N I Judgments

Section 77 of the NI Act deals with the liability of a Banker for negligently dealing with the Bill presented for payment. In Indian Overseas Bank vs. Industrial Chain Concern, 2010 (1) NIJ 147 (SC)[NOC], it was held that where a person presents a cheque for collection with his banker such bank acts as an agent or conduit pipe to receive payment of the cheque from the banker on whom they are drawn and to hold the proceeds at the disposal of its customer. It is the action of the bank as a collecting agent or a conduit pipe to receive the payment of the cheques that has to be adjusted in the light of the case under consideration. The conduct of the bank as noted above does not allow an inference to be drawn that it has acted negligently. It has taken due and reasonable case for the purpose of collecting the proceeds. It has no control over the postal authorities.

In Shree Shankar Saw Mill (P) Ltd. vs. United Bank of India, 2018 (1) NIJ 226 (Cal), the High Court relied on judgment in Branch Manager, Federal Bank Ltd. vs. N.S. Sabastian, 2009 (1) NIJ 142 (SC). The Supreme Court has considered a scenario  where the cheques were lost in a transit and has held that, the bank which had acted as the collecting bank was not liable for negligence.

No, the bare denial of the passing of the consideration apparently does not appear to be any defence.

Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts & circumstances upon consideration of which the Court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. The burden upon defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidences led in the case including that of the plaintiff as well.

[Bharat Barrel & Drums Manufacturing Co. vs. Amin Chand, 

(1993) 3 SCC 35

 referred in Sanjay Arora vs. Monika Singh

, 2018 (1) NIJ 109 (Del)]

In M/s. M.M.T.C. Ltd. & Anr. vs. M/s. Medchl Chemicals & Pharma (P) Ltd. & Anr., (2002) 1 SCC 234 = 2009 (1) NIJ 76 (SC)[NOC], in context of stop payment instructions, the Supreme Court explained the mode of rebuttal of the presumption thus :

"19.  The authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the stop-payment? instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused." [Para 16]

No, the contention of accused that as default sentence has been undergone, no compensation is payable cannot be accepted. In Yasah Pal Gupta vs. Stae & Anr., 2018 (1) NIJ603 (Del), that the petitioner accused did not deposit the fine and chose to underwent the sentence in default of deposit of fine of imprisonment for a period of three months. After the petitioner was released, having undergone the sentence; the respondent complainant initiated proceedings seeking to recover the compensation amount by the proceedings & warrant of attachment was challenged by the petitioner, the Revisional Court dismissed the contention of the petitioner. Aggrieved by the rejection petitioner filed this petitioner before the High Court. The High Court held that the Revisional Court has correctly appreciated the law laid down by the Supreme Court in Kumaran vs. State of Kerala, 2017 (1) NIJ 584 (SC) and has correctly rejected the contention passed by the petitioner that as default sentence has been undergone, no compensation is payable. In otherwords, by merely undergoing the default sentence, the accused cannot claim discharge of the liability to pay the compensation amount.

Yes. Where there is implied consent of the complainant available on the record, the offence can be compounded on application of the accused. In Ruchika Sawhney vs. M/s. Landmark Apartment Pvt. Ltd. & Ors., 2018 (1) NIJ 642 (P&H), after the Trial Court summoned the respondent accused, they filed an application for compounding of the offence as they have submtited a demand draft for Rs. 2 lakhs in favour of the appellant complainant the learned counsel for the complainant contended that the complainant is not agreed to compound the offence the Trial Court while passing the order on the application considered that receiving the demand draft agaisnt the cheque amount shows his concern with the payment only, therefore compounding of offence was allowed. The complainant appeal against the order before the High Court . The High Court in para 6 held :–

"After hearing learned counsel for the appellant, I find no merit in the present appeal. Admittedly, the appellant accepted the demand draft of Rs. 2 lacs against the cheque amount and the accused persons have been further directed to deposit 10% of the cheque amount in District Legal Services Authority, therefore, the implied consent of the appellant is apparent on record. Even otherwise, the Hon'ble Supreme Court in 

M/s. Meters and Instruments Private Limited and anr. vs. Kanchan Mehta,

 2017 (2) NIJ 583 (SC) has held that though for the compounding, consent of both the parties is required but in the absence of consent of one party, the Court in the interest of justice on being satisfied that the complainant has been duly compensated, in its discretion, can close the proceedings and discharge the accused."

No, the revisional jurisdiction of High Court is one of supervisory for correcting the miscarriage of justice. Where the lower Appellate Court has upheld the well reasoned & after appreciation of all evidences on record, there is no basis seen for the High Court coming to the conclusion that the accused was successful in creating doubt regarding the existence of debt or liability. The High Court has no jurisdiction to re-appreciate evidence on record and set aside the conviction. (Kishan Rao vs. Shankargouda, 2018 (2) NIJ 1 (SC))

In Preetesh Kumar vs. the State of Telanagana, 2017 (2) NIJ 807 (AP) the question was put before the High Court The contention raised by the accused that the memorandum of understanding which is sought to be marked by the complainant is inadmissible in evidence, which is not only unstamped but also it is unregistered. However, the learned Magistrate Under Section 33 of Evidence Stamp Act held that the document cannot be impounded, Therefore, the matter was before the High Court. It was observed that:-

"(10) Sub-section (d) of Section 35 is also an exception to receipt of instrument not duly stamped in evidence. Section 35 mandates that no instrument chargeable with duty shall be admitted in evidence for any purpose of any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped. The Special Magistrate is a person under authority to receive evidence in a Calendar Case, Section 35 undoubtedly applicable to the personauthorized to record evidence in any proceedings but clauses (a) to (e) of proviso are the exceptions in Jagannath Rahatgir vs. Pandit Deokinandan, 29 Ind. Cas. 6712. The proviso (d) is relevant for the purpose ofdeciding the present issue and it reads as follows:

"35(d) nothing herein contained shall prevent the admission ofany instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (Chapters 9 and 10 of Cr.P.C., 1973);

Proviso (d) to Section 35 permits the Magistrate to receive any document and admit any instrument in evidence in any proceedings in criminal Court but create an interdict on the power of the Magistrate to receive such insufficiently stamped document in any proceedings under Chapters IX and X of the Code of CriminalProcedure, 1973 (for short Cr.P.C.). Chapter-IX of Cr.P.C. dealswith order for maintenance of the wife, children and parents.Chapter X of Cr.P.C. deals with maintenance of public order and tranquility covering Sections 125 to 128 and 129 to 148 Cr.P.C. respectively. Therefore, in the proceedings covered by these Chapters, the Magistrate is incompetent to receive insufficiently stamped document but in other cases the Magistrate is entitled to admit insufficient stamp or unstamped documents in evidence inany criminal case pending before it."           [Para 10]

In identical question regarding admissibility of a document, when an appeal for the offence punishable under Section 138 ofthe Act came up before Madhya Pradesh High Court in 

Ramesh Giri vs. Dheeraj Gobhuj, 

2015 (1) NIJ 14 (MP), the Single Judge of the Court had an occasion to deal with a similar petition and while deciding an applicatio nunder Section 482 Cr.P.C. challenging the order passed by the Magistrate and confirmed by the revisional Court, based on Section 33 of the Indian Stamp Act and sub-section (2)(a) proviso held that proceedings under Section 138 of the Act are summary in nature and the Magistrate declined to impound the document. The same was confirmed by the revisional Court since Section 33(2) proviso(a) does not require impounding the document which has been produced before the Court by the complainant. In those circumstances, the Court found that proceedings under Section 138 of the Act are criminal in nature although offence may be in the nature of civil and the document is admissible and the bar under Sections 33 and 34 would not apply to the proceedings under Section 138 of the Negotiable Instruments cases and confirmed theorder passed by the revisional Court declining to direct the Magistrate to impound the document to levy stamp duty and penalty. [Para 11]

Yes, upon the death of complainant in summon case, court can premit the legal representative to continue with the complaint u/s 138 of NI Act The Supreme Court in the case of 

Shri Balasaheb K. Thackeray (supra) and thereafter, held in Para 15 as under, "In view of what has been discussed above, we are of the view that High Court did not commit any error in allowing the legal heirs of the complainant to prosecute the Criminal Misc. Petition before the High Court. We do not find any error in the order of the High Court. The appeal is dismissed.

So far second argument that before allowing the application, petitioner against whom summons were issued was not heard, is concerned, it is to be noted that till today petitioner has not caused appearance before the court below even though accused was summoned through bailable warrants for 31.7.2012. Therefore, the right course for the petitioner is to appear before the trial court and file an application disputing impleadment of Mahesh Chand Jain as legal representative of Bhagchand Jain. Third argument that application was filed under wrong provisions, has no legs to stand as essence of application is to be seen and not the sections. In case petitioner appears and file an application to this effect, this court has no doubt that the said application shall be decided by the trial court after passing a detailed speaking order taking into consideration Section 256 and 302 Cr.P.C. and enunciation of law, noted above. [Para 9, 10 & 11]–

[Amit Kumar vs. Firm Kapoorchand Bhouchand

, 2018 (2) NIJ 53 (Raj.)]

Once the rebuttal evidence is adduced and accepted by the Court, the burden shift back to the complainant and thereafter, the presumption u/s 118 & 139 of the Act will not come to the complainant's rescue. In Sanjay Yadhavraoji Makode vs. Suhas Prakashji Dhote, 2019 (2) NIJ 90 (Bom) the High Court depicted the case of Kumar Exports (M/s.) vs. M/s. Sharma Carpets, 2009 (1) NIJ 225 (SC).

"20. The accused in a trial underSection 138of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned inSection 114of the Evidence Act to rebut the presumptions arising underSections 118and139of the Act.

21. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118and139of the Act will not again come to the complainant's rescue." [Para 10]

No, the complainant cannot be permitted to present the very same complaint at any later stage, This remedy is only to file afresh complaint In Shivaraju K.R. vs. M.K. Chetangowda, 2019 (2) NIJ 72 (Karn) the question was answered in light of Yogendra Pratap Singh vs. Savitri Pandey & Anr., 2014 (2) NIJ 412 (SC). The Hon`ble Supreme Court has held as under:-

"41. Section 142 of the NI Act prescribes the mode and so also the time within which a complaint for an offence under Section 138 of the NI Act can be filed. A complaint made under Section 138 by the payee or the holder in due course of the cheque has to be in writing and needs to be made within one month from the date on which the cause of action has arisen under clause (c) of the proviso to Section 138. The period of one month under Section 142(b) begins from the date on which the cause of action has arisen under clause (c) of the proviso to Section 138. However, if the complainant satisfies the court that he had sufficient cause for not making a complaint within the prescribed period of one month, a complaint may be taken by the court after the prescribed period. Now, since our answer to Question (i) is in the negative, we observe that the payee or the holder in due course of the cheque may file a fresh complaint within one month from the date of decision in the criminal case and, in that event, delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the NI Act. This direction shall be deemed to be applicable to all such pending cases where the complaint does not proceed further in view of our answer to Question (i). As we have already held that a complaint filed before the expiry of 15 days from the date of receipt of notice issued under clause (c) of the proviso to Section 138 is not maintainable, the complainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the court of sufficient cause. Question (ii) is answered accordingly." [Para 4]

No, Section 142 of NI Act does not provide for filing a complaint by the payee or holder in due course to the police for investigation u/s 156 CrPC. Therefore, no cognizance can be taken by the Court u/s 138 of NI Act on the basis of FIR instituted in the police station. (Hemant Kumar Das. vs. State of Bihar & Anr.2019 (2) 53 (Pat)) In N. Harihara Krishnan vs. J. Thomas 2017 (2) NIJ 438 (SC) the Supreme Court has held that the scheme of CrPC. Section 138 of NI Act creates an offence and prescribes punishment. No procedure for investigation is contemplated. The prosecution is initiated on the basis of complaint made by the payee of cheque before a competent court of jurisdiction.

An HUF, simplification without any activity will not come with in the purview of association of individual in terms of sec. 141 of the NI Act In Dr. G. Ramkrishna Reddy vs. State of Andhra Pradesh, 2019 (2) NIJ 16 (AP) of High Court of Andhra Pradesh it observed that mere combination of individual will not constituted an association of individuals with in the fold of Section 141 of NI Act. According to Hon`ble Apex Court in order to make an association of individuals in terms of Section 141 of NI Act, the said association of Individuals shall fulfill the following two requirements:-

1. The combinations of the individual must be on their own volition.

2. Such a combination of individual must be made with a specific common purpose that is for doing some business or some other legal activity.

HUF is concerned, both the essential requirements are missing. In HUF, the individuals member will form into an association not by their consensus or volition but because of their very birth in a particular HUF. Therefore, the first ingredient as specified above is not fulfilled. Similarly for a HUF there is no common purpose to be carried forward. Each member of the HUF can act in regard to his or her share without any right or application to other owners. Therefore, the Second requirement is also missing in case of HUF to make it an association of individual within the fold of explanation Section 141 of NI Act. It is therefore, true that generally a HUF, since it does not fulfill the two essential requirements will not come in terms of association of individuals in terms of Section 141 of NI Act. It means when a HUF is simply a family unit, and not undertaking any activity like business or other legal functions, the said HUF will not come under the term of association of individuals. However, some times a HUF is engaged in some business or other legal activity. Take an example, a father expires leaving behind to his sons a business activity, the sons, who are the member of HUF may decided to continue said business activity by becoming partners/share holders. Here by birth in HUF, they might have become members and there was no violation. However, they come to a common understanding to continue the family business. In such an event, they will fit into the slot of association of individual in terms of explanation to section 141 of NI Act. Similarly members of a HUF who may not have a business at inception, may commence such activity by an agreement. In such case also the HUF can be called as association of individuals. Thus, in short a HUF simpliciter without any activity will not come under the preview of association of individuals in term of Section 141 of NI Act, However if the HUF carries on a business or other legal activity through its members and in the course of said activity, if a cheque is issued and bounced , certainly, the said HUF will come with in the rigor of Section 141 of NI Act.

Yes, the guidelines issued by Hon`ble Supreme Court in A.C. Narayan vs. State of Maharashtra & Anr. 2015 (1) NIJ 153 (SC) clearly states that the person who has knowledge in respect of the said transaction can lead evidence before the Court.

"15–While holding that there is no serious conflict between the decisions in "M.M.T.C. and Janki Vashdeo Bhojwani", the larger Bench clarified the position and answered the questions framed in the following manner: (A.C. Narayanan case, SCC pp.808-09, para33) 

33.1(i) Filing of complaint petition under Section 138 of the NI Act through power of attorney is perfectly legal and competent.

33.2(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.

33.3(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.

33.4(iv) In the light of Section 145 of the NI 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 NI 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 NI Act. 

33.5(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." [

Sri. Rajaiah vs. Sri. Chowdamma

, 2019 (1) NIJ 453 (Karn)] [Para 10]

No, a non-executive director is, no doubt, a custodian of the governance of the company but he is not involved in the day to day affairs of the business and only monitors the executive activity, therefore, he cannot be prosecuted u/s 138 read u/s 141 of NI Act. In Pooja Ravinder Devidasani vs. State of Maharashtra & Anr. 2015 (1) NIJ 1 (SC) in Para 17 it was observed that :-

There is no dispute that the appellant, who was wife of the Managing Director, was appointed as a  Director of the Company-M/S Elite International Pvt. Ltd. on 1st July, 2004 and had also executed a Letter of Guarantee on 19th January, 2005. The cheques in question were issued during April, 2008 to September, 2008. So far as the dishonor of Cheques is concerned, admittedly the cheques were not signed by the appellant. There is also no dispute that the appellant was not the Managing Director but only a non-executive Director of the Company. Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day-to-day affairs of the running of its business and only monitors the executive activity. To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person shall have been at the helm of affairs of the Company, one who actively looks after the day-to-day activities of the Company and particularly responsible for the conduct of its business. Simply because a person is a Director of a Company, does not make him liable under the N.I. Act. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the N.I. Act. In National Small Industries Corporation (supra) this Court observed :

"Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.

