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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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Payment stopped because of attachment of the bank account by an order of the Court, NI ACt will not be applicable

* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Crl.M.C.No. 1328/2007
% Date of Decision : 06.05.2008
Shri Vijay Chaudhary …. Petitioner
Through: Mr. Ruchir Batra, Mr. Sandeep
Chaudhary and Mr. Vijay Chaudhary
Advocates
versus
Shri Gyan Chand Jain …. Respondent
Through: Mr. D.K.Thakur, Advocate.
CORAM:
HON’BLE MR. JUSTICE VIPIN SANGHI
1. Whether the Reporters of local papers may
be allowed to see the judgment?
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported Yes
in the Digest?
VIPIN SANGHI, J. (Oral)
1. This petition u/s 482 of the Cr.P.C (for short ‘the Code’)
has been preferred for quashing the proceedings initiated u/s 138 of
the Negotiable Instruments Act titled “Gyan Chand Jain Vs. Vijay
Chaudhary”, earlier pending in the Court of Ms. Navita Kumari Bagha
and now pending in the Court of Mr. Sudesh Kumar, M.M., Patiala
House, New Delhi.
2. The case of the complainant/respondent in his aforesaid
complaint is that on 8.8.2004 (which according to the counsel for the
Crl.M(C)1328.07 page 1 of 20respondent should be read as 6.8.2004), the accused/petitioner
visited the shop of the complainant and took some diamonds and
diamond studded jewellery worth Rs.1,52,35,000/- on consignment/
sale basis and in lieu thereof, the accused/petitioner issued a cheque
bearing no.061630 for a sum of Rs.1,52,35,000/- drawn on Federal
Bank, Overseas Branch, New Delhi dated 10.4.2006. It is further
alleged that the complainant presented the said cheque through its
banker for collection and the same has been returned unpaid with the
remarks ”funds insufficient” and “payment stopped by
attachment order/court order”.
3. The submission of the petitioner is that even according to
the complainant, the said cheque was a post dated one, which was
presentable for encashment after nearly one year and eight months
from the date of its alleged issue. He submits that in the meantime,
the operation of the account on which the cheque was allegedly
issued was stopped on account of an attachment order/court order in
relation to FIR No.283/2005 u/s 406/420/467/468/471/120-B IPC
registered against the petitioner with P.S Connaught Place. On
account of the said attachment order, it was not possible for the
petitioner to operate the said account either to deposit any amount in
the account, or to withdraw any amount therefrom. For an offence
to be made out u/s 138 of the Negotiable Instruments Act, the
account must be “maintained” by the drawer with his banker for
payment of the amount for which the cheque is drawn. He submits
that on the date of the dishonour, it could not be said that the
Crl.M(C)1328.07 page 2 of 20account was maintained by the petitioner and, therefore, there was
no question of the offence u/s 138 of the Negotiable Instruments Act
having been committed by the petitioner.
4. There are various other allegations and cross-allegations
between the parties with regard to the alleged theft of the said
cheque; its being filled up by the respondent; and also with regard to
the dealings between the parties. However, I am not concerned with
any of those issues in the present proceedings. I am only confronted
with the issue whether, in a case where the payment has to be
stopped because of attachment of the bank account on which the
cheque is drawn by an order of the Court, in respect of a post dated
cheque, which attachment has taken place between the date of
issuance of the cheque and the date when the payment under the
cheque became due, the offence u/s 138 of the Negotiable
Instruments Act can be said to have been committed, if the cheque is
dishonoured for the reason “payment stopped by attachment
order/court order”, apart from the reason of the funds being
insufficient.
5. Learned counsel for the petitioner has placed reliance on
the following decisions in support of his submissions:
1. Ramesh Kumar Vs. State of Kerala, 2008(2) Civil Court
Cases 099 (Kerala);
2. Standard Chartered Bank & Anr. Vs. State & Anr.,
2008(1) Civil Court Cases 442 (DELHI), and;
3. Nagaraja Upadhya Vs. M. Sanjeevan, 2007(4) Civil
Court Cases 387 (Karnataka).
Crl.M(C)1328.07 page 3 of 206. On the other hand, the submission of the learned counsel
for the respondent is that while interpreting the provision of Section
138 of the Negotiable Instruments Act, the Court has to keep in view
the mischief that the said provision intends to remedy. He submits
that the Courts have, from time to time, interpreted Section 138 so as
to meaningfully apply the same to cases where the drawer of the
cheque resorts to ways and means to avoid payment of the cheque
by creating grounds other than those mentioned in Section 138,
such as, issuance of stop-payment instructions, closure of the bank
account and the like. In support of his submissions, learned counsel
for the respondent has relied upon the following decisions:-
1. Pawan Kumar V. Ashish Enterprises & Others,
1993(1) Crimes 51.
2. M/s. Modi Cement Ltd. V. Kuchil Kumar Nandi, IR
1998 SC 1057;
3. NEPC Micon Ltd & Others V. Magma Leasing Ltd.,
1999 Cri L.J. 2883;
4. Yogendra Kumr Gupta V. Ram Prakash Agarwal,
2007(2) Crimes 467 (M.P);
5. Vinod Tanna & Another V. Zaheer Siddqui,
2002(1) Crimes 104;
6. Bishan Dayal V. Dinesh Kumar Singal II(2007)
DLT(Cri) 630.
7. D. Vinod Shivappa V. Nanda Belliappa, 130(2006)
DLT 534(SC)
7. I proceed to examine the cases cited by the petitioner and
thereafter I shall examine the cases cited by the respondent.
In Ramesh Kumar (supra), on the same date on which
Crl.M(C)1328.07 page 4 of 20the accused issued cheques i.e. on 25.9.2000, the Company Court at
Thiruvananthapuram passed orders for winding up of the accused
company. One of the cheques was dishonoured for the reason “funds
insufficient”, while other two were dishonoured assigning the reasons
“operations stopped by the Court”. In relation to the cheque which
had been dishonoured on account of “funds insufficient”, the High
Court rejected the challenge to the complaint made by the accused.
However, it drew a distinction when it came to the complaints filed in
respect of the two cheques which have been dishonoured with the
reason “operations stopped by the Court”. The Court held that when,
by reason of an order of a Court, the bank was necessarily required
not to make any payment from out of the account of the accused
company, it is unjust and illegal to say that an employee of the
company, who had issued the two cheques on behalf of the accused
company can be held liable for an offence u/s 138 of the Act. In
Standard Chartered Bank (supra), the Tax Recovery Officer on
30.1.2003 issued warrants of attachment, attaching the account of
A.D Exports Private Ltd. On 11.2.2003, the Tax Recovery Officer
required the petitioner, Standard Chartered Bank to remit the money
lying in the account of A.D Exports Private Ltd in pursuance of the
attachment. On 3.3.2003, A.D Exports Pvt. Ltd got prepared a
banker’s cheque for Rs.4,86,000/- in favour of the complainant M/s.
Omni Plast Private Ltd and handed over the same to the said
company. When the bankers cheque was presented for encashment,
the same was returned unpaid with return memo having the
instructions “refer to drawer”. M/s Omniplast Private Ltd filed the
Crl.M(C)1328.07 page 5 of 20complaint u/s 138 of the Act against the Standard Chartered Bank.
This Court took the view that since the banker’s cheque was issued
after debiting the account of the customer, but after the account had
been lawfully attached by an authority competent to attach the
account, issuance of the pay order being the result of an oversight or
negligence would not give the complainant the right to prefer a
complaint u/s 138 of the Act, since such a complaint cannot be
founded on the tort of negligence. The sine qua non for fastening
liability u/s 138 of the Act is return of a cheque unpaid by the bank
either because the amount of money standing to the credit of that
account is insufficient to honour the cheque, or that the cheque
amount exceeds the amount arranged to be paid from that account
under an agreement between the account holder of the bank.
Consequently, the complaint filed by M/s Omni Plast Pvt. Ltd. was
quashed. In Nagaraja Upadhyay (supra), the Karnataka High Court
took the view that where the account of the accused had been closed
by the bank at the instance of the bank, and not at the instance of the
accused, the provisions of Section 138 of the Act are not attracted. In
this case the Court found as a matter of fact that the bank account
had been closed by the bank under its Rules on 25.6.1996 without
intimation to the account holder/accused, who had thereafter
proceeded to issue a cheque dated 3.6.1997. Since the account had
not been closed by the accused, but by the bank on its own without
intimation to the account holder, the Court held that the complaint u/s
138 of the Act was not maintainable.
Crl.M(C)1328.07 page 6 of 208. The respondent has relied on Pawankumar (supra) to
contend that Section 138 of the Act is attracted when the person
concerned who has issued the cheque does not have adequate funds
in his credit to honour the cheque. In this case the Bank had filed a
recovery suit against the drawer/account holder. The drawer/account
holder had no amount to his credit in his bank account. This decision
does not deal with a situation like the present, and is therefore of
hardly any assistance in deciding the present controversy. The
material difference was that the drawer did not have any amount in
his account on which the cheque was drawn and the suit was filed by
the same bank precisely for the same reason, that the
drawer/account holder had even not repaid the loan that he had
taken from the Bank. The real reason for dishonour was the
insufficiency of funds.
9. In M/s Modi Cements Ltd (supra), the Supreme Court
held that once the cheque is issued by the drawer, a presumption u/s
139 of the Act arises in favour of the holder, and merely because the
drawer issues a notice to the drawee or to the bank for stoppage of
payment, it will not preclude an action u/s 138 of the Act by the
drawee, or the holder of the cheque in due course. The Supreme
Court, while reversing its earlier view in Electronics Trade and
Technology Development Corporation Ltd., Secundrabad vs.
Indian Technologists & Engineers (Electronics) (P) Ltd. (1996)
2 SCC 739 wherein the Court had taken the view that “…..after the
cheque is issued to the payee or to the holder in due course and
Crl.M(C)1328.07 page 7 of 20before it is presented for encashment, notice is issued to him not
to present the same for encashment and yet the payee or holder
in due course presents the cheque to the bank for payment and
when it is returned on instructions, Section 138 does not get
