Case BriefsHigh Courts

Kerala High Court: R. Narayana Pisharadi, J., dismissed a revision petition which was filed against the judgment of the trial and the appellate court by the petitioner holding him guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

According to the complainant, the accused had borrowed an amount of Rs 2,50,000 from the complainant promising that he would repay the amount within three months which he failed to repay later the accused issued a cheque dated 17-08-2011 for Rs 2,50,000 to the complainant in discharge of the liability, the complainant presented the cheque in the bank but it was returned unpaid for the reason that there was no sufficient amount in the account of the accused further the complainant sent notice to the accused demanding payment of the amount of the cheque, the accused received the notice and replied to the complainant raising false contentions and did not pay the amount of the cheque. The accused contended that he was the manager of the petrol pump conducted by his brother-in-law and the complainant was the watchman in that petrol pump and that he had kept a signed blank cheque in the petrol pump and the complainant committed theft of the cheque and misused it and filed the case although no evidence was presented by the accessed to support his contentions.

The Court while dismissing the petition held that the courts above have properly analyzed the evidence in the case and come to the right conclusion. [T. Sunilkumar v. State of Kerela, Crl. Rev. Pet. No. 45 of 2020, decided on 17-01-2020] 

Case BriefsHigh Courts

Bombay High Court: Vibha Kankanwadi, J., allowed a criminal revision application filed against the order of the Additional Sessions Judge whereby the appeal filed by the applicant against the decision of the trial court convicting him for dishonour of cheque punishable under Section 138 of the Negotiable Instruments Act, 1881, was dismissed for non-payment of fine. 

The applicant was convicted by the trial court under Section 138. He was sentenced to suffer simple imprisonment of 1 year and pay a fine of Rs 6.58 lakhs. The applicant filed an appeal against the decision of the trial court. The Additional Sessions Judge suspended his sentence pending the disposal of appeal subject to deposit of 20 percent of the fine amount as imposed by the trial court. However, the applicant failed to fulfill that condition within the prescribed limit and remained absent for a long time. In such circumstances, the Additional Sessions Judge dismissed the appeal in default for want of prosecution. Aggrieved thereby, the applicant file the instant revision application. 

The High Court gave due consideration to the submissions made by S.S. Bora, Advocate appearing for the applicant, and S.J. Salunke, Advocate representing the respondent. 

The Court relied on Bani Singh v. State of U.P., (1996) 4 SCC 720 and Vijay D. Salvi v. State of Maharashtra, (2007) 5 SCC 741, and reiterated that a criminal appeal cannot be dismissed for non-payment of fine, it will have to be disposed of on merits. 

In such view of the matter, the High Court held that the order passed by the Additional Sessions Judge was not a valid legal order and, therefore, quashed the said order. 

However, at the same time, the Court deprecated observed that the applicant cannot take the system for a ride. When the suspension of the sentence against him was conditional, then he was bound to obey those conditions. Deprecating the conduct of the applicant, the Court imposed costs of Rs 25,000 on him. [Adesh Prakashchand Jain v. Harish Punamchand Une, 2020 SCC OnLine Bom 96, decided on 08-01-2020]

Case BriefsHigh Courts

Bombay High Court: K.R. Shriram, J., dismissed a criminal appeal filed against the order of the trial court whereby it had acquitted the accused of charges under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

As per the complainant, she had given a loan of Rs 4.5 lakhs to the accused, for repayment of which, he had issued a cheque in favour of the complainant. However, on presenting the cheque for encashment, it was dishonoured. Per contra, the accused took the stand that the cheque in question was given to one Sanjay, who was a former business partner of the accused. The cheque was given to Sanjay to be handed over to a third party to connect with a mutually agreed transaction. However, subsequently, disputes arose between the accused and Sanjay. It was submitted that the Sanjay and complainant were very close friends and lived in the same house. The accused submitted that Sanjay dishonestly handed over the blank cheque in question to the complainant and fraud was being played upon him.

The High Court perused Section 138 (dishonour of cheque) along with its Explanation and noted that the keyword “legally enforceable debt or other liability”. Similarly, discussing Section 139 (presumption in favour of the holder), the Court noted that the presumption is rebuttable and the onus is on the accused to raise a probable defence.

The Court then reproduced the principles summarised and enumerated by the Supreme Court in Basalingappa v. Mudibasappa, (2019) 5 SCC 418, and observed that the standard of proof for rebutting the presumption is that of the preponderance of probabilities and not beyond a reasonable doubt. It was also noted as settled law that Section 139 imposes an evidentiary burden and not a persuasive burden.

