criminal Procedure, appellant herein filed criminal application before the High Court of Judicature at Bombay, inter alia contending that the complaint petitions filed by the Power of Attorney Holder was not maintainable and relying thereupon or on the basis thereof the learned Magistrate could not have issued summons.

The said contention has been negatived by the High Court in its impugned judgment. In the aforementioned premises interpretation of Section 142 (a) of the NI Act comes up for consideration before us. We may notice that in M.M.T.C. and Anr. vs. Medchl Chemicals & Pharma (P) Ltd. and Anr. [2002 (1) SCC 234], a Division Bench of this Court has opined: “This Court has, as far back as, in the case of Vishwa Mitter v. O.P. Poddar (1983 4 SCC 701) held that it is clear that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take cognizance. It has been held that no court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint.

It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. In the present case, the only eligibility criteria prescribed by Section 142 is that the complaint must be by the payee or the holder in due course. This criteria is satisfied as the complaint is in the name and on behalf of the appellant Company.” However, in a later judgment in Janki Vashdeo Bhojwani and Anr. vs. Indusind Bank Ltd. and Ors. [2005 (2) SCC 217], albeit in a different context, another Division Bench of this Court overruled the judgment of the Bombay High Court in Pradeep Mohanbay vs. Minguel Carlos Dias [2000 (1) Bom. L.R. 908], inter alia opining as follows:

“Order 3 Rules 1 and 2 CPC empowers the holder of power of attorney to ‘act’ on behalf of the principal. In our view the word ‘acts’ employed in Order 3 Rules 1 and 2 CPC confines only to in respect of ‘acts’ done by the power-of-attorney holder in exercise of power granted by the instrument. The term ‘acts’ would not include deposing in place and instead of the principal. In other words, if the power of attorney holder has rendered some ‘acts’ in pursuance of power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal is entitled to be cross-examined.”

“On the question of power of attorney, the High Courts have divergent views. In the case of Shambhu Dutt Shastri v. State of Rajasthan (1986 2 WLN 713 (Raj.) it was held that a general power-or-attorney holder can appear, plead and act on behalf of the party but he cannot become a witness on behalf of the party. He can only appear in his own capacity. No one can delegate the power to appear in the witness box on behalf of himself. To appear in a witness box is altogether a different act. A general power-of-attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.” “However, in the case of Humberto Luis v. Floriano Armado Luis (2002 2 Bom. CR 754) on which reliance has been placed by the Tribunal in the present case, the High Court took a dissenting view and held that the provisions contained in Order 3 Rule 2 CPC cannot be construed to disentitle the power-of-attorney holder to depose on behalf of his principal. The High Court further held that the word ‘act’ appearing in Order 3 Rule 2 CPC takes within its sweep ‘depose’.

We are unable to agree with this view taken by the Bombay High Court in Floriano Armando.” It is not in dispute that there is a conflict of opinion on this issue amongst various High Courts, including the decision of Bombay High Court in Mamatadevi Prafullakumar Bhansali vs. Pushpadevi Kailashkumar Agrawal & Anr. [2005 (2) Mah. L.J. 1003] on the one hand and a decision of the Andhra Pradesh High Court in S.P. Sampathy vs. Manju Gupta and Anr. (2002 Crl.L.J. 2621), on the other. One of the questions which would arise for consideration is as to whether the eligibility criteria prescribed by Section 142(a) of the NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque and/or whether a complaint petition has to be presented before the Court by the payee or the holder of the cheque himself.

Another issue which would arise for consideration is as to whether the payee must examine himself in support of the complaint petition keeping in view the insertion of Section 145 of the said Act (Act No.55 of 2002). In our opinion, in view of difference of opinion amongst various High Courts as also the decisions of this Court in M.M.T.C. Ltd. (supra) and Janki Vashdeo Bhojwani (supra), particularly in view of the fact that in the later case the earlier one was not noticed, an authoritative pronouncement is necessary to be given in this regard. We, therefore, are of the opinion that the matter should be considered by a larger Bench.”Before going into the factual details, rival contentions and the legal issues, it is useful to refer Sections 138 and 142(a) of the N.I. Act which read as under:

“138. Dishonour of cheque for insufficiency, etc., of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-

a. the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

b. the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

c. the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

.- For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.”

142. Cognizance of offences.- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) – (a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; Xxxx xxx xxx”

8. In terms of Section 142 of the N.I. Act, no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. Learned senior counsel appearing for the appellant pointed out that with a non obstante clause, Section 142 provides that only two categories of persons, namely, the payee or the holder in due course of the cheque is entitled to file a complaint under Section 138 of the N.I. Act. According to learned senior counsel for the appellant, in the first case, the verification statement of solemn affirmation has been made by the constituted attorney and not by the complainant.

It is further pointed out that the verification affidavit made by the constituted attorney is not on the basis of her personal knowledge and hence, it would squarely fall within the ambit of hearsay evidence and cannot be read in evidence in a court of law. By pointing out the same, learned senior counsel for the appellant submitted that the constituted attorney is incompetent to depose on behalf of the complainants. In other words, according to the appellant, the Power of Attorney holder is not competent to depose about the transaction that took place between the payee and the drawer of the cheque.