A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141." [Para 17]

Yes, an unregistered partnership firm can bring a complaint u/s 138 of NI Act because proceeding u/s 138 of NI Act are not recovery proceedings. The questions was brought before in Uttam Traders Ranghiri vs. Tule Ram Alias Tule Ram 2019 (1) NIJ 387 (HP). It was considered view of the High Court that criminal prosecution initiated by the complainant against accused is not hit by the Section 69 of the Partnership Act. Reference of Hon`ble Supreme Court in R. Vijayan vs. Baby & Anr. 2012 (1) NIJ 264 (SC) was made that:- 

"17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation under section 357(1)(b) of the Code. Though a complaint under section 138 of the Act is in regard to criminal liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount, (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged under section 138 of the Act, a civil suit is seldom filed to recover the amount of the cheque. This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque, under section 357 (1)(b) of the Code and the provision for compounding the offences under section 138 of the Act. Most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary." [Para 26]

Yes, Society registered under the Society Act can be arraigned as an accused in case of complaint u/s 138 of NI Act because society is essentially an artificial person. Explanation to the section clearly defines "company" means any body corporate and includes a firm or other association of individuals; and further also explains that the "director", in relation to a firm, means a partner in the firm. The aforesaid explanation clearly indicates that the definition of company is not exhaustively defined by the statue but definition of inclusive, which includes any association of individuals which result into the artificial person. Indisputably Shri Jalpari Co-operative Housing Society Limited is flowing from Gujarat Co-operative Society Act, 1961 which is essentially the artificial person and came to be found and constituted by association of person.[Premjibhai Lakhanbhai Chauhan vs. State of Gujarat, 2019 (1) NIJ 313 (Guj)][Para 7]

Where accused invokes the inherent jurisdiction of High Court u/s 482 of CrPC to quash complaint on the basis of non-service of or irregular service of notice, the High Court may refuse to quash the complaint on this sole ground because the question whether the notice as required by NI Act has been served to be decided during the Trial and the complaint cannot be dismissed at the threshold on the purported ground that there was no proper service of the notice or service of notice has not been disclosed in the complaint.

Chintamani Jaiswal vs. State of U.P. & Anr. 2019 (1) NIJ 41 (All)

In Mansa Ram vs. Prathap Ram & Anr. 2019 (1) NIJ 104 (Raj) the High Court held that, Though, Compounding requires consent of both parties, in absence of such consent the Court in the interest of justice, on being satisfied that the complainant has been duly compensated, can inits discretion, close the proceedings and discharge the accused. The supreme Court in a recent judgment M/s. Meters and Instruments Pvt. Ltd. & Anr. vs. Kanchan Mehta, 2017 (2) NIJ 583 (SC) has reiterated the compensatory aspect of remedy to be given priority over the punitive aspect vis-a-vis offence under Section 138 of the N.I. Act. The Court held:-

"18. From the above discussion following aspects emerge:

i) Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on accused in view presumption under Section 139 but the standard of such proof is "preponderance of probabilities". The same has to be normally tried summarily as per provisions of summary trial under the Cr.P.C. but with such variation as may be appropriate to proceedings under Chapter XVII of the Act. Thus read, principle of Section 258 Cr.P.C. will apply and the Court can close the proceedings and discharge the accused on satisfaction that the cheque amount with assessed costs and interest is paid and if there is no reason to proceed with the punitive aspect.

ii) The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.

iii) Though compounding requires consent of both parties, even in absence of such consent, the Court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused.

iv) Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the Court has jurisdiction under Section 357(3) Cr.P.C. to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 Cr.P.C. With this approach, prison sentence of more than one year may not be required in all cases.

v) Since evidence of the complaint can be given on affidavit, subject to the Court summoning the person giving affidavit and examining him and the bank's slip being prima facie evidence of the dishonor of cheque, it is unnecessary for the Magistrate to record any further preliminary evidence. Such affidavit evidence can be read as evidence at all stages of trial or other proceedings. The manner of examination of the person giving affidavit can be as per Section 264 Cr.P.C. The scheme is to follow summary procedure except where exercise of power under second proviso to Section 143 becomes necessary, where sentence of one year may have to be awarded and compensation under Section 357(3) is considered inadequate, having regard to the amount of the cheque, the financial capacity and the conduct of the accused or any other circumstances."[Para 10]

Since the company is a legal entity & function only through its directors and managing director, service of notice on managing director would be sufficient service of notice on the company. In DSC Ltd. vs. Dada Jeetu Buildcon Pvt. Ltd., 2019 (1) NIJ 15 (Del) the High Court observed that "In the present case, subject cheque was issued by the company under the signatures of Mr. M.S. Narula, its Managing Director. The statutory notice is addressed and served on Mr M.S. Narula. Since the company is a legal entity and functioning only through its directors and Managing Director, service of notice on the Managing Director would be sufficient service of notice on the company. There could be no better way of serving a legal entity like a company than by serving a notice on the person who is in charge and in control of the company. The Managing Director is the key person who is in control of the affairs of the company. Statutory notice in the present case has been served on the Managing Director. It cannot lie in the mouth of the company to contend that it was not aware that the cheque issued by the company had dishonoured and that demand under section 138 N.I. Act had been made on the company. Since the company which acts through its Managing Director is aware that its cheque has beendishonoured and the statutory notice has been received, it was obligatory on the company to have complied with the same. Since the company has failed to comply with the statutory notice, it became liable for prosecution under section 138 N.I. Act." [Para 16 & 17]

In Sk. Tamisuddin vs. Joy Joseph Creado & Anr. 2019 (1) NIJ 52 (SC), the question was before the Hon`ble Supreme Court The Hon`ble Court observed in this appeal that the competence of the Legal Heir of a person aggrieved to continue a criminal complaint is not in doubt. In A.C. Narayan vs. State of Maharastra 2015 (1) NIJ 153 (SC) it has been clearly held that a complaint filled by the Power of Attorney would be maintainable in law. If that is so, the initial complaint filed by the appellant on behalf of Sairabee as the complainant would not be invalid in law as held by the High Court in the order under challenge. After the death of Sairabee, the application filed by the appellant was to continue the Criminal Prosecution as the Legal Heir of the deceased Sairbee, the High Court seems to have understood this application to be for continuation of the Criminal prosecution in his capacity as a power of attorney. The High Court therefore ought to have allowed the continuation of proceedings.

Yes, non-registration will not prevent a partnership firm from filing a complaint under Sec. 138 of NI Act. In Sugunan vs. Thulaseedharan & Anr., 2015 (2) NIJ 378 (Ker) in Para 12 the Court observed “further in the decision reported in Abdul Gafoor vs. Abdurahiman, 1999 (2) KLT 634, it has been held that, merely because the complainant/partnership is not registered one, that will not prevent the complainant firm by filing a complaint under Sec. 138 of the Negotiable Instruments Act, in respect of a cheque given by the accused, in discharge of a liability for the amount due to the complainant firm, as it will not affect the criminality of the transaction, that has been committed by the accused and the effect of non-registration of the partnership of a firm under Sec. 69 of the Partnership Act has no application to criminal cases”.

No, merely because amount was given in cash though it was more than 20,000 with not make the transaction illegal one though it may give a cause of action of the Income Tax Authorities for prosecution. In Sugunan vs. Thulaseedharan & Anr., 2015 (2) NIJ 378 (Ker), the counsel for the revision petitioner vehementally argued that, under the Income Tax Act, any amount more than 20,000/- has to be paid only by way of cheque and not by cash and infraction of that provision will make the transaction an illegal one and thereby, it cannot be treated as a legally enforcible debt. (Para 5) the Hon'ble Court observed that “it is true that in the decision reported in Bhaskaran Nair vs. Mohanan, 2009 (2) KLT 897 = 2010 (1) NIJ 75 (Ker)[NOC], a reference has been made regarding the provisions of the Income Tax Act and it is observed that, a loan transaction beyond a sum of Rs. 20,000/- otherwise than by cheque or draft, it has to be noted, is interdicted under Sec. 269(SS) of Income Tax Act, which came into force from 1.4.1984 and any infraction there of liable to be punished under Sec. 217(d) of the above Act. It cannot be treated as a proposition, that any transaction in violation of that provision, will make the transaction itself unenforceable through Court of law. It was only observed in that decision that, that has to be taken into consideration while considering the facts of that case to arrive at a conclusion, as to whether the transaction alleged by the complainant is believable or not. It was a case where the complainant was a partner of a money lending firm having money lending licence and doing business in money lending, who is expected to do transaction in accordance with law. Further the evidence of the complainant in that case was that, this amount was not shown in the account of the firm and it was not mentioned in the Income Tax return of the firm and he had only informed about the same to his son alone, coupled with the fact that, such a huge amount was paid by cash/by a partner of the firm, when a loan was taken was viewed by this Court, as a suspicious one to disbelieve the case of the complainant. So that cannot be taken as a proposition laid down that, any transaction by a hand loan given by ordinary persons, will make it an unenforceable one and any cheque given in discharge of such liability cannot be treated as a cheque issued in discharge of a legally enforceable debt, so as to maintain an action under Sec. 138 of the Act. Further any violation of a particular Act, which may lead to a penal offence in that Act, will not affect the transaction as such illegal, though it may give a cause of action for that department, to initiate action, against the person, who violated the provisions of that Act.” (Para 11)

In view of provisions of Sec. 34 of CPC, Trial Court cannot allow interest more than 6% p.a. In Heera & Anr. vs. Mangilal, 2015 (2) NIJ 168 (Raj) the Hon'ble Justice Arun Bhansali viewed that the award of interest by the Trial Court @ 2% per month in highly excessive & looking to the nature of translations cannot be sustained. Moreover, Sec. 34 of CPC provisions for grant of pendent lite & future interest at the rate not exceeding 6% p.a. on the principal sum, the proviso to Sec. 34 CPC provides for higher interest in case of a liability arising out of a commercial transaction. Whereas in the present case, the transaction between the plaintiff and the defendants is not a nature of commercial transaction as the plaintiff is not a money lender and has apparently advanced the sum as a `one off' transaction; the principal sum is admittedly Rs. 80,000/-, therefore, in view of the provisions of Sec. 34 CPC the Trial Court could not have awarded interest more than 6% per annum on the principal sum of Rs. 80,000/- from the date of filing the suit till passing of the decree and thereafter till actual payment. (Para 14)

No provision of Sec. 138 of NI Act are not applicable to pay orders. In Omniplast Pvt. Ltd. vs. Standard Chartered Bank & Ors., 2015 (2) NIJ 1 (SC),in this case the appellant referred the judgment from by Apex Court in Punjab & Sind Bank vs. Vinkar Sahakari Bank Ltd. & Ors., 2009 (1) NIJ 63 (SC)[NOC] and contended that a pay order is nonetheless a cheque satisfying the definition of cheque given under Sec. 6 of the NI At, therefore a complaint under Sec. 138 of NI At is maintainable. However, the Apex Court observed that when we consider the above submissions and the development that had taken place after the passing of the order of the learned Magistrate dated 1.11.2003, at the very outset, we find that the appellant cannot proceed against respondent No. 1 under any circumstance as regards the complaint preferred before the learned Trial Judge. Once respondent No. 1 stood excluded to be dealt with, we fails to see as to how the complaint could be maintained as against respondent No. 2, who was only a Branch Manager of respondent No. 1/Bank. Leaving it aside for a while, when we refer to the decision relied upon by learned counsel for the appellant it is stated therein that a pay order is nonetheless a `cheque' having regard to the definition of `cheque' under Sec. 6 read along with definition of a `Bill of Exchange' under Sec. 5 of the Negotiable Instruments Act. However, when we read the said judgment in detail, we were not able to discern any definite principle laid down therein as to how far Sec. 138 of the Negotiable Instruments Act can be applied with reference to a `Bill of Exchange' as against `cheque'. Sec. 138 has been set out in detail by making specific reference to the `drawer' of the `cheque' by a person on an `account' maintained by him for payment of any amount of money from out of `that account' for the discharge of any debt or other liability because of non-availability of that amount of money standing to the credit of `that account' was insufficient or it exceeded the amount arranged to be paid from `that account' by way of an agreement made with the Bank. Having regard to such specific prescriptions set out in Sec. 138 referring to `the person' who issued the `cheque' again referable to `an account' of that person so on and so forth, we have our own doubts as to how far the said decision rendered in respect of pay order issued can be applied to the facts of this case. (Para 6)

Yes. In Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited, 2016 (2) NIJ (SC), Hon'ble Supreme Court has clarified the position regarding security cheque given under loan agreement. The appellant accused approached the Hon'ble High Court to seek quashing of the complaints contending that the cheque were given by way of security as mentioned in the loan agreement and on date of the cheque issued, there was no debt or liability outstanding. The High Court did not accept the contention & held that when the post dated cheques were issued, the loan had been sanctioned which fall in the first category. That is, they were those cheques which were issued for a debt in present but payable in future. Hence, there is no reason to quash the complaint. Aggrieved appellant before the Hon'ble Supreme Court repeated the contention, but, however, the Apex Court distinguishing the judgment in Indus Airways Private Limited vs. Magnum Aviation Private Limited , 2014 (2) NIJ 114 (SC),—and held that :— “Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract under Section 138, which arises on account of dishonour of cheque issued was not by itself at par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of cheque issued for discharge of later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque there was a debt/liability in present in terms of the loan agreement, as against the case of Indus Airways (supra) where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan installment which had fallen due though such deposit of cheques towards repayment of installments was also described as security in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque.” (Para 8) “Thus, the question has to be answered in favour of the respondent and against the appellant. Dishonour of cheque in the present case being for discharge of existing liability is covered by Section 138 of the Act, as rightly held by the High Court. Accordingly, we do not find any merit in this appeal and the same is dismissed. Since we have only gone into the question whether on admitted facts, case for quashing has not been made out, the appellant will be at liberty to contest the matter in trial court in accordance with law.” (Para 12)

No minimum punishment is prescribed for the offence punishable under Sec. 138 of NI Act. In Vinod Rakhan vs. State of M.P. & Anr., 2016 (1) NIJ 259 (SC), the Hon'ble Supreme Court while disposing an appeal against conviction & sentence, held in para 15— “Before proceeding further we would note that no minimum punishment is prescribed for the offence punishable under Sec. 138 of the NI Act. Therefore, in view of the submissions so made by learned counsel for the appellant, we are of the considered opinion that the ends of justice will be met if we modify the sentence to the period already undergone. Accordingly, while confirming the conviction of the appellant, we modify the sentence to the period undergone”.

