Case BriefsHigh Courts

Allahabad High Court: Chandra Dhari Singh, J., expressed that,

Merely because the litigation has reached a revisional stage or that even beyond that stage, the nature and character of the offence would not change automatically and it would be wrong to hold that a revisional stage, the nature of offence punishable under Section 138 NI Act should be treated as if the same is falling under table-II of Section 320 IPC.

Petitioner and OP 2 had a business relationship during the course of business and had issued two cheques in favour of OP 2 and when he had deposited, the cheques were bounced due to insufficient funds.

OP 2 had filed a complaint case under Section 138 Negotiable Instruments Act, 1881. Trial Court had convicted the petitioner and further on being aggrieved the petitioner had preferred a criminal appeal.

Question for consideration

Whether an order passed by the High Court in the criminal revision petition confirming the conviction can be nullified by the High Court in a petition filed under Section 482 CrPC noticing subsequent compromise of the case by the contesting parties?

Analysis, Law and Decision

High Court stated that it is well stated that inherent powers under Section 482 CrPC can be exercised only when no other remedy is available to the litigant and not where a specific remedy is provided by the statute.

Inherent powers under Section 482 of CrPC include powers to quash FIR, investigation or any criminal proceedings pending before the High Court or any Courts subordinate to it and are of wide magnitude and ramification. Such powers can be exercised to secure ends of justice, prevent abuse of the process of any court and make such orders as may be necessary to give effect to any order under this Code, depending upon the facts of a given case.

 In the Supreme Court decision of Krishan v. Krishnaveni, (1997) 4 SCC 241, the Court held that though the inherent power of the High Court is very wide, yet the same must be exercised sparingly and cautiously particularly in a case where the petitioner is shown to have already invoked the revisional jurisdiction under Section 397 of the Code. Only in cases where the High Court finds that there has been failure of justice or misuse of judicial mechanism or procedure, sentence or order was not correct, the High Court may in its discretion prevent the abuse of process or miscarriage of justice by exercising jurisdiction under Section 482 of the Code.

Bench opined that it is not in agreement that when the adjudication of a criminal offence has reached the state of revisional level, there cannot be any compromise without permission of the Court in all cases including the offence punishable under Negotiable Instruments Act, 1881.

Section 147 of NI Act begins with a non obstante clause and such clause is being used in a provision to communicate that the provision shall prevail despite anything to the contrary in any other or different legal provisions. So, in light of the compass provided, a dispute in the nature of complaint under section 138 of N.I. Act, can be settled by way of compromise irrespective of any other legislation including CrPC in general and Section 320 (1)(2) or (6) of the CrPC in particular. The scheme of Section 320 CrPC deals mainly with procedural aspects; but it simultaneously crystallizes certain enforceable rights and obligation.

Further, it is well settled that the operation or effect of a general Act may be curtailed by a special Act even if a general Act contains a non-obstante clause. But here is not a case where the language of Section 320 CrPC would come in the way of recording the compromise or in compounding the offence punishable under Section 138 of the N.I. Act.

In the present matter, the problem was with the tendency of litigants to belatedly choose compounding to resolve their dispute.

Section 147 NI Act does not carry any guidance on how to proceed with compounding of offences under the Act.

 Hence the Court held that offence under Section 138 NI Act read with Section 147 are at liberty to compound the matter at any stage.

“…when both the parties have invoked the jurisdiction of this Court and there is no bar on exercise of powers and the inherent powers of this court can always be invoked for imparting justice and bringing a quietus to the issue between the parties.”

Concluding the matter, High Court allowed the present petition under Section 482 CrPC is allowed in terms of the compromise arrived at between the parties to this litigation out of court. [Rishi Mohan Srivastava v. State of U.P., 2021 SCC OnLine All 532, decided on 13-08-2021]


Counsel for Applicant:- Naved Ali, Sandeep Yadav

Counsel for Opposite Party:- G.A., Pawan Bhaskar

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., decided a matter concerning dishonour of cheque.

Petitioner had filed a suit for recovery of Rs 1,65, 75,000 under Order XXXVII of the Code of Civil Procedure, 1908.

Background

Managing Director and other Directors of the respondent/defendant persuaded the petitioner/plaintiff to give friendly loans at an interest @18% per annum. Petitioner and his wife gave Rs 18,00,000 from the bank account to Hari Om Anand as the Managing Director of the respondent/defendant.

At the request of Hari Om Anand, the petitioner/plaintiff also started looking after the legal consultation work of the respondent/defendant and the Managing Director and other Directors. Subsequently, the petitioner/plaintiff gave another friendly loan of Rs 3,20,00,000 from his bank account to Hari Om Anand and continued to take care of the legal work.

Further, Petitioner/Plaintiff submitted that 6 cheques were issued by Hari Om Anand. The said cheques were dishonoured on presentation due to insufficient funds. The petitioner/plaintiff filed a criminal case under Section 138 NI Act.

The above was preceded by a notice to which no reply was sent.

In an appearance respondent/defendant offered to furnish a corporate guarantee duly signed by the Managing Director and duly authorized by the Board Resolution relating to immovable properties, for securing the suit amount and the restrain order was filed.

Present petition was filed against two orders of the trial court.

Vide an Order dated 28-7-2020, this Court observed that the trial Court had erred in not securing the amount of Rs 1.5 crores as directed in the order dated 24-12-2019 and ought to have asked the respondent/defendant to submit documents of a property of which the title was clear or a bank certificate recording a no objection to the creation of a second charge on the property to the extent of Rs 1.5 crores ought to have been furnished.

Vide orders dated 4-12-2020, this Court had after noting the letter of the Punjab National Bank, Gymkhana Branch, Meerut, U.P. that a lien had been created in the sum of Rs 1.50 crores, directed that the said amount of Rs 1.50 crores be deposited in an interest-bearing fixed deposit. This FDR had since been deposited in the Registry of this Court as was noted in the orders of this Court dated 5-03-2021 and 8-03-2021

Further, the petitioner’s counsel submitted that trial court had wrongly granted leave to defend the respondent in a case where the respondent/defendant had raised no triable issues.

Adding to the above, it was stated that trial court had proceeded in a wrong direction as the loan transactions between the petitioner/plaintiff and the respondent/defendant were different transactions and had nothing to do with the payment of Rs.1.50 crores, which was towards the legal fees of the petitioner/plaintiff and for which the invoice had been raised.

There was no dispute in that the petitioner/plaintiff had acted as a legal advisor to the respondent/defendant.

There was no document to establish a lawyer-client relationship, no retainership agreement had been filed and therefore, the claim of the petitioner/plaintiff was suspicious that he was entitled to a sum of Rs 1.50 crores towards such legal assistance.

As regards the question whether leave to defend has been rightly granted to the respondent/defendant or not, the facts that prevailed upon before the learned Trial Court were that the petitioner/plaintiff himself has referred to loans having been given to the respondent/defendant by way of bank transfer.

When the respondent/defendant had challenged the claim of the petitioner/plaintiff that he had acted as legal advisor to them and, therefore, the invoice raised was for a fee, this fact too would have to be proved.

In application for leave to defend, the respondent/defendant it was averred that the petitioner/plaintiff had claimed to have been providing legal assistance to the respondent/defendant since the year 2000.

With respect to the submissions made by the counsel for the petitioner/plaintiff, on taking cognizance of an offence by the MM under Section 138 of the N.I. Act automatically a decree against the respondent/defendant should follow, cannot be accepted, as cognizance leads to trial and the accused can also get acquitted.