attracted” (emphasis supplied), observed that if this proposition is
accepted Section 138 would be rendered a dead letter “for by
giving instructions to the Bank to stop payment immediately
after issuing a cheque against a debt or liability the drawer can
easily get rid of the penal consequences notwithstanding the fact that
a deemed offence was committed.” Once again, this decision does
not appear to be of much relevance to the present fact situation. It is
not the respondent’s case that the cheque has been dishonoured on
account of stop payment instructions given by the petitioner.
Similarly, the decision of the Supreme Court in NEPC MICON Ltd
(supra) is of no avail to the respondents, since the fact situation was
materially different from the facts of the present case. In that case
the drawer of the cheque had closed the account from which the
cheque was issued. The Supreme Court in that decision observed:
“After issuing the cheque drawn on an
account maintained, a person, if he closes
that account apart from the fact that it may
amount to another offence, it would certainly
be an offence under S.138 as there was
insufficient or no fund to honour the cheque in
‘that account.” (emphasis supplied)
10. From the aforesaid, it appears that to rope in the drawer
of the cheque within the ambit of Section 138 of the Act, when the
cheque is dishonoured for ostensible reasons different from those
Crl.M(C)1328.07 page 8 of 20specifically provided under the Act, it is necessary to establish that
the ostensible reason is one attributable to a voluntary act/omission
of the drawer, and that the same is merely a ruse to avoid payment of
the cheque and the real reason is the insufficiency of funds in the
account, or that the amount of the cheque exceeds the arrangement
that the drawer has with the bank under an agreement.
11. In Yogendra Kumar Gupta (supra) the Madhya Pradesh
High Court has expressed the view that the reason for dishonour of
cheque is wholly irrelevant, and if the amount remained unpaid
despite demand notice being served upon accused, he can be held
liable under Section 138 of the Act. With due respect, the
interpretation given by the Madhya Pradesh High Court in the
aforesaid decision does not appeal to me. For arriving at its aforesaid
conclusion, the Madhya Pradesh High Court has relied upon the
decision in Modi Cements Limited (supra), which was a case where
the drawer of the cheque had issued stop payment instructions after
drawing the cheque and before its presentation by the drawee. With
respect to the Madhya Pradesh High Court, the Supreme Court in this
decision does not appear to have laid down a general and broad
proposition that irrespective of the reason for the dishonour of the
cheque, the offence under Section 138 is made out if the drawer of
the cheque does not make payment despite issuance of statutory
notice by the payee. The Madhya Pradesh High Court also relies upon
a decision of a Division Bench of the Bombay High Court in Rakesh
Nemkumar Porwal v. Narayan Dhondu Joglekar 1993 Crl. LJ 680.
Crl.M(C)1328.07 page 9 of 20The various observations made in the decision of the Bombay High
Court in Rakesh Nemkumar Porwal(supra), no doubt supports the
proposition laid down by the Madhya Pradesh High Court in
Yogendra Nath Gupta (supra). The Bombay High Court in Rakesh
Nemkumar Porwal (supra) observed:
“21. A clear reading of section 138 leaves no doubt
in our mind that the circumstances under which
such dishonour takes place are required to be
totally ignored. In this case, the law only takes note
of the fact that the payment has not been
forthcoming and it matters little that any of the
manifold reasons may have caused that situation.
If, for instance, the closure of an account or the
stoppage of payment or any other of the
commonplace reasons for dishonour were to be
justifiable, then, the Legislature would have set
these out in the section as exceptions not
constituting an offence. No such intention can be
read into section 138, as none exists. The solitary
exception made by the Legislature is with regard to
the drawer being offered a final opportunity of
paying up the amount within 15 days from the
receipt of notice which, in other-words, provides a
last opportunity to prove one’s bona fides. It is
obvious, that having regard to the widespread
practice of issuing cheques which are dishonoured
and the many ingenious methods of avoiding
payment that are practiced, the Legislature has
opted for a non-nonsense situation. The possibility
has not been overlooked whereby an account any
inadvertently be overdrawn or a dishonour may be
for technical reasons or where a genuine mistake
has occurred and the grace period provided for by
the Legislature after service of notice on the drawer
is in order to afford an opportunity to the drawer to
rectify these. Undoubtedly, even when the
dishonour has taken place due to the dishonesty of
the depositor, the drawer is still given a last chance
to act otherwise. Consequently, the reasons for
dishonour even if they be very valid as was sought
to be pointed out in this case, should not and
cannot be taken into account by a Magistrate when
such a complaint is presented.”
Crl.M(C)1328.07 page 10 of 20“28. ……………………………….. The wording and the
endorsement from the bank or the circumstances
under which a cheque is returned are not the
guiding criterion but the fact that on presentation
of the cheque, the payment was not made. There
could be a host of reasons for this (i.e. for the
dishonour of the cheque) but the bottom line of the
situation is that the payment could not be made by
the banker and the mechanics of the reasons
apart, the irresistible conclusion that, had the
funds been available, the payment would have
been made leads back to the position that
dishonour, therefore, implies insufficiency of funds.
We are reinforced in this view by the definition of a
cheque as appears in section 6 of the Negotiable
Instruments Act which defines it as a bill of
exchange drawn on a specified banker. A bill of
exchange is defined in section 5 which reads as
follows :
“A bill of exchange is an instrument in
writing containing an unconditional order
signed by the maker directing a certain
person to pay a certain sum of money only
to, or to the order of, a certain person or to
bearer of the instrument.”
12. It may be pertinent to analyze the dispute before the
Bombay High Court in Rakesh Nemkumar Porwal(supra) and the
circumstances in which these observations were made by the Court.
The Court was dealing with a situation where a complaint under
Section 138 the Act had been filed by the complainant within the
notice period of 15 days after dishonour as provided by the Section.
In this factual background, the real controversy that arose for
consideration was whether the complaint when filed was premature
or not. However, it appears that arguments were advanced on
various other issues, which strictly were not even required to be gone
into, to decide the primary issue arising in the case. The Court had
framed the following questions for its considerations:
Crl.M(C)1328.07 page 11 of 20“(a) Whether it is open to a complainant to invoke the
process of a criminal court alleging an offence under
section 138 of the Negotiable Instruments Act at any
point of time earlier to that as it prescribed in the
section and whether this infirmity is at all curable or
whether it is fatal to the prosecution ?
(b) What is the correct manner in which the time-frame
as is prescribed in sections 138 and 142 of the
Negotiable Instruments Act is required to be
computed ?
(c) Whether it would be open to the complainant, in the
course of proceedings under section 482 of the Code of
Criminal Procedure, to produce material before the
High Court for purposes of effectively amendings
statements or the factual position or as has happened
in the present case, the material date set out in the
complaint or conversely, whether the record of the
lower court is sacrosanct and cannot be altered at this
stage ?
(d) Is section 138 to be afforded restrictive application
by confining it to the narrow category of cases where
the rejection slip reads “insufficiency of funds” or was it
prescribed as an antidote for the malignant trade
practice of indiscriminately issuing cheques that are
dishonoured without any compunction, in other words,
would dishonour of a cheque attract criminal
consequences in the normal course ?”
13. The Court answered the first question against the
complainant, and held that the complaint was premature and liable to
be dismissed. Therefore, in my humble view, question(d) was not
required to be considered. The decision of the Court on question(d)
was, in my view an obiter dicta.
14. Even otherwise, the above extracted observations do not
seem to be in consonance with the clear and unambiguous language
of the Statute. Section 138 of the Act is a comprehensive provision. It
firstly creates the offence that defines the ingredients that must exist
Crl.M(C)1328.07 page 12 of 20for the offence to get completed and thereafter also prescribes the
punishment with which the offender can be punished. The Section is
divided into two parts. The first part deals with the essential
ingredients which constitute the offence. The second part is a proviso,
which lays down certain preconditions which must be fulfilled before
the Section can be applied. The essential preconditions found in the
main body of the Section cannot be obliterated by focussing only on
the preconditions laid down in the proviso, for the application of the
Section.
15. The Legislature, in its wisdom has cautiously not used
the expression “irrespective of the reasons for dishonour” and instead
has used the words “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”.
16. The necessary ingredients of the offence have been
noticed by the Supreme Court in Kusum Ingots & Alloys Ltd V.
Pennar Peterson Securities Ltd., (2000) 2 SCC 745 and the same
read as follows: -
“(i) a person must have drawn a cheque on an
account maintained by him in a bank for
payment of a certain amount of money to
another person from out of that account for the
discharge of any debt or other liability;
(ii) that 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;
Crl.M(C)1328.07 page 13 of 20(iii) that cheque is returned by the bank unpaid,
either because the amount of money standing
to the credit is insufficient to honour the cheque
or that it exceeds the amount arranged to be
paid from that account by an agreement made
with the bank;
(iv) the payee or the holder in due course of the
cheque 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 15
days of the receipt of information by him from
the bank regarding the return of the cheque as
unpaid;
(v) the drawer of such cheque fails to make
payment of the said amount of money to the
payee or the holder in due course of the cheque
within 15 days of the receipt of the said notice.”
17. I may also refer to Section 140 of the Act, which states