On the factual score, it was found that there was no evidence as to when the amount in question was handed over to the accused. No receipts were produced. Also, there was no evidence to show that the complainant had Rs 4.5 lakhs to give to the accused, and it was also admitted that she was not even paying income tax. Moreover, the fact of the dispute between Sanjay and the accused was also admitted. All this, according to the High Court went on to prove that the accused had raised a probable defence that the complainant had not proved that there was a legally enforceable debt or other liability.

Accordingly, finding no fault with the order of the trial court, the High Court dismissed the present appeal and upheld the acquittal of the accused. [Tasneem Murshedkar Mazhar v. Ramesh, 2020 SCC OnLine Bom 20, decided on 02-01-2020]

Case BriefsHigh Courts

Bombay High Court: Vibha Kankanwadi, J., while allowing a writ petition, quashed a complaint under Section 138 of the Negotiable Instruments Act, 1881, filed against the petitioner in a cheque dishonour case. It was held that the complaint filed by the respondent-complainant could not be treated as a “complaint” in the eyes of law.

The complainant, in her complaint, had alleged that the petitioner had taken a loan from her, which he failed to repay. He issued a cheque for the discharge of the said liability, which was dishonoured on presenting for encashment. Therefore, she filed the subject complaint before the Magistrate against the petitioner.

Aggrieved, the petitioner filed the instant petition praying for quashing of the complaint against him. His counsel, M.D. Thube-Mhase, submitted that when, as per the contents of the complaint, the accused had refused to accept the notice on 3-1-2017, the period of 15 days for the compliance after the service or refusal of the notice would have been till 18-1-2017, and the complainant could have filed the complaint on or after 19-1-2017 within the statutory period. However, when she has filed the complaint on 18-1-2017 itself, it cannot be taken as a complaint, and therefore, the complaint is liable to be quashed.

Per contra, A.N. Gaddime and A.V. Indrale Patil, counsel for the complainant, contended that though the complaint was filed on 18-1-2017, the complaint was registered on the next date, i.e., 19-1-2017, and the cognizance was taken by order of issuing process on 15-04-2017, therefore the complaint was maintainable.

The High Court considered the law as laid down in Yogendra Pratap Singh v. Savitri Pandey, (2014) 10 SCC 713, wherein the Supreme Court disapproved the view that if the complaint under Section 138 is filed before the expiry of 15 days from the date on which notice has been served on the drawer/accused, the same is premature and if on the date of taking cognizance a period of 15 days from the date of service of notice on the drawer/accused has expired, such complaint was legally maintainable.

Finally, observing that the date of 15th day or conversely the day on which the refusal was there should be excluded, the High Court held that complaint, which was filed on 18-1-2017, was definitely premature, i.e., before the expiry of 15 days of the refusal of the notice. Therefore, it was held, that the subject complaint could not be treated as a “complaint” in the eyes of law. Consequently, the writ petition was allowed and the complaint was quashed. [Afroj Khan v. Mandodra, 2019 SCC OnLine Bom 5422, decided on 12-12-2019]

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Kerala High Court: R. Narayana Pisharadi, J. rejected this petition in which the petitioner prayed to file an appeal against the judgment passed by the trial court, for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

This petition was filed by the petitioner to seek relief against the order of the trial court where the trial court acquitted the accused under Section 255(1) of the Code of Criminal Procedure, 1973. Section 255(1) of CrPC states that if the Magistrate, after recording the evidence, finds that the accused is not guilty, he shall record an order of acquittal.

This petition was filed by the complainant in the trial court by the case S.T. No. 114 of  2017 on the file of the Court of the Chief Judicial Magistrate, Thodupuzha. The case was filed under the offence punishable under Section 138 of the NI Act. It consists of dishonour of cheque for insufficiency, etc., of funds in the account, punishable with imprisonment for a term which may extend to 2 years or with fine which may extend to twice the amount of the cheque.

During the trial, the prosecution as well as the accused, both were examined and documents were also marked, complying with the needs of Section 255 CrPC.

The facts of the present petition is that the petitioner wants to file an appeal because the trial court acquitted the accused under Section 255(1) CrPC on the ground that the cheque drawn by him was not on an account maintained by the accused himself, in the bank. Rather it was drawn on an account maintained by one Kavitha Chandrasekharan. The Manager of the Bank of the said account gave evidence that the said account did belonged to Kavitha Chandrasekharan. The counsel for the petitioner contended that the trial court should have charged the accused for an offence punishable under Section 420 of the Penal Code.