Learned senior counsel also pointed out that Section2 of the Power of Attorney Act, 1882 cannot override the specific provisions of the Statute which require that a particular act should be done in a particular manner (vide Nazir Ahmed vs. King Emperor, AIR 1936 PC253, Rao Bahasur Ravula Subba Rao & Ors. vs. Commissioner of Income Tax, AIR 1956 SC 604 at 612-613). It was further pointed by learned senior counsel for the appellant that the decision in Rao Bahasur Ravula Subba Rao(supra) was followed in Jimmy Jahangir Madan vs. Bolly Cariyappa Hindley(dead) by LRs, (2004) 12 SCC 509.

9. In view of the above, learned senior counsel for the appellant relied on a decision of this Court in Janki Vashdeo Bhojwani (supra) wherein this Court held that Power of Attorney cannot depose for the acts done by the principal. Likewise, it was further held that he cannot depose for principal in respect of matters of which only the principal can have personal knowledge and in respect of which the principal is liable to be cross-examined. It was further held that the Power of Attorney can appear only as a witness in respect of facts, which are within his personal knowledge.

10. In the case on hand, it is pointed out by learned senior counsel for the appellant that the constituted attorney did not even file the Power of Attorney along with the complaint or with the verifying statement and in view of the same, the Magistrate could not have issued process on the basis of such a complaint. No doubt, it is true that the Power of Attorney was produced along with the reply to the application for discharge filed by the complainant after two years of the order passed by the Additional Chief Metropolitan Magistrate issuing summons. In other words, the Power of Attorney holder is at best a witness to the execution of the Power of Attorney and not to the contents of the complaint.

11. Learned senior counsel for the appellant also pointed out that the provision under Section 200 of the Code is mandatory and obligatory on the part of the Magistrate to examine the complainant. However, a perusal of the Section makes it clear that examination of witnesses present, if any, is optional.

12. Learned senior counsel for the appellant further contended that the object of such examination is to ascertain whether there is a prima facie case against the accused of the commission of an offence as mentioned in the complaint and also to prevent the issuance of a process on a complaint which is either false or vexatious or intended to harass a person.

13. Learned senior counsel for the appellant further contended, by drawing our attention to the language of Section 200 of the Code, that the Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant. She further pointed out that where the language of an Act is clear and explicit, it must be given effect to, whatever may be the consequences, as has been held by this Court in Vishwa Mitter of M/s Vijay Bharat Cigarette Stores, Dalhousie Road, Pathankot vs. O.P. Poddarand Ors., (1983) 4 SCC 701. In the said decision, this Court has held that if a special enactment provides for a specific procedure then that particular procedure has to be followed and hence, learned senior counsel for the appellant contended that the provisions of Section 142 of the N.I. Act regarding cognizance on the basis of a complaint filed by the payee or the holder in due course will prevail.

14. Learned counsel for the respondents met all the contentions which we will discuss hereunder.

15. In terms of the reference order, the following questions have to be decided by this Bench:

i. Whether a Power of Attorney holder can sign and file a complaint petition on behalf of the complainant?/ Whether the eligibility criteria prescribed by Section 142(a) of NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque?

ii. Whether a Power of Attorney holder can be verified on oath under Section 200 of the Code?

iii. Whether specific averments as to the knowledge of the Power of Attorney holder in the impugned transaction must be explicitly asserted in the complaint?

iv. If the Power of Attorney holder fails to assert explicitly his knowledge in the complaint then can the Power of Attorney holder verify the complaint on oath on such presumption of knowledge?

v. Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the N.I. Act which was introduced by an amendment in the year 2002?

16. In order to find out the answers to the above and also to ascertain whether there is any conflict between the two decisions as pointed out in the referral order, let us consider the factual details and the ultimate dictum laid down in both the decisions.

17. In MMTC (supra), the appellant is a Government of India company. Respondent No. 1 therein is also a company and Respondent Nos. 2 and 3 were the Directors of the respondent-Company. The appellant-Company and the respondent-Company entered into a Memorandum of Understanding (MoU) dated01.06.1994 and the same was slightly altered on 19.09.1994. Pursuant to the MoU, two cheques were issued by the respondent-Company in favour of the appellant-Company. When both the cheques were presented for payment, the same got returned with an endorsement “payment stopped by drawer”.

Two notices were served by the appellant-Company on the respondent-Company. As the amounts under the cheques were not paid, the appellant-Company lodged two complaints through one Lakshman Goel, the Manager of the Regional Office (RO) of the appellant-Company. Respondents therein also filed two petitions for quashing of the complaints. By the impugned order, both the complaints were quashed. In the said case as well as in the cases filed subsequently, the respondents took identical contentions in their petitions in order to quash the complaints, viz., that the complaints filed by Mr Lakshman Goel were not maintainable and that the cheques were not given for any debt or liability.

In the impugned judgment, it was held that the complaints filed by Mr Lakshman Goel were not maintainable. The High Court held that it is only an Executive Director of the Company who has the authority to institute legal proceedings. While holding that the reasoning given by the High Court cannot be sustained, this Court held that Section142 of the N.I. Act provides that a complaint under Section 138 can be made by the payee or the holder in due course of the said cheque. This Court further held that the complaints in question were by the appellant-company who is the payee of the two cheques. After finding that the Court cannot quash a complaint as stated by the High Court, this Court set aside the same and directed the trial Court to proceed with the complaints against Respondent Nos. 1 and 3 therein in accordance with law.