that “It shall not be a defence in a prosecution for an offence under
section 138 that the drawer had no reason to believe when he issued
the cheque that the cheque may be dishonoured or presentment for
the reasons stated in that section.”(emphasis added). The
intention of the Parliament is, therefore, not to create the offence
under Section 138 of the Act in all cases of Dishonour of Cheque, but
only in such cases where the dishonour is “for reasons stated in that
Section.”
18. I am in respectful disagreement with the aforesaid view
of the Division Bench of the Bombay High Court. In my view one
cannot ignore the language used by the Parliament in the Statute and
stretch its meaning to such an extent as to obliterate the express
words used by the Parliament. Moreover, if this decision is understood
as laying down the correct law, then the same is irreconcilable with
Crl.M(C)1328.07 page 14 of 20the decision of the Supreme Court in Kusum Ingots(supra) wherein
the Supreme Court has held that proceedings under Section 138 read
with Section 142 of the Act would not lie where, before the date on
which the cheque was drawn or before expiry of the statutory period
of 15 days after notice, a restraint order of BIFR under Section 22A of
the SICA was passed against the company. In such a case it may
reasonably be said that the dishonouring of the cheque by the bank
and failure to make payment of the amount by the company and/or
its directors is for reasons beyond the control of the accused. This
Court has also held in M.L.Gupta & Anr. V. Ceat Financial
Services Ltd., 136(2007) DLT 308 that once the Company Court
passes an order for winding up of a company and appoints a
provisional liquidator, in respect of cheques which may have been
issued prior to the passing of such an order by the Court, which
became payable after the passing of the winding up orders, no
offence under Section 138 of the Act would be made out.
19. No doubt, the said provision has to be construed in a
meaningful way so as to advance the purpose for which it has been
enacted. However, the interpretation of the said section cannot be
stretched to such limits so as to render the drawer of a cheque liable
for penal action wherever the cheque has been returned by the bank
unpaid for whatever reason. It is well settled that penal Statutes
have to be construed strictly.
20. Chapter XVII of the Act is engrafted to discipline those
who discredit the system of making payment through cheques in
Crl.M(C)1328.07 page 15 of 20certain cases. While it creates legal sanction against the dishonour of
cheques and the subsequent failure to make payment in certain
circumstances, the objective of the said Chapter is not to provide a
remedy for recovery of the amount due. It is not that the payee or
the holder of the cheque in due course has no other remedy available
in law to enforce his claim. He has a remedy by way of filing a civil
suit, may be even a summary suit under Order 37 C.P.C to enforce his
claim independently. He may even initiate action for winding up u/s
433 of the Companies Act. Invariably, the dishonour of the cheque
may also involve the offence of cheating. Therefore, a complaint
under Section 420 IPC may also be maintainable.
21. The decision in Vinod Tanna (supra), in turn, relies upon
the decision of the Bombay High Court in Rakesh Nemkumar
Porwal (supra). Since I have expressed my disagreement with the
said decision, I do not feel persuaded to follow the decision of the
Bombay High Court in Vinod Tanna (supra). The decision of this
Court in Bishan Dayal (supra) has no application to the facts of the
present case. In Bishan Dayal (supra) the quashing petition had
been filed on the ground that the petitioner did not owe any amount
to the complainant. This Court held that it is not for the Court while
exercising jurisdiction u/s 482 of the Code to go into the veracity of
this assertion. As aforesaid, I am only concerned with the aforesaid
legal issue, and I am not going into the factual disputes between the
parties in the present case. The last decision relied upon by the
respondent is of the Supreme Court in D.Vinod Shivappa (supra).
Crl.M(C)1328.07 page 16 of 20The same has been cited to contend that the object of Section 138 of
the Act is to punish unscrupulous persons, who purport to discharge
their liabiity by issuing cheques without intending to do so which is
demonstrated by insufficient balance in account to discharge their
liability. In para 13 of the said decision, the Supreme Court held as
follows:-
“13. Section 138 of the Act was enacted to punish
those unscrupulous persons who purported to
discharge their liability by issuing cheques without
really intending to do so, which was
demonstrated by the fact that there was no
sufficient balance in the account to discharge
the liability. Apart from civil liability, a criminal
liability was imposed on such unscrupulous
drawers of cheques. The prosecution, however,
was made subject to certain conditions. With a
view to avoid unnecessary prosecution of an
honest drawer of a cheque, or to give an
opportunity to the drawer to make amends, the
proviso to Section 138 provides that after
dishonour of the cheque, the payee or the holder of
the cheque in due course must give a written
notice to the drawer to make good the payment.
The drawer is given 15 days time from date of
receipt of notice to make the payment, and only if
he fails to make the payment he may be
prosecuted. The object which the proviso seeks to
achieve is quite obvious. It may be that on account
of mistake of the bank, a cheque may be returned
despite the fact that there is sufficient balance in
the account from which the amount is to be paid.
In such a case if the drawer of the cheque is
prosecuted without notice, it would result in great
in-justice and hardship to an honest drawer. One
can also conceive of cases where a well
intentioned drawer may have inadvertently missed
to make necessary arrangements for reasons
beyond his control, even though he genuinely
intended to honour the cheque drawn by him. The
law treats such lapses induced by inadvertence or
negligence to be pardonable, provided the drawer
after notice makes amends and pays the amount
within the prescribed period. It is for this reason
that Clause (c) of proviso to Section 138 provides
Crl.M(C)1328.07 page 17 of 20that the section shall not apply unless the drawer
of the cheque fails to make the payment within 15
days of the receipt of the said notice. To repeat,
the proviso is meant to protect honest drawers
whose cheques may have been dishonoured for the
fault of others, or who may have genuinely wanted
to fulfil their promise but on account of
inadvertence or negligence failed to make
necessary arrangements for the payment of the
cheque. The proviso is not meant to protect
unscrupulous drawers who never intended to
honour the cheques issued by them, it being a part
of their modus operandi to cheat unsuspecting
persons.”(emphasis added).
22. A perusal of the above extract shows that the Supreme
Court consciously used the words “which was demonstrated by the
fact that there was no sufficient balance in the account to discharge
their liability”. This observation of the Supreme Court also reaffirms
my view that whatever be the reason for dishonour of the cheque, it
has to be co-related to the insufficiency of funds in the account or to
the lack of arrangement made by the drawer with his bank under an
agreement.
23. Turning to the facts of the present case, one finds that
the attachment by an order of the Court in this case was after the
alleged issuance of the cheque, but prior to its presentation for
encashment. The attachment of the bank account of the petitioner
had the effect of disabling the petitioner from operating or
maintaining the said account. The petitioner could not exercise his
right either to deposit into or withdraw from the said account. Even
if it were to be assumed for the sake of argument, that the cheque
was in fact issued in discharge of the petitioner’s liability owed to the
Crl.M(C)1328.07 page 18 of 20respondent, and that at the time of issuance of the cheque, he did not
have sufficient balance in the account, or an arrangement with his
banker, in case the bank account had not been attched under the
orders of a Court, nothing prevented the petitioner from either
depositing money in his account or entering into an agreement with
his bank to arrange for sufficient funds in the account, to be able to
honour the cheque in question by the date when the said cheque
could have been presented for payment at the earliest. This is so
because there was sufficient time gap i.e of nearly one year and eight
months between the date of alleged issue of cheque and the date of
its presentation. As held by the Hon’ble Supreme Court in Modi
Cements (supra), the issuance of the cheque without having
sufficient balance in the account of the drawer does not by itself
tantamount to the commission of an offence u/s 138 of the Act.
However, in the facts of this case, the petitioner could not have, even
if he would have so desired, either deposited funds in his account or
otherwise made arrangements for the payment of the cheque upon
its presentation by entering into an agreement with the bank, since
there was a Court attachment on the bank account of the drawer.
This Court attachment was by a Court ceased of the case arising out
of FIR No.283/2005 u/s 406/420/467/468/471 & 120-B IPC registered
with P.S. Connaught Place. The act of attachment of the bank
account of the drawer/petitioner cannot be said to be a voluntary act
of the drawer. It cannot be said that the petitioner contrived to have
the account attached only for the purpose of warding of the penal
consequences u/s 138 of the Act. It also cannot be said that after the
Crl.M(C)1328.07 page 19 of 20attachment of the bank account, the same was being maintained by
the petitioner. For an account to be maintained by an account holder,
it is essential that he is in a position to operate the said account by
either depositing monies therein or by withdrawing money therefrom.
He should be in a position to give effective instructions to his banker
with whom the account is maintained. However, in the present case,
once the account has been attached by an order of the Court, the said
account could not be operated by the petitioner. He could not have
issue any binding instructions to his banker, and the banker was not
obliged to honour any of his instructions in relation to the said
account, so long as the attachment under the court orders continued.
24. For all the aforesaid reasons, in my view, even if the
contents of the complaint are accepted in toto, no offence under
Section 138 of the Act can be said to have been committed against
the accused, this petition deserves to succeed. I, therefore, allow the
petition and quash the complaint filed by the respondent before the
learned Metropolitan Magistrate, New Delhi.
May 06, 2008 VIPIN SANGHI, J.
as
Crl.M(C)1328.07