No, before dismissing the complaint in default the diligence of the complainant is a pivotal fact to be considered by the Court. In Tej Gurung vs. Kailash Chettri & Anr., 2016 (1) NIJ 194 (Sikkim), the Hon'ble High Court observed & held that “the object of the provisions of the CrPC is that the Court should take serious notice of the absence of the person who approaches the Court to set the law in a motion. But at the same time, the conduct of the complainant and his seriousness in pursuing the matter is to be considered, in other words, the diligence of the complaint is a pivotal fact to be considered by the Court. The Magistrate is not bound to dismiss a complaint for non-appearance of the complainant and he has to adopt one or the other course open to him, as provided under Sec. 256 of the CrPC and pass an appropriate order. In other words, he has to exercise his discretion judiciously. In the impugned order, I am of the considered view that it was unduly harsh on the part of the Magistrate to have dismissed the complaint in default, when not only was the accused absent, but the proclamation issued against him under Sec. 82 of the CrPC had also not been returned and the date was not fixed for hearing. The appropriate order for the Learned Magistrate would have been to reissue notice to the complainant and thereafter, either awaited the return of the unreturned Proclamation under Sec. 82, CrPC against the accused or to reissue the proclamation afresh, giving not less than 30 days' time, as required under the said provision”. (Para 19 & 20). The Hon'ble Apex Court has observed on the same matter in Mohd. Azeem vs. A. Venkatesh & Ors., 2002 (7) SCC 726 “ . . .that the petitioner was prosecuting the complaint diligently and had been attending the Court of Magistrate on all dates, excepting one, because according to him he wrongly noted the date for hearing. Due to his absence on one day fixed for trial, the Magistrate dismissed his complaint and acquitted the accused. Aggrieved by the order, an appeal was filed before the High Court, which upheld the decision of the Learned Magistrate. The Apex Court was of the opinion that the learned Magistrate and the High Court had adopted a very strict and unjust attitude resulting in failure of justice. That, the learned Magistrate committed an error in acquitting the accused only for absence of the complainant on one day and refusing to restore the complaint, when sufficient cause for the absence was shown by the complainant”. (para 15)

According to proviso to Sec. 142(b)-` . . ..such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to Sec. 138 : Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period. Therefore, when the Court is satisfied that there were uncontrolled reasonable causes which deprived him from filing the complaint in time, it may condone the delay. However, it is not mechanically grant. Where petitioner complainant suffers from lack of bonafides Court is not inclined to take a lenient & liberal approach. The conduct, behaviour & attitude of a litigant pertaining to his inaction or negligence or same of the attendant facts has to be taken into account before granting condonation of delay. (K. Ganesh vs. C. Arasukumar , 2016 (2) NIJ 470 (Mad)). Supreme Court in H. Dohib Construction Company Private Limited vs. Nahar Export Ltd. & Anr., reported in 2015 (1) SCC at page 680 and at special page 682 whereby & whereunder it is observed & held as under : “Courts are required to weigh the scale of balance of justice in respect of both the parties and the same principle cannot be given a go-by under the guise of liberal approach even it it pertains to refiling. The filing of an application for condoning the delay of 1727 days in the matter of refiling without disclosing reasons, much less satisfactory reasons only results in the respondents not deserving any indulgence by the court in the matter of condonation of delay. The respondents had filed the suit for specific performance and when the trial court found that the claim for specific performance based on the agreement was correct but exercised its discretion not to grant the relief for specific performance but grant only a payment of damages and the respondents were really keen to get the decree for specific performance for filing the appeals, they should have shown utmost diligence and come forward with justifiable reasons when an enormous delay of five years was involved in getting its appeals registered. Thus there is total lack of bona fides in its approach and the impugned order of the High Court in having condoned the delay in filing as well as refiling, of 9 days and 1727 days respectively, in a casual manner without giving any reason, much less acceptable reasons, cannot therefore be sustained”. (para 11)

Yes, an application under Sec. 147 of NI Act has to be filed for compounding of the offence. If there is no application under Sec. 147 of the Act, application by accused for compounding of offence is nothing but abuse of process. (P. Sridevi vs. State of Telangana & Ors., 2016 (1) NIJ 333 (AP), the High Court held as under “it is not even the case of the petitioner to say that the de facto complainant is ready to compound on receiving the cheque amount to accept pursuant to that expression to close the appeal proceedings by compounding. If there is no application under Sec. 147 of NI Act, the application Criminal P.M.P. No. 243 of 2014 filed is nothing but abuse of process. The learned Sessions Judge instead of dismissing by imposing costs asked the learned Counsel for appellant to submit arguments for the appeal itself be decided, which is now impugned. In fact needless to repeat that the petition is nothing but abuse of process, thereby it is liable to be dismissed at the threshold. Hence the appeal needs to be taken up for disposal by the learned Judge.  It is needless to say the principal laid down by the Apex Court in Bani Singh vs. State of Uttar Pradesh, AIR 1996 SC 2439, referring to Secs. 386 and 390, CrPC, the lower Appellate Court is directed to decide the appeal on merits after hearing the arguments if parties/Counsel appear and submit, else by taken as heard on own merits. It is further directed to dispose of the appeal as expeditiously as possible being the appeal of the year, 2012.”. (Para 1 & 2)

No, A complaint cannot be entertained against the drawer of the cheque before expiry of 15 days from the date of receipt of notice under Sec. 138(c) because the drawer cannot be said to have committed any offence till than. In Pawan Kumar Mishra vs. State of U.P., 2016 (1) NIJ 344 (All), the Hon'ble High Court held “thus the position, which now emerges is that a complaint cannot be entertained against the drawer of the cheque before expiry of 15 days from the date of the receipt of notice under Section 138(c) of the Act because the drawer/ accused cannot be said to have committed any offence till then, Tapadia (supra) was expressly overruled and it further held that if a complaint is being dismissed as premature the payee or the holder in due course of the cheque is at liberty to file a fresh complaint within one month from the date of decision in criminal case and the delay shall be deemed to have been condoned under Section 142(b) of the Act. The Apex Court further made it clear that the complainant cannot be permitted to present the same complaint at a later stage and that a remedy is to file a fresh complaint”. (Para 10) Before holding above, the Hon'ble High Court mentioned observations of Hon'ble Supreme Court (Para 9) “36. Can an offence Under Section 138 of the NI Act be said to have been committed when the period provided in Clause (c) of the proviso has not expired? Section 2(d) of the Code defines `complaint'. According to this definition, complaint means any allegation made orally or in writing to a Magistrate with a view to taking his action against a person who has committed an offence. Commission of an offence is a sine qua non for filing a complaint and for taking cognizance of such offence. A bare reading of the provision contained in Clause (c) of the proviso makes it clear that no complaint can be filed for an offence Under Section 138 of the NI Act unless the period of 15 days has elapsed. Any complaint before the expiry of 15 days from the date on which the notice has been served on the drawer/accused is no complaint at all in the eye of law. It is not the question of prematurity of the complaint where it is filed before expiry of 15 days from the date on which notice has been served on him, it is no complaint at all under law. As a matter of fact, Section 142 of the NI Act, inter alia, creates a legal bar on the Court from taking cognizance of an offence Under Section 138 except upon a written complaint. Since a complaint filed Under Section 138 of the NI Act before the expiry of 15 days from the date on which the notice has been served on the drawer/accused is no complaint in the eye of law, obviously, no cognizance of an offence can be taken on the basis of such complaint. Merely because at the time of taking cognizance by the Court, the period of 15 days has expired from the date on which notice has been served on the drawer/accused, the Court is not clothed with the jurisdiction to take cognizance of an offence Under Section 138 on a complaint filed before the expiry of 15 days from the date of receipt of notice by the drawer of the cheque.”

In case of issuance of cheque from the joint account, a joint account holder cannot be prosecuted unless the cheque has been signed by both joint holder. A very interesting arguments were observe in Manjula Shetty (Dr.) vs. Dr. C.G. Ananda Rao, 2016 (1) NIJ 359 (Ker), the learned counsel for petitioner contended that though the cheque was drawn on a joint account to be operated as `either or survivor', as the petitioner was not the drawer of the cheque and in view of Sec. 7 of the Act, defining the word “drawer”, as the maker of a bill of exchange or cheque, no liability under Sec. 138 of the Act can be fastened on the petitioner”. (Para 3) On the other hand, learned counsel for respondent contended that “both the accused having joint account and, as any one could issue the cheque, the  petitioner and her husband being `an association of individuals', as envisaged under Sec. 141 of the Act, learned Magistrate is justified in taking cognizance end issuing process. He submitted that in the facts and circumstances of the case, since the petitioner should face trial, power under Sec. 482, CrPC cannot be exercised. (Para 4) Here the judgment of Apex Court Aparna N. Shah (Mrs.) vs. M/s. Sheth Developers Pvt. Ltd. & Anr., 2013 (2) NIJ 160 (SC) in relevant, on this issue Hon'ble Supreme Court held as follows :— “27. In the light of the above discussion, we hold that under Sec. 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains the name of the appellant and her husband, the fact remains that her husband alone had put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque. 28. We also hold that under Sec. 138 of the NI Act, in case of issuance of cheque from joint accounts, a joint account-holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account-holder. The said principle is an exception to Sec. 141 of the NI Act which would have no application in the case on hand. The proceedings filed under Sec. 138 cannot be used as arm-twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Sec. 138. The culpability attached to the dishonour of a cheque can, in no case “except in case of Sec. 141 of the NI Act” be extended to those in whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Sec. 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him”. (para 8) High Court of Karnataka relied on this judgment and allowed the petition holding that no liability can be fastened upon the petitioner.

Obviously, he has to prove that how he is the holder in due course of the cheque in question. In Kiranraj Bohra vs. Ashok Chhangani, 2016 (2) NIJ 344 (Raj), Hon'ble Justice Sandeep Mehta has rightly observed that since cheque in question was bearing the name of M/s. Sunrise Company, complainant failed to put any such document before the Court which would prove that he has related with the firm. Even he failed to file an application under Sec. 311 CrPC to prove the fact.

Yes, proceedings for an offence under IPC would be maintainable, being different & distinct from the proceedings under Sec. 138 of NI Act. In Sangeetaben Mahendrabhai Patel vs. State of Gujarat & Anr., 2012 (2) NIJ 40 (SC) in Paras 27 & 28, the Hon'ble Supreme Court observed as follows : “27. Admittedly, the appellant had been tried earlier for the offences punishable under the provisions of Sec. 138 NI Act and the case is sub judice before the High Court. In the instant case, he is involved under Secs. 406/420 read with Sec. 114 IPC. In the prosecution under Sec. 138 NI Act, the mens rea i.e. fraudulent or dishonest intention at the time of issuance of cheque is not required to be proved. However, in the case under IPC involved herein, the issue of mens rea may be relevant. The offence punishable under Sec. 420 IPC is a serious one as the sentence of 7 years can be imposed. In the case under NI Act, there is a legal presumption that the cheque had been issued for discharging the antecedent liability and that presumption can be rebutted only by the person who draws the cheque. Such a requirement is not there in the offences under IPC. In the case under NI Act, if a fine is imposed, it is to be adjusted to meet the legally enforceable liability. There cannot be such a requirement in the offences under IPC. The case under NI Act can only be initiated by filing a complaint. However, in a case under the IPC such a condition is not necessary. 28. There may be some overlapping of facts in both the cases but ingredients of offences are entirely different. Thus, the subsequent case is not barred by any of the aforesaid statutory provisions”.

No, mere information to the drawer would not serve the purpose. The service of notice demanding the cheque amount is necessary for maintaining a complaint under Sec. 138 of the Act. Unless a notice is served in conformity with proviso (b) to Sec. 138 of the NI Act, the complaint cannot be maintained. In C.P. Abdul Rasak vs. P. Gangadharan, 2016 (2) NIJ 306 (Ker), it was held by the Hon'ble High Court that mere information of dishonoured cheque is not sufficient compliance of the demand for payment as contemplated under Sec. 138(b) of NI Act. In Para 11 “It is clear from Ext.P4 that no demand was made in Ext.P4 notice, for payment of cheque amount. There was only an intimation to the revision petitioner with regard to the dishonour of the cheque. Since Ext.P4 is not  a notice of demand as contemplated under proviso (b) toSection 138 of the Act, I am of the view that the complaint filed pursuant to Ext.P4 cannot be maintainable. Thecourts below did not consider this aspect while  appreciating the evidence and consequently, the conviction  and sentence passed by the courts below cannot be sustained. In the result, this revision petition stands allowed, setting aside the conviction and sentence passed by the  courts below under Section 138 of the N.I. Act and the  revision petitioner is acquitted for the said offence. The bail bond of the revision petitioner stands cancelled and he is set at liberty”.

Yes. It has been laid down in unequivocal words in Hon'ble Supreme Court that for maintaining the prosecution against director under Sec. 141 of the NI Act, arraigning of a company as an accused is imperative and this equally applies to a partnership firm also. Thus, unless the firm is prosecuted & convicted, the partners thereof cannot be convicted with the aid of Sec. 141 of NI Act. (Aneeta Hada vs. M/s. Godfather Travels & Tours Pvt. Ltd., 2012 (2) NIJ 103 (SC).

In Philip J. vs. Ashapura Minechem Ltd., 2016 (2) NIJ (Bom), the High Court observed in Para 15 & 16 : “Therefore, the ratio laid down in the case of Aneeta Hada (supra) can be made equally applicable in the case of partnership firm also. The partners are liable and sued in their vicarious liability. Whether the partnership firm is a juristic person or not is a different aspect. What is important is that a partner of the firm is arraigned as an accused in the dragnet on the touchstone of vicarious liability, as is done in the case of directors of the company. Therefore, there is no reason at all to make any distinction in respect of the law to be made applicable to partnership firm and the company.  Moreover, the Legislature has already made it clear that the company includes any body corporate which includes firm or other association of individuals and director in relation to a firm means a partner in the firm. On this count also, when section 141 of the NI Act and explanation thereto does not make any distinction between the company and the partnership firm, there is absolutely no reason to make such distinction while making applicable the law laid down by the Apex Court in Aneeta Hada (supra) to the partnership firm merely because in that judgment the Apex Court was considering the eventuality of non-joining of the company. The basic premise of holding either the director or the partner liable for prosecution being the same that of the vicarious liability. Therefore, once the company is held to be essential party and that arraigning of a company as an accused is imperative for prosecution under section 141 of the NI Act, it necessarily follows that arraigning of a partnership firm is also imperative for prosecution against the partners under section 141 of the NI Act. The prosecution launched against only one of the partners of the partnership firm, without joining the partnership firm, cannot be maintainable and on this very ground, the process issued against the petitioner is liable to be quashed and set aside”.

Sec. 138 of NI Act is contained in Chapter XVII of the NI Act is, of penalties in case of dishonour of certain cheque for insufficiency of funds in the account, Sec. 138 reads about imprisonment as follows—“ . . . . .  .Such person shall be deemed to have committed an offence and shall, without prejudice with imprisonment for a term which may be extended to two years . . . . . .”. The term “two years” subs. By Act 55 of 2002, Sec. 7 for “a term which may be extended to one year” (w.e.f. 6.2.2003). In otherwords, keeping in view the recommended one of the standing committee an finance & other representation, it has been decided to increase the punishment as provided under the Act from one year to two years. Therefore, it can be understood that imprisonment is mandatory, but the term may be according to the facts & circumstances of the case such that it cannot extend beyond 2 years.

However, in Amarnath Jaiswal vs. Biswanath Agarwal & Anr., 2016 (2) NIJ (Cal), the Hon'ble High Court of Calcutta observed a different view and was not inclined to pass substantive sentence for imprisonment as awarded by the learned Trial Court. In Para 9 “one thing that has been lost sight of by both the Courts in regard to compensation. Admittedly, the cheque amount was 2,50,000/- and the learned Trial Court had the power to award compensation to the extent of double the amount of the cheque but that is not done. Learned First Appellate Court has also lost sight of the same. It appears that the alleged offence took place in 2004 i.e. the litigation is pending for a decade and the complainant has to bear the expenses of such three tiers litigation for no fault of his own for the last 12 years. Therefore, I am of the view that the purpose of justice shall be best served if the convict petitioner be directed to pay compensation to the tune of 5,00,000/- instead of 2,50,000/-, which has been awarded by the Trial Court. At the time of hearing learned Counsel appearing on behalf of the convict petitioner has submitted that recovery of money is the principle of the offence under Section 138 of N.I. Act and not to send the convict behind the bar. It is an economic offence concerning two private parties. The main mission of such type of cases is to ensure the recovery of money and not to send the convict for imprisonment. That is why and for that reason substantive sentence of imprisonment is not mandatory. The convict petitioner is hereby directed to pay double of the cheque amount i.e. 5,00,000/- as compensation to the complainant within 15 days from the date of this order failing which he is to suffer rigorous imprisonment for six months. Therefore, this Court is not inclined to pass substantive sentence for imprisonment as awarded by the learned Trial Court. If the said amount of 5,00,000/- is not paid, learned Trial Court shall take all possible steps for securing the presence of the convict petitioner and to send him to jail for serving the sentence as awarded by this Court. With this direction, this revisional application stands dismissed.”. The Hon'ble High Court doubted the cheque amount as compensation and only in case of failure to pay the compensation within specified period, the accused has to suffer rigorous imprisonment for 6 months.