18. Now, let us consider the later decision of this Court in Janki Vashdeo Bhojwani (supra). This case relates to powers of Power of Attorney under the Code of Civil Procedure, 1908 and it was concluded that a complaint by a power of attorney holder on behalf of original plaintiff is maintainable provided he has personal knowledge of the transaction in question. This Court further held as under: “12. In the context of the directions given by this Court, shifting the burden of proving on to the appellants that they have a share in the property, it was obligatory on the appellants to have entered the box and discharged the burden by themselves.

The question whether the appellants have any independent source of income and have contributed towards the purchase of the property from their own independent income can be only answered by the appellants themselves and not by a mere holder of power of attorney from them. The power-of-attorney holder does not have personal knowledge of the matter of the appellants and therefore he can neither depose on his personal knowledge nor can he be cross-examined on those facts which are to the personal knowledge of the principal.

13. Order 3 Rules 1 and 2 CPC empower the holder of power of attorney to “act” on behalf of the principal. In our view the word “acts” employed in Order 3 Rules 1 and 2 CPC confines only to in respect of “acts” done by the power-of-attorney holder in exercise of power granted by the instrument. The term “acts” would not include deposing in place and instead of the principal. In other words, if the power-of- attorney holder has rendered some “acts” in pursuance of power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross-examined.”This Court further held thus:

“17. On the question of power of attorney, the High Courts have divergent views. In the case of Shambhu Dutt Shastri v. State of Rajasthan it was held that a general power-of-attorney holder can appear, plead and act on behalf of the party but he cannot become a witness on behalf of the party. He can only appear in his own capacity. No one can delegate the power to appear in the witness box on behalf of himself. To appear in a witness box is altogether a different act. A general power-of-attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.

18. The aforesaid judgment was quoted with approval in the case of Ram Prasad v. Hari Narain. It was held that the word “acts” used in Rule 2 of Order 3 CPC does not include the act of power-of-attorney holder to appear as a witness on behalf of a party. Power-of-attorney holder of a party can appear only as a witness in his personal capacity and whatever knowledge he has about the case he can state on oath but he cannot appear as a witness on behalf of the party in the capacity of that party. If the plaintiff is unable to appear in the court, a commission for recording his evidence may be issued under the relevant provisions of CPC.

19. In the case of Pradeep Mohanbay (Dr.) v. Minguel Carlos Dias the Goa Bench of the Bombay High Court held that a power of attorney can file a complaint under Section 138 but cannot depose on behalf of the complainant. He can only appear as a witness.

20. However, in the case of Humberto Luis v. Floriano Armando Luis on which reliance has been placed by the Tribunal in the present case, the High Court took a dissenting view and held that the provisions contained in Order 3 Rule 2 CPC cannot be construed to disentitle the power-of-attorney holder to depose on behalf of his principal. The High Court further held that the word “act” appearing in Order 3 Rule 2 CPC takes within its sweep “depose”. We are unable to agree with this view taken by the Bombay High Court in Floriano Armando.

21. We hold that the view taken by the Rajasthan High Court in the case of Shambhu Dutt Shastri followed and reiterated in the case of Ram Prasad is the correct view. The view taken in the case of Floriano Armando Luis cannot be said to have laid down a correct law and is accordingly overruled.”

19. As noticed hereinabove, though Janki Vashdeo Bhojwani (supra),relates to powers of Power of Attorney holder under CPC but it was concluded therein that a plaint by a Power of Attorney holder on behalf of the original plaintiff is maintainable provided he has personal knowledge of the transaction in question. In a way, it is an exception to a well settled position that criminal law can be put in motion by anyone [vide Vishwa Mitter (supra)] and under the Statute, one stranger to transaction in question, namely, legal heir etc., can also carry forward the pending criminal complaint or initiate the criminal action if the original complainant dies [Vide Ashwin Nanubhai Vyas vs. State of Maharashtra (1967)1 SCR 807].

Keeping in mind various situations like inability as a result of sickness, old age or death or staying abroad of the payee or holder in due course to appear and depose before the Court in order to prove the complaint, it is permissible for the Power of Attorney holder or for the legal representative(s) to file a complaint and/or continue with the pending criminal complaint for and on behalf of payee or holder in due course. However, it is expected that such power of attorney holder or legal representative(s) should have knowledge about the transaction in question so as to able to bring on record the truth of the grievance/offence, otherwise, no criminal justice could be achieved in case payee or holder in due course, is unable to sign, appear or depose as complainant due to above quoted reasons. Keeping these aspects in mind, in MMTC (supra), this Court had taken the view that if complaint is filed for and on behalf of payee or holder in due course, that is good enough compliance with Section 142 of N.I. Act.

20. The stand of the appellant in Criminal Appeal No. 73 of 2007 is that no complaint can be filed and no cognizance of the complaint can be taken if the complaint is by the power of attorney holder, since it is against Section 200 of the Code and deserves to be rejected. There is no dispute that complaint has to be filed by the complainant as contemplated by Section 200 of the Code, but the said Section does not create any embargo that the attorney holder or legal representative(s) cannot be a complainant.