No complaint under Section 138 is maintainable against the person, who has neither issued the cheque nor the same was issued from her account.

Criminal Misc.M.No.32786 of 2010 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Criminal Misc. -M No.32786 of 2010
Date of Decision : December 16, 2011
Navjot Kaur …Petitioner
Versus
INSCOL …Respondent
CORAM; HON’BLE MR.JUSTICE ALOK SINGH
1. Whether Reporters of local news papers may be
allowed to see judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the
Digest?
Present: Mr. Rajiv Joshi, Advocate
for the petitioner.
Mr.Rakesh Bhatia, Advocate
for the respondent.
Alok Singh, J.
The short question involved in the present case is as to
whether a person, who is neither a signatory of the cheque nor has
issued cheque, can be made accused in a complaint under Section
138 of the Negotiable Instruments Act.
The brief facts of the case are that respondent
(complainant) has filed complaint against Avtar Singh, father as
well against Navjot Kaur daughter of Avtar Singh alleging therein
that accused No.2-Navjot Kaur got admission in Foreign Nursing
Course; to discharge the liability of Navjot Kaur-accused No.2,Criminal Misc.M.No.32786 of 2010 2
accused No.1, father of accused No.2 has issued one account payee
cheque No.173472 from S.B.Account No.134400 dated 16.9.2007
for a sum of Rs.1,25,000/- drawn on Punjab National Bank, D.A.V.
College, Jalandhar; on the presentation, cheque was dishonoured
on account of insufficient funds on 22.9.2007; a legal notice was
issued on 20.10.2007. However, despite of the service, payment
was not made within the stipulated period, therefore, complaint
was filed before the learned Magistrate on 27.11.2007.
I have heard learned counsel for the parties and have
carefully perused the record. Section 138 of the Negotiable
Instruments Act reads as under:-
“138. Dishonour of cheque for insuf iciency, 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 insuf icient 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
of ence 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 shallCriminal Misc.M.No.32786 of 2010 3
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.”
From the perusal of Section 138, I have no hesitation
to hold that complaint under Section 138 can only be filed against
the person, who has drawn the cheque on an account maintained by
him with the Banker for payment of any amount of money. Since
petitioner is neither maintaining the account nor has issued the
cheque under her signatures, therefore, no complaint under Section
138 of the Negotiable Instruments Act is legally maintainable
against the petitioner-accused No.1. daughter of accused No.2.
Learned counsel for the complainant has vehemently
argued that since cheque was issued by the father of the petitioner
to discharge the liability of the petitioner in her presence and
petitioner has assured that cheque shall be honoured, therefore,Criminal Misc.M.No.32786 of 2010 4
complaint under Section 138 of the Negotiable Instruments Act
can be filed against her as well.
I am not inclined to accept this arguments. No
complaint under Section 138 is maintainable against the person,
who has neither issued the cheque nor the same was issued from
her account. Therefore, present petition is allowed. Complaint
against the petitioner stands quashed. However, trial Court shall
proceed against accused No.1-Avtar Singh only.
(Alok Singh)
December 16, 2011 Judge