Yes, recording of evidence through video conferencing is admissible. The request may be made through application under Order XVIII Rules 3 & 4 of Code of Civil Procedure for permitting the recording of the statement of witness through video conferencing. In International Planned Parenthood Federation (IPPF) vs. Madhu Bala Nath, 2016 (2) NIJ (Del)(DB), Hon'ble High Court of Delhi observed that “we are unable to accept the view taken by the learned Single Judge for rejecting the application. The learned Single Judge has erred in not noticing the development of law and technology that has taken place over the years. The Code is a procedural Code and procedures are subservient to justice. With the development of law and technology, the Courts have to use procedure, which facilitates the Courts in dispensing speedier justice. If a facility is available to the Court for the purposes of expediting the trial then every opportunity is to be taken by the Court to make use of such technology so as to further the process of dispensation of justice. The learned Single Judge, in the impugned order, has taken a very narrow view of the matter. Merely because a witness is travelling over the world and/or may have the financial resources to travel to India does not necessarily imply that the Court must insist upon the witness personally coming to the Court for the purpose of deposing before the Court and/or her cross-examination”. (Para 4)

Further the Hon'ble Bench observed that “The learned Single Judge has erred in not noticing several decisions of this court as well as the Supreme Court. As far back as in the year 2003 in the case of State of Maharashtra vs. Dr. Praful B. Desai, AIR 2003 (4) SCC 601, the Supreme Court in the context of the Criminal Procedure where it is mandated that evidence shall be take in the presence of the accused, interpreted the term presence? not to mean actual physical presence in Court. The Supreme Court noticing the technological advancements held that presence could be through video conferencing”. (Para 6)

Under the provisions of CrPC there is no such requirement that the surrender is necessary before filing of revision petition. The Supreme Court is Bihar Prashad Sangh vs. State of Bihar & Anr., 2000 SCC (Cri.) 1380 (SC) observed that “under the provisions of CrPC there is no such requirement though many High Courts in this counting have made such provision in the respective rule of the High Court. But it is stated to us that there is no such rule in the Patna High Court Rules. In that view of the matter the High Court was not justified in rejecting the application for revision solely on the ground that the accused has not surrender.”

However, the Apex Court held that certain High Court have made such provisions in their Rule which compel the petitioners to surrender before filing of revision petition in the High Court.

Yes. Even if the cheque is returned with the endorsement the joint signature is required, Sec. 138 would be attracted & the accused cannot avoid the responsibility. It is only a “species of the genus”. The Supreme Court in Laxmi Dyechem vs. State of Gujarat & Ors. , 2013 (1) NIJ 91 (SC) observed that “if after issue of the cheque the drawer closes the account it must be presumed that the amount in the account was nil hence insufficient to meet the demand of the cheque.  A similar result can be brought about by the drawer changing his specimen signature given to the bank or in the case of a company by the company changing the mandate of those authorised to sign the cheques on its behalf. Such changes or alteration in the mandate may be dishonest or fraudulent and that would inevitably result in dishonour of all cheques signed by the previously authorised signatories. There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment.”

Provisions of Sec. 138 of the Ni Act do not require any specific averment regarding service of notice on the accused. It is settled principle of law that if a notice is sent by registered post on correct address of the addressee. There will be presumption of its service on the addressee. There are so many case law on this point in the matter between landlord & the tenant but the position may not be considered to be different in cases under Sec. 138 of NI Act. The question of valid service of statutory notice is a question of fact to be determined by adducing evidence during the trial before the Court, however, it cannot be entertained under inherent jurisdiction of the High Court. In netshell, the Sec. 138 of the Act do not require any specific averment regarding service of notice but the accused can be rebut the presumption as to service of the notice on him.

Where the cheque is issued to the complainant is only for documents as security, there is no question for arise of any legal debt or liability in case of dishonour of such cheque. In Basanta vs. Amrit Lal Jain, 2015 (1) NIJ 319 (P&H), the conclusion drawn by the Trial Court was that the clear in question was issued in prove of the complaint as a security for the documents. Once on the basis of the documents & enquiries conducted by the ASJ, it was found that the cheque had been given as security, therefore, there was no legal liability of the accused to make the payment. Hence the complaint under Sec. 138 of the Act was dismissed & the accused was acquitted. On leave to appeal against the acquittal the High Court upheld the judgment of Trial Court and declined the leave to appeal.

Where, the evidence has been recorded in full like summons case, there is no need for de novo trial on every change of Magistrate. In Sumedha @ Surendha vs. Krishnakumar, 2015 (1) NIJ 316 (Bom) the High Court observed that the observation that case is tried as regular case needs to be read appropriately the wordings in Sec. 242(3) CrPC dealing with warrant cases (tried as regular cases) and wordings in Sec. 254(1) dealing with the summons case, regarding recording of evidence are similar, requiring the Magistrate “to take such evidence as may be produced in support of the prosecution”. Thus even in summons case the evidence would be in full. Looking to the observations of the Sessions Court, it is clear that the evidence has been recorded in all details and such evidence cannot be treated as substance of evidence under Sec. 264 of CrPC. In the matter of Indo Rama Synthetics (I) Ltd. vs. HRK Infra & Oils & Ors., 2012 (8) LJSOFT 58 and in the matter of Dinesh Thacker vs. State of Maharashtra & Anr., 2013 (3) LJSOFT 206, the judgments of the Court, it has been held that although offence under Sec. 138 of NI Act can be tried as summary case. If the evidence recorded in full fledged evidence, de novo trial is not necessary.

It is well settled principle of law that an entry in the bahi khata merely is an admission by its maker in his our favour. It is only admissible in evidence if it is accepted by the loanee and not otherwise. Such entries shall alone be not sufficient to charge any person with liability, in view of ratio laid by the Hon'ble Supreme Court in case of Chandradhar Goswami case AIR 1967 SC 1058 and Rajasthan High Court in case of Pit Ram Singh case 1992 AIR (Raj.) 149.

No, under Sec. 138 of NI Act complainant is not required to prove as to where and in whose presence he gave money to the accused.

It is settled law that the complaint under Sec. 138 of NI Act must contain the following ingredients : (1) that there is a legally enforceable debt (2) that the cheque was drawn from account of Bank for discharge in whole or in part of any debt or other liability which per-supposes a legally enforceable debt (3) cheque so issued had been returned due to insufficiency of fund. 

The complainant is required to prove only what is contained in Sec. 138 of the Act, and nothing else. He is not supposed to prove as to where from he collected the money which was paid to the accused & in respect of which money, the accused gave a cheque in his favour. Further, he is also not required to prove in whose presence the cheque was given to the accused.

In the case of Murtaza Ali vs. Aslam, 2015 (2) NIJ 68 (Uttara) the High Court held that “thus although an application under Sec. 311 of CrPC was maintainable before the Trial Court so long as the Court retains seisin of the criminal proceedings, but there was no need for the complainant to examine such witnesses, inasmuch as he was not required to prove in a case under Sec. 138 of the Negotiable Instruments Act, 1881, as to where from he collected the money and in whose presence he gave such money to the accused.”

No, the Court may reject the application under Sec. 91 CrPC compelling for the production of accounts books of the complainant particularly when the complainant is ready to face the consequence of non-production of account books. In Basant Kumar Jain vs. State of Rajasthan & Anr., 2015 (2) NIJ 5 (Raj) the High Court after hearing the parties held that `since the respondent No. 2-complainant has specifically stated before the Trial Court as well as the Revisional Court that he is ready to face the consequences of non-production of account books of his firm, the Courts below have not committed any illegality in rejecting the applications filed by the petitioner. Needless to say that the Trial Court shall consider the impact of non-production of account books by the complainant-respondent No. 2 at the time of final hearing of the matter.

Yes. Cognizance under Sec. 138 of the NI Act can be taken on account of the complaint filed before the 15 days period lapsed. In Pragati Ventura Pvt. Ltd. vs. Jasmine Road Lines, 2015 (2) NIJ 53 (Ori) the High Court observed that “even though the complaint case was filed prior to the expiry of 15 days therefrom and filed on 14.1.2008, from the impugned order sheet it clearly appears that the order of cognizance was passed by the learned S.D.J.M. (S), Cuttack on 29.1.2008 clearly beyond the 15 days offered to the petitioner. If the petitioner possessed any bona fide, he could have made payment within the period statutorily prescribed and sought for quashing of the proceeding. The petitioner cannot permitted to take advantage of such situation, since it is well settled by the Hon'ble Supreme Court in the case of Narsingh Das Tapadia vs. Goverdhan Das Patani, AIR 2000 SC 2946 = 2009 (1) NIJ 40 [NOC](SC) that even in a case where a complaint is filed prior to expiry of 15 days of notice, the same cannot be said to be incompetent since the bar of expiry of 15 days is only for the purpose of taking cognizance and not for filing of the complaint and, therefore, even if a complaint is filed before expiry of the 15 days period, if the order of cognizance has been taken after the expiry of 15 days period as in the case, the order of cognizance cannot be allowed to be challenged on such ground.”

It has been held that demanding of money given on loan is not an offence under any provision of the criminal law. In the case of Madan Mohan Singh vs. State of Gujarat, 2010 (6) Supreme 376 the Hon'ble Supreme Court observed that in order to bring out an offence under Sec. 307, IPC specific abetment as contemplated by Sec. 107, IPC on the part of the accused with an intention to bring out the suicide of the concerned person as a result of that abetment is required. The intention of the accused to aid or to instigate or to abet the deceased to commit suicide is a must for this particular offence under Sec. 306 of IPC.

In Damodar Sharma vs. State of Rajasthan, 2006 (2) RLW (Raj.) 1588 it was observed that while framing a charge for offence under Sec. 306, IPC the learned Court has to consider whether the abettor intentionally instigated or entered into a criminal conspiracy or aided the commission of suicide. In case, there is no evidence to show that the abettor intended that suicide should be committed, then no offence under Sec. 306, IPC is made out. In Kheta Ram & Anr. vs. State of Rajasthan, 2015 (2) NIJ 80 (Raj), one Mangla Ram, father of deceased Manohar Lal, lodged a written alleging therein that his son (deceased) was a property dealer and on that day, when he did not return to home, he made inquiry about him then he came to know that his dead body is lying in an under-constructed building, where he committed suicide. On this report, the SHO, PS Luni, Jodhpur registered Marg No. 2/2014 and initiated inquiry under Sec. 174 CrPC. On 10.1.2014, the complainant again lodged a written report alleging inter alia that the petitioners-accused pressurized his son to pay the due amount to them and under this pressure, his son committed suicide and a suicide note was also found in his pocket.” The High Court held that “in the facts of the present case are carefully scrutinized and critically examined in the light of the settled legal position, the framing of charge under Sec. 306/34 IPC against the petitioners-accused by the learned Court below is found to be erroneous and unsustainable. Further, as held by a coordinate Bench of this Court, demanding of money given on loan is not an offence under any provision of the criminal law. Rather, if the borrower commits suicide, they will loose their money. Thus it cannot be held that the petitioners, in any way, instigated or aided the deceased to commit suicide.”

A whole time director is responsible to the company and for the conduct of the business of the company. In K.K. Ahuja vs. V.K. Vora & Anr., 2009 (2) NIJ 172 (SC). Para No. 14 it is held as under :—

“A combined reading of Section 5 and 291 of Companies Act, 1956 with the definitions in Clauses (24), (26), (30), (31), (45) of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the Company for the conduct of the business of the Company :

(a) the managing director/s; (b) the whole-time director/s; (c) the manager; (d) the secretary; (e) any person in accordance with whose directions or instructions the Board of directors of the Company is accustomed to act; (f) any person charged by the Board with the responsibility of complying with that provision (and who has given his consent in that behalf to the Board); and (g) where any Company does not have any of the officers specified in Clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors.

It follows that other employee of the Company, cannot be said to .be persons who are responsible to the Company, for the conduct of the business of the Company.”                                         

In Para Nos. 20, 21 and 22, it held as under :— “The position under Section 141 of the Act can be summarized thus : (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the Company, for the conduct of the business of the Company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix 'Managing' to the word 'Director' makes it clear that they were in charge of and are responsible to the Company, for the conduct of the business of the Company.

(ii) In the case of a director or an officer of the Company who signed the cheque on behalf of the Company, there is no need to make a specific averment that he was in charge of and was responsible to the Company, for the conduct of the business of the Company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the Company, would give rise to responsibility under sub-sec. (2) of Section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Section 2(24) of the Companies Act) or a person referred to in clauses (e) and (f) of Section 5 of the Companies Act, an averment in the complaint that he was in charge of, and was responsible to the Company, for the conduct of the business of the Company is necessary to bring the case under Section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance of negligence, in the complaint, to bring the matter under that sub-section. (iv) Other Officers of a Company cannot be made liable under Sub-section (1) of Section 141. Other officers of a Company can be made liable only under Sub-section (2) of Section 141, be averring in the complaint their position and duties in the Company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence.

If a mere reproduction of the wording of Section 141(1) in the complaint is sufficient to make a person liable to face prosecution, virtually every officer/employee of a Company without exception could be impleaded as accused by merely making an averment that at the time when the offence was committed they were in charge of and were responsible to the Company for the conduct and business of the Company. This would mean that if a Company had 100 branches and the cheque issued from one branch was dishonoured, the officers of all the 100 branches could be made accused by simply making an allegation that they were in charge of and were responsible to the Company for the conduct of the business of the Company. That would be absurd and not intended under the Act. As the trauma, harassment and hardship of a criminal proceedings in such cases, may be more serious than the ultimate punishment, it is not proper to subject all and sundry to be impleaded as accused in a complaint against a Company, even when the requirements of Section 138 read and Section 141 of the Act are not fulfilled.

A Deputy General Manager is not a person who is responsible to the Company for the conduct of the business of the Company. He does not fall under any of the categories (a) to (g) listed in Section 5 of the Companies Act (extracted in para 14 above). Therefore, the question whether he was in charge of the business of the Company or not, is irrelevant. He cannot be made vicariously liable under Section 141(1) of the Act. If he has to be made liable under Section 141(2), the necessary averments relating to consent/connivance/negligence should have been made. In this case, no such averment is made. Hence, the first respondent, who was the Deputy General Manager, could not be prosecuted either under Sub-section (1) or under Sub-section (2) of Section 141 of the Act.”

Therefore, from the law laid down by the Hon'ble Supreme Court in above case it is clear that whole time director is mainly responsible for managing & conducting day to day affair, and he is liable alongwith the company to be prosecuted under Sec. 138 of the NI Act. 

No. When the power of attorney holder does not have personal knowledge about the transaction, then he cannot be examined notwithstanding that the complaint had been filed by him. Complaint can be filed by him, this now needs no debate in view of authoritative pronouncement by the Hon'ble Supreme Court in M/s. Shankar Finance & Investments vs. State of Andhra Pradesh & Ors., 2008 (2) NIJ 532 (SC). It has been explicitly laid down that power of attorney holder can be allowed to file a complaint on behalf of the payee/holder of the cheque. But the same is not contended in case of his examination in lack of his personal knowledge of the transaction. In Daljit Singh vs. Jasbir Singh Sandhu, 2014 (2) NIJ 604 (P&H)[NOC], “a perusal of averments contained in the complaint and the affidavit tendered by Jatinder Sharma makes it manifest that there is no reference that Jatinder Sharma has personal knowledge of the transaction in question which is the basis for initiating criminal proceedings against the petitioner. The Attorney holder may be allowed to depose for the purpose of issue of process for the offence punishable under Section 138 of the Act, but there is an exception to this rule that when the Power of Attorney holder does not have a personal knowledge about the transaction then he cannot be examined. As in the circumstances of the present case, Jatinder Sharma is not a competent witness to depose about the transaction in question on behalf of the complainant, his statement can not become the basis for recording a finding that there is a prima-facie case to issue process against the accused. That being so, the summoning order passed by the trial Court cannot be allowed to sustain.”

No, it is well settled that for the purpose of quashing a complaint or FIR the High Court cannot look into the defence of the accused. The Court is only required to see whether  on the basis of the averments made in the complaint and the relevant particulars produced by the complainant, there are grounds for proceeding against the accused. The inherent power does not confer on the Court to act arbitrarily as per its over whims & caprice. At this stage the Courts cannot go into the merits and reach a conclusion that there are no existing debt or liability and quash the complaint.                             