Secondly, on the one hand, the petitioner/plaintiff claims that the cheques were towards loans which were separate transactions and on the other hand, wants this Court to draw conclusions on that basis, that the signatures on the cheques were admitted and the MM had taken cognizance of the case to decree this suit.

Bench stated that in light of the above submissions, it is indeed a matter of trial as to what was the liability of the respondent/defendant towards the petitioner/plaintiff and towards what transaction or service rendered by the petitioner/plaintiff, that is, as a lender or as a legal advisor, would he be entitled to the suit amount.

High Court held that the Trial Court was right in observing that the defence taken was not moonshine and disclosed triable issues which required inquiry. Leave to defend had to be granted in the light of these varying stands taken by the petitioner/plaintiff in different proceedings.

in the light of the previous orders of this Court and the deposit of the FDR for a sum of Rs.1.5 crores with the Registry of this Court, the leave to defend granted to the respondent/defendant is not unconditional and does not work to the disadvantage of the petitioner/plaintiff.

In view of the above, petition was dismissed. [Sarvesh Bisaria v. Anand Nirog Dham Hospital (P) Ltd., 2021 SCC OnLine Del 3859, decided on 30-7-2021]


Advocates before the Court:

For the Petitioner; Vivek Kumar Tandon, Advocate

For the Respondent: Sanchit Garga, Advocate

Case BriefsHigh Courts

Bombay High Court: The Division Bench of V.K. Jadhav and Shrikant D. Kulkarni, JJ., observed that,

“…in the case of cheating, the intention of cheating right from the inception is important.”

Instant matter was directed towards quashing the FIR registered for the offence punishable under Sections 420, 323, 504, 506 of Penal Code, 1860.

Respondent 2 dealt used to sell onion collected from small farmers in the wholesale market on commission. Allegedly the applicants had purchased a huge quantity of onion. Respondent 2 submitted that the amount to the tune of Rs. 30,77,431/- towards the price of purchased onion remained unpaid.

Even after repeated demands for the said amount, applicant did not pay the said amount.

Analysis, Law and Decision

High Court expressed that the power of quashing the criminal proceeding should be exercised very sparingly and with circumspection and that too in a rarest of rare cases.

Court is not justified in embarking upon the inquiry as to the reliability or genuineness or otherwise of the allegations made in the F.I.R. or the complaint and that extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim and caprice. 

Court noted that respondent 2 did not dispute about the filing of the complaints against the deceased for having committed the offence punishable under Section 138 NI Act.

Bench was surprised to note that the allegations were made against the deceased alone with the specific contention that he was the proprietor and in that capacity, he had issued the cheques for the balance amount.

Adding to the above, Court observed that it was not stated in those complaints that deceased Selvakumar, being a power of attorney, had issued the cheques in favour of respondent 2 for the balance amount on behalf of the firm and therefore, since he being the signatory of the cheques, the complaints under Section 138 of the Negotiable Instruments Act, 1881 came to be filed against him.

After the death of the deceased, respondent 2 changed his stand and instituted the suit wherein the applicants have been implicated as defendants.

In Court’s opinion, respondent 2 had filed the complaint with some ulterior motive and mala fide intention.

“…lodging of the complaint in the police station with some mala fide intention is nothing but an attempt to convert a civil dispute into a criminal dispute.” 

In Supreme Court’s decision of Anand Kumar Mohatta v. State (NCT of Delhi), (2019) 11 SCC 706, it was ruled that where a civil dispute is converted into a criminal case to harass the accused, the exercise of power to quash criminal proceedings warranted.

Dispute in the present matter was purely of civil nature and it did not constitute a criminal offence.

Hence, Court opined that the F.I.R. lodged by respondent 2 is nothing but an abuse of the process of the court and the same is necessary to be quashed and set aside in the interest of justice.

In view of the above discussion, criminal application was disposed off. [Thirumalai Prabhu R v. State of Maharashtra, 2021 SCC OnLine Bom 874, decided on 18-06-2021]


Advocates who appeared in this case:

Advocate for Applicants: Mrs. Sonawane Sunita G.

APP for Respondent No. 1-State: Mr. G.O. Wattamwar

Advocate for Respondent No. 2: Mr. Rahul R. Karpe

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., refused to exercise and inherent powers under Section 482 CrPC to quash a complaint filed under Section 138 of the Negotiable Instruments Act for dishonour of cheque.

Instant application was filed to quash the proceeding of a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881.

In the present matter, a proposal for OTS was submitted by Chairperson with an application to the Chief Manager, Bank of India. The said proposal was accepted by the applicants.

Further, it was stated that a resolution was passed giving 4 Cheques. Letter for renewal of OTS by giving 4 new Cheques were submitted before Zonal Manager for Rs 100 lacs was allegedly given.

Union Bank of India issued a return memo with the remark ‘Funds Insufficient’. Legal notice due to dishonor of cheque was issued.

A complaint under Section 138 NI At was also filed by the Bank of India and Chief Manager’s statement was recorded under Section 200 CrPC.

Court opined that it is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein.

In, State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, it was held that an F.I.R. or a complaint may be quashed if the allegations made therein are so absurd and inherently improbable that no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused, but the High Court has not recorded such a finding, obviously because on the allegation in the F.I.R. it was not possible to do so. Therefore, it must be held that the High Court has committed a gross error of law in quashing the F.I.R. and the complaint.

Bench stated that it is only an afterthought that non-bailable warrants were issued that the applicants approached this Court, they did not appear before the lower court nor challenge the summoning order.

High Court held that prima facie ingredients of the offence were made out.

High Court should be loath in exercise of jurisdiction under Section 482 of Code to enter into the process of determining the veracity of complaint.

Powers vested in High Court under Section 482 CrPC have far-reaching consequences, most important being the consequence that it would negate the prosecution’s/complainant’s case without allowing the prosecution/complainant to lead evidence and therefore, the exercise of the said powers should be with the utmost caution, care and circumspection.

In Court’s view, the present matter is one which cannot be said to be one where extraordinary power is required to be exercised.

“…application is devoid of merits and is dismissed with exemplary costs of Rs. 50,000/- to be deposited with the Legal Service Authority which can be utilized for the patients of Covid-19 as officers of such institutions after falling to appear before the Court below have come up with this challenge which is a belated challenge.”

Bench added that two proceedings cannot simultaneously be proceeded. Further, the Court stated that the liabilities were prima facie there and hence cannot be said that the issuance of summons was bad.

Hence, the amount of cheque and contours of Section 138 of N.I. Act, cannot be said to have been prima facie not made out.

Accused may appear before the lower court and the Court may consider the applications for cancellation of non-bailable warrants.