21. The power of attorney holder is the agent of the grantor. When the grantor authorizes the attorney holder to initiate legal proceedings and the attorney holder accordingly initiates such legal proceedings, he does so as the agent of the grantor and the initiation is by the grantor represented by his attorney holder and not by the attorney holder in his personal capacity. Therefore, where the payee is a proprietary concern, the complaint can be filed by the proprietor of the proprietary concern, describing himself as the sole proprietor of the payee, the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor, and the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor. However, we make it clear that the power of attorney holder cannot file a complaint in his own name as if he was the complainant. In other words, he can initiate criminal proceedings on behalf of the principal.

22. From a conjoint reading of Sections 138, 142 and 145 of the N.I. Act as well as Section 200 of the Code, it is clear that it is open to the Magistrate to issue process on the basis of the contents of the complaint, documents in support thereof and the affidavit submitted by the complainant in support of the complaint. Once the complainant files an affidavit in support of the complaint before issuance of the process under Section 200of the Code, it is thereafter open to the Magistrate, if he thinks fit, to call upon the complainant to remain present and to examine him as to the facts contained in the affidavit submitted by the complainant in support of his complaint.

However, it is a matter of discretion and the Magistrate is not bound to call upon the complainant to remain present before the Court and to examine him upon oath for taking decision whether or not to issue process on the complaint under Section 138 of the N.I. Act. For the purpose of issuing process under Section 200 of the Code, 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 under Section 138 of the N.I. Act. It is only if and where the Magistrate, after considering the complaint under Section 138 of the N.I. Act, 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(s) is required, 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 a decision whether or not to issue process on the complaint under Section 138 of the N.I. Act.

23. In the light of the discussion, we are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the N.I. Act. An exception to the above is when the power of attorney holder of the complainant does not have a personal knowledge about the transactions then he cannot be examined. However, where the attorney holder of the complainant is in charge of the business of the complainant-payee and the attorney holder alone is personally aware of the transactions, there is no reason why the attorney holder cannot depose as a witness. Nevertheless, an explicit assertion as to the knowledge of the Power of Attorney holder about the transaction in question must be specified in the complaint. On this count, the fourth question becomes infructuous.

24. In view of the discussion, we are of the opinion that the attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. We also reiterate that where the payee is a proprietary concern, the complaint can be filed

i. by the proprietor of the proprietary concern, describing himself as the sole proprietor of the “payee”;

ii. the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and

iii. the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor.

25. Similar substantial questions were raised in the appeal arising out of S.L.P (Crl.) No. 2724 of 2008, which stand answered as above. Apart from the above questions, one distinct query was raised as to whether a person authorized by a Company or Statute or Institution can delegate powers to their subordinate/others for filing a criminal complaint? The issue raised is in reference to validity of sub-delegation of functions of the power of attorney. We have already clarified to the extent that the attorney holder can sign and file a complaint on behalf of the complainant-payee. However, whether the power of attorney holder will have the power to further delegate the functions to another person will completely depend on the terms of the general power of attorney. As a result, the authority to sub-delegate the functions must be explicitly mentioned in the general power of attorney. Otherwise, the sub-delegation will be inconsistent with the general power of attorney and thereby will be invalid in law. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.

26. While holding that there is no serious conflict between the decisions in MMTC (supra) and Janki Vashdeo Bhojwani (supra), we clarify the position and answer the questions in the following manner:

i. Filing of complaint petition under Section 138 of N.I Act through power of attorney is perfectly legal and competent.

ii. The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.

iii. It is required by the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case.

iv. In the light of section 145 of N.I Act, 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 under Section 138 of the N.I Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the N.I. Act.

v. The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.

27. We answer the reference on the above terms and remit the matter to the appropriate Bench for deciding the case on merits.

……………………CJI. (P. SATHASIVAM)

……………………..J. (RANJANA PRAKASH DESAI)

……………………..J. (RANJAN GOGOI)

NEW DELHI;

SEPTEMBER 13, 2013

 

The notice of demand was served upon the wife of the appellant and not the appellant, acquittal