Therefore, the basic law is that the complaint under Sec. 138 of NI Act cannot be quashed by High Court taking recourse to Sec. 482 CrPC, if disputed questions of facts are involved which need to be adjudicated after respective evidence is led by the parties before the Trial Court. (Rajeev Bhalla vs. State & Anr., 2014 (2) NIJ 592 (Del)[NOC]

In Gold Field Steels Pvt. Ltd. & Anr. vs. Sanjay Alloys Pvt. Ltd. & Anr., 2014 (2) NIJ 590 (Karn)[NOC] the High Court relied on M/s. S.I.L. Import USA vs. M/s. Exim Aides Silk Exporters, Bangalore, 2009 (1) NIJ 84 (SC)[NOC] and concluded that where issuance of notice by telegram and receipt of telegram are not disputed, the contention that the telegram does not contain the signature of the complainant is not maintainable.

The Supreme Court in the case of M/s. SIL Import, USA vs. M/s. Exim Aides Silk Exporters, Bangalore, AIR 1999 SC 1609 = 2009 (1) NIJ 84 (SC)[NOC], in Paras 14 to 17 has made the following observations: “Facsimile (of Fax) is a way of sending handwritten or printed or typed materials as well as pictures by wire or radio. In the West such mode of transmission came to wide use even way back in the late 1930. By 1954, International News Service began to use Facsimile quite extensively. Technological advancement like Facsimile, Internet, E-mail, etc., were on a swift progress even before the Bill for the Amendment Act was discussed by the Parliament. So when Parliament contemplated notice in writing to be given we cannot overlook the fact that Parliament was aware of modern devices and equipment already in vogue. Francis Bennion in "statutory Interpretation" has stressed the need to interpret a statue by giving "allowances for any relevant changes that have occurred, since the Act's passing, in law, social conditions, technology, the meaning of words, and other matters”.

For the need to update legislation, the Courts have the duty to use interpretative process to the fullest extent permissible by the enactment. The following passage at Page 167 of the above book has been quoted with approval by a three Judges-Bench of this Court in State (through CBI/New Delhi) vs. S.J. Choudhary, (1996)2 SCC 428 : 1996 AIR SCW 1128 at p. 1131: “It is presumed that Parliament intends the Court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed (an updating construction). While it remains law, it is to be treated as always speaking. This means that in its application on any date, the language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law.” So if the notice envisaged in Clause (b) of the proviso to Section 138 was transmitted by Fax, it would be compliance with the legal requirement.”

In the case of Habu vs. State of Rajasthan, AIR 1987 Raj. 82 the Supreme Court has extensively dealt with the power of recall of the order by underlining that the power to recall is different than the power of altering or reviewing the judgment. In Para 39 inter alia vide clause (v) the following declarations were made :—“(v) that inherent powers given under Sec. 482 CrPC (Sec. 561A-CrPD Old) are wide enough to cover any type of cases if 3 conditions mentioned therein so warrant, namely—

    (a) for the purpose of giving effect to any order passed under CrPC;                           

    (b) for the purpose of preventing the abuse of the process of any Court, and;            

    (c) for securing the ends of justice.”                                                                                   

In Harish vs. Sukhdeo, 2014 (2) NIJ 658 (Bom)[NOC], the applicant sought the recall of the order passed by the High Court in Criminal Application No. 4127 of 2012 and 4128 of 2012. The applicant submitted that due to inadvertence, despite the clear pronouncement of law on this topic (presenting appeal against acquittal before the High Court in complaint cases), the applicant's counsel wrongly made the submission against the law. Therefore the earlier order be recalled. He placed reliance on the ratio in the case of Habu vs. State of Rajasthan that recalling of the order in certain circumstances is permitted.

The Court observed that in view of Sec. 378(4) of CrPC complainant is required to file an appeal in the High Court against the order of acquittal recorded in complaint case. Despite this is counsel for the applicant earlier made a submission that the appeal is required to be filed in concerned Sessions Court. If the order is allowed to remain, the applicant/appellant would be remediless. Therefore if the present application is allowed, it would not be amounting to review of the earlier order, but recall of the same, as in absence of any such order, the present applicant would have no remedy to prefer any appeal in law. The order in Criminal Application No. 4127 & 4128 of 2012 are hereby recalled.

Under the NI Act, there is no condition precedent for a complainant to show or disclose the amount he lent to the accused in his Income Tax Return. Amount not disclosed in the Income Tax Return may be a contention of the accused and would certainly depend upon the facts & circumstances of the case. The same contention was raised by the accused in the matter Sunil vs. Raiskhan & Anr., 2014 (2) NIJ 662 (Bom)[NOC], the Hon'ble Court held that `so far as point of not showing the details of the Income Tax return, the learned Judge has observed that it was violation of the Rules and for that purpose, the complainant may face the consequences but, it will not defuse contentions raised by the complainant about the liability. The accused did not challenge financial worth of the complainant as to his capability to release either Rs. 70,000/- or any other amount. On analysis of both the judgments, I do not find any error or perversity to interfere on the appreciation of facts and documents.'

A certificate about non-involvement of another co-accused is a private document, which needs to be proved in a satisfactory manner and this can be possible only during the trial. By mere presentation of such document cannot grant it evidentiary value unless it faces trial.                          

In a case the applicant placed reliance on two documents, one a discharge certificate purportedly issued by the principal, Juhu Parle Education Society's Junior College, where the applicant was supposedly working from the period from 1987 to 1.5.2012. Apparently, this has been produced to show that the applicant could not have been an active or whole time director in the accused company. Second, a certificate issued by the accused company itself to the effect that the applicant is only a nominal director of the accused company without any authority to act for the company. Both these documents were held private document, and it was held that “So far as the certificate issued by the accused company is concerned, it would be extremely doubtful, in principle, whether the same can be taken into consideration at all, in as much as, it is only a certification by a co-accused about non-involvement of another co-accused. As regards the other document, it being a private document would need to be proved in a satisfactory manner and this can be done only if a trial is held. Thus, on the claim of existence of such documents, is not possible to hold that the categorical assertion about the applicant being a Directors, he being actively involved in the business and day to day activities of the accused company; of fully being aware of the transaction; and of the cheque in question having been issued also with the approval of the applicant, etc., is insufficient for proceeding against the applicant; and that the Court should examine the complaint further to see whether further details about the role or duties of the applicant have been mentioned in the complaint.” (Mala Umesh Mehta vs. AVR Logistic Pvt. Ltd. & Ors., 2014 (2) NIJ 520 (Bom)

No, he cannot do so by way of bringing an application for the amendment in the complaint. It is only any clerical or typographical error which can be corrected. The correction of a statement of a fact, which according to him was wrongly stated cannot be permitted. However he shall be free to state that he had earlier made a wrong statement, during the course of evidence. In other words, if a mistake had occurred in the complaint, the only way of correcting the same is in the course of evidence. No amendment with respect to the relevant statement could be permitted by the Magistrate. (Madan vs. Ashok Sonaji Hembade, 2015 (1) NIJ 851 (Bom)[NOC])

Sometimes it is fatal to fill in the particulars in the cheque and/or tempering it without consent or knowledge of the drawer. Since the complainant has to prove that the drawn had voluntarily and willingly drawn the cheque in his favour, it becomes very important for the complainant to avoid. Such situation in Deoki Nandan Joshi (Dr.) vs. Pramod Kumar Joshi, 2012 (2) NIJ 272 (Sikkim) the complainant challenged the acquittal of the accused, but the appeal was dismissed on this ground. The exhibits established that the complainant and his father tempered with the cheque by incorporating some imaginary computerised account number which never existed. The name and date having been filled up by the complainant, the cheque said to be signed by the accused cannot be said to have been drawn by the accused in accordance with law. Sec. 138 of NI Act requires the cheque to be drawn by the person issuing means that the cheque should be duly filled in with the name of the person in whose favour it is drawn with date and necessary particulars, except the statement of the complainant and his father, there is no evidence to establish that the particulars of the cheque were filled in by the complainant and his father at the instance of and in the presence of the respondent.

Yes. A cheque is a payment unless it is dishonoured. The Hon'ble Supreme Court in Director of Income Tax (Exemption), New Delhi vs. Raunaq Education Foundation, 2013 (2) NIJ 213 (SC) relied upon its judgment in Income Tax, Bombay South, Bombay vs. M/s. Ogale Glass Works Ltd., Ogale Wadi, 1955 (1) SCR 185 in which it observed that when it is said that a payment by negotiable instrument is a conditional payment what is meant is that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured, the creditor may consider it as waste paper and resort to his original demand. In  Byles on bills, 20th edition, page 23 the position is summarised pithly as follows :

“A cheque under dishonoured  is payment”.

In Aparna A. Shah (Mrs.) vs. M/s. Sheth Developers Pvt. Ltd. & Anr., 2013 (2) NIJ 160 (SC) the Hon'ble Supreme Court held that under Sec. 138 of the NI Act, in case of issuance of cheque from thejoint account, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Sec. 141 of NI Act which would have no application in this case where the appellant is not a drawn of the cheque and she has not signed it, though it contained the name of the appellant and her husband, her husband has alone put his signature on the cheque and  only the drawer of the cheque can be prosecuted under Sec. 138 NI Act.

Yes. To promote justice and to prevent abuse of process the High Court may interfere into the matter under Sec. 482 CrPC even at prima facie stage. This has been held by Supreme Court many occasions. In IKF Technologies Ltd. & Ors. vs. Sasi Bhusan Raju, 2013 (2) NIJ 195 (Del) the High Court quashed the summoning order passed by the learned MM in complaint under Sec. 138 NI Act. The High Court observed the scope of powers of High Court under Sec. 482 CrPC as held in State of Madhya Pradesh vs. Awadh Kishore Gupta & Ors., 2004 SCC (Cri.) 352, the Supreme Court observed as under :—      

“It is fairly settled now that while exercising inherent jurisdiction under Sec. 482 or revisional jurisdiction under Sec. 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an inquiry in respect of merits of the accusations. However, in an appropriate case, if on the face of the documents which are beyond suspicion or doubt placed by accused, the accusations against him cannot stand, it would be travesty of justice if accused is relegated to trial and he is asked to prove his defence before the Trial Court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at  prima facie stage.”

It is a common thing which must be borne in mind by the complainant that he has to produce all those documents which are in his possession during the trial. If the complainant has failed to produce certain documents during the trial, and the accused is acquitted, then in such case, the complainant cannot be permitted to produce documents on records and request for a fresh trial. In Smt. Sapna Jotwani vs. Ghanshyam Singh Patel, 2012 (2) NIJ 177 (MP) total 10 documents  have been requested to be taken on record on the ground that the appellant complainant is having personal income and is capable of given loan and she is income tax payee. The High Court observed that once document were obtained after pronouncement of the judgment and other documents were very much in possession of the complainant from very beginning and they ought to have been produced at the time of trial but they were not produced so there is failure and latches on the part of the appellant complainant, and he, therefore, cannot be permitted to take advantage of her our laches and fault. This will certainly cause injustice to the respondent.

The Apex Court in a decision reported in M/s. Mandvi Co-operative Bank Ltd. vs. Nimesh B. Thakore, 2010 (1) NIJ 149 (SC) held that permitting the accused to file an affidavit in lieu of chief examination is illegal. The provision of Sec. 145 of the NI Act provide that it is the complainant and the witnesses who can file an affidavit in lieu of chief examination and not the accused. In law, accused is not allowed to file an affidavit it is necessary for him to enter the witness box even for chief examination. Only provisions of Evidence Act has to be followed in recording the evidence of accused.—Anand Kumar Bhandari vs. N. Narsimha Murthy, 2013 (2) NIJ 435 (Karn)

A complaint under Sec. 138 of the NI Act must establish relevant dates either by documentary or by oral evidence. In facts of a case, it was transpired that the cheque were issued on 4.5.2004 and the said cheques were presented for payment before the bank on 6.5.2004 and the same were dishonoured and thereafter a legal notice was issued on 1.11.2004 the date on which the memo from the bank dishonouring the cheque was issued has not been mentioned in the counter affidavit nor there was any material on record to verify the said date. Unless and until the date on which the memo, dishonouring the cheque had been received the issue of notice could not be said to be within time because as per law, it had to be within 30 days from the date of refusal. Admittedly, in this case, the notice was issued on 1.11.2004, therefore, there was so long gap between the presentation of the cheque and the issuance of notice.—Hriday Ram Yadav (Dr.) vs. State of U.P., 2013 (2) NIJ 334 (All)

No, it is not compulsory to present the cheque successively in case of dishonour on the ground of “account closed”.                                                                                                                   

In the case of Sri H. Nanjundappa, AIR 2007 Karn 2706 a cheque issued by the accused was dishonoured on the ground `account closed by the drawer'. Cheque was re-presented and legal notice was issued, after return of the cheque by the bank on second occasion and thereafter, complaint was filed. In that context, it was held as follows —

“But in the case of “account closed”, the question of successive presentation makes no sense because the account itself is not in existence, there is no possibility of having a fruitful result by successive presentation unlike in the case of “insufficiency of funds”. Therefore, whenever the cheque is dishonoured on ground of account closed, the payee cannot resort to successive presentation to save the limitation. So also in the case of dishonour of cheque on the ground that “the signature does not tally with the specimen”.”

No, from a bare reading of Sec. 138 of NI Act we may found that the liability of drawer who has issued the cheque from the joint account maintained by him and his wife, does not specifically bear any implication that the wife is also equally liable even when the cheque was drawer by her husband, and,  therefore, no vicarious liability can be fastened on the holder of a joint account by a mere fact that the dishonoured cheque was issued from the same account by the drawer of such a cheque. The analogy of Sec. 141 of the NI Act which deals with the offences of the company, cannot be stretched to make the joint bank account holder vicariously liable to face the prosecution under Sec. 138 of the NI Act.—[See Smt. Bandeep Kaur vs. S. Avneet Singh, 2008 (2) NIJ 568 [NOC](P&H) = 2008 (2) PLR 796; Urmila Kumari vs. Rukmani Devi & Ors., 2013 (2) NIJ 7 (Del)]

Yes, the Appellate Court may impose condition while suspending the sentence and of course, the power of imposing condition is discretionary. However, it will depend upon the facts and circumstances of each case. In Stanny Felix Pinto vs. M/s. Jangid Builders Pvt. Ltd. & Anr., 2009 (1) NIJ 13 (SC)[NOC] the Hon'ble Apex Court observed that  . . . . . . .”we feel that while suspending the sentence for the offence under Sec. 138 NI Act it is advisable that the Court imposes a condition that the fine part is remitted within a certain period. If the fine amount is heavy, the Court can direct at least a portion there of to be remitted as the convicted person wants the sentence to be suspended during the pendency of the appeal”.                                                                                

        The ratio of judgment was followed in  Dilip S. Dahanukar vs. Kotak Mahindra Co. Ltd. & Anr. , 2007 (1) NIJ 413 (SC) where in it was held that not only the amount of compensation must be reasonable, but the condition of suspending the sentence should also be reasonable.

It is not necessary that if a complaint is filed the complainant has to mention to the Court that the Court has got jurisdiction. It is for the Court, while taking cognizance under Sec. 190 of CrPC to find out whether there is jurisdiction for the Court.—Vijendra vs. S.D. Hosamani, 2013 (2) NIJ 21 (Karn)

The ground that complaint is not marked during the course of evidence and non-furnishing of list of witnesses alongwith the complaint cannot be sustained. Complaint filed under Sec. 138 NI Act is a private complaint. No where in the CrPC or in the Evidence Act it is stated that the complaint should be marked as exhibit. High Court of Karnataka in 2004 (4) KCCR 2758 (Division Bench) held that a complaint before the Court need not be marked as an exhibit. Therefore, it is not necessary that the complaint be marked in the cross-examination, when the complainant speaks regarding the complaint that itself would be sufficient to consider the materials found in the complaint. However, only if there exists some discrepancy between complainant's evidence before the Court and the version in the complaint, the accused can use the said benefit in his favour.—Vijendra vs. S.D. Hosamani, 2013 (2) NIJ 21 (Karn)

In G. Surya Prabhawati vs. Nekkanti Subramanyeshwara Rao & Ors., 1998 (3) Crimes 543, the High Court of Andhra Pradesh laid down that it is settled principle of law that penal provisions should be construed strictly and the emphasis is on the words “such person”. It is manifest from the expression of the words used in Sec. 138 of the NI Act “such person shall be deemed to have committed the offence” relate to the person who has drawn the cheque in favour of the payee and if the said cheque is returned unpaid on account of the conditions mentioned under Sec. 138 of the Act such person alone is liable but not other except the contingencies mentioned under Sec. 141 of the Act.