Complaint can not be filed by authorized agent by proprietorship firm without GPA or permission of Court.

Calcutta High Court
Prasanta Kumar Basu vs Narendra Kumar Anchalia And Anr. on 22 November, 2006
Equivalent citations: 2007 CriLJ 1026
Author: S K Gupta
Bench: S K Gupta

JUDGMENT

Sadhan Kumar Gupta, J.

1. This criminal appeal has been preferred against the judgment passed by the learned City Sessions Judge, 8th Bench, Calcutta in Criminal Appeal No. 21 of 1999 whereby he acquitted the accused for the offence under Section 138 of the N.I. Act.

2. The case of the appellant is that he is the Manager of the firm M/s. L. M. Enterprises and being duly empowered and authorised by the proprietor of the said firm, he filed a petition of complaint under Section 138 of the N.I. Act against the accused/respondent in the Court of the Chief Metropolitan Magistrate, Calcutta. Said case was registered as Case No. C/1815/95.

3. It was alleged in the said complaint, by the complainant that the accused/respondent as the proprietor of M/s. Sree Ramdevji Art International, in discharge of his existing liabilities issued two account payee cheques of Rs. 5,00,000/- each drawn on Indian Overseas Bank, Chowranghee Branch in favour of the appellant-company. But those cheques were dishonoured and returned back to the appellant-company. A notice was sent to the accused demanding payment of the amount as mentioned in those two cheques within 15 days from the receipt of the said notice. However, as the accused failed to make the payment, so the petition of complaint was filed against the accused by the complainant.

4. During trial, charge under Section 138 of the N.I. Act was framed against the accused who pleaded not guilty and claimed to be tried. The accused contested the case challenging the service of the notice as well as the maintainability of the case. The complainant examined three witnesses while the defence also examined three witnesses including himself.

5. Learned Metropolitan Magistrate 16th Court, Calcutta, upon consideration of the evidence on record, was pleased to hold the accused guilty for the offence punishable under Section 138 of the N.I. Act. But as he was of the opinion that he could not impose adequate sentence, as provided in the statute, so he referred the matter to the learned Chief Metropolitan Magistrate as per provisions of Section 328 of Cr. P.C.

6. Learned Chief Metropolitan Magistrate by his judgment dated 17-8-1999 held the accused guilty for the offence under Section 138 of the N.I. Act and sentenced him to pay fine of Rs. 10,00,000/- in default to suffer rigorous imprisonment for one year with the direction that 80% of the fine amount, if realised, would be paid to the complainant by way of compensation.

7. Against the said order of conviction, the accused preferred an appeal before the learned City Sessions Court and said Court by his judgment dated 31-1-2001 was pleased to set aside the order of conviction, as passed by the learned Chief Metropolitan Magistrate, Calcutta and acquitted the accused.

8. As the complainant/appellant is aggrieved by the said order of acquittal of the accused by the learned Sessions Judge, so this criminal appeal has been preferred by the complainant before this Court after obtaining special leave. It has been alleged in the appeal, as filed by the complainant, that the learned Sessions Judge was not at all justified in holding that the notice was not properly served upon the accused and the notice is also not legal and valid in the eye of law and that the petition or complaint was not entertainable as it was not filed by the proprietor himself. According to the appellant, the findings of the learned Sessions Judge are absolutely illegal and improper and those are perverse in nature causing failure of justice. So the appellant has prayed for setting aside the order of acquittal, as passed by the learned Sessions Judge.

9. Learned Advocate for the appellant argued that the learned Sessions Judge acquitted the accused/respondent mainly on three grounds viz. 1) the notice was not properly served upon the accused; 2) the notice is also not legal and valid and 3) since the complainant is a proprietorship firm and since the proprietor himself has not signed the petition or complaint and he has not come forward to the Court for giving deposition, so the petition or complaint, as filed by the alleged authorized person is not maintainable in the eye of law. According to the learned Advocate for the appellant notice was duly sent by registered post with A/D at the correct address of the place of the business of the accused and it was delivered at such place by the postman and as such notice should be deemed to have been served upon the accused. In this respect he has relied upon the decisions ,Madan and Co. v. Wazir Jaivir Chand and , K. Bhaskaran v. Sankaran Vaidhyan Balan.

10. Regarding the contention that notice was not legal and valid. Learned Advocate for the appellant argued that contents of the notice was perfectly legal and the learned Sessions Judge was not at all justified in holding that the notice is defective and is not sustainable in the eye of law. In support of his contention he has relied upon the decisions reported in 1998 C Cr LR (Cal) page 106, Ajay Kumar Churiwala v. Suman Sethi and Ors. 2000 C Cr LR SC page 257 : 2000 Cri LJ 1391,Suman Sethi v. Ajay K. Churiwala and Anr. According to the learned Advocate for the appellant the finding of the learned Sessions Judge in this respect should be set aside.