In view of the above discussion, application was dismissed with exemplary costs of Rs 50,000.[Shiksha Educational Trust v. State of U.P., 2021 SCC OnLine All 450, decided on 2-07-2021] 

Hot Off The PressNews

Chhattisgarh High Court relied on Supreme Court judgment In re: Expeditious Trial of Cases under Section 138 of Negotiable Instrument Act 1881, dated 16-04-2021, following directions are issued in compliance of the order. These are:

  1. The Magistrates having jurisdiction to try offences under the Negotiable Instruments At, 1881 shall record cogent and sufficient reasons before converting a complaint under Section 138 of the NI Act from summary trial to summons trial in exercise of power under the second proviso of Section 143 of NI Act. Due care and caution shall be exercised in this regard and the conversion of summary trial to summons trial shall not be in a mechanical manner.
  2. On receipt of such complaint under Section 138 of the NI Act wherever it is found that any accused is resident of the area beyond the territorial jurisdiction of the Magistrate to arrive at sufficient grounds to proceed against the accused as prescribed under Section 202 CrPC.
  3. While conducting any such inquiry under Section 202 CrPC, the evidence of witnesses on behalf of the complaint shall be permitted to be taken on affidavit. In suitable cases, the Magistrate may restrict the inquiry to examination of documents for satisfaction as to the sufficiency of grounds for proceeding under the said provision.
  4. Trial Court shall treat service of summons in one complaint under Section 138 NI Act forming part of a transaction, as deemed service in respect of all complaints filed before the same Court relating to dishonor of cheques issued as part of the same transaction.
  5. Trial Courts have no inherent power to review or recall the issue of summons in relation to complaint filed under Section 138 of the NI Act. However the same shall not affect the power of the Trial Court under Section 322 of CrPC to revisit the order of issue of process in case it is brought to the court’s notice that it lacks jurisdiction to try the complaint.
  6. Section 258 of CrPC has no applicability to complaints under Section 138 of the NI Act. The words “as far as may be” in Section 143 are used only in respect of applicability of Sections 262 to 265 of the Code and the summary procedure to be followed for trials under the said Code.
  7. The Appellate Courts before which appeals against the judgments in complaint under Section 138 of NI Act are pending are directed to make an effort to settle the dispute through mediation.

The Court directed that “these directions shall come into force with immediate effect.”

[Practice Directions, No. 6265/ Litigation/2021, dated 02-07-2021]


Arunima Bose, Editorial Assistant has reported this Circular.

Case BriefsHigh Courts

Madras High Court: P. Velmurugan, J., addressed a matter revolving around the offence under Section 138 of the Negotiable Instruments Act.

A complaint was filed for an alleged offence under Section 138 of the Negotiable Instruments Act, 1881. Judicial Magistrate found the respondent guilty of offence under Section 138 NI Act.

The appellate Judge while allowing the respondent’s appeal set aside the conviction and acquitted the respondent for the offence punishable under Section 138 NI Act, for which he was prosecuted before the trial court.

Appellant’s case was that the respondent had borrowed a sum of Rs 90,000 from the appellant and in order to discharge the debt issued a cheque which returned when presented to the bank with endorsement “drawers signatures differs”.

Analysis, Law and Decision

Bench noted that on statutory notice sent by appellant, respondent responded stating that he had denied the execution of the cheque.

Another significant fact was that the appellant did not prove that there was a transaction between the appellant and the respondent.

High Court remarked that,

When the cheque was returned for the reason that the signature differs, and the respondent/accused has taken a stand that the complainant is a stranger to the accused, it is for the appellant/complainant to establish the case and the appellant has not proved the same, and if once, execution of cheque is proved, the presumption under Sections 118 and 139 of the Negotiable Instruments Act can be drawn and the accused has to rebut the presumption that there is no legally enforceable debt and cheque has not been issued for legally enforceable debt.

 Hence, in the present matter, complainant could not establish the execution of the cheque and borrowal of money by the respondent.

Therefore, in Court’s opinion the appellate Court’s decision had no perversity and Bench found no compelled circumstances or reason to interfere with the Judgment of acquittal.

In view of the above-stated facts and circumstances, criminal appeal was dismissed. [S. Ashok Kumar v. S. Boopal,  2021 SCC OnLine Mad 2325, decided on 22-04-2021]


Advocates before the Court:

For Appellant : Mr. M. Marudhachalam

For Respondent: Mr. L.Mouli

High Court Round UpLegal RoundUp

Here’s a short recap of what we covered under the High Court’s section on the SCC Online Blog for the month of June 2021. In case, you missed out on catching up with some interesting cases, then, you have clicked on the right post to be read.

Go ahead and check out the June updates of 2021!


Allahabad High Court

Section 138 NI Act

  • All HC | Can complaint under S. 138 NI Act be quashed for failure to disclose date of service of notice? Court says it is a matter of evidence

https://wp.me/pcenps-12WK

  • All HC | Can factum of disputed service of notice in S. 138 NI Act case be adjudicated under S. 482 CrPC? HC elaborates

https://wp.me/pcenps-136I

Live-in Relationship

All HC | ‘We are not against live-in relationship’; HC grants protection to couple of marriageable age

https://wp.me/pcenps-132G

Dowry Death

304-B IPC and S. 113-B of Evidence Act are decisive provisions to ascertain unnatural death as dowry death: Allahabad HC explains

https://wp.me/pcenps-12YE


Bombay High Court

COVID-19

  • Bom HC | CSR, Mucormycosis and Deficit Drug Supply; HC reminds Center, “the situation is war like”

https://wp.me/pcenps-12SZ

  • [PM Cares Ventilators] Bom HC | “Will not permit experimentation of faulty ventilators”; HC warns Union Government

https://wp.me/pcenps-12PQ

  • Bom HC | No prohibition by Center on door-to-door vaccination; HC gives Maharashtra one week time to sanction door to door vaccination

https://wp.me/pcenps-12ZT

Property Suit

Bom HC | In a property suit in which decree has been passed, can a third party’s intervention application claiming his right to recovery be maintainable? Read on

https://wp.me/pcenps-130f

Commercial Bid

Bom HC | Can possible case of cartelization be determined only after opening of commercial bid? HC answers

https://wp.me/pcenps-12Uo

Matrimonial Dispute 

Bom HC | Whether HC should quash an FIR arising out of matrimonial dispute on ground of same being settled amicably? Gian Singh v. State of Punjab referred

https://wp.me/pcenps-12WP

Bail

Read why Bombay HC granted anticipatory bail to ‘Constable’ accused of rape and other offences | Succinct Report

https://wp.me/pcenps-12Ys

Amendment of Pleadings

Bom HC | In case of an application for amendment of pleadings, what would be the principal condition that Courts need to consider? Read on

https://wp.me/pcenps-12P9


Calcutta High Court

Dowry

Cal HC | Is mere demand of money, property, etc. sufficient to penalise for demanding dowry? Court answers; says gifts exchanged out of love are not dowry

https://wp.me/pcenps-137C

COVID-19

[Mismanagement and Wastage of Medicines in Government Hospitals] Cal HC | Taxpayers money cannot be wasted; Court directs State to produce records of medicines, maintain system through IT

https://wp.me/pcenps-1365

Bengal Post Poll Violence

Cal HC | State from very beginning had been denying everything, the way State was proceeding in matter, did not inspire confidence; NHRC constitutes committee to examine complaints

https://wp.me/pcenps-134u

Interim Bail 

Cal HC | Interim bail to TMC leaders followed by arguments on maintainability and constitution of larger Bench

https://wp.me/pcenps-12OO


Chhattisgarh High Court

COVID-19

Chh HC | Mathematical precision cannot be adhered to the percentage of jab to be provided to different categories in terms of State’s policy dated 9th May, 2021

https://wp.me/pcenps-12Z3

Termination of Pregnancy

Chh HC | Pregnancy which is caused by rape would presume to cause grave injury to mental health of the pregnant woman; Right to make reproductive choices is a dimension of ‘personal liberty’

https://wp.me/pcenps-1393

Right to Speedy Trial

Can writ under Art. 226 Constitution of India be filed for grant of compensation under public law for infringement of fundamental right? Chh HC answers

https://wp.me/pcenps-136a


Delhi High Court

Trademark Infringement

  • Del HC | Usage of domain names identical/deceptively similar to ‘BAJAJ FINANCE’ or ‘BAJAJ FINSERV’ would amount to infringement

https://wp.me/pcenps-12Nz

  • Del HC | “Singh + Singh” prima facie deceptively similar to “Singh & Singh”: HC grants interim relief to law firm in trademark infringement case