Yes, looking to the facts & circumstances of the case, upholding the conviction, it is within the power of the learned Sessions Judge to impose reasonable condition while suspending the sentence to deposit certain amount within specified period of time.—Bindu Krishna Das vs. P. Ashok Kumar, 2012 (2) NIJ 81 (Ker)

It has been many times reiterated by various High Court that a complaint under Sec. 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. Therefore, any person giving assurance that the cheque shall be honoured would not bring him in the clutch of provisions of Sec. 138 NI Act.—Navjot Kaur vs. INSCOL, 2012 (2) NIJ 553 (P&H)[NOC]

Yes, in M.M.T.C. Ltd. & Anr. vs. Medchl Chemicals and Pharma (P) Ltd. & Anr., 2009 (1) NIJ 76 (SC)[NOC], this question was relevant. The question in that decision was whether a complaint filed in the name and on behalf of the company by its employee without necessary authorisation is maintainable. After analyzing Secs. 138 and 142(a) of the NI Act, it was held that such complaint is maintainable and held that want of authorisation can be rectified even at a subsequent stage. The Court further clarified that the only eligibility criteria prescribed by Sec. 142 is that the complaint must be by the payee or the holder in due course. The Court held that this criteria is satisfied as the complaint is in the name and on behalf of the appellant company. It was further held that even presuming that initially there was no authority, still the company can at any stage, rectify the defect. At a subsequent stage the company can send a person who is competent to represent it.—Indira Kumar Patodia vs. Reliance Industires Ltd. & Ors., 2013 (1) NIJ (SC)

Yes, because when the guarantor issues a cheque towards dues against the principal debtor he cannot escape from his liability moreover the liability of the guarantor is co-extensive. In Vijender Singh vs. M/s. Eicher Tractor Limited & Anr., 2012 (2) NIJ 619 (Del)[NOC], it was held that (Para 7) `bare perusal of the above provision clearly shows that the section commences with the words “where any cheque”. The use of word “any” assumes significance here. It shows that for whatever reason if a cheque a drawn on an account maintained by the drawer with its bank, in favour of any person for the discharge of “any debt or other liability”, the ingredients of offence under Sec. 138 of the Act gets attracted in case cheque is returned dishonoured for insufficiency of funds and the cheque amount is not paid within the statutory period despite service of notice. The legislature has been careful enough to record not only discharge in whole or in part of “any debt” but the same includes “other liability” as well Supreme Court in ICDS Ltd. vs. BeenaShabeer & Anr., 2009 (1) NIJ 5 (SC)[NOC] has held that the words “any cheque” and “other liability” occurring in Sec. 138 are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. These expressions leave no manner of doubt that for whatever reason it may be, the liability under Sec. 138 cannot be avoided in the event the cheque stands returned by the banker unpaid. It is further held that guarantor issuing cheque towards dues outstanding against principal debtor cannot escape from his liability and the complaint under Sec. 139 against the guarantor would be maintainable.'

Yes, Since the accused failed in his obligation under compromise, a legally payable debt was existed. In Suryakant vs. State of Maharashtra & Anr., 2012 (2) NIJ 582 (Bom)[NOC], it was held that (Para 15) `in present case, the plaintiff had already performed the proclamation of relinquishment by signing on the compromise in the hope of encashment of cheques. Whatever was due, was the performance on the part of the accused, to honour the cheque and to pay. The accused had failed in his obligation and a legally payable debt thus existed'.

No, When the cheque is not dishonoured on account of difference in signature and the Magistrate also found no difference in signature after comparison, the petition for examination of handwriting expert is not allowable. In Ramya vs. State of Bank of India & Ors., 2012 (2) NIJ 593 (Del)[NOC], it was held that (Para 11) `the interference by learned ASJ in the order of MM was unwarranted and, in fact, against the orders dated 19.3.2011 and 10.8.2011 of this Court. The cheque was dishonored not on account of difference in signature but on account of insufficient funds. The Bank Manager also confirmed this fact and was nowhere confronted by the respondent/accused as regards her signatures on the cheque. Further, admittedly, the Magistrate had also compared the signature of the accused as appeared on the cheque with her admitted signatures as per his power under Sec. 73 of the Evidence Act and did not find variation in the signatures. The plea regarding the cheques not bearing her signature was taken by the respondent/ accused only at the stage of defence evidence'.

When appeal was from conviction order appellate Court is not competent to enhance the sentence.—Vijay Kumar vs. Rakesh Kumar Jain, 2012 (2) NIJ 598 (Uttara)[NOC]

If the signature on the cheque are admitted by the accused, he cannot escape his liability on the ground that the other particulars of the cheque were filled by other person. In Gurmeet Singh vs. State of Haryana & Anr., 2012 (2) NIJ 579 (P&H)[NOC], it was held that (Para 7) `the signatures on the cheque have been admitted by the petitioner. It is well settled that even if the amount, date and other particulars are filled up by some other person with different ink accused cannot escape his liability under Sec. 138 of the Negotiable Instruments Act, 1881, if he has admitted his signatures on the cheque in question'.

When the cheque which is dishonoured was issued as security and not issued towards discharge of legally enforceable debt or any other liability cannot be brought under the purview of Sec. 138 of NI Act.—Maharashtra State Seeds Corporation Ltd. vs. Nagarao Raghunath Jibhkate & Anr., 2012 (2) NIJ 565 (Bom)[NOC]

Not always, the opinion of the handwriting expert is not a perfect science, being imperfect in nature, the experts' opinion must not be acted upon unless substantially corroborated, the Hon'ble Supreme Court in Ravichandran vs. State by Dy. Superintendent of Police, Madras, 2010 (2) CCC 554 (SC) has examined the settled position of law regarding the said science. This has been relied in Naresh Kumar vs. Sukhdev Singh, 2012 (2) NIJ 53 (P&H).

. No, The bare denial of the passing of consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. In otherwords, to disprove the presumption, the defendant has to bring on record such facts & circumstances upon which the Court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist.—Bharat Barrel & Drum Manufacturing Co. vs. Ahim Chand Pyarelal, (1983) 3 SCC 35; Rangappa vs. Sri Mohan, 2010 (1) NIJ 396 (SC).

No, A person cannot be deemed to be liable merely because he is the office bearer of the company. The factual details stating as to how he is responsible for the commission of the offence must be specifically averred in the complaint. There is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process and made him vicariously liable under Sec. 138 & 141 of the NI Act.—Mahendra Kumar Rustogi vs. State of West Bengal, 2012 (2) NIJ 217 (Cal); National Small Industries Corporation Ltd. vs. Harmeet Singh Paintal, 2010 (1) NIJ 164 (SC), S.M.S. Pharmaceuticals vs. Neeta Bhalla, 2006 (1) NIJ 97 (SC).

Yes, Complaint may be filed before mandatory period by the complainant, but the Magistrate may instead of returning the complaint wait till the mandatory period of 15 days in accordance with provisions of Sec. 138 NI Act gets over and thereafter can take cognizance on such complaint. In otherwords, Magistrate should either return the complaint to the complainant to be presented after maturity period or should wait till the complaint becomes mature.—Abdul Mutalib vs. State of Rajasthan, 2006 (2) NIJ 231 (SC), Narsingh Das Tapadia vs. Goverdhan Das Partani, 2009 (1) NIJ 40 (SC)[NOC].

This legal question was came up before the Hon'ble Apex Court is Ranveer Singh vs. State of Haryana & Ors., 2010 (1) SCC (Cri.) 96. In para 26 it held as under :                                                                                                               

   “The said situation is mainly covered by the decision of this Court in Jatinder Singh case, wherein the decision in Pramatha Nath Talukdar case was also taken into consideration and it was categorically observed that in the absence of any provision in the Code barring a second complaint being filed on the same allegation, there would be no bar to a second complaint being filed on the same facts if the first complaint did not result in the conviction or acquittal or even discharge of the accused, and if the dismissal was not on merits but on account of a default on the part of the complainant.”

            Therefore, in nutshell, it is amply clear that filling of the second complaint is barred only when the first one has resulted in conviction or acquittal or even discharge of the accused on merits.

It is very interesting to know that cheques given in advance also comes within the ambit of Sec. 138 NI Act. If at the time of entering into a contract, it is one of the conditions of the contract that the purchaser has to pay the amount in advance then advance payment is a liability of the purchaser. The seller of the items would not have entered into contract unless the advance payment was made to him. A condition of advance payment is normally put by the seller for the reasons that the purchaser may not later on retract and refuse to take the goods either manufactured or procured for him for, payment of cost of the goods in advance being one of the condition of the contract becomes liability of the purchaser. The issuance of a cheque at the time of signing such contract has to be considered against a liability as the amount written in the cheque is payable by the person on the date mentioned in the cheque. Where the seller or manufacture on the basis of cheque issued, manufactures or procures the goods from out side, and has acted upon the contract, the liability of the purchaser gets fastened the moment the seller or purchaser acts upon the contract & procures goods. If, however, for any reason, the seller fails to manufacture the goods or procure the goods, it is only under those circumstances that no liability is created.—Magnum Aviation Pvt. Ltd. vs. State & Ors., 2011 (1) NIJ 112 (Del)

Generally cheques issued as security are not covered under Sec. 138 NI Act, but in same cases, cheques issued as security may be brought in the ambit of Sec. 138 NI Act when it is dishonoured. In K.S. Bakshi & Ors. vs. State, 146 (2008) DLT 125 there was an agreement between the parties to construct a multi-storey residential building and certain sum was to be payable by the accused as security to ensure performance of the contract. A few cheque given as security for that purpose got dishonoured. Having regard to the terms of the agreement, it was held that the accused had a liable to pay the security amount to the complainant who was the owner of the said property and the discharge of this liability was stated as fundamental to the agreement. It was further held that it was irrelevant whether such money was retained or returned in future. What was relevant for the purpose of Sec. 138 of the Act was the fact that at the time of issuance of cheque the accused company had liability to pay money to the complainant as the owner of the property. Therefore, in nutshell, we can say where cheque has been issued as security to ensure performance of the contract, it is covered by Sec. 138 NI Act.

Yes, where the Trial Court has convicted & sentenced the accused, and Additional District & Sessions Judge upheld the same and further the High Court has also confirmed the judgments of below Courts, the accused prefers appeal and during pendency of appeal he enters into a compromise with the complainant, the Court may allow the parties to compound the offence and acquit the accused, but however he may be burdened with exemplary costs because he has wasted the public time.—R. Raju vs. K. Sivaswamy, 2012 (1) NIJ 328 (SC)

No, not always by virtue of Sec. 118 NI Act holder of the cheque in due course even if the cheque is blanked in dates & other endorsement, is entitled to fill in the same and present the same to his bank for encashment. It could not be said that by mere act of filling detail or endorsements the holder had made material alteration in the cheque.—Sunil Kumar vs. State of Rajasthan, 2002 (1) RCD 377; M/s. LG Electronics India Pvt. Ltd. vs. State of Rajasthan & Ors., 2012 (1) NIJ 374 (Raj)

When a complaint ex-facie does not disclose, any alleged offence and such a complaint through an FIR is instituted as a counter blast, and just as an attempt to pre-empt the complaint under Sec. 138 NI Act it is liable to be quashed by the High Court exercising its inherent power under Sec. 482 CrPC.—M/s. LG Electronics India Pvt. Ltd. vs. State of Rajasthan & Ors., 2012 (1) NIJ 374 (Raj), Sunil Kumar vs. M/s. Escorts Yahama Motor Ltd. & Ors., 2009 (1) NIJ 136 (SC)[NOC], Mahindra & Mahindra Financial Services Ltd. vs. Rajiv Dubey, 2009 (1) NIJ 474 (SC).

The expression “trial” is not defined under the Code of Criminal Procedure. Expression `inquiry' is defined under Sec. 2(g)of the Code as follows :

            “Inquiry” means every inquiry, other than a trial, conducted under this Code by a Magistrate or Court”. This would indicate that “trial” is different from inquiry. However, the term `trial' has not been defined. In a civil case trial starts after issues are framed. A criminal trial starts when the charge is framed and the plea is recorded.—

Ratilal Bhanji Mithani vs. State of Maharashtra & Ors.,

 AIR 1979 SC 94

Yes, though the Managing Director is deemed to be responsible for the business of a company yet it is necessary to array him as an accused before his conviction in his individual capacity for the act of the company. In Lokesh Kumar Singh vs. Om Prakash Gupta, 2012 (1) NIJ 294 (Raj), Hon'ble High Court of Rajasthan, Jaipur Bench observed that it is indeed, trite to state that it is fundamental principle of law that no person can be condemned without being heard. It is not only a part of principle of audi alteram partem, but is also a part of the concept of fair trial enshrined under Art. 21 of the Constitution of India.

No, the legal heirs of the signatory to the cheque are not criminally liable to be proceeded against for offence under Sec. 138 NI Act. In Neena Chopra vs. Mahendra Singh Vaishya & Ors., 2012 (1) NIJ 299 (MP), the Hon'ble Court observed that the cheque which is the subject matter of complaint against the petitioner was not issued by the petitioner herself, she is not criminally liable in regard to the cheque issued by her mother (late). If legal heir is convicted, it would be travesty of justice with the accused.—Also see Droupadi Bai alias Maya Suppi vs. State of Rajasthan, 2000(3) Crimes 645.

No, without deciding the merits of complaint the observations made by a revisional Court are unwarranted, hence, may be subject to expunge the order of dismissal of a complaint under Sec. 204(4) CrPC is not an appealable order. Only a revision is maintainable and the revisional Court should consider this aspect and may set aside the order without observations.—Anandha Vadivelu vs. Kannapan, 2011 (2) NIJ 573 (Mad)

No, Hon'ble Supreme Court in State of Gujarat vs. Shyamlal, held that it would be an odd procedure for a Court to issue summons to an accused person present in Court “to attend and produce” a document. It would be still more odd for a police officer to issue a written order to an accused in his custody to “attend & produce” a document. Therefore, in its true construction, Sec. 91 CrPC does not apply to an accused person. Moreover, when the original document are not in custody of accused person under Sec. 66 of Indian Evidence Act also he cannot be compelled to produce document, as such no notice can be issued to him.—R. Dhanasekaran vs. N. Dhakshinamoorthy, 2011 (2) NIJ 608 (Mad)[NOC].

Any Trial Court is required to start with statutory presumption until the contrary is proved that the cheque in question was issued or drawn for consideration. The burden in such case is on the accused in view of the statutory presumption in favour of the complainant. To rebut the presumption by leading an adequate and satisfactory evidence to substantiate contention in defence to the prosecution. Accused is not required to lead evidence beyond all reasonable doubt, but satisfactory evidence of rebuttal must be such which would satisfy the minds of prudent persons upon preponderance of probability in respect of case in defence.—M/s. Kusum Ignots & Alloys Ltd. vs. M/s. Pennar Peterson Securities Ltd. & Ors., 2009 (1) NIJ 74 (SC)[NOC]; Kiran vs. Sushila & Ors., 2011 (1) NIJ 587 (Bom).

Not always, the Apex Court has held in Rahul Builders vs. Arihant Fertilizers & Chemical, 2008 (1) NIJ 134 (SC) that the requirement of law under Sec. 138 of NI Act is to issue a notice calling upon the drawer to make payment of amount of money under the cheque. What is held in the decision is that the demand must relate to the amount covered under the cheque and not any other amount due towards loan. However, if in the notice, the complainant has mentioned about the document and the amount due by the accused, but in clear terms a demand is made in the last paragraph relating to the amount covered under the cheque only, notice cannot be regarded as a defective one.—B.H. Lakshmi Narayan vs. Smt. Girijamma, 2011 (1) NIJ 585 (Karn).