11. Regarding the observation of the learned Sessions Judge that as the proprietor of the firm has not signed the petition of complaint and as he did not come forward before the Court for giving deposition and for that reason the petition or complaint was not maintainable, learned Advocate for the appellant argued that this finding of the learned Sessions Judge is absolutely illegal and improper which resulted in the failure of justice. In this respect he has relied upon the decisions reported in 1993 C Cr. L. R. (Cal) page 225 Sk. Abdur Rahim v. Amal Kumar Banerjee; Associated Cement Co. Ltd. v.

Keshavanand; M.M.T.C. Ltd. and Anr. v. Medchl

Chemicals & Pharma (P) Ltd. and Anr. 2005 Cr LJ page 3572 Y. Vijaylakshmi alias Rambha v. Manickam Narayanam.

12. Regarding the argument as made by the learned Advocate for the respondent that there was defect in complying the provisions under Section 251, Cr.P.C. the learned Advocate for the appellant argued that it is merely an irregularity which is curable under Section 465, Cr. P.C. and for that he relied upon the decision, reported in AIR 1949 Pat page 323, Rajeshar Prasad Singh v. Province of Bihar and AIR 1956 Assam page 127, Abdul Kadir v. Gafur Sheikh and Ors.

13. As against this, learned Advocate for the respondent argued that the statutory notice was not properly served upon the accused and as such on this ground the proceeding under the N.I. Act was liable to be set aside. In this respect he has cited decisions reported in 2005 (2) Bankman page 88; 2004 (3) CHN page 165; 2005 (1) Bankman page 125; 2005 (2) Bankman page 317; 1993 CLJ page 2196. According to him onus to prove the service of notice is upon the complainant and since that onus has not been properly discharged in this case, so the proceedings under the N.I. Act cannot proceed.

14. He further argued that contents of the notice is also defective as it has been mentioned therein not only about the amount but also the interest that was claimed by the complainant. According to him, this is not permissible and as such the notice should be held defective.

15. Learned Advocate for the respondent further argued that the accused was not properly examined under Section 251, Cr. P.C. as the substance of allegation was not properly stated to him at the time of such examination, thereby vitiating the entire proceeding. In this respect he has relied upon the decision reported in 1962 (1) Cri LJ page 429; 2000 Cal Cr LJ page 460; 2001 Cal Cr LR page 32; 2003 C.Cr. L. R. page 267; 2004 CHN page 187 and 2004 (1) E Cr N (Cal) page 1385.

16. The learned Advocate for the respondent further argued that this is the admitted position that the entire amount in question has been fully realised by the complainant by way of filing civil suit and as such present proceeding should not be allowed to be continued. In this respect he has relied upon the decisions reported in 2002 (2) CHN page 407; 2004 (4) CHN page 291; 2006 Cr LR page 616; 2005 (1) ACJ page 299 (SC); 1998 Cr LJ 1690. By citing those decisions, the learned Advocate for the respondent/ accused argued that since the payment has already been made there cannot be any justification for proceeding further with the matter and as such he prayed for passing appropriate order in this respect.

17. The learned Advocate for the accused/respondent lastly argued that admittedly the complainant is a proprietary firm and the proprietary concern has got no entity in the eye of law and as such only the said proprietor can file the petition or complaint under Section 142(a) of the N.I. Act. According to him, authorised representative of the said proprietor cannot file the petition of complaint as because he is not the payee or the person concerned who subsequently came in charge of the cheques in question. As such, said representative cannot file the petition or complaint. He further argued that even if the petition or complaint can be filed by the authorised representative, then it must bear the signatvire of the proprietor whose examination under Section 200, Cr. P.C. is a must, Since all these, things have not been complied with, so the learned Advocate for the respondent argued that the petition or complaint is not maintainable and the learned Sessions Judge was perfectly justified in making observation to that effect and consequently acquitting the accused from the case. In this respect he has cited decisions reported in 2003 (2) DCR page 9; 2003 (2) DCR page 607; 2004 (2) Bankman page 380; 2005 (2) Bankman page 412; 2006 (1) Cr LJ page 314; 2006 (1) DCR page 229; 2005 (2) DCR page 439; 1999 Cal Cr LR (SC) page 160 : 1999 Cri LJ 2092; 1996 Cr LJ page 3099 (Guj) and 1999 (1) BC page 313.

18. I have considered the submissions of the learned Advocates for both the sides as well as perused the decisions as cited by them in support of their respective contention. First of all, it may be pointed out here that the present appeal has been preferred against the order of acquittal. Learned Advocate for the respondent argued that normally High Court should not interfere into the decision of acquittal, as passed by the Court below when it was based on the materials available in the record. According to him, as the learned Sessions Judge acquitted the accused after thoroughly discussing the materials on record, so it will not be proper on the part of this Court to interfere in the said order of the learned Sessions Judge. As against this, the learned Advocate for the appellant argued that the power of the High Court in an appeal against the acquittal are not different from its powers hearing an appeal against an order of conviction. According to him, High Court can always interfere into the order of acquittal, if it appears to the High Court that the said order of acquittal was not passed after proper appreciation of the evidence on record. In this respect he has cited decision Lakhan Kalu

Nikalji v. State of Maharashtra wherein the Hon’ble Supreme Court observed “The powers of the High Court in an appeal against the acquittal are not different from the powers of the same Court in hearing an appeal against a conviction. The High Court in dealing with such an appeal can go into all questions of fact and law and reach its own conclusions on evidence…” in the decision , Sitaram Durga Prasad v. State of Madhya Pradesh it has also been held that the High Court has full power to review at large the evidence, on which the order of acquittal was founded and to reach the conclusion that upon the evidence the order of acquittal should be reversed. So, it appears that while hearing an appeal, against an order of acquittal, this Court can always look into the materials, as were there before the Court below and to come to a conclusion as to whether the learned Court below was justified in passing the order of acquittal. Keeping this legal principle in mind, let us now consider the judgment, as passed by the learned Sessions Judge.

19. Learned Advocate for the appellant argued that the learned Sessions Judge was not at all justified in holding that the notice was not properly served upon the accused/ respondents. It appears that the learned Judge in his judgment observed that the complainant failed to prove that notice was properly served upon the accused/respondent. According to the learned Advocate for the respondent, onus lies on the complainant to prove that notice was served upon the accused/respondent particularly when the accused clearly denied such service. It appears that the complainant in order to discharge this onus adduced evidence. The P.W. 3 Prasanta Kumar Basu in his evidence claimed that the notice was duly received on behalf of the accused by one of his employee who was competent to receive the same. In addition to this, the learned Advocate for the appellant drew my attention to the evidence of D. W. 1 Narendra Kumar Anchalia the accused himself. In his evidence the accused admitted “My address given in A/D card i.e. exhibit 6 is correct”. At the same time he further admitted that he did not give any instruction to the postal authority that registered letter addressed to him should not be handed over to his employees. If we look into the evidence of D.W.2, the Assistant Superintendent of Post Office, then it will appear that he admitted that a registered letter could be delivered to the authorized representative of the addressee either on verbal or by written instruction. The evidence of the D. W. 3 in this respect is most important. He is the peon who actually delivered the said letter. In his evidence-in-chief this witness claimed that the letter was handed over to Mr. Subramouium popularly Known as Swamiji of the film industry. In cross examination this witness admitted “I know Mr. Subramonium alias Swami who is working in this office of accused Narendra Kumar Anchalia at the relevant time. On several occasions I delivered registered letters of Mr. Narendra Kumar Anchalia to his employee Mr. Subramonium and there was no complaint made before the Post Office for such delivery of registered letter of Mr. Narendra Kumar Anchalia to Mr. Subramonium”.