https://wp.me/pcenps-12SQ

Passing Off

Del HC | Interim relief against passing off. Is identical placement of colours and other features in label of product being passed off enough? HC decides

https://wp.me/pcenps-12NG

Maintenance

  • Del HC | Can magazine covers be sufficient evidence to explain that wife who is a model can sustain herself? HC addresses while deciding a Maintenance matter

https://wp.me/pcenps-12NX

  • Del HC | Whether woman is party to adultery/bigamy so as to refuse relief under DV Act is a matter of trial: HC refuses to quash lower court orders

https://wp.me/scenps-adultery

  • Delhi HC decides that Father’s obligation to maintain a child cannot end once he/she turns 18 years of age. Read why

https://wp.me/pcenps-134d

Arbitration

  • Del HC | Does non-payment of stamp duty on a commercial contract invalidates arbitration agreement? Explained

https://wp.me/pcenps-12R8

  • Del HC | Can sole arbitrator’s appointment be disputed if he was consultant/advisor to one of the parties to dispute? Court examines

https://wp.me/pcenps-133T

  • Del HC adverts to scope of judicial review of an arbitral award; Wades through bunch of pleas including violation of Part 1, CPC and insurance against breakage during transit, etc.

https://wp.me/pcenps-138F

5G Technology

Colossal Harm by rolling out of 5G Technology: Delhi HC dismisses suit for defective plaint, filed for gaining publicity; Imposes costs of Rs 20 lakhs

https://wp.me/pcenps-12RC

Delhi Riots

  • Del HC | Crucial aspects of ‘Terrorist Act’ and Right to Protest | Everything about Asif Iqbal Bail Order

https://wp.me/pcenps-132M

  • Devangana & Natasha v. State | Pivotal Findings in State against Devangana Kalita & Natasha Narwal [Succinct Report]

https://wp.me/pcenps-132J

Infringement

Del HC | Telegram to take down infringing contents to cinematograph film ‘MAADATHY’ on receiving a request from Plaintiff

https://wp.me/scenps-maadathy

Section 139 NI Act

Del HC | Can mere ipse dixit and statement in defence under S. 313 CrPC rebut presumption cast under S. 139 NI Act? Read on

https://wp.me/pcenps-138W


Gauhati High Court

COVID-19

  • Gau HC | Violence against Doctors; HC directs State to take immediate actions if any medical practitioner is manhandled or abused

https://wp.me/pcenps-130k

  • Gau HC | Verify availability of separate rooms before directing home Isolation; HC directs State

https://wp.me/pcenps-12OY

  • Gau HC | Court directs ration be provided to struggling sex workers and their families who have been identified; further asks AIDS societies to identify the rest and give relief

https://wp.me/pcenps-12N7


Himachal Pradesh High Court

HP HC | Can an application for addition/ alteration of charges be made by State at the stage when the matter is fixed for arguments? Court explains

https://wp.me/pcenps-133p

COVID-19

Decentralized opening of Primary Health Care centers into ICU hospitals with beds & oxygen facilities is of paramount importance; Himachal Pradesh HC directs State to take steps

https://wp.me/pcenps-12Pl


Jammu and Kashmir High Court

COVID-19

J&K HC | Kins of persons dying of Covid-19 can view face and perform last rites of deceased; HC declines to handover dead bodies to the family

https://wp.me/pcenps-12Xn

Bail Application

J&K HC | “Heinous offence against serving Law Officer”; HC rejects bail application of convicts who killed Dy. AG, Ajit Singh Dogra

https://wp.me/pcenps-12Sj


Jharkhand High Court

Judicial Review

Jha HC | Jharkhand Public Service Commission is a constitutional body, but its actions and decisions are not immune from judicial review

https://wp.me/pcenps-12UL

Family Pension

Jhar HC | Is the second wife of an ex-employee entitled to family pension? Court answers in light of instant facts

https://wp.me/pcenps-12Z8

Warrant of Arrest

Jhar HC | Parameters of warrant of arrest and S. 82 CrPC have not been complied as time and place has not been indicated

https://wp.me/pcenps-1368

Parity in Pay

Jhar HC | Employees of Telco Recreation Club cannot claim parity in pay with employees of Telco Ltd.; HC quashes Labour Court’s order

https://wp.me/scenps-employer

Writ Petition

Jhar HC | Practice of filing a writ petition Art. 226 of the Constitution of India because a person has a grievance that his FIR has not been registered by the police must be discouraged

https://wp.me/scenps-fir

Sexual Assault

Jhar HC | “Is the police taking side by not bringing victim in witness box?” HC comes down heavily on authorities for discrepancies in sexual assault case, warns authorities of contempt proceeding

https://wp.me/pcenps-1398


Karnataka High Court

COVID-19

  • Kar HC | 1/3rd of beneficiaries who have completed six weeks will get second dose of COVAXIN and remaining two-third will not get it

https://wp.me/scenps-covaxin

  • Kar HC | Treatment of Mucormycosis including administration of Amphotericin injection is free of cost and the entire cost will be borne by the State Government in public hospitals

https://wp.me/pcenps-139x

NLSIU | Institutions of Eminence status

Kar HC | NLSIU is free to make an application seeking declaration as ‘Institutions of Eminence Deemed to be Universities’ under UGC in terms of UGC Regulations, 2017

https://wp.me/pcenps-12Pi

Common Charge-Sheet

Kar HC | IO filed common charge-sheet for various crimes registered in different Police Stations; Amalgamation of final reports in respect of different FIRs held to be impermissible

https://wp.me/pcenps-12XZ

Medical Treatment

Kar HC | Persons with disabilities are entitled to priority in medical treatment in light of S. 25 of Rights of Persons with Disabilities Act, 2016

https://wp.me/pcenps-12TH

Right to Marry a Minor

Kar HC | Merely because second marriage is permissible in Mohammedan law it does not mean that right to marry a minor girl accrues; Bail denied inspite victim gave ‘no objection’

https://wp.me/pcenps-1341

Default Bail

Kar HC | ‘Default bail’ granted under S. 167 (2) CrPC in case of non-compliance of notice under S. 43-D of UAPA

https://wp.me/pcenps-132E

All India AYUSH – Post Graduate Entrance Test

Kar HC | Students admitted to the academic year 2017-18 permitted to continue and complete their respective Post Graduate courses in Ayurveda

https://wp.me/pcenps-138r


Kerala High Court

COVID-19

  • Ker HC | Read why HC granted pre-arrest bail to the police officer accused of manhandling a doctor

https://wp.me/pcenps-1390

  • Ker HC | Homeopathy doctors can prescribe adjuvant medicine for Covid-19; HC upholds right to practice of Homeopathic practitioners

https://wp.me/pcenps-12Uy

GST

Ker HC | GST on petrol and diesel; HC seeks Centre’s take on inclusion of petrol and diesel under the GST regime

https://wp.me/pcenps-138t

Mid-Day Meal

Ker HC | Dairy farm shutdown and exclusion of chicken/meat from Mid-day Meal; HC stays two controversial orders of Lakshadweep Administration

https://wp.me/pcenps-136A

Lakshadweep Regulations

  • Ker HC | Draft stipulations are premature, cannot be assailed through PIL

https://wp.me/pcenps-132C

  • Ker HC | Government should be eager to consider public suggestion; HC grants liberty to raise objections/suggestions even after expiry of outer time limit

https://wp.me/pcenps-12Rs

  • Ker HC | “Protestors shall not be deprived of access to justice”; HC directs release of detained Lakshadweep protestors