It was upheld in a Supreme Court judgment, Jugesh Sehgal v. Shamsher Singh, (2009) 14 SCC 683, that one of the basic ingredients of offence punishable under Section 138 of the Act is that the cheque shall be drawn on an account maintained in the bank in the name of the drawer himself. Hence, the Court here upheld the decision of the trial court.

After noting the contentions of the counsel for the petitioner, Latheesh Sebastian, and the counsel for the respondent, C.N. Prabhakaran, Senior Public Prosecutor, High Court held that the decision given by the Chief Judicial Magistrate was correct as the case did not satisfy all the ingredients that are needed to punish someone under Section 138 of the NI Act. Secondly, this Court also said that it was not necessary for the trial court to convert this case into a warrant case and start a de novo trial. Hence, the prayer for granting leave to file an appeal was rejected and the petition was dismissed. [Areeplavan Finance v. Chandrasekharan, 2019 SCC OnLine Ker 5330, decided on 11-12-2019]

Case BriefsHigh Courts

Delhi High Court: Suresh Kumar Kait, J., allowed a petition wherein directions were sought for quashing the complaint case filed against the petitioner under Section 138 (dishonour of cheque) read with Sections 141 (offences by companies) and 142 (cognizance of offence) of the Negotiable Instruments Act, 1881.

The petitioner- Society, Employees Welfare Fund of the employees of Hindustan Aeronautics Ltd., had issued four cheques for a total sum of Rs 4.1 Crores in favour of the respondent-complainant. According to the complainant, the petitioner had drawn to said cheques in the discharge of legally recoverable debt pursuant to the terms of the MoU/ Agreement to Sell concerned, however, on presentation of encashment, the subject cheques got dishonoured. The complainant-builder was represented by Nimesh Chib and Siddharth Chaturvedi, Advocates.

Per contra, Vikas Gupta and Ieshaan Gupta, Advocates, submitted on behalf of the petitioner that the proceeding initiated by the complainant was an abuse of the process of law, and the complaint does not satisfy ingredients of the offence punishable under Section 138 NI Act.

The High Court noted that the subject cheques were issued by the petitioner-Society on behalf of its individual members to facilitate the transaction in getting their houses constructed by the respondent. Since the individual members of the Society immediately doubted whether the respondent would be able to complete the flats, they did not deposit the amount with the Society and, thus, the cheques issued by the Society got dishonoured.

Being of the opinion that the petitioner-Society was not liable under Section 138, the High Court observed: “It is not disputed that the society was constituted for the welfare of its members who were interested in getting their houses constructed by the respondent. Therefore, the society played a role only to facilitate its members in getting their houses constructed and the society had no liability as per Section 138 NI Act on the date of signing of the MoU.”

It was further opined that even if it is presumed that the said was paid to the respondent as advance money, even then there appeared to be no criminal liability or any liability which was recoverable under provisions of Section 18.

In such view of the matter, the court allowed the instant petition and quashed the complaint case filed against the petitioner as also all proceedings emanating therefrom. [Employees Welfare Fund v. KRA Infrastructure Developer (P) Ltd., 2019 SCC OnLine Del 11245, decided on 19-11-2019]

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Bombay High Court: K.R. Shriram, J., dismissed a criminal appeal filed against the order of the trial court whereby the accused was acquitted of the charge under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

The appellant had initiated a complaint under Section 138 against the accused alleging dishonour of cheque issued by him in favour of the appellant. It was alleged that the subject cheque was issued by the accused for payment of outstanding liability in relation to purchase of grapes from the appellant. The accused did not deny the purchase of grapes; he, however, contended that the subject cheque was given only as a security cheque and the outstanding payment was already made in three installments. The accused was tried for the offence as aforesaid. At the conclusion of the trial, the accused was found not guilty and was, therefore, acquitted. Aggrieved, the appellant preferred the instant appeal.

 The High Court reiterated the well-settled law that it is settled law that the important ingredient for the offence punishable under Section 138 is that cheque must have been issued for the discharge in whole or in part of any debt or other liability. If the cheque is not issued for the discharge of any debt or other liability, Section 138 can not be invoked.

Perused the facts of the instant case, the Court found that the appellant, in his cross-examination, had admitted that the cheque issued was only for guarantee. Relying on its earlier decisions, the Court noted that if the cheque is issued only as security for performance of a certain contract or an agreement and not towards the discharge of any debt or other liability, offence punishable under Section 138 is not made out.

Following the aforenoted position of law, and noting the admission of the appellant in his cross-examination, the Court concluded that there could be no other conclusion that the cheque was not issued for the discharge of any debt or other liability. The important ingredient for the offence punishable under Section 138, therefore, was missing.