20. So it is clear from the evidence of this D. W. 3 that Mr. Subramonium was the authorized person of the accused to receive registered letter on his behalf. As such, I think that there is nothing wrong on the part of the postal peon to deliver the said letter of the accused to Mr. Subramonium. It is also palpably clear that the address as mentioned in the body of the said registered letter is correct. As such, it appears that since the address of the accused was correctly mentioned in the envelope and since it was duly received by his authorised representative, so we can safely presume that the notice was duly received by the accused. Under such circumstance, I am unable to agree with the finding of the learned Trial Judge that notice was not properly served upon the accused/respondent.

21. Learned Advocate for the respondent further pointed out that the notice, as given under the N.I. Act by the complainant to the accused is bad in the eye of law and on the basis of the said notice the proceeding in question cannot continue. It appears that the learned Judge was also of the opinion that the notice was defective and as such on the basis of the said notice, the proceeding cannot continue. Learned Judge was of the view that since it was mentioned in the said notice that the complainant would claim interest from the accused in respect of the unpaid amount, so the notice should be held to be defective. In this respect, the learned Judge placed reliance upon a decision. But in the decision reported in 1998 C. Cr. L. R. (Cal) page 106, Ajoy Churiwala v. Suman Sethi and Ors., the learned single Judge of this Court was of the opinion that even if the notice includes claim for incidental charges besides the amount of bounced cheque and if the cheque amount is specifically shown then the notice cannot be said to be bad. The learned single Judge considered the decision of Gopa Devi’s case as reported in 1956 C. Cr L. R. (Cal) page 40 : 1995 Cri LJ 3412 while coining to such a conclusion. It appears that the order of the learned single Judge of this Court was challenged before the Hon’ble Supreme Court as reported in 2000 C. Cr. L. R. (SC) page 257 : 2000 Cri LJ 1391, Suman Sethi v. Ajoy Kumar Churiwala and Anr. wherein the view, as taken by the learned single Judge of this Court, has been affirmed. As such, in view of such ratio, as decided by this Court as well as by the Hon’ble Supreme Court, it cannot be said that as in the notice, besides the cheque amount, the complainant mentioned about the interest that would be charged against the accused, same cannot be held to be bad in the eye of law. In fact, at the time of argument, learned Advocate for the respondent frankly and fairly conceded this legal position. So, I have got no hesitation to hold that the learned Judge was not at all justified in holding that the notice was bad in the eye of law and as such the proceeding cannot proceed.

22. Learned Advocate for the accused/ respondent further argued that in this case the plea of the accused under Section 251, Cr.P.C. was not properly recorded and as such the proceeding is liable to be set aside on that ground also. In support of his contention he drew my attention that the detail of the substance of accusation was not read over and explained to the accused by the Court. As such, according to him, in view of such defect, the proceeding is liable to be set aside and the accused is entitled to be acquitted on that ground too. In order to substantiate his claim in this respect the learned Advocate for the appellant cited decisions reported in 1962 (1) Cri LJ page 429, State of Kerala v. Raman Nair 2000 C. Cr. L. R. (Cal) page 460, Dilip Kumar Das and Anr. v. The State of West Bengal, 2001 C. Cr. L. R. (Cal) page 32, Natendra Nath Giri v. State of West Bengal, 2003 C. Cr. L. R. (Cal) page 267, Ashok Kapri v. Iswar Chandra Jana and Anr., 2004 (1) E. Cr. N. page 1385,Om Prakash Modi v. State. It appears from all those decisions that the learned single Judges of different High Courts were of the view that unless substance of accusation, disclosing the vital materials against the accused, are explained to him, as provided under Section 251, Cr. P.C. then it must be held that the accused was prejudiced in properly defending his case. Learned Advocate for the respondent/accused argued that in this case there is no doubt that the material allegations were not read over and explained to the accused under Section 251, Cr. P.C. The provisions of Section 251, Cr. P.C. was only complied with mechanically and as such, he submits that on this ground also the accused is entitled to be acquitted as he has been prejudiced in properly defending his case.

22-A. As against this learned Advocate for the appellant/complainant relied upon the decisions reported in AIR 1949 Pat page 323, Rajeswar Prasad Singh v. Province of Bihar, AIR 1956 Assam page 127, Abdul Kadir v. Gafur Sheikh and Ors. It appears that both these decisions were delivered by the Division Bench. So far as the decisions relied upon by the learned Advocate for the accused/respondent it appears that all those decisions were delivered by the learned single Judges. As such, there cannot be any doubt that we should place more reliance upon the ratio as decided by the Division Bench. From those decisions it is clear that simply because the substance of accusation was not properly read over and explained to the accused that cannot be a ground for his acquittal unless it is shown that it caused prejudice to the accused in defending the case. The Division Benches are of the clear view that this defect in the examination of the accused under Section 251, Cr. P.C. is a mere irregularity and can be cured. The main thing that is to be considered, is, whether there was any prejudice caused to the accused for this defect in complying with the provisions of Section 251, Cr. P.C. So far as the present case is concerned, it appears that the accused contested the case and cross-examined the complainant’s witnesses in detail. That apart the accused also adduced evidence of himself as well as the evidence of other witnesses on his behalf. As such, under no stretch of imagination, it can be said that the accused was prejudiced in defending his case property as the substance of accusation was not read over and explained to him properly. Considering the legal aspect, as discussed above, I am of opinion that the accused cannot be acquitted on this ground, as claimed by the learned Advocate for the respondent. So this contention of the learned Advocate for the respondent is rejected.