https://wp.me/pcenps-12P4

Plea of Guilt

Ker HC | A monosyllabic “yes” does not amount to plea of guilty; HC issues detailed guidelines to be followed before convicting on plea of guilt

https://wp.me/pcenps-131W

Triple Murder

Ker HC | Nature of offence ought to have cautioned the Investigating Officer to subject her to psychiatric evaluation; HC extends benefit of doubt to woman accused of triple murder

https://wp.me/pcenps-12ZV

Corruption

Ker HC | Complaint cannot be entertained in corruption cases where the FIR based on the same facts has already been quashed on merit

https://wp.me/pcenps-12Z6

Campaigns and Protests

Ker HC | Footpaths are not for campaigns and protests; HC asks State to explain steps taken to avoid encroachment of pedestrians’ right to footpath

https://wp.me/pcenps-12Xp

Cruelty

Ker HC | Malevolent intention is not essential to cruelty; HC grants divorce on the ground of cruelty for making false allegation of impotency

https://wp.me/pcenps-12Sl

Scholarship

Ker HC | Can State sub-classify minority communities for extending scholarship benefits? HC holds scheme of granting 80% minority scholarship to Muslims cannot legally sustain

https://wp.me/pcenps-12N9

OBC-NCL Certificate

Rejection of candidature for belated submission of OBC-NCL certificate illegal; Kerala HC directs to reconsider candidature of woman who failed to submit certificate on time due to pregnancy

https://wp.me/pcenps-12TF


Madras High Court

Dissolution of Marriage

Madras HC | 12 long years of proceedings, but no appearance of wife. Assault on husband’s vital body part, not denied. Can her appeal against dissolution of marriage be still accepted? Read on

https://wp.me/pcenps-12Om

Defamation

Toon Controversy | Cartoonist wanting to express anger, cannot be construed as defamation: Madras HC quashes criminal case against cartoonist, says cannot teach ethics to people

https://wp.me/pcenps-12T8

Domestic Violence Act

Proceedings under Domestic Violence Act, whether criminal or civil, will challenge to them be maintainable under Art. 227 of Constitution? Madras HC answers

https://wp.me/pcenps-12Y4

LGBTQIA+

Madras HC Judge “removes Lordship’s hat” for framing guidelines for proper recognition of LGBTQIA+ rights, acknowledges “gurus” for pulling him out of darkness of ignorance: Read detailed case report

https://wp.me/pcenps-12TA

Motor Accident Claim

Madras HC | In motor accident claims, can tribunal deduct certain percentage from compensation because rider had a learner’s license? Court answers

https://wp.me/pcenps-1325

Child Pornography 

Viewing ‘Child Pornography’ is an offence? Is there a distinction between a one-time consumer of ‘child pornography’ and someone who distributes and transmits it on a digital domain? Imperative Decision

https://wp.me/pcenps-131O

Advocates

  • Madras HC | Is there any mechanism to take action against members of legal fraternity for their misbehaviour with officials on duty? Bar council of Tamil Nadu to respond

https://wp.me/pcenps-130U

  • Significance of ‘suo motu’ action under S. 35 of Advocates Act | Synoptic report of Madras HC decision on power and mechanism of Bar Council to take action against erring Advocates

https://wp.me/pcenps-133H

Contempt of Court 

Madras HC | Sons turning turtle after giving undertaking to vacate their father’s premises is Contempt of Court: Read synopsis of Court’s opinion

https://wp.me/pcenps-130Q


Madhya Pradesh High Court

Sensitivity of Judges

MP HC | Judge ought to have seen the sensitivity of the matter; Strict compliance of S. 309 of CrPC directed to Trial Courts

https://wp.me/pcenps-139e

Bail

MP HC | Bail denied to juvenile in Rape Case; Court questions lawmakers conscience, How many more Nirbhayas’ sacrifice would be required?

https://wp.me/pcenps-1396

Advocates

MP HC | Whether Advocates who appear on behalf of agencies like CBI, ED etc. before HC and lower Courts, appointed by process of consultation with HC, in terms of S. 24(1) and 24(4) of CrPC? Court seeks clarification from State

https://wp.me/pcenps-136o

Unlawful Detention

MP HC | Police comes up with the argument that the CCTV cameras are dysfunctional in order to cover up instances of unlawful detention; Court demands explanations

https://wp.me/pcenps-132k

Doctors

Striking doctors have completely forgotten the solemn oath taken by them; MP HC declares strike illegal

https://wp.me/pcenps-12SL


Meghalaya High Court

COVID-19 Vaccination

Megh HC | Whether vaccination can at all be made mandatory and whether such mandatory action can adversely affect the right of a citizen to earn his/her livelihood? Court answers

https://wp.me/pcenps-137x


Orissa High Court

Public Servant

Can writ under Art. 226 of Constitution be enforced if any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant? Orissa HC discusses

https://wp.me/pcenps-12Oz

Disputes Questions of Facts

Ori HC | Where disputed questions of facts are involved, a petition under Art. 226 of Constitution is not a proper remedy; Leading of evidence and examination and cross-examination of witnesses required

https://wp.me/pcenps-12Ou

Affidavit

Ori HC | Is the common practice of advocate’s clerk swearing an affidavit permissible in law? Is there an exception, if yes, upto what extent?

https://wp.me/pcenps-1347

Anticipatory Bail

Ori HC | Anticipatory bail rejected due to petitioner being a journalist/influential person having political connections; Offence being economic offence, custodial interrogation demanded

https://wp.me/pcenps-133n

Rule of Attribution

Do “rule of attribution” which is relevant to the functioning of a limited company be applied in the case of organizational structure like Railways? Orissa HC answers

https://wp.me/pcenps-12Yc

Rights of a Lessee

Ori HC | Rights of a lessee in a Khasmahal land are similar to those of owner of a private land; Interest in such land is both hereditary and transferable

https://wp.me/pcenps-12TP

Promotion 

Ori HC | An officer who substantially holds a lower post merely to discharge the duties of a higher post cannot be treated as a promotion; Only eligible for a ‘charge allowance’

https://wp.me/pcenps-12SV

Decongest Prisons

Decongest prisons, upgrade other State buildings to meet prison requirements; Orissa HC asks for a detailed plan from State

https://wp.me/pcenps-12Pu


Patna High Court

Sensitization of Judicial Officers

Pat HC | Sensitize judicial officers towards Child rights; HC urges Chief Justice

https://wp.me/pcenps-12Z1

Appointment of Doctors

Pat HC | “Health Department is severely deficient in terms of manpower”; HC directs State to be flexible regarding maximum age limit of 37 years in appointing doctors

https://wp.me/pcenps-1349

COVID-19

Pat HC | We are not just fighting a pandemic; we are fighting an infodemic; HC slams Bihar government over reluctance to put credible stats of Covid deaths in public domain

https://wp.me/pcenps-1337


Punjab and Haryana High Court

Live-in Relationship

P&H HC | Inaction to legitimately end matrimonial alliance from wife before entering into live-in-relationship is incongruous

https://wp.me/pcenps-1344

Police Encounter

P&H HC | Dead body kept at home for 9 days due to rejection by family to cremate; HC directs second post-mortem in gangster Jai Pal Bhullar’s alleged police encounter after SC’s intervention

https://wp.me/pcenps-1366

Legal Guardian

P&H HC | Husband is legal guardian of his minor Hindu wife; HC quashes kidnapping case against husband

https://wp.me/pcenps-12TK

Custody

P&H HC | Extra-marital affair cannot lead to conclusion that woman would not be a good mother; HC grants custody of 4-year-old to the mother