Moreover, it was found that the appellant had been giving different dates on which the cheque was issued, which shows that he was economical with the truth. Reiterating that a person, who’s case is based on falsehood, has no right to approach the Court, the High Court dismissed the instant appeal. [Shantaram Namdeo Sathe v. State of Maharashtra, 2019 SCC OnLine Bom 4354, decided on 15-11-2019]

Case BriefsHigh Courts

Delhi High Court: Suresh Kumar Kait, J., dismissed a criminal petition wherein the petitioner sought quashing of the summoning order passed by the Metropolitan Magistrate and also the criminal complaint under Section 138 read with 142 of the Negotiable Instruments Act, 1881.

The petitioner represented by Ehraz Zafar, Akash Tyagi and Sataya Anand, Advocates, submitted that the complaint in question was filed on 2-5-2013, however, the cognizance was taken by the court by issuing summons against the petitioner on 17-04-2017. The punishment under Section 138 is two years and the cognizance taken by the trial court is after more than four years. It was contended that, therefore, the complaint was liable to be rejected.

At the outset, the High Court noted the fact remains that the instant was not the case of a warrant. The complaint was filed under Section 138 NI Act which is a summary trial. Relying on the Supreme Court decision in Indra Kumar Patodia v. Reliance Industries Ltd., (2012) 13 SCC 1, the High Court held that, The limitation provided under Section 468 is not applicable,

It was further held that, ”Moreover, the cognizance of the complaint was taken by the CMM concerned, who thereafter marked the case to the trial court concerned. The trial court after going through the contents of the complaint and evidence on record, issued summons. However, it is provided in Section 138 and 142 of the NI Act that the summons shall be issued within the prescribed time.”

In such view of the matter, the Court did not find any merit in the instant petition and, therefore, dismissed the same. [Uma Kant Umesh v. State (NCT of Delhi), 2019 SCC OnLine Del 10754, decided on 22-10-2019]

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Bombay High Court: S.S. Shinde, J. refused to interfere with the order of the Magistrate whereby process was issued against the applicants (directors of the accused company) for the commission of offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.

The complainant’s case was that the accused company had issued a post-dated cheque on their favour on account of payment for supply of certain bio-medical equipment’s. However, on presentation, the said cheque was dishonoured and, therefore, the complainant instituted the current proceedings against the accused company as well as the applicants (directors of the accused company).

The applicants submitted that the Magistrate erred in issuing process against them as he failed to consider that the applicants had, at the time of commission of the offence, already resigned from their offences. Per contra, the complainant rebutted their submission with the help of Section 168 of the Companies Act, 2013 (resignation of directors).

Perusing Section 168, the High Court opined that the said provision make it abundantly clear that, the Director who wishes to resign from his office, has to give notice in writing to the company and the Board shall on receipt of such notice, take note of the same and company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place fact of such resignation in the report of the directors laid in the immediately following general meeting of the company provision.

Considering the record of the case, it was noted that although the applicants had forwarded their resignation from the office of Director, however, the same was not yet approved by the Board as contemplated by the section discussed above.

Holding that the documents produced by the applicants cannot be considered as uncontroverted or of unimpeachable character, the Court was of the view that the order of issuance of process against the applicants passed by the Magistrate needs no interference.

In such view of the matter, the Court held the instant criminal application to be devoid of merits and rejected the same. [Kulwant Chauhan v. State of  Maharashtra, 2019 SCC OnLine Bom 2280, decided on 23-09-2019]

Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J. allowed a petition filed against the order of the trial Judge whereby the petitioner’s complaint filed for the commission of offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881, was dismissed for non-prosecution.

The petitioner had advanced a loan to the respondent who defaulted in repaying the same. The cheque given by the respondent for the discharge of the said liability was also dishonoured. After fulfilling the codal formalities, the petitioner filed a complaint under Section 138.

The petitioner along with his counsel was present when the Metropolitan Magistrate issued summons against the respondent. Thereafter, on the next date, counsel for the petitioner was present but Metropolitan Magistrate was not available on account of training, Thereafter, counsel for the petitioner was present and bailable warrants were issued against the respondent. When notice was required to be framed, the case was transferred to another Metropolitan Magistrate. On the subsequent date, none appeared before the Metropolitan Magistrate as the advocates were on strike. On the date of the impugned order, the complaint was dismissed on account of non-appearance on behalf of the petitioner.