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.711 OF 2009
(Arising out of S.L.P. (Crl.) No.7828 of 2007)
M.D. Thomas …Appellant(s)
Versus
P.S. Jaleel and Anr. …Respondent(s)
O R D E R
Leave granted.
Heard learned counsel for the parties.
The Trial Court, upon conclusion of the trial, acquitted the appellant of the
charge under Section 138 of the Negotiable Instruments Act, 1881, [for short ‘the
Act’]. On appeal by the complainant, the High Court set aside the order of acquittal,
convicted the appellant and sentenced him to undergo imprisonment till the rising of
the Court and directed to pay the sum of rupees one lakh twenty thousand to the
complainant; in default, to undergo further simple imprisonment for a period of three
months. Against the said order, present appeal has been filed by special leave.
Learned counsel for the appellant argued that his client’s conviction is
liable to be set aside because before filing complaint, the respondent did not serve
upon him notice as per the requirement of Clause (b) of proviso to
….2/– 2 -
Section 138 of the Act. He submitted that service of notice on the appellant’s wife
cannot be treated as compliance of the mandate of law. Learned counsel for
respondent No.1 did not dispute that the notice issued by his client was, in fact, served
upon the appellant’s wife but argued that this should be treated as sufficient
compliance of the requirement of giving notice of demand.
Section 138 deals with the dishonour of cheque for insufficiency, etc., of
funds in the accounts of the person who draws the cheque and lays down that such
person shall be deemed to have committed an offence and shall, without prejudice to
any other provisions of this Act, be punished with imprisonment for a term which
may be extended to two years, or with fine which may extend to twice the amount of
the cheque, or with both. Proviso to Section 138 specifies the conditions which are
required to be satisfied before a person can be convicted for an offence enumerated in
the substantive part of the section. Clause (b) of the proviso to Section 138 cast on the
payee or the holder in due course of the cheque, as the case may be, a duty to make a
demand for payment of the said amount of money by giving a notice in writing, to the
drawer of the cheque, within thirty days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid. In the present case, the notice of
demand was served upon the wife of the appellant and not the appellant. Therefore,
there is no escape from the conclusion that complainant-respondent had not
complied
….3/– 3 -
with the requirement of giving notice in terms of Clause (b) of proviso to Section 138
of the Act. Unfortunately, the High Court overlooked this important lacuna in the
complainant’s case. Therefore, the conviction of the appellant cannot be sustained.
In the result, the appeal is allowed. The impugned order is set aside and
the order of acquittal passed by the Trial Court is restored.
………………….J.
[B.N. AGRAWAL]
………………….J.
[G.S. SINGHVI]
New Delhi,
April 13, 2009.

Demand Notice should be received by Drawer of the cheque.

CR.A/249/2005 1/5 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL APPEAL No. 249 of 2005
For Approval and Signature:
HONOURABLE MR.JUSTICE BANKIM.N.MEHTA
========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4
Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= PATEL AMRUTBHAI NARAYANDAS – Appellant(s) Versus STATE OF GUJARAT & 1 – Opponent(s) ========================================================= Appearance : MR Y.M. THAKORE FOR MR. PRAKASH K JANI for Appellant(s) : 1, MS. C.M. SHAH, APP, for Opponent(s) : 1, MR PAVAN BAROT FOR MR. AMRISH S BAROT for Opponent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE BANKIM.N.MEHTA
Date : 23/01/2012
ORAL JUDGMENT By filing this appeal, appellant – original complainant has challenged the impugned judgement and order passed by learned Additional Sessions Judge, Mehsana, on 25.7.2002 in Criminal Appeal No. 1 of 2001, acquitting the
CR.A/249/2005 2/5 JUDGMENT
respondent accused for the offence under Section 138 of the Negotiable Instruments Act (“the Act” for short). 2. According to the complainant, the respondent accused came to him as he was in need of finance and demanded Rs. 50,000/- for one month as hand loan. On account of relations, he gave Rs. 50,000/- in cash to the accused who gave cheque No. 375223 dated 20.7.1998 drawn on The Sarvoday Nagarik Sahakari Bank Limited, Patel Market, Visnagar. He presented the cheque in the bank on 18.8.1998 but said cheque returned unpaid with endorsement “fund insufficient”. Therefore, he demanded unpaid cheque amount by giving notice dated 27.8.1998 through his advocate. Despite receipt of the notice, the accused did not comply with the same. Therefore, complaint under Section 138 of the Act was filed. 3. The trial Court issued summons to the accused who appeared in the Court and denied having committed the offence. Therefore, the prosecution adduced evidence. On completion of recording of evidence, further statement of the accused was recorded under Section 313 of the Code of Criminal Procedure. The accused in his further statement stated that Rs. 5000/- were taken as hand loan from the complainant on 1.10.1993 and cheque was given against that amount. The said amount was returned in presence of Ambalal but the cheque was not returned to him and it has been misused by making alteration in the cheque. After hearing learned advocate for the parties, the trial Court convicted the accused. Therefore, Criminal Appeal No. 1 of 2001 was preferred by the accused in the Court of learned Additional Sessions Judge, at Mehsana. 4. After hearing learned advocates for the parties, the
CR.A/249/2005 3/5 JUDGMENT
lower appellate Court allowed the appeal and set aside the judgement and order of conviction passed by the trial Court. Therefore, the complainant has preferred this appeal. 5. I have heard learned advocate Mr. Thakore for learned advocate Mr. Jani for the appellant and learned advocate Mr. Pavan Barot for learned advocate Mr. Amrish Barot for the respondent accused and learned A.P.P. Ms. C.M. Shah for respondent State at length and in great detail. I have also perused the impugned judgement and order of the trial Court. 6. Under Section 138 of the Act where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account, such person shall be deemed to have committed an offence. It further provides that this provision shall not apply unless the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. 7. It appears from the record that cheque Exh. 12 was returned unpaid by the bank on account of insufficient fund by Bank memo dated 18.8.1998 produced at Exh. 18. Therefore, notice dated 27.8.1998 Exh. 50 was issued to the accused. It appears that the payee of the cheque made demand for the payment of unpaid cheque amount by giving notice in writing
CR.A/249/2005 4/5 JUDGMENT
within 30 days of the receipt of information from the bank regarding return of cheque as unpaid. Now the question is whether the accused received the notice. 8. The complainant in his evidence Exh. 11, deposed that he served notice on 27.8.1998 and it was served by registered post acknowledgement due. The complainant has produced acknowledgement due at Exh. 14. It appears from the acknowledgement due at Exh. 14 that it was received by Patel Ashaben Ganeshbhai. Therefore, it emerges that the accused did not receive the notice. In the decision of M.D. THOMAS VS. P.S. JALEEL reported in (2009) 14 SCC 398, Hon’ble Supreme Court ruled that clause (b) of the proviso to Section 138 cast on the payee or the holder in due course of the cheque, as the case may be, a duty to make a demand for payment of the said amount of money by giving a notice in writing to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and when the notice of demand was served upon the wife of the appellant and not the appellant, the complainant had not complied with the requirement of giving notice under the said provision. In the present case also notice is not served upon the accused but it was received by a family member of the accused. Therefore, the complainant has not complied with the requirement of giving notice in terms of clause (b) of the proviso to Section 138 of the Act. 9. In view of above, as the complainant has not complied with the legal requirement, the lower appellate Court was justified in acquitting the accused. Hence no interference is warranted in the impugned judgement. 10. As the appeal is dismissed on the ground of non-
CR.A/249/2005 5/5 JUDGMENT
compliance of Section 138(b) of the Act, the other aspects of the matter are not required to be elaborately discussed as except bare words, the complainant did not produce any documentary evidence in support of his case that the amount was advanced to the accused as hand loan. 11. In the result, the appeal fails and stands dismissed.
(BANKIM N. MEHTA, J)