https://wp.me/pcenps-12PO

Divorce

P&H HC | 6 months wait is uncalled for; HC waives 6 months’ requirement, grants divorce to couple entrapped in an irretrievably broken marriage

https://wp.me/pcenps-12T1

COVID-19

  • P&H HC | “Extreme technicality highly deplorable”; HC holds denial of permission to import ventilators is against interest of the patients

https://wp.me/pcenps-12Oe

  • P&H HC | Set Uniform rates for RAT and RT-PCR tests in Punjab, Haryana and Chandigarh; HC directs States

https://wp.me/pcenps-12Nd


Sikkim High Court

Judicial Services

Sikk HC | ‘Honourable acquittal’, ‘acquittal giving benefit of doubt’ raises and rests presumption-Difference demerits a candidate of merit |  No room for error in judicial services

https://wp.me/pcenps-132q


Telangana High Court

Section 498-A IPC

Tel HC | Can cousin of a husband who was accused of offence under S. 498-A IPC be also roped in on grounds of instigating and supporting husband? Read on

https://wp.me/pcenps-12WS


Tripura High Court

COVID-19

Tri HC | Disproportionate distribution of vaccines in age group where there is a severe shortage, needs to be addressed by the State

https://wp.me/pcenps-12SX


Uttaranchal High Court

COVID-19

Utt HC | Covid 19 infection, vaccination and precautions in the prisons; Court issues directions, forms committee

https://wp.me/pcenps-132h

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., addressed a matter with regard to offences under Section 138 of Negotiable Instruments Act, 1881.

Instant revision petition was filed against the decision passed by the Additional Sessions Judge dismissing the appeal filed by the petitioner and affirming the Judgment of Metropolitan Magistrate convicting petitioner for offences under Section 138 of Negotiable instruments Act.

Respondent 2 instituted a complaint against the petitioner for an offence punishable under Section 138 NI Act.

Petitioner submitted that he was to procure material for assembling the computers for supply to the complainant and the cheque was given as a security for the loan which was to be arranged by the complainant from other parties.

Analysis, Law and Decision

Bench noted that the acknowledged receipt stated that the petitioner had taken a loan of Rs 15,00,000 and in lieu of the loan he issued a cheque. The said receipt was signed by the petitioner.

Court for the above-stated decided that the fact that there was no witnesses and the fact that it does not state as to from whom the loan was being taken doesn’t persuade the Court to disbelieve the document.

The said cheque was returned with endorsement “Insufficient Funds”.

Receipt along with cheque made out a case under Section 138 NI Act. Presumption under Section 139 of the N.I. Act, therefore, arises in favour of the holder of the cheque i.e. the complainant and unless the contrary is proved, that the complainant has received the cheque for discharge, in whole or in part, of any debt or other liability.

Bench stated that the petitioner couldn’t rebut the presumption under Section 139 NI Act. He didn’t deny his signatures on the cheque and did not deny the fact that the receipt was given by him which acknowledged a sum of Rs 15,00,000 taken as a loan.

Further, it was also added that the mere ipse dixit of the petitioner and the statement in defence under Section 313 CrPC without any material does not rebut the presumption cast on the petitioner under Section 139 of the N.I. Act.

The fact that the loan was given in violation of Section 269 SS of IT Act does not mean that the Court cannot look into the documents at all.

Offence Section 269 SS IT Act at best makes an offence under Section 271 D of the IT Act but it does not mean that the loan of Rs.15,00,000/- has not been given by the complainant to the petitioner herein. 

High Court agreed with the Courts below that the initial burden cast against the petitioner had not been discharged.

In view of the above revision, the petition was dismissed. [Barun Kumar v. State of NCT of Delhi, 2021 SCC OnLine Del 3498, decided 25-06-2021]


Advocates before the Court:

For the Petitioner: Mr. Dheeraj Malhotra and Mr.Gaurav Gupta, Advocates

For the Respondents: Mr Hirein Sharma, APP for the State Mr. Shakeel Sarwar Wani and Mr. Himanshu Garg for respondents No.2 to 4

Case BriefsHigh Courts

Allahabad High Court: Vivek Varma, J., held that factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done by the trial court.

In the instant matter, OP had filed a complaint under Section 138 of the Negotiable Instruments Act against the applicant as the cheques issued by the applicant was returned by the bank with the remark “fund insufficient”.

A legal notice in view of the above-stated circumstances was sent. There is a presumption of service of the said notice and despite service of notice, the applicant did not make any payment nor sent any reply.

Analysis, Law and Decision

Bench stated that Section 138 NI Act was considered by the Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555, wherein the presumption under Section 114 of the Evidence Act and Section 27 of the General Clauses Act was enunciated.

The above-stated case was followed by the Supreme Court in Ajeet Seeds Limited v. K. Gopala Krishnaiah, (2014) 12 SCC 685 and held that absence of averments in the complaint about service of notice upon the accused’s is the matter of evidence.

Noting the settled legal position in the above cases, Bench expressed that the complaint cannot be thrown at the threshold even if it does not make a specific averment with regard to service of notice on the drawer on a given date. Complaint, however, must contain basic facts regarding the mode and manner of issuance of notice to the drawer of the cheque.

Supreme Court’s decision in Subodh S. Salaskar v. Jayprakash M. Shah, (2008) 13 SCC 689, was relevant to the present matter.

High Court elaborated that, notice being sent on 19-09-2012, if the presumption of service of notice within a reasonable time is raised, shall be deemed to have been served, at the best within a period of 30 days from the date of issuance. Applicant was required to make payment in terms of the said notice within 15 days thereafter.

The factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court and not by this Court under the jurisdiction conferred by Section 482 CrPC.

However, since the complaint case was pending since the year 2014, as per the mandate of the Act the proceedings under Section 138 NI Act ought to be concluded within 6 months.

Hence, the Court below was directed to expedite the hearing of the complaint case. [Anil Kumar Goel v. State of U.P., 2021 SCC OnLine All 410, decided on 7-06-2021]


Advocates before the Court:

Counsel for Applicant:- Anand Prakash Dubey, Pradeep Kumar Rai, Saurabh Trivedi

Counsel for Opposite Party:- Govt. Advocate Vikrant Rana

Case BriefsHigh Courts

Allahabad High Court: Vivek Varma, J., refused to quash a complaint case filed under Section 138 NI Act and directed the trial court to expedite the hearing.

Instant application was filed to quash the proceedings of a Complaint Case under Section 138 of Negotiable Instruments Act, 1881pending in the Court of Metropolitan Magistrate.

Applicant’s Counsel submitted that the cheque in question was not issued against any existing debt or liability and the date of service of notice was not disclosed in the complaint. It was added that until the date of service of notice is not disclosed, the cause of action to initiate the prosecution under Section 138 NI Act will not arise.

Though the AGA appearing for the State submitted that the disclosure of the date of service of notice is not mandatory. The said is a matter of evidence and can be seen during the trial.

Analysis, Law and Decision

Bench first referred to Section 138 of NI Act and further, the decision of Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555 wherein presumption under Section 144 of the Evidence Act and Section 27 of the General Clauses Act was enunciated.

The above case was followed in the Supreme Court decision of Ajeet Seeds Limited v. K. Gopala Krishnaiah, (2014) 12 SCC 685, wherein it was held that the absence of averments in the complaint about service of notice upon the accused is the matter of evidence.

High Court in view of the above settled legal position stated that the complaint cannot be thrown at the threshold even if it does not make a specific averment with regard to the service of notice on the drawer on a given date.

Though the Bench added that the complaint must contain basic facts regarding the mode and manner of issuance of notice to the drawer of the cheque.