The High Court was of the view that the petition ought to be allowed. It was considered that neither the complainant nor his counsel could appear due to strike as mentioned above and that the clerk of the counsel wrongly noted the next date, and therefore the complainant or his counsel could not again appear on the date of the impugned order. In such circumstances of the case, the Court thought it fit to restore petitioner’s complaint on the file of the Metropolitan Magistrate. The petition was accordingly allowed. [Rajeev Kumar v. Gagan Makhija, 2019 SCC OnLine Del 9708, decided on 07-08-2019]

Case BriefsHigh Courts

Kerala High Court: B Sudheendra Kumar, J. allowed the petition and quashed the complaint and further proceedings against the petitioners which were filed by the Respondent 2.

In the instant case, Respondent 2, Branch Manager, had filed a complaint against the petitioners, trustees of a trust, alleging offence under Section 138 of the Negotiable Instruments Act, 1881. Hence, the instant criminal cases had been filed by petitioners, praying for quashing the complaint and further proceedings against them. The Court appointed Advocate Jamshed Hafiz as amicus curiae.

The learned counsel for the petitioners, Shaji Chirayath had argued that no successful prosecution against the petitioners, invoking the provisions under Section 141 of the NI Act, could be sustained, as the “Trust” was not an “association of individuals”. The learned counsel for the Respondent 2, Salil Narayanan K.A. argued that the “Trust” was an “association of individuals” and hence, the petitioners were vicariously liable under Section 141 of the NI Act. The learned amicus curiae, Jamshed Hafiz submitted that the “Trust” will not come within the ambit of “association of individuals” and hence, the provisions of Section 141 of the NI Act could not be made applicable to prosecute the petitioners under Section 138 of the NI Act.

The first issue involved in the instant case was that the “trust” was a body corporate or not. As per the Sections 3,11,13,47 and 48 of the NI Act, it was clear that the trustees were the owners of the property and were bound to maintain and defend all suits for the preservation of the trust. Thus it appeared that the “Trust” was not capable of suing and being sued in a Court of law. Therefore, a “Trust” was not a juristic person and was not like a body corporate, which had a legal existence of its own.

The second issue involved was that the “trust” was an “association of individuals” or not. For this, the Court placed reliance on Ramanlal Bhailal Patel v. State of Gujarat, (2008) 5 SCC 449, in which it was held that an “association of persons/body of individuals” was one in which two or more persons join in a common purpose and common action to achieve some common benefit. As per Section 3 of the NI Act, the trustees do not get benefit out of the trust. Therefore, it could not be said that the trustees were persons joined together for a common action to achieve some common benefit. Since, the common purpose of the “Trust” was not to achieve benefit to the trustees, the “Trust” could not be said to be an “association of persons/body of individuals”.

In view of the above, it was held that the “Trust” was neither a “body corporate” nor an “association of individuals” as provided in the explanation to Section 141 of the NI Act. Therefore, no prosecution against the petitioners, the trustees, invoking the provisions under Section 141 of the NI Act could be maintained. Consequently, no successful prosecution against the petitioners, invoking the provisions of Section 141 of the NI Act, could be sustained as the petitioners did not sign the cheque involved in the instant case. The complaint and further proceedings against the petitioners in the instant case were quashed.[N.M. Nabeesa v. State of Kerala, 2019 SCC OnLine Ker 2481, decided on 06-02-2019]

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Delhi High Court: Sunil Gaur, J. allowed a petition filed against the order of the trial court whereby it had passed summoning orders against the petitioners in a complaint filed for committing of an offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

The petitioners, represented by Senior Advocate N. Hariharan with Ashwani Kr. Dhatwalia, Iti Sharma and Kuljeet Rawal, Advocates, prayed for quashing the summoning orders as well as the complaint filed under Section 138. They relied on Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd.,(2014) 12 SCC 539 for submitting that the cheques in question were security cheques, they disputed that there was no existing debt or liability. Per contra, Ashish Pratap Singh and Deepa Sharma, Advocates appearing for the complainant submitted that the cheques in question were towards an existing liability and were not security cheques.

The High Court referred to Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 quashed the complaint and the summoning order, as it was found that there were no averments in the complaint on the basis of which a complaint could be maintained. Further, in SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 reiterated that in the case of Section 138, the essential averments are to be made in the complaint. Again, in Omniplast (P) Ltd. v. Standard Chartered Bank, (2015) 15 SCC 693, it was declared that in the absence of requisite pleadings in respect of the transaction concerned, quashing of the complaint of Section 138 NI Act is justified.