No, once the financier had exercised the option of seizure of vehicle, the post dated cheque obtained from the buyer of the vehicle at the time of finance, cannot be presented for encashment after seizer. In Sudha Beevi vs. State of Kerala the learned High Court Kerala laid down that when the agreement had stood “determined ipso facto” and also when the owner had repossessed the vehicle, he is not entitled to present any of the post dated cheque for encashment. The reason behind is that by effecting seizure of vehicle, the owner had exercised the option available to him under the agreement therefore, the post dated cheque in the hands of owner became instruments for which consideration had failed, accordingly would not attract the provisions of Sec. 138 NI Act.—N. Rajangan vs. M/s. Centurian Bank Ltd., 2011 (1) NIJ 485 (Mad).

No, letter written by complainant to the accused making him aware of the fact of the dishonour of cheque in absence of any demand to make payment within 15 days could not be construed as a notice contemplated under Sec. 138(c) of the NI Act. Therefore, the limitation for filing complaint would start from the date of issuance of notice “containing the stipulation” of making payment within 15 days and it would not start from date of such letter.—Padmini Polymers Ltd. vs. Unit Trust of India, 2003 CrLJ 1053 (Del).

The Supreme Court have reiterated many times the legal position that the legally enforceable liability as contemplated under Sec. 138 NI Act, need not necessarily be the legally enforceable liability of the drawer of the cheque. Even if a cheque has been issued by an individual as against the liability of a different person even then the dishonour of the said cheque and the failure to comply with the notice will be an offence under Sec. 138 NI Act as against the drawer of the cheque.—P.J. Agro Tech. Ltd. vs. Water Base Ltd., 2010 (2) NIJ 241 (SC).

No, in Shri Ishar Alloys Steels Ltd. vs. Jayaswal NECO Ltd., 2009 (1) NIJ 21 (SC)[NOC] it was specifically mentioned that the bank referred to in clause (a) the proviso to Sec. 138 of the NI Act, would mean the `drawee bank' on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued.—P. Somon vs. M/s. Fullerton India Credit Company Ltd., 2012 (1) NIJ 55 (Mad)

Yes, mere issuance of a demand notice is not suffice, the notice must be received by the drawer of the cheque. If it is returned unserved but with correct address, it is deemed proper service. Therefore, in case first notice remained unserved and second notice is sent within the time limit, and it is received by the drawer, the cause of action would arise by receipt of second notice.—M/s. Arihant Finance (India) Ltd. vs. Lakshmi Reddy, 2011 (2) NIJ 637 (Mad).

Yes, according to the Sec. 73 of Indian Evidence Act the Court is competent to do so, but however, it is not advisable that a judge should take up the task of comparing the admitted handwriting with the disputed one to find out whether the two agree with each other and therefore, the prudent course is to obtain the opinion and assistance of an expert. It may be hazardous and inconclusive.—State vs. Pali Ram, AIR 1979 SC 14; Fakhrudin vs. State of M.P., AIR 1967 SC 1326; O. Bhorathan vs. Sudhakaran & Ors., AIR 1996 SC 1140; T.G. Balaguru vs. Ramchandran Pillai, 2011 (1) DCR 687.

No, the Supreme Court has clearly observed in Ashok Tsherina Bhatia vs. State of Sikkim, AIR 2011 SC 1363 that the powers of Court under Sec. 391 CrPC are vast. It has to be used sparingly. It cannot be utilised in order to permit an accused to play in the loop holes. Therefore, it is only during the course of trial, when an application under Sec. 391 CrPC can be moved for summoning any document or relevant person—Satpal Singh vs. State of Rajasthan & Ors., 2011 (2) NIJ 569 (Raj).

To make a joint account holder liable under Sec. 138 NI Act, the holders must be joint signatory. Therefore, where the joint account holder is not the signatory to the instrument, no prosecution can be allowed under Sec. 138 NI Act.—Supreet Kaur (Smt.) vs. M/s. Model Cooperative Urban Bank Ltd., 2011 (2) NIJ 609 (AP)

No, where the cheques in question has been issued by the accused, and complaint under Sec. 138 NI Act is pending against him, since he is not traceable, his relatives like wife and son who are not involved in the matter cannot be pressurised by lodging FIR against them to recover money of the said cheque. It is abuse of process of law.                                          

Sukhdeep Kaur & Ors. vs. State of Punjab & Anr.

, 2011 (2) NIJ 632 (P&H).

. No, on each presentation of the cheque and its dishonour of `fresh right? and not a cause of action accrues in favour of the complainant. The complainant, may, therefore, without taking pre-emptory action in exercise of his right under clause (b) of Sec. 138 of NI Act, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But once the complainant gives a notice under clause (b) of Sec. 138, he forfeits such right, as in case of failure of the drawer to pay the money within the stipulated time he would be liable for the offence and the cause of action for filing the complaint will arise. Therefore, on reading of Sec. 138 & 142 in combined manner, cause of action can arise only once.—Naresh Kumar vs. State of Uttaranchal & Ors., 2011 (2) NIJ 614 (Uttara) (See also 2013 (1) NIJ 308 (MP).

No, so far as the criminal complaint is concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding sentence, it may have some effect on the Court trying the offence. But by no stretch of imagination, a criminal proceedings could be quashed on account of deposit of money in the Court. The complainant has to come forward for settlement with the accused.—P.S. Sethuraman vs. P. Elavazhagan, 2011 (2) NIJ 634 (Mad).

No, when chief examination of a witness is completed and after his cross-examination the case is transferred to another Magistrate, he may read in evidence such recorded evidence instead of de-novo trial. However, if the Court finds it necessary to further examine such witness in the interest of justice he may do so under Sec. 326(1) CrPC but not to fill up the lacuna, if any, in the earlier evidence of such witness.—A.V. Sivakumar vs. A. Shanmugam, 2011 (2) NIJ 601 (Mad) [NOC].

Section 77 of the NI Act deals with the liability of a Banker for negligently dealing with the Bill presented for payment. In Indian Overseas Bank vs. Industrial Chain Concern, 2010 (1) NIJ 147 (SC)[NOC], it was held that where a person presents a cheque for collection with his banker such bank acts as an agent or conduit pipe to receive payment of the cheque from the banker on whom they are drawn and to hold the proceeds at the disposal of its customer. It is the action of the bank as a collecting agent or a conduit pipe to receive the payment of the cheques that has to be adjusted in the light of the case under consideration. The conduct of the bank as noted above does not allow an inference to be drawn that it has acted negligently. It has taken due and reasonable case for the purpose of collecting the proceeds. It has no control over the postal authorities.

            In 

Shree Shankar Saw Mill (P) Ltd. vs. United Bank of India

, 2018 (1) NIJ 226 (Cal), the High Court relied on judgment in 

Branch Manager, Federal Bank Ltd. vs. N.S. Sabastian

, 2009 (1) NIJ 142 (SC). The Supreme Court has considered a scenario  where the cheques were lost in a transit and has held that, the bank which had acted as the collecting bank was not liable for negligence.

No, the bare denial of the passing of the consideration apparently does not appear to be any defence.

    Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts & circumstances upon considerationof which the Court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. The burden upon defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidences led in the case including that of the plaintiff as well.

    Bharat Barrel & Drums Manufacturing Co. vs. Amin Chand, (1993) 3 SCC 35 referred in Sanjay Arora vs. Monika Singh, 2018 (1) NIJ 109 (Del)

In M/s. M.M.T.C. Ltd. & Anr. vs. M/s. Medchl Chemicals & Pharma (P) Ltd. & Anr., 2009 (1) NIJ 76 (SC)[NOC], in content of stop payment instructions, the Supreme Court explained the mode of rebuttal of the presumption thus :

            "19. The authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the stop-payment? instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused." [Para 16]

No, the contention of accused that as default sentence has been undergone, no compensation is payable cannot be accepted. In Yasah Pal Gupta vs. Stae & Anr., 2018 (1) NIJ 603 (Del), that the petitioner accused did not deposit the fine and chose to underwent the sentence in default of deposit of fine of imprisonment for a period of three months. After the petitioner was released, having undergone the sentence; the respondent complainant initiated proceedings seeking to recover the compensation amount by the proceedings & warrant of attachment was challenged by the petitioner, the Revisional Court dismissed the contention of the petitioner. Aggrieved by the rejection petitioner filed this petitioner before the High Court. The High Court held that the Revisional Court has correctly appreciated the law laid down by the Supreme Court in Kumaran vs. State of Kerala, 2017 (1) NIJ 584 (SC) and has correctly rejected the contention passed by the petitioner that as default sentence has been undergone, no compensation is payable. In otherwords, by merely undergoing the default sentence, the accused cannot claim discharge of the liability to pay the compensation amount.

Yes. Where there is implied consent of the complainant available on the record, the offence can be compounded on application of the accused. In Ruchika Sawhney vs. M/s. Landmark Apartment Pvt. Ltd. & Ors., 2018 (1) NIJ 642 (P&H), after the Trial Court summoned the respondent accused, they filed an application for compounding of the offence as they have submtited a demand draft for Rs. 2 lakhs in favour of the appellant complainant the learned counsel for the complainant contended that the complainant is not agreed to compound the offence the Trial Court while passing the order on the application considered that receiving the demand draft agaisnt the cheque amount shows his concern with the payment only, therefore compounding of offence was allowed. The complainant appeal against the order before the High Court . The High Court in para 6 held :—

    "After hearing learned counsel for the appellant, I find no merit in the present appeal. Admittedly, the appellant accepted the demand draft of Rs. 2 lacs against the cheque amount and the accused persons have been further directed to deposit 10% of the cheque amount in District Legal Services Authority, therefore, the implied consent of the appellant is apparent on record. Even otherwise, the Hon'ble Supreme Court in M/s. Meters and Instruments Private Limited and anr. vs. Kanchan Mehta, 2017 (2) NIJ 583 (SC) has held that though for the compounding, consent of both the parties is required but in the absence of consent of one party, the Court in the interest of justice on being satisfied that the complainant has been duly compensated, in its discretion, can close the proceedings and discharge the accused."

No, the revisional jurisdiction of High Court is one of supervisory for correcting the miscarriage of justice. Where the lower Appellate Court has upheld the well reasoned & after appreciation of all evidences on record, there is no basis seen for the High Court coming to the conclusion that the accused was successful in creating doubt regarding the existence of debt or liability. The High Court has no jurisdiction to re-appreciate evidence on record and set aside the conviction. (Kishan Rao vs. Shankargouda, 2018 (2) NIJ 1 (SC)) 

It is well settled law that a criminal appeal cannot be dismissed in default for non prosecution of the case. In Parasram Patel & Anr. vs. State of Orissa, (1994) 4 SCC 664, Hon'ble Supreme Court held that the criminal appeal cannot be dismissed for default in appearance & the Court must decide the matter on merits even in the absence of the appellant or his counsel. In Bani Singh & Ors. vs. State of U.P., (1996) 4 SCC 720. Hon'ble Supreme Court (3 Judges Bench) held that dismissal of appeal for default or non-prosecution without going into the merits of the case is illegal. The Appellate Court must dispose of the appeal on merits after perusal & scrutiny of the record. 

            In 

Raju vs. Tarachand & Ors.

, 2018 (2) NIJ 227 (HP), the High Court of Himachal Pradesh relied on the above judgment of Hon'ble Supreme Court while deciding a revision petition against dismissal of appeal in default.

Questioning of personal knowledge of the power of attorney holder is to be seen at the time of examining him. The power of attorney holder is amply empowered to file power and depose for the purpose of process of Section 138 of the Act and his knowledge can of course be adjudged by the learned court below at the time of proceedings. The question of knowledge of power of attorney holder about the transaction is an open question but the same will not effect the merits of the case, even if the respondent is not allowed as a power of attorney holder then also he can be permitted to appear as a witness and give evidence on affidavits of fact in accordance with Section 145(2) of the Act. (Para No. 7) Great Landcraft Pvt. Ltd. & Ors. vs. Smt. Mohni Verma, 2018 (1) NIJ 221 (Raj.)

Upon death of complainant, the complaint under Sec. 138 of NI Act itself shall not abate, the Court has power to implead legal representative of the complainant. In Amit Kumar vs. Firm Kapoorchand Bhagchand, 2018 (2) NIJ 53 (Raj), the complainant was expired during the pendency of the complaint under Sec. 138 of the NI Act, it was continued even though the death of complainant. After 1.5 years an application under Order 22 Rule 3 CPC was moved. The accused alleged that after the death of complainant, he should have been acquitted under Sec. 256 CrPC, the High Court held that upon death of complainant in summons case Court can permit the legal representatives to continue with the complaint.

Yes, the proceedings under Sec. 138 of the NI Act and criminal trial in respect of a criminal offence can be allowed to run simultaneously against the accused. In Abubakar vs. State of Rajasthan & Anr., 2018 (2) NIJ 8 (Raj). A complaint under Sec. 138 of NI Act was pending for consideration against the accused. Cognizance under Sec. 420 IPC was taken against the accused separately. The accused challenged cognizance taken under Sec. 420 IPC, where the High Court dismissed the petition the ground that no interference is called for in the impugned cognizance because, simultaneous proceedings can be launched against the accused.

In many cases, remand of complaint under Sec. 138 of NI Act is justified. In Praveen Kumar Solanki vs. State of Rajasthan & Anr., 2018 (2) NIJ 84 (SC), it was held that where the Trial Court has not marked the documents of the complainant or exhibits them, nor the accused is provided proper opportunity to rebut the presumption under Sec. 139 of the Act, the complaint case may be remanded for a fresh decision.

No, merely because the accused drawer of the cheque has admitted hissignature & accepted the receipt of notice, it cannot be held that the guilt has been proved. As per Sec. 139 of the Act, it is obligatory upon the Court to presume, unless the contrary is proved, that the holder of cheque received the cheque in whole or in a part, of any debt or other liability, but at the same time for that purpose the holder of the cheque has to provide details or the factual basis for raising the said presumption and if the factual basis for raising the presumption, as available under Sec. 139 of the Act, has not been established, the prosecution can fail. (Chittorgarh Kendriya Sahkari Bank Ltd., Main Branch, Chittorgarh vs. Heera Singh Rajput, 2018 (1) NIJ 46 (Raj.))

Yes, since the liability of a partner in a partnership firm is unlimited, he is liable to meet the liability of such firm even in his personal capacity. In Dhirendra Nath Pattanayak & Anr. vs. Sujit Kumar Maity & Anr., 2018 (1) NIJ 20 (Cal), the Court observed, in Para 7 :

            "The status of a company and a partnership firm is absolutely different in the context of liability of the company and the partnership firm in civil and criminal cases. The liability of shareholders of a company are limited to the extent of the value of their shares and the shareholders cannot be made liable beyond the value of their shares in their personal capacity. However, the liability of a partner in a partnership firm is unlimited and the partners are liable to meet the liability of such partnership firm even in their personal capacity. It is apparent from the judgment of the learned 1st appellate Court that the present petitioners were members of the earlier partnership firm and after issuance of such cheque they have changed the nomenclature of the partnership firm but they remained partners of that partnership firm. Cheque was issued in their personal capacity and accordingly it was not incumbent upon the compliant to implead the partnership firm. The case under reference cannot be challenged only on the ground that the partnership firm has not been arrayed as accused in the case. The decision relied on by learned Advocate of the petitioner reported in 1971 SCC (Cr) 97 (supra) is thus not applicable in the context of the given facts and circumstances of this case. It has been observed by the Supreme Court in the decision reported in (2014) C. Cr. LR (SC) 510 (supra) that the complainant had no knowledge about the amount that was advanced by him and the complainant had no knowledge as to who scribe of the cheque and he was also not aware of the place of alleged transaction. In addition to that the complainant also could not justify the source of fund in order to establish his financial capacity having regard to the facts and circumstances of that case. The learned trial Court acquitted the accused but the High Court concerned reversed the judgment of acquittal. The Hon'ble Suprme Court has however in the context of the given facts and circumstances of this case upheld the judgment passed by the learned trial Court. The facts of the case are not similar to the facts of the instant case. The complainant in the case under reference is fully aware that the cheque was issued by the petitioners and they had issued such cheque in due discharge of their liability and therefore, in terms of Section 118 and 139 of the Negotiable Instruments Act the learned trial Court was justified in coming to a specific conclusion that the petitioners are guilty of an offence under Section 138 of the Negotiable Instruments Act." [Para 7]

On this issue different views have been expressed by various High Courts. There is a Bar under Sec. 69(2) of Indian Partnership Act the section prohibits the enforcement of rights in respect of an unregistered firm by way of a suit.