“…factum of disputed service of notice requires adjudication on the basis of evidence. The same can only be done and appreciated by the trial court and not by this Court under the jurisdiction conferred by Section 482 Cr.P.C.”

Burden of proving that the cheque was issued for debt or liability will also be upon the applicant and can be gone into by the Trial Court.

Pre-trial cannot be held before the actual trial begins. At the stage of summoning, the Magistrate has only to see whether a prime facie case is made out or not.

Therefore, in view of the Supreme court decision and the reasons stated above, the present application was dismissed.

The complaint case had been pending since 2007 and the as per Negotiable Instruments Act the proceedings under Section 138 NI Act ought to be concluded within 6 months, hence Court directed the lower court to expedite the hearing. [Ganesh Babu Gupta v. State of U.P.,  2021 SCC OnLine All 420, decided on 7-06-2021]

Case BriefsHigh Courts

Jammu and Kashmir High Court, Srinagar: Sanjeev Kumar, J., while addressing a matter in respect to Section 138 NI Act, stated that

“…issuance of process and putting a person to trial is a serious matter and the Magistrate, while exercising such power cannot afford to be mechanical or lackadaisical.”

Petitioner has sought quashment of the Order passed b Judicial Magistrate in the case file titled as Aijaz Ahmad Dar v. Zulfikar Ahmad Dar, whereby and where under trial court has while taking cognizance of complaint filed by the respondent under Section 138 of the Negotiable Instruments Act, has issued the process for appearance of the accused (petitioner).

Respondent instituted a complaint under Section 138 NI Act against the petitioner in trial court. It was alleged that respondent had lent more than two crores and seventy-five thousand to the petitioner through different modes.

Petitioner had paid part of the said amount and was reluctant t pay the balance amount. But the matter was settled in the month of October/November 2019. Petitioner discharged his liability by making payment of Rs 40 Lakhs in cash and issued 4 cheques for amount of Rs 32 Lakhs and amount of Rs 10 lakhs was to be paid in a short period of time.

Further, it was stated that before the respondent could present the cheques for encashment to the bank, he was requested by the petitioner not to present cheque dated 10-05-2020 for an amount of Rs.10 lacs for encashment with a promise that petitioner would make the payment of the entire amount once the lockdown imposed by the Government due to COVID-19 was lifted.

Petitioner did not keep his promise and respondent presented the remaining three cheques which were all dishonoured for the reason of insufficient balance. On informing the petitioner about the same, he was requested by the respondent to pay the amount of Rs 42 lakhs but he avoided the same.

In view of the above, respondent served a demand notice. Despite having received the same, petitioner failed to liquidate the amount and hence the respondent filed the complaint which is impugned in the present petition.

Analysis, Law and Decision 

Understanding of the term ‘Cognizance’

High Court explained the meaning of the word “Cognizance”. The said word means ‘knowledge’ or ‘notice’ and taking cognizance of offence means, ‘taking notice’ or ‘become aware of the alleged commission of offence’.

The term ‘cognizance of offence’ is nowhere defined in the Code of Criminal Procedure.

Further, the Bench stated that Sections 190 to 199 of the CrPC deal with method and the limitations, subject to which various criminal Courts ought to take cognizance of offences.

In the Supreme Court decision of R. R. Chari v. State of U.P, AIR 1962 SC 1573, held that:

 “Taking cognizance does not mean any formal action or accepted action of any kind but occurs as soon as a magistrate, as such involves his mind to the suspected commission of the offence.”

Court observed that generally the Magistrates, before whom the complaint of facts constituting offences are presented, mix up the ‘cognizance’ and the ‘issuance of process’.

The cognizance in matters like the present one is taken under Section 190 CrPC and it is only after the Magistrates takes cognizance under Section 190 CrPC, he proceeds to record the preliminary statement of the complainant and his witness, if any present, so as to find out whether the allegation in the complaint, which constitutes an offence, are substantiated.

Sometimes on not being satisfied after taking cognizance, the Magistrate postpones the issue of process and resorts to inquiry under Section 202 of CrPC.

Preliminary Statement and Section 138 NI Act

High Court made a very pertinent observation that, in the matter of complaint under Section 138 NI Act, in which the ingredients of offence are clearly pleaded and made out with the support of documentary evidence, the omission to discuss the preliminary statement of the complainant and his witness may be an irregularity, but that would not vitiate proceedings unless in the Court’s opinion a failure of justice has in fact been occasioned.

In view of the above-stated discussion, Court did not accept the plea of the petitioner that for not discussing and analysing preliminary statements of complainant and his witness the impugned order is vitiated.

Another observation laid down in view of the facts of the present matter was that, in a case involving the dispute purely of a civil nature, the criminal law cannot be set in motion but, it is equally well settled that certain offences like the offences of cheating, criminal breach of trust, criminal misappropriation and offence under section 138 of the NI Act do arise out of the civil transactions and if the ingredients of offence/offences are made out, criminal law too can be set in motion alongside the civil remedy for resolution of the dispute. 

Mens Rea and Dishonour of Cheque

Section 138 creates a statutory offence in the matter of dishonour of cheques on the grounds of insufficiency of funds in the account maintained by a person with the banker and that it exceeds the amount arranged to be paid. Generally, in the criminal law, mens rea is an essential component of crime but dishonour of cheque is a criminal offence where there is no need to prove a mens rea.

In the present matter, enough material was appended to put the petitioner on notice to face the trial.

Hence, complaint filed by the respondent and impugned summoning order issued by the trial court were fully in consonance with the law and required no interference.

In view of the above, petition was dismissed. [Zulfikar Hussain Dar v. Aijaz Ahmad Dar, 2021 SCC OnLine J&K 345, decided on 17-05-2021]

Case BriefsHigh Courts

Gujarat High Court: Vaibhavi D. Nanavati, J., compounded an offence under Section 138 of the Negotiable Instruments Act and set aside the conviction and sentence of the accused, while observing at the same time that generally powers under Section 482 CrPC are not to be exercised when a statutory remedy is available under law.

Brief Facts of the Matter

Applicant issued a cheque of amount Rs 9,00,000 in favour of the original complainant and on depositing the same, the cheque came to be dishonoured with the notings that ‘Account Closed’.

After issuance of notice, original complainant instituted the Criminal Complaint about the alleged offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

Trial Court had convicted the applicant imposing 1-year imprisonment and also directed the applicant to pay compensation to the tune of Rs 13,50,000.

Original complainant thereafter instituted Criminal Appeal for enhancement of sentence. But later, both complainant and respondent 2 arrived at a settlement which was reduced in writing form.

Analysis, Law and Decision

While pronouncing its decision Court stated that it would be apposite to refer to the observation made and guidelines issued by the Supreme Court in the case of Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663.

Further, the High Court referred to a plethora of decisions with respect to the issue involved in the present matter.

Respondent 2 on 31-03-2021 stated that the parties have arrived at a settlement and the entire amount agreed between the parties was received by respondent 2 and that now he had no objection if the conviction of the applicant with respect to present offence was quashed.

Bench added that,

 Applying the ratio of various decisions by this Court and the Supreme Court as well as in view of the guidelines as laid down in the case of Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663 as also considering the object of Section 138 of the NI Act, which is mainly to inculcate faith in the efficacy of banking operations and credibility of transacting business through cheque as also taking into account the provisions of Section 147 which states that every offence punishable under this Act shall be compoundable.

High Court also noted that generally the powers available under Section 482 of the Code would not have been exercised when a statutory remedy under the law is available, however, considering the peculiar set of facts and circumstances it would not be in the interest of justice to relegate the parties to the appellate court. 