In the present matter, after perusing the record, the Court was of the opinion that the necessary ingredients to maintain the complaints in question were lacking, thereby rendering the impugned order unsustainable and so, the continuance of proceedings arising out of the complaints in question would be an exercise in futility. Resultantly, the impugned complaints and the summoning orders were quashed.[Shivom Minerals Ltd., v. State, 2019 SCC OnLine Del 9329, decided on 17-07-2019]

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Bombay High Court: S.S Shinde, J. dismissed a criminal application filed against the order of a Judicial Magistrate thereby issuing process against the applicant for an offence punishable under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

The complainant-respondent had alleged that he advanced a loan of Rs 30 lakhs to the applicant, for the repayment of which, the applicant had issued a cheque in his name. However, on presenting the cheque for encashment, it was returned unpaid due to insufficiency of funds. Pursuant thereto, after complying with codal formalities, the complainant filed a complaint against the applicant for the commission of an offence under Section 138 of NI Act. Consequently, the Magistrate issued a process. Aggrieved thereby, the applicant filed the present application under Section 438 CrPC.

The applicant, represented by S.V. Marwadi, Advocate, inter alia, contended that the complaint was filed after the statutory period of limitation has ended. Per contra, S.V. Marwadi, Advocate representing the complainant contended otherwise and supported the impugned order.

The High Court was of the view that to find out whether the complaint filed by the complainant was within the period of limitation or otherwise, appreciation of documents was necessary. Prima Facie, it appeared that the complaint was within limitation, and therefore it could not be concluded at the threshold that the complaint was not maintainable. Similarly, it was held that the other contentions made on behalf of the applicant also required to be appreciated at the trial. In such view of the matter, the Court held that the present application was liable to be dismissed. Orders were made accordingly. [Amit Digvijay Singh v. Gokuldas Jagannath Bhutada, 2019 SCC OnLine Bom 1350, decided on 19-07-2019]

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Kerala High Court: R. Narayana Pisharadi, J. dismissed a petition seeking to quash a complaint filed under Section 142 of the Negotiable Instruments Act, 1881.

The complainant and the accused were close relatives. The accused had borrowed an amount of Rs 35,00,000 from the complainant. The cheque given by the accused to repay the money was dishonored due to insufficient funds. The complainant received intimation of this on 13-02-2014 and he sent a notice regarding the same to the accused on 15-02-2015 which was received by him on 17-02-2014.

The learned counsel for the petitioner, K.B. Pradeep, submitted that no demand for payment of the amount of the cheque was made by the complainant as per the notice sent by him under clause (b) of the proviso to Section 138 of the Act and therefore, the notice was defective and the proceedings initiated against the petitioner pursuant to such notice could not be sustained.

The counsel representing the complainant, K.K. Dheerendrakrishnan, contended that the requirement under clause (b) of the proviso to Section 138 of the Act had been complied with.

The High Court observed that a demand for payment of the amount of the cheque by sending a notice in writing was an essential condition for filing such a complaint was a condition precedent for filing a complaint about an offence under Section 138 of the NI Act. The Court relied on K.R. Indira v. G. Adinarayana, (2003) 8 SCC 300 in which it was held that if no demand for payment of amount was made, the notice would fall short of its legal requirement. The Court, on a perusal of the said notice, found that demand of payment of the amount was made in the notice sent by the complainant. In view thereof, the Court held that the impugned notice was meeting the requirements as under Section 138(b) of the Act. The Court also declined the petitioner’s contention that the notice was defective as the nature of the debt or liability was not mentioned. It was held that there was no statutory mandate that the notice should narrate the nature of debt or liability. All the other pleas of the petitioners were not sustained as they were pertaining to questions of facts and the Court held that it would not express its view on disputed questions of fact in a petition under Section 482 of the Criminal Procedure Code, 1974.

In view of the above, the Court held that the impugned notice met the requirement under Clause (b) of the proviso to Section 138 of the Act and hence the petition to quash the said complaint was dismissed.[B. Surendra Das v. State of Kerala, 2019 SCC OnLine Ker 1624, decided on 20-05-2019]

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Bombay High Court: S.S. Shinde, J. dismissed a writ petition filed against the order of the Magistrate who had directed the petitioner to deposit 20% of the amount of the subject cheques while allowing his application of exemption from appearance on the condition that his Advocate record the plea.