If there is dishonour of a cheque issued by way of security and not issued towards discharge of legally enforceable debt or other liability, such dishonour would not come within the purview of Section 138 of the Act.

Bombay High Court
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH : NAGPUR
Criminal Appeal No.  195 of 2009
Appellant : The Maharashtra State Seeds Corporation Limited,
through its District Manager Prasad Tukaram
Deshmukh, resident of Chhatrapati Nagar, Nagpur
versus
Respondents: 1) Nagorao Raghunath Jibhkate, aged about
49 years, occ: Cultivator and Chairman of Kuhi
Taluka Shetki Kharedi Vikri Sahakari Sanstha,
Kuhi, District Nagpur
2) Yuvraj Ramchandra Wanve, aged about 
40 years, occ: service, Manager of Kuhi Taluka
Shetki Kharedi Vikri Sahakari Sanstha, Kuhi,
District Nagpur
Mr P. S. Khubalkar, Advocate for appellant
Mr P. V. Thakre, Advocate for respondents
Coram :  A. P. Bhangale, J
Dated  :  6th July 2012
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Oral Judgment
1. This appeal is directed against the acquittal of respondents by 
the   Judicial   Magistrate,   FC   (Special   Judge   under   Section   138   of   the 
Negotiable Instruments Act) for an offence punishable under Section 138 
of the Negotiable Instruments Act (for short, the “Act”) vide judgment & 
order dated 22nd December 2008 rendered in Criminal Complaint Case No. 
4872 of 2005.   
2. The facts are as under.
Appellant­The   Maharashtra   State   Seeds   Corporation   is   a 
Company registered under the Companies Act, 1956 while respondent no. 
1 is Chairman of Kuhi Taluka Shetki Kharedi Vikri Sahakari Sanstha and 
respondent no. 2 is the Manager of said Sanstha. Parties hereinafter shall 
be referred  to as per  their original status in  the complaint.   There were 
business   transactions   between   the   parties   and   according   to   the 
complainant   as   on   31.8.2004   an   amount   of   Rs.   4,91,445/­   stood 
outstanding  against  the   accused  and  for  payment  of  dues,  they issued 
cheque  bearing no. 110467 dated 17.11.2004 drawn on Nagpur District 
Central   Cooperative   Bank   Limited,   Nagpur     for   Rs.   4,91,445/­. 
Complainant presented the said cheque for realisation with its bankers viz. 
Bank  of  Maharashtra,  Hanuman   Nagar   Branch,  Nagpur.    However,  the 
cheque was  returned dishonoured by  the bankers of accused   owing  to 
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insufficiency of funds in the account of accused.  Complainant issued notice 
dated 1.12.2004 calling upon  the accused  to pay  the amount of cheque 
within fifteen days from the receipt thereof.  Accused received notice on 
13.12.2004.  However, they failed to make payment within the stipulated 
period and,  therefore, complainant  filed complaint under Section 138 of 
the   Act   against   the   accused   on   28.12.2004   before   the   Special   Court. 
Verification   Statement   on   behalf   of   complainant   was   recorded   on 
22.2.2005 and on 20.9.2005, learned Special Judge issued  process under 
Section 138 of the Act against the accused.  On 20.9.2005,  complainant 
had  filed  application   for   permission   to  lead   secondary   evidence   which 
came to be allowed by the learned Special Judge.  A detailed reference of 
this event would be made in the later part of this judgment. 
3. In response to the notice, respondents appeared.  Particulars of 
the offence were explained  to  them and accused pleaded not guilty and 
claimed to be tried.  
4. Complainant   examined   its   Manager   Sanjay   Raut   and   two 
employees of the Banks, one from the Bank of Maharashtra and the other 
from the Nagpur District Central Cooperative Bank.   Statements of accused 
were recorded under Section 313 Cr. P. C.  Their defence was that cheque 
in question did not bear their signature and a false case was filed against 
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them.  
5. Learned Special Judge, on the basis of oral and documentary 
evidence adduced on record and after hearing the parties, dismissed the 
complaint   and   acquitted   the   accused   of   the   offence   punishable   under 
Section 138 of the Act.  
6. I   have   heard   learned   counsel   for   the   respective   parties. 
Learned counsel  for  the complainant strenuously argued  that defence of 
the accused was that they did not sign the cheque and cheque was given 
for   security   purpose.       He   submits   that   since   the   trial   Court   has   not 
accepted  the defence of  the accused and inferred  their signature on  the 
cheque in question.  Hence, accused ought to have been convicted for an 
offence   punishable   under   Section   138   of   the   Act.       He   contends   that 
impugned judgment & order deserves to be set aside and appeal deserves 
to be allowed.  
7. Learned   counsel   for   the   accused   supported   the   impugned 