    But following the decision of Hon'ble Supreme Court in BSL Ltd. vs. Gift Holdings Pvt. Ltd., ILR 2003 Karn 4325; Beacon Industries vs. Anupam Ghosh, it was held :

    "5. A careful reading of Section 69(2) of the Partnership Act clearly shows that an unregistered partnership firm is barred from filing a civil suit and there is no bar as such to file a private complaint and it is purely criminal liability on the part of the person who has issued the cheque. Even if the cheque issued by a partner of an unregistered firm for legally recoverably debt or otherwise and if such cheque dishonoured when it was presented for encashment, it amounts to a criminal liability. Therefore the dismissal of a complaint by the Trial Court by relying on the decision of the Andhra Pradesh High Court referred to above is incorrect. Whenever a complaint is presented under Section 138 of the Negotiable Instruments Act it is the duty of the learned Magistrate to take note of the cognizance and record the sworn statement of the complainant and his witnesses and after hearing if there is any prima facie case then it is the duty of the Court to issue summons to the accused.

    6. In the case of Abdul Gafoor vs. Abdur Rehman, 2006 (2) NIJ 165 (Ker) the Kerala High Court held that an unregistered firm can prosecute a complaint under Section 138 of the Negotiable Instruments Act and the effect of non-registration of a firm under Section 69 of the Partnership Act is applicable only to a case involving civil rights.

    Further, the Supreme Court in the case BSI Ltd. vs. Gift Holdings Pvt. Ltd., 2009 (1) NIJ 12 [NOC](SC)  has held that:

    " . . . . A criminal prosecution is neither for recovery of money nor for enforcement of any security etc. Section 138 of the Negotiable Instruments Act is a penal provision the commission of which offence entails a conviction and sentence on proof of the guilt in duly conducted criminal proceedings. Once the offence under Section 138 is completed the prosecution proceedings can be initiated not for recovery of the amount covered by the cheque but for bringing the offender to penal liability.

    Again in the case of Gurcharan Singh vs. State of U.P., [2002 (4) Crimes 165] the Allahabad High Court has followed the above said judgment of the Supreme Court.

    Therefore, in view of the above decisions of the Supreme Court as well as of the other High Courts, the contention of the respondent that filing of a criminal complaint by a partner of an unregistered firm is hit by Section 69(2) of the Partnership Act cannot be accepted. The said section has no application to the criminal cases. Under these circumstances it could be said that Section 69(2) of the Partnership Act is applicable only where the civil rights are invoked and not in criminal cases. Non-registration of the firm has no legal bearing on the criminal case. Hence the finding recorded by the Trial Court is totally incorrect and illegal and the same is liable to be set aside." (Para 6) [Rani Kapoor (Smt.) vs. M/s. Silvermount, 2018 (1) NIJ 25 (Del)]

            Thus, we can say, Bar applicable under Sec. 69(2) of the Partnership Act would not operate in the proceedings under Sec. 138 of the NI Act because it does not relate to a criminal complaint.

No, at the stage summoning it is not the requirement of law that the date of service of statutory notice is to be disclosed in the complaint. The only requirement, is that the complaint must aver the mode & manner of issuance of notice. Ram Babu vs. State of U.P. & Anr., 2018 (1) NIJ 81 (All).

    Recently the Apex Court in the case of Ajeet Seeds Ltd. vs. K. Gopala Krishnaiah, 2014 (2) NIJ 371 (SC), had an occasion to examine a similar issue wherein the High Court quashed the complaint at the stage of summoning on the premise that there are no recitals to demonstrate that the registered notice under Section 138 of the Act was served on any specific date, and the High Court observed that there was no proof of evidence of service of notice or return of notice unserved and there was also no averment in the complaint regarding the same. The Apex Court while approving the law in the case of C.C. Alavi Haji (supra), held that a service of notice could be presumed both under Section 114 of the Evidence Act and Section 27 of the General Clauses Act and that it is not necessary to aver in the complaint that inspite of the notice returned unserved, it is deemed to have been served or that the addressee is deemed to have the knowledge of the notice unless and until contrary is proved by the addressee at the stage of evidence. [Para 7]

No, dishonour of cheque by itself does not constitute the offence of cheating. In Sangita Shrivastava (Smt.) vs. Santram & Anr., 2018 (1) NIJ 442 (MP), the High Court of Madhya Pradesh discussed the law point in detail.

    In the present case what is to be examined is whether the present petitioner can be said to a party to the so called act of cheating by her husband. The primary requirement to make out an offence of cheating under Section 415 punishable under Section 420 of IPC is that dishonest or fraudulent intention of the accused at the time of alleged inducement is made. Mere breach of contract does not give rise to criminal prosecution under Section 420 unless fraudulent or dishonest intention is shown right at the beginning of transaction time, when the offence was said to have been committed. In the present case it is evident from the statement given by the complainant to the police that the present petitioner had not visited Gwalior to show him or his family property proposed to be purchased or proposed to be sold by her husband. Her role was only limited to introducing her husband who was a property dealer. There is no agreement to sale on record to depict that there was any transaction in relation to the property or it was a transaction of loan simplicitor. Amounts were paid by the complainant to the husband of the petitioner and not to the petitioner. Cheque was issued by the husband of the petitioner in favour of the complainant at the instance of the complainant, thereafter, the cheque was bounced. [Para 8]

            Now what is to be examined is whether dishonor of the cheques by itself constitute an offence of cheating or not. Even the report relied on by the respondent/complainant as was submitted by the CSP Bhind reveals that he has mentioned that the case is made out under Section 420, 34 read with Section 138 of N.I.Act. Admittedly, cheque was signed by Dheeraj Shrivastava and not by the petitioner. In fact in the case of 

Sitakant Govind Bhobe vs. J.X. Miranda

 as reported in 1977 CRI.L.J. 531 (Goa), it has been held that dishonour of cheque by itself does not constitute the offence of cheating. In the present case, it is apparent that the petitioner was not a party to the transaction. No amount was settled at her instance or before her. No amount was paid at her instance or before her. On the contrary, she facilitated return of the money given by the complainant to the husband of the petitioner. Thus, in a case of cheating the charge must set out in the manner in which the offence was committed and in the present case manner of inducement as far as the petitioner is concerned, is not available. Petitioner as a colleague had only facilitated meeting of property dealer with the complainant but incidentally property dealer happens to be her husband does not per se mean that she had any intention of cheating or dishonestly inducing the respondent/ complainant to deliver any property. In fact on the other hand she has acted as a facilitator as per the own showing of the complainant in asking her husband to return the amount through cheques. [Para 9]

Commonly, two question are raised in this regard, whether Sec.9 of General Clauses Act, 1897 is applicable to a statutory notice under Sec. 138 of NI Act? And, whether the day on which the information is received from the Bank is to be excluded or included while computing the 30 days period. The Supreme Court in Econ Antri Ltd. vs. Rom Industries Ltd. & Anr., 2013 (2) NIJ 338 (SC), in para 20 observed :

    "As the Limitation Act is held to be not applicable to N.I. Act, drawing parallel from Tarun Prasad Chatterjee where the Limitation Act was held not applicable, we are of the opinion that with the aid of Section 9 of the General Clauses Act, 1897 it can be safely concluded in the present case that while calculating the period of one month which is prescribed under Section 142(b) of the N.I. Act, the period has to be reckoned by excluding the date on which the cause of action arose. It is not possible to agree with the counsel for the respondents that the use of the two different words `from' and `of' in Section 138 at different places indicates the intention of the legislature to convey different meanings by the said words." [Para 20]

            The Hon'ble Apex Court held that the words `from' and `of' used in Sec. 138 convey the same meaning i.e. `after' and accordingly the date on which the cause of action arises has to be excluded while calculating the period of limitation under Sec. 138 as well as under Sec. 142 of the Act.

Yes, imposing of such conditions tantamounts to deprive the accused from his release on bail during the pendency of appeal. In Amarveer Singh vs. State of Rajasthan & Ors., reported in 2010 (1) CrLR (Raj.) 414, it was observed by the Hon'ble High Court of Rajasthan that the suspension of sentence is to release the accused on bail. In fact, the very heading of Sec. 389 CrPC states that "suspension of sentence pending the appeal; release of appellant on bail". Further more, the said provision has empower the Appellate Court to see that the execution of sentence or order appeal against, be suspended and also if he is in confinement that he be released on bail. ".......In other words, the learned courts below are not to impose condition of any nature while suspending the sentence/ granting bail toan accused which amounts to be onerous. Such imposition is virtually denial of bail to the accused even though he is entitled for the same, otherwise.

    Therefore, in view of the question involved in this matter, it is to be noted that an accused for commission of offence under Section 138 of the Negotiable Instrument Act would ordinarily be granted bail in view of the fact that the offence is bailable one. Therefore, an accused is not to be taken in custody during trial. Likewise, while exercising appellate powers, a person should not be made to suffer imprisonment only because the conditions imposed for suspending the sentence are harsh.—(Vinod vs. State of Rajasthan, 2018 (1) NIJ 418 (Raj)

No, merely because at the time of taking cognizance the period of 15 days have expired, the Court is not clothed with the jurisdiction to take cognizance under Sec. 138 of the NI Act, the Hon'ble Supreme Court  in case Yogendra Pratap Singh vs. Savitri Pandey & Anr., 2014 (2) NIJ 412 (SC) observed :

    "A complaint filed before expiry of 15 days from the date on which notice has been served on drawer/accused cannot be said to disclose the cause of action in terms of clause (c) of the proviso to Section 138 and upon such complaint which does not disclose the cause of action the Court is not competent to take cognizance. A conjoint reading of Section 138, which defines as to when and under what circumstances an offence can be said to have been committed, with Section 142(b) of the NI Act, that reiterates the position of the point of time when the cause of action has arisen, leaves no manner of doubt that no offence can be said to have been committed unless and until the period of 15 days, as prescribed under clause (c) of the proviso to Section 138, has, in fact, elapsed. Therefore, a Court is barred in law from taking cognizance of such complaint. It is not open to the Court to take cognizance of such a complaint merely because on the date of consideration or taking cognizance thereof a period of 15 days from the date on which the notice has been served on the drawer/accused has elapsed. We have no doubt that all the five essential features of Section 138 of the NI Act, as noted in the judgment of this Court in Kusum Ingots & Alloys Ltd.19 and which we have approved, must be satisfied for a complaint to be filed under Section 138. If the period prescribed in clause (c) of the proviso to Section 138 has not expired, there is no commission of an offence nor accrual of cause of action for filing of complaint under Section 138 of the NI Act." [Para 37]

When the accused has yet not started the cross-examination of the complainant, he cannot direct the complainant to act in a particular manner. [Madhusudan Floor Mills Pvt. Ltd. & Ors. vs. Sanjay Mane, 2018 (1) NIJ 296 (MP)] In otherwords, it cannot be said by the accused that he would not cross-examine the complainant or his witness unless & until all the documents, so wanted by him, are produced by the complainant. The reason is simple, the complaint has been filed by the complainant. It is for him to decide in what manner he would like to prove his case. The Supreme Court in the case of John K. Abraham vs. Simon C. Abraham, 2014 (1) NIJ 120 (SC)  has held as under :-

    "9. It has to be stated that in order to draw the presumption under Section 118 read along with Section 139 of the Negotiable Instruments Act, the burden was heavily upon the complainant to have shown that he had the 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.'' (Para 8)

            Thus, it is clear that in order to draw presumption under Sec. 139 of the Act, the complainant is required to discharge his initial burden, therefore, it is for the complainant to decide that in what manner, he would like to prove his case. The accused cannot demand for document or direct the complainant to act in a particular manner before cross-examination begins.

No, failure to make payment in due discharge of liability may be dealt within form of financial punishment but to sentence a person to suffer rigorous imprisonment would be in excess of reasonable discretion exercised by any Court. In Para (6) of Arunava Bhattacharya @ Bhattacharjee @ Chanchal vs. Sk. Jamshed Ali, 2018 (1) NIJ 309 (Cal) matter, the Court observed :

    "Learned trial Court has convicted the appellant and sentenced him to undergo Rigorous Imprisonment for two years and to pay a fine of Rs. 3,00000/-. The cheque was issued on 30th April, 2006 and the opposite party no.2 has been prosecuting with the case since 2006. Considering the pendency of the litigation for last 12 years I am of considered view that the appellant ought to be sentenced to pay a fine of Rs. 3,00000/- and there is absolutely no doubt or confusion in the mind of the Court to affirm the sentence to the extent of the fine awarded by learned trial Court as well as by the learned first appellate Court. Admittedly, the cheque was issued during the course of business transaction and therefore, in my considered view learned Courts did not consider that substantial rigorous punishment for two years would be in excess of the actual offence committed by the appellant. Failure to make payment in due discharge of liability may be dealt with in the form of financial punishment but to sentence a person to suffer Rigorous Imprisonment for two years would be in excess of reasonable discretion exercised by the learned Courts below. By invoking the jurisdiction under Section 482 of the Code of Criminal Procedure I thus modify the quantum of sentence by setting aside the sentence of imprisonment and simultaneously maintaining the sentence of fine." [Para 6]

Many times the Court  closes the defence evidence of the accused on account of not submitting the same even after given sufficient opportunities, and conclude the trial without defence evidence. The Rajasthan High Court in Mohd. Harun vs. State of Rajasthan, 2018 (1) NIJ 356 (Raj), however, took a different view. It observed that any conclusion of trial under Sec. 138 of NI Act without defence evidence shall be detrimental to the broader cause of justice. Therefore, in the interest of justice, the Trial Court was directed to give one last opportunity to the accused petitioner for cross-examination concerned, if he submits the cost of Rs. 5000/- within 15 days from to day which shall be deposited with the Rajasthan State Legal Services Authority.

Yes, proceeding under Sec. 138 of the NI Act and under Sections of IPC are two separate proceedings, therefore they can be initiated simultaneously. In a case Asha Parihar vs. State of Rajasthan & Ors., 2018 (1) NIJ 374 (Raj), the accused contended that the contents of the FIR were false and fabricated at best it was a bad transaction between two parties doing business together and therefore, the maximum liability of the accused petitioner was to be decided and determined in accordance with the specialised law for the purpose of default in the cheque i.e. under the Negotiable Instruments Act.

    However, the precident law in Sangeetaben Mahendrabhai Patel vs. State of Gujarat & Anr., 2012 (2) NIJ 40 (SC), the contention of the petitioners were discarded, the Hon'ble Apex Court has said that plea of double Jeopardy for quashing the said proceedings under IPC on the ground that appellant had proceeded under section 138 of Negotiable Instrument Act was not tenable as the ingredients of the offence under Section 138 of Negotiable Instrument Act were entirely different from the offence under Section 420 IPC. Hon'ble Apex Court has further laid down in the same precedent law, the offence under the IPC have no legal presumption of antecedent law against the drawer of cheque and no fine can be imposed to meet a legally enforceable liability. Thus, the Hon'ble Apex Court in the aforementioned judgment deal with the plea of autrefois convict and double jeopardy and has held that proceeding with the petitioner under Section 138 of the Negotiable Instrument Act and under Section 406 and 420 IPC was permissible and did not amount to double jeopardy. (Para 7)