23. Learned Advocate for the accused/ respondent argued that the amount in question for which the cheques were bounced, have already been received by the complainant along with interest and there is nothing outstanding. This position was also admitted by the learned Advocate for the appellant/complainant and he submitted that the amount in question has already been realised by the complainant, by filing a Civil Suit, along with interest. So the fact remains that the amount in question has already been received by the complainant and there is nothing outstanding. As such, learned Advocate for the accused/respondent submitted that since the amount has already been paid, as full and final settlement, then this fact should be taken into consideration by the Court and there was no necessity for the complainant to proceed with the proceeding under Section 138 of the N.I. Act against the accused/respondent. According to him, under such circumstances, it will be fit and proper for the Court to drop the proceeding against the accused and to acquit him from the charge. In this respect, the learned Advocate for the accused/respondent cited decisions reported in 2002 (2) CHN page 407, Jasoda Glass & Silicate and Ors. v. Regional Provident Fund Commissioner and Ors., 2004 (4) CHN page 291, Howrah Motor Company Limited and Ors. v. Samir Kumar Das, (2006) 1 C. Cr. L. R. (Cal) 616, Air Transport Corporation and Ors. v. The State of West Bengal and Anr. 2005 (1) ACJ page 299, Mohd. Shamim v. Smt. Nahid Begum and 1998 Cri LJ page 1690, Provident Fund Inspector, Guntur v. Chirala Co-operative Spinning Mills Ltd. and Ors. It appears that all those decisions except the decision reported in 2005 (1) ACJ page 299 (supra) are based in connection with violations of Provident Fund Act. There is gulf of difference in between the said Act and the provisions of N.I. Act. The decision reported in 2005 (1) ACJ 299 is in respect of a case under Section 498-A of the Indian Penal Code and the Hon’ble Supreme Court was of the opinion that when the husband and wife settled the matter amicably in between themselves so there was no justification for allowing the proceeding to continue and considering that aspect the Hon’ble Supreme Court was pleased to set aside criminal proceeding. But so far as the present case is concerned, it appears that the proceeding was started against the accused for issuing a cheque knowing it fully well that it would not be honoured. In order to prevent such act of unscrupulous persons, special provisions have been made in the N.I. Act. The provisions of the N.I. Act cannot under any circumstances be equated with the provisions of the Provident Fund Act where the main intention was to recover and realise the Provident Fund amount which was due to the workers. The realisation of the amount in question, in my opinion, can only be a mitigating circumstance for imposing penalty upon the concerned accused. As soon as it has been proved that the offence has been committed, then the accused person is certainly liable to be punished for the violation of the same. It will be improper to hold that if the amount is paid, then the accused concern is liable to be acquitted although the payment was made belatedly. So far as the present case is concerned, it appears that the accused did not pay the amount voluntarily. It is the admitted position that after obtaining decree from the Civil Court, the complainant could realise that amount along with interest. As such, the accused cannot under this circumstance, claim benefit of the decisions, as cited on his behalf. Under such circumstances, I reject this contention of the learned Advocate for the accused/respondent. To my mind, the accused is certainly liable to be punished if the complainant is in a position to prove that the proceeding against the accused is maintainable in the eye of law and that the accused violated the provisions of Section 138 of the N.I. Act and there by liable to be punished.

24. Let us now see as to whether from the materials on record it can be said that the proceeding, in question, as filed against the accused by the complainant is maintainable in the eye of law or not.

25. The learned Advocate for the respondent vehemently argued that this petition of complaint was not maintainable as the Proprietor himself did not sign the petition of complaint. Nor he came forward before the Court to give deposition in support of his claim. According to him, the authorisation, as allegedly given by the Proprietor, will not cure this defect and at least permission of the Court is required to be obtained by the Proprietor in proceeding with the petition or complaint through its authorised agent. It is the admitted position that the cheque was issued in the name of a Proprietorship Firm. It appears from the petition or complaint that it was filed on behalf of the Proprietor by his agent who has allegedly been authorised by the said Proprietor. Nowhere it appears that the permission of the Court was obtained by the Proprietor in this respect. It appears from the Full Bench decision of Andhra Pradesh High Court 2006 (1) DCR page 229 (supra) it has been held “we hold that the power of attorney of a payee or a holder in due course of a dishonoured cheque can file a complaint for an offence under Section 138 of the Act after obtaining permission from the Court, either before or after filing of the complaint”. In the decision reported in 2005 (2) DCR page 439 (supra) learned single Judge of the Madhya Pradesh High Court actually made survey of all the earlier decisions in this respect and thereafter came to the conclusion that the petition of complaint could be presented by the G. P. A. on behalf of the payee provided the complaint is signed by the payee himself and an affidavit in proof of his execution of the G. P. A. is filed and other formalities are observed. But so far as the present case is concerned, I have already pointed out that it was instituted by one Prasanta Kumar Basu describing himself as the authorised representative of M/s. L. M. Enterprises. There cannot be any doubt that this authorised agent is neither the payee nor the holder of the cheque in due course. So far as the present case is concerned, it appears that only a letter of authority had been produced by the person concern. There is nothing on record that the Proprietor executed a General Power of Attorney in favour of that person and there is also no such proof that the Proprietor gave declaration before the Court to that effect or that permission of the Court was obtained for filing the petition of complaint through the authorised agent.

26. To counter this position, the learned Advocate for the appellant cited decision reported in 1993 C, Cr. L. R. (Cal) page 225 (supra) wherein the learned single Judge of this Court held that authorised agent can file the petition of complaint. But in the said decision it has been observed by the learned single Judge that the authorised person is entitled to file the case on behalf of another person provided he is otherwise competent to file the petition of complaint. I have already pointed out that the Full Bench of the Andhra Pradesh High Court, clearly spelt out the conditions which are to be followed while permitting any such person to file the petition of complaint. There is no doubt that those conditions have not been fulfilled in filing the present petition of complaint. As such this decision, as relied upon by the appellant is of no help to him.

27. Learned advocate for the appellant further relied upon the decisions (supra) and

(supra) in support of his contention that an authorised agent can file a petition of complaint on behalf of the company. It appears that in those cases complainants were the companies, who were undoubtedly juristic persons. Hon’ble Supreme Court held that there must be a person to represent such juristic person in the Court of law and as such a person duly authorised by the company can file the petition of complaint on behalf of the said company. But so far as the present case is concerned, admittedly the complainant is the Proprietor of a Firm and so he can very well come forward to the Court for filing the petition of complaint. So, these two decisions are of no help to the complainant/appellant and I think that the Full Bench decision of the Andhra Pradesh High Court should be followed in deciding this question.

Learned Advocate for the appellant further argued by pointing out decision reported in 2005 Cri LJ page 3572 (supra) and contended that the authorised person of the complainant can file the petition Or complaint. I have perused the said decision. It appears that there it has been clearly mentioned that the complaint can be presented by a General Power of Attorney holder, on behalf of the payee provided certain conditions are observed. It may be pointed out here that the person concerned, who filed the petition of complaint, is not the General Power of Attorney holder of the payee. Nor it can be said that he is the holder of the cheque in due course. As such this decision, in my considered opinion, cannot under any circumstances, be of any help to the cause of the complainant/appellant.

28. Therefore, from my above discussion, I am of opinion that the learned Sessions Judge was perfectly justified in holding that this Prasanta Kumar Basu, the alleged authorised agent of the Proprietor, had no authority to file the petition of complaint against the accused on behalf of the Proprietor. The petition of complaint, as filed before the learned Magistrate, under such circumstances must be held to be defective and the entire proceeding is liable to be set aside. In this respect, I fully agree with the views of the learned Sessions Judge and I find no scope for interference into the said finding.

29. Therefore, from my above discussion, I am of opinion that the learned Sessions Judge was perfectly justified in holding that the petition of complaint, as filed against the accused, is not at all maintainable in the eye of law and as such the proceeding is liable to be set aside. Since it appears that the proceeding is not maintainable, so the accused cannot be held guilty for the offence charged with and he is entitled to be acquitted. The appeal in question, under such circumstances, is liable to be dismissed, in view of my discussion made above.

30. In the result, the appeal and the same is dismissed on contest. The judgment dated 31-1-2001 passed by the learned Sessions Judge, 8th Bench, City Sessions Court in Criminal Appeal No. 21 of 1999 is affirmed.

31. Send a copy of this judgment along with the L. C. R. to the Court below at once for information and taking necessary action.

32. Xerox certified copy, if applied, may be handed over to the parties on urgent basis.

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