judgment and order of acquittal.  He submits that Manager of complainant 
Seeds  Corporation     admitted  the   circular  dated  3.5.2003  issued  by its 
District   In­charge   and   reply   given   thereto   by   the   accused   and   those 
documents were exhibited during  the course of his cross­examination at 
exhibits 52 and 53.   According to him, since there is documentary proof to 
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hold  that  the cheque in question was issued by way of security, learned 
Special Judge has rightly dismissed the complaint.  He further submits that 
merely because in  their  statement  recorded under Section 313 Cr. P. C. 
accused did not take defence, in express words, that cheque was issued by 
way of security, the Court can very well consider the defence of accused as 
disclosed from the cross­examination and that they had denied the case as 
false  and  also  denied  their  signature  on  the  cheque.    He  submits  that 
appeal is liable to be dismissed.  
8. Learned counsel for the appellant has placed reliance on the 
following  case laws in support of his submissions :
(1) 2007 (1) Mh.L.J. 210
Purushottam Gandhi v. Manohar Deshmukh & anr
(2) (2002) 6 SCC 426
ICDS Ltd v. Beena & anr
(3) 2005 (2) Crimes 47
M. A. Mohana Pai v. V. A. Jabbar & anr
(4) 2007 Cri. L.J. 2643
K. P. Rathikumar v. N. K. Santhamma & anr
(5) (2010) 11 SCC 441
Rangappa v. Sri Mohan
(6)   2008 (1) Mh.L.J. 505\
Hemant Pavel v. Socorro Santan
(7) 2010 (2) Bom. C. R. (Cri) 822
Nitin Mankar v. Vyankatesh Housing & anr
(8) 2010 (5) Mh. L.J.  129
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Matoshri Cashew Nuts v. Mohammad Kadar
(9) (2009) 1 SCC (Cri) 558
S.L. Constructions & anr v. Alapati Rao & anr
(10) (2009) 1 SCC (Cri) 823
Kumar Exports v. Sharma Carpets
while learned counsel for the respondents pressed into service the
following case laws :
(1) AIR 2008 SC 166
Hariom Agrawal v. Prakash Chand Malviya
(2) 2011 Cri.L.J.  531
Joseph Vilangadan v. Phenomenal Health & anr
(3) 2006 (5) Mh.L.J. 676
M. S. Narayana Menon v. State of Kerala & anr
9. Precisely enough,   following legal position emerges from the 
rulings cited by the respective counsel : 
(1) It is open to a person to sign and deliver a blank or incomplete 
cheque and is equally open for the holder to fill up blanks and specify the 
amount therein.  This does not amount to any alteration in the cheque if 
the cheque was not initially signed and issued for any different specified 
sum which was changed. When a drawer of a cheque delivers a signed 
cheque, he gives an implied authority  to  the holder  to put a date of his 
choice. 
(2) Liability  of  the  guarantor is  co­extensive with  the  borrower 
and if  the  cheque issued  by  a  guarantor is  bounced,  proceeding  under 
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Section   138   of   the   Negotiable   Instruments  Act   vis­a­vis  a   guarantor  is 
maintainable. 
(3) If   the   cheque   is   handed   over   representing   that   at   the 
eventuality of failure to repay loan within the stipulated period it could be 
encashed,     it   cannot   be   said   that   the   cheque   was   issued   representing 
security and not liability. 
(4) Presumption   mandated   by   Section   139   of   Negotiable 
Instruments   Act   includes   a   presumption   that   there   exists   a   legally 
enforceable debt or liability.  However, such presumption is rebuttable in 
nature.  When an accused has to rebut the presumption under Section 139, 
the   standard   of   proof   for   doing   so   is   that   of   “preponderance   of 
probabilities”.  Therefore, if the accused is able to raise a probable defence 
which creates doubts about the existence of a legally enforceable debt or 
liability, the prosecution can fail.
(5) Silence   on   the   part   of   the   accused   in   not   replying   to   the 
statutory notice is a strong circumstance which may reflect the falsity of 
the case of the accused. 
(6) If all presentations of cheque were within validity period of six 
months, condition precedent as stipulated in proviso clause (a) of Section 
138 of the Act is satisfied.  There is no prohibition on the number of times 
the cheque is presented within six months.
(7) If there is dishonour of a cheque issued by way of security and 
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not issued towards discharge of legally enforceable debt or other liability, 
such dishonour would not come within the purview of Section 138 of the 
Act. 
(8) As far as appeal against acquittal under Section 138 of the Act 
is   concerned,   Appellate   Court   examining   the   findings   of   a   trial   Court, 
should   indeed   be   slow   to   disturb   a   finding   of   fact   though   it   may   be 
necessary for an appellate court to find out as to what facts are established 
and whether on the basis of such facts, any presumption gets attracted or 
rebutted   in   order   to   draw   appropriate   inferences   in   the   facts   and 