The petitioner was alleged to be a debt of Rs 100 crores due to Aditya Birla Real Estate Fund — the complainant. It was alleged that he had issued 4 cheques in the name of the complainant for discharging the said debt. However, when presented for encashment, the said cheques were dishonoured for insufficiency of funds. After the legal formalities, the complainant registered a complaint under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881. Subsequently, the process was issued by the Magistrate and summons were served on the petitioner. He was, however, not able to appear before the Magistrate due to non-availability of confirmed railway ticket from Gurgaon to Mumbai. But he instructed his Advocate to attend the proceedings and “take appropriate steps in the interest of the petitioner”. The Advocate appeared before the Magistrate and presented an application for personal exemption of the petitioner. The Magistrate passed a conditional order thereby allowing the exemption application on a condition that the Advocate for the petitioner shall record plea on his behalf if the Advocate pleads not guilty then the petitioner shall secure his presence for bail and deposit 20% of the cheque amount as interim compensation within 60 days from the date of the order. The impugned order was passed by the Magistrate in the exercise of his powers under Section 143-A of the NI Act.

Rohan R. Sonawane, Advocate for the petitioner contended that Magistrate erred in passing the impugned order when the petitioner was absent and an exemption application seeking personal exemption for the day was sought on his behalf. Per contra, A.A. Ponda, N. Mndargi, S. Poria and C. Keswani, Advocates for Aditya Birla Real Estate Fund, opposed the present petition.

The High Court referred to several cases of the Supreme Court including Surinder Singh Deswal v. Virender Gandhi, 2019 SCC OnLine SC 739 and Bhaskar Industries Ltd. v. Bhiwani Denim & Apparels Ltd. (2001) 7 SCC 401. It was noted, The magistrate is empowered to record the plea of the accused even when his counsel makes such plea on behalf of the accused in a case where the personal appearance of the accused is dispensed with.” The contention of the petitioner was that no written instructions were given to the Advocate, thereby authorising him to record a plea of the accused. On this aspect, the Court stated: “Under Section 205 CrPC on the first day, the Advocate for the accused can record the plea, for which written application by the accused is not contemplated.”

Note was also taken of the fact that the petitioner filed the present petition near about 2 months from the date of passing the impugned order. The proceedings under Section 138 are required to be disposed of within 6 months keeping in view the mandate of Section 143 of the NI Act and within 3 months from the date of assignment of the case as held by the Supreme Court in Indian Bank Assn. v. Union of India, (2014) 5 SCC 590.

Keeping in view the mandate of Section 143, the Court was of the opinion that the Magistrate was right in passing the impugned order. In such view of the matter, it was held that the petition was liable to be rejected.[Sidharth Chauhan v. Aditya Birla Real Estate Fund, 2019 SCC OnLine Bom 1297, decided on 19-07-2019]

Case BriefsHigh Courts

Bombay High Court: Rohit B. Deo, J. allowed a petition filed against the order of the trial court whereby it had issued process against the accused-petitioners for the offence punishable under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

The accused were a company registered under the Companies Act and its Managing Director and Chief Financial Officer. The accused contended that the company was registered with the Board for Industrial and Financial Reconstruction (BIFR), and was declared a “sick unit” on 16-7-2009, and a direction under Section 22-A of the Sick Industrial Companies (Special Provision) Act, 1985, restraining the company from disposing of its assets was issued.

The company entered into certain contracts with the complainant-respondent and issued 12 cheques in complainant’s favour in regard to the said agreements. Subsequently, the complainant presented the cheques for encashment which were dishonoured and therefore after codal formalities, the complaint was filed under Section 138 NI Act. The trial court passed an order issuing process under the said offence. The accused challenged the order of the trial court on several grounds. The thrust of the submissions of Senior Counsel Anil Mardikar, representing the accused was that in view of the decision Kusum Ingots &Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745, the ingredients of offence punishable under Section 138 were not established. This submission was on the premise that in view of the proceedings under SICA and the orders passed by the BIFR therein, the accused were precluded from honoring the cheques, even if it is assumed that the cheques were issued towards satisfaction of the existing and legally enforceable debt.

The High Court noted that in Kusum Ingots, the Supreme Court articulated that if before the date on which the cheque was drawn or expiry of the statutory period of 15 days after notice, a restraint order of BIFR under Section 22-A was passed against the company, then it cannot be said that the offence under Section 138 of the Act was completed. The reasoning of the Supreme Court was that the failure to make the payment would be for reasons beyond the control of the accused and it may also be contended that the amount claimed is not recoverable from the assets of the company in view of the ban order passed by the BIFR.

However, Shilpa Tapdiya, Advocate appearing for the complainant contended the provisions of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 came into force in 2016, the proceedings pending before the BIFR stood abated in view of the provisions of Section 4(b) of the Repeal Act. The submission was that in view of the repeal, the proceedings initiated under Section 138 of the Act were not barred and no exception could be taken to the order of issuance of process dated 20-04-2018.