circumstances of given case.
10. Coming back to the facts of present case, relevant part of the 
Circular  dated  3.5.2012 issued by  the District  In­charge  of complainant 
Corporation reads thus :
“……    In some cases, dispute  for  the payment arised and it 
gets very difficult for us to recover the amount in such cases. 
For overcoming  from such situation, Mahabeej management 
had decided to  have bank guarantee and two blank cheques 
in   favour   of  M.  S.  S.  C.  Ltd.,  Nagpur   from   all   dealers  as 
security against seed supply.
Hence it is decided to have bank guarantee of Rs. 1 lac 
from   dealers   whose   turnover   is   above   10   lacs   and   bank 
guarantee of Rs. 50 thousand from dealers whose turnover is 
below 10 lacs.   So please cooperate us in  this  regards and 
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submit bank guarantee and two blank cheques to our District 
office before 20th May 2003.
Early   and   positive   action   in   this   regard   is   highly 
solicited.”
Copy   of   circular   dated   3rd  May   2003   was   marked   to   the 
accused no. 2.  It is thus obvious that two blank cheques  for the purpose of 
security   along   with   bank   guarantee   were   demanded   by   complainant 
Corporation.  In response to the said circular, accused issued reply dated 
20.4.2003 and along with  the reply accused issued  two cheques bearing 
nos. 110466 and 110467.  Accused regretted their inability to furnish bank 
guarantee since they were not permitted to do so.  Cheque used in this case 
is bearing number 110467.  It has been held by the Apex Court in M. S. 
Narayana Menon v. State of Kerala & anr (supra) that If there is dishonour 
of a cheque issued by way of security and not issued towards discharge of 
legally enforceable debt or other liability, such dishonour would not come 
within   the   purview   of   Section   138   of   the   Act.     Complaint   of   the 
complainant Corporation fails on this count alone.
11. On   20.9.2005   when   the   process   was   issued   against   the 
accused,   complainant   had   made   an   application   for   permission   to   lead 
secondary   evidence.     Though   the   application   is   not   happily   worded, 
complainant wanted to state that   original cheque was misplaced on the 
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way to office from court and that police report had been lodged as also an 
affidavit was sworn in to that effect.  Said application was not supported by 
affidavit   and   it   was   signed   by   the   counsel   for   complainant.     Learned 
Special Judge very surprisingly allowed the application to lead secondary 
evidence by a single­word order “Granted”.   The secondary evidence can 
be permitted to be adduced only after non­production of primary evidence 
is satisfactorily accounted  for.   Secondary evidence may be given of  the 
existence,   condition   or   contents   of   a   document,   inter­alia,     when   the 
original   has   been   destroyed   or   lost.     It   is   settled   position   of   law   as 
pronounced by the Apex Court in  State of  Rajasthan v. Khemraj reported 
in  AIR  2000  SC  1759  that  application  for  the  production  of  secondary 
evidence must give full details and must be supported by a proper affidavit. 
In the present case, application preferred by the complainant Corporation, 
purportedly under Section 65 of the Evidence Act,  was not supported by 
affidavit; it did not give full particulars and was under the signature of a 
counsel   appearing   for   complainant.       Moreover,   when   learned   Special 
Judge   issued   process   against   accused   on   the   same   day   when   the 
application   was   filed   i.e.   on   20.9.2005,   he   could   have   waited   for 
appearance of the accused in order to afford them an opportunity to give 
say or contest the application instead of allowing the same hastily or ex­
parte  on the very day when the application was moved.  Learned counsel 
for the complainant cannot be heard to say that since the accused did not 
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object  the complainant leading secondary evidence, a clear­cut inference 
can be drawn  that  they had no objection  for  the complainant  to do so. 
Merely because there was no objection raised by the accused in black and 
white,   does   not   mean   that   the   Court   should   have   lost   sight   of   the 
elementary principle of natural justice.   The Court has  to adhere  to and 
give due observance  to  the principles of   law of evidence,  fairplay  and 
justice.     Be that as it may, the ultimate view taken by the trial Court is 
found  proper in  the  facts  and  circumstances  of  the  case  and  needs  no 
interference. 
12. In the result, appeal fails and is accordingly dismissed.
A. P. BHANGALE, J
joshi
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