The High Court found itself unable to countenance the said submission. It was held: “The statutory immunity available under Section 22 of the SICA Act may not be available w.e.f. 1-12-2016. However, in view of the observations in Para 19 of Kusum Ingots, it must be held that the offence under Section 138 of NI Act was not complete and the order of issuance of process is unsustainable. The offence is not complete, not because there was a statutory bar, but as explained by the Supreme Court, because the directors of the company were prevented by reasons beyond their control from honouring the cheques. The repeal of SICA, cannot breathe life in the complaint which was still born since the offence was not complete as on the date of the issuance of process by the learned Magistrate.”

In view of that the effect of the restraint order under the SICA which was in force prior to the issuance of the cheque, and in any event prior to the expiry of the statutory period and having found merit in the submission that the offence under Section 138 of the NI Act was not complete, it was held that the order of issuance of process was liable to be quashed. Orders were made accordingly.[NRC Ltd. v. Fuel Corpn. of India, 2019 SCC OnLine Bom 1222, decided on 09-07-2019

Case BriefsHigh Courts

Jharkhand High Court: Anil Kumar Choudhary, J. dismissed an interlocutory application praying for grant of special leave under Section 378(4) of the Code of Criminal Procedure against a judgment passed by Judicial Magistrate, Jamshedpur on the grounds of probable violation of the settled principle of law.  

The appellant-complainant granted a friendly loan of Rs 35,000 to accused-respondent 2 which was not paid back and the same was demanded back. The accused-respondent 2 issued a cheque in pursuance of the same demand, however, it was dishonored due to lack of funds in the bank account. Thereafter, a notice was issued which was never acknowledged by the accused-respondent 2 and consequently a complaint under Section 138 of Negotiable Instruments Act, 1881 was filed. The trial court, however, acquitted the accused-respondent 2 by concluding the complaint to be premature. 

Issue: whether there exists a prescribed period for filing a complaint to retrieve loan amount or can the same be done at any time after the issuance of notice. 

The appellant-complainant was represented by Mukesh Kumar Dubey who submitted that the trial court was mechanical in it’s approach and ignored the fact and law. Further, it was contested that the judgment is perverse and hence, the special leave should be granted.  The defense was represented by the Additional Public Prosecutor who submitted that a settled principle of law should not be hampered by such appeals. It was contended that in case of notice is not received by the payee, presumption of notice would be on the 30th day from the date of issuance and only after waiting for the statutory period of 15 days the amount would be payable. Therefore, at the earliest, the complaint can be filed after 45 days from the issuance of notice. It was contested that since the complaint was issued only in 22 days therefore, special leave should not be granted.  

The Court after considering all evidences presented concluded that the trial court acted in consonance with the settled principle of law which required a minimum of 45 days from the issue of notice of demand in case there exists no evidence to suggest receipt of notice by the concerned parties. Further, relying on Subodh S. Salaskar v. Jayprakash M. Shah, (2008) 13 SCC 689, the court affirmed the mandated requirement of 30 days from the date of issuance of notice and held that the complaint is premature. Therefore, special leave was not to be granted. [Shyam Sundar Singh v. State of Jharkhand, 2019 SCC OnLine Jhar 768, decided on 20-06-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Vivek Singh Thakur, J. disposed of a petition relating to dishonour of cheques wherein the petitioner wilfully confessed on payment of the remaining amount to the respondent.

In the instant case, the petitioner/accused was convicted by the learned Judicial Magistrate 1st Class, Shimla and had served simple imprisonment for six months and was subjected to payment of a fine amount for dishonour of cheques. The petitioner had borrowed money from respondent which was due from his end. 

The counsel representing the petitioner, Parmod Singh Thakur stated that the amount of compensation that was awarded by the lower court being Rs 65,000, Rs 10,000 of which has been paid by cash and the remaining amount was deposited with the Registry of the High Court in installments and thereby, he intends to compound the matter and not contest the matter any further. The Counsel also submitted that the interest amount was also deposited to the Himachal Pradesh State Legal Services Authority and requested the Court to release the amount deposited in favour of the respondents.

The counsel representing the respondents, Seema Guleria, did not object to the compounding of the case and the compromise arrived and stated that the compromise arrived between the parties was out of the free will and no coercion, pressure, or threat was involved therein.

The High Court took note of the submissions of both the parties and directed the Registry to release the amount in favour of the respondents. The High Court also considered the entire amount deposited by the petitioner and the part amount being handed to the respondents by cash and the 15% of cheque amount payable to the Himachal Pradesh State Legal Services Authority.[Mohan Lal v. Golf Link Finance and Resort Ltd., 2019 SCC OnLine HP 912, decided on 02-07-2019]