In Court’s opinion, taking into account the guidelines as laid down in the case of the above stated Supreme Court decision and the fact that the parties have settled the dispute amicably, the compounding of the offence was required to be permitted.

 Hence the present application was allowed. The decision passed by Additional Senior Civil Judge and Additional Chief Judicial Magistrate under Section 138 NI Act was set aside. [Khokhar iliyas Bismillah Khan v. State of Gujarat, 2021 SCC OnLine Guj 852, decided on 06-05-2021]

Case BriefsSupreme Court (Constitution Benches)

Supreme Court: Noticing that the summary trials of complaints filed under Section 138 of the Negotiable Instruments Act, 1881 are being routinely converted to summons trials in a “mechanical manner”, the Constitution bench of SA Bobde, CJ and L. Nageswara Rao, BR Gavai, AS Bopanna and S. Ravindra Bhat, JJ has directed the High Courts to issue practice directions to the Magistrates for recording cogent and sufficient reasons while doing so.

The Court explained that in a case tried summarily in which the accused does not plead guilty, it is sufficient for the Magistrate to record the substance of the evidence and deliver a judgment, containing a brief statement of reasons for his findings. There is a restriction that the procedure for summary trials is not to be applied for any sentence of imprisonment exceeding three months. However, Sections 262 to 265 of the Code were made applicable “as far as may be” for trial of an offence under Chapter XVII of the Act, notwithstanding anything contained in the Code.

“It is only in a case where the Magistrate is of the opinion that it may be necessary to sentence the accused for a term exceeding one year that the complaint shall be tried as a summons trial.”

However, considering the the responses of various High Courts, the Court noticed that the conversion by the Trial Courts of complaints under Section 138 from summary trial to summons trial is being done mechanically without reasons being recorded.

“The result of such conversion of complaints under Section 138 from summary trial to summons trial has been contributing to the delay in disposal of the cases.”

Further, the second proviso to Section 143 mandates that the Magistrate has to record an order spelling out the reasons for such conversion. The object of Section 143 of the Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, to the extent possible.

“The discretion conferred on the Magistrate by the second proviso to Section 143 is to be exercised with due care and caution, after recording reasons for converting the of the complaint from summary trial to summons trial. Otherwise, the purpose for which Section 143 of the Act has been introduced would be defeated.”

Listing the matter for further consideration after 8 weeks, the Court concluded:

1) The High Courts to issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 of the Act from summary trial to summons trial.

2) Inquiry shall be conducted on receipt of complaints under Section 138 of the Act to arrive at sufficient grounds to proceed against the accused, when such accused resides beyond the territorial jurisdiction of the court.

3) For the conduct of inquiry under Section 202 of the Code, evidence of witnesses on behalf of the complainant shall be permitted to be taken on affidavit. In suitable cases, the Magistrate can restrict the inquiry to examination of documents without insisting for examination of witnesses.

4) Suitable amendments be made to the Act for provision of one trial against a person for multiple offences under Section 138 of the Act committed within a period of 12 months, notwithstanding the restriction in Section 219 of the Code.

5) The High Courts to issue practice directions to the Trial Courts to treat service of summons in one complaint under Section 138 forming part of a transaction, as deemed service in respect of all the complaints filed before the same court relating to dishonour of cheques issued as part of the said transaction.

6) Trial Courts have no inherent power to review or recall the issue of summons. However, this does not affect the power of the Trial Court under Section 322 of the Code to revisit the order of issue of process in case it is brought to the court’s notice that it lacks jurisdiction to try the complaint.

7) Section 258 of the Code is not applicable to complaints under Section 138 of the Act. To conclusively deal with this aspect, amendment to the Act empowering the Trial Courts to reconsider/recall summons in respect of complaints under Section 138 shall be considered by the Committee constituted by an order of this Court dated 10.03.2021.

On 10.03.2021, a Committee with Hon’ble Mr. Justice R.C. Chavan, former Judge of the Bombay High Court, as the Chairman was formed to consider various suggestions that are made for arresting the explosion of the judicial docket.

8) All other points, which have been raised by the Amici Curiae in their preliminary report and written submissions and not considered herein, shall be the subject matter of deliberation by the aforementioned Committee. Any other issue relating to expeditious disposal of complaints under Section 138 of the Act shall also be considered by the Committee.

The aforementioned directions came in the case relating to “Expeditious Trial of Cases under Section 138 of N.I. Act 1881” in the light of the humongous pendency of complaints under the said provision.

The preliminary report submitted by the Amici Curiae showed that as on 31.12.2019, the total number of criminal cases pending was 2.31 crores, out of which 35.16 lakh pertained to Section 138 of the Act. The reasons for the backlog of cases, according to the Amici Curiae, is that while there is a steady increase in the institution of complaints every year, the rate of disposal does not match the rate of institution of complaints.

[In Re: EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881, 2021 SCC OnLine SC 325, decided on 16.04.2021]


Appearances before the Court by:

Amici Curiae: Senior Advocate Siddharth Luthra and advocate K. Parameshwar

Tushar Mehta, Solicitor General of India and Vikramjit Banerjee, Additional Solicitor General of India,

Advocate Ramesh Babu for the Reserve Bank of India

Advocate Dr. Lalit Bhasin for the Indian Banks’ Association.

Case BriefsHigh Courts

Delhi High Court: Rajnish Bhatnagar, J., held that:

“Once a cheque is issued by a person, it must be honored and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences.”

Accused 2, 3 and 4 had approached Respondent 2 in January 2009 and allured him into investing Rs 50 lacs in their company with the assurance that the same would be doubled in 5 years and relying on such assurances, he invested his lifetime savings with them.

Accused persons failed to return the principal amount with interest being total of Rs 1 Crore but then he was further inducted to invest Rs 20 lacs more with the promise to return Rs 2 crores on or before March 2019 and that MoU dated 26-07-2018 was executed, whereby accused persons undertook to pay the complainant a sum of Rs 47,53,519 and a cheque was also issued; and that later MoU dated 05-05-2019 was executed and it was promised that the complainant would be made a partner in the business and receipt of Rs 50 lacs as principal amount was retained with the promise that it would be safe and secure with them and it would become Rs 2 crores in 2019.

On 18-02-2019 another Promissory Note was issued by accused 2 in favour of the complainant and his wife acknowledging liability to pay an amount of Rs 2,47,53,000/- payable to the complainant and his wife on or before 30-06-2019.

Later, in July 2019 nine cheques were issued and the said cheques were dishonored and while cheque at Sr No. 1 was dishonored for the reasons “account closed”, the bank returning memos in respect of other cheques from Sr Nos. 2 to 9 came with the remarks “kindly contact drawer”.

Respondent 2 served a legal notice upon the accused persons, which were duly served upon but since no payment was made under the cheque, the complaint was filed by respondent 2.

Accused 4/ Petitioner was summoned by the MM for offences under Section 138 of the Negotiable Instruments Act.

Petitioner sought quashing of the present proceedings on the grounds that neither she was a Director nor she had signed the cheques in question nor she ever participated in any of the meeting or negotiations with the complainant with regard to the transactions in question nor she ever executed any document, hence she had no role in the offence.

Analysis, Law and Decision

“…Negotiable Instruments Act, provides sufficient opportunity to a person who issues the cheque.”

Bench stated that the High Court cannot usurp the powers of the Metropolitan Magistrate and entertain a plea of an accused, as to why he should not be tried under Section 138 of the N.I. Act.

The plea regarding why he should not be tried under Section 138 NI Act is to be raised by the accused before the Court of Metropolitan Magistrate.

Further, the High Court expressed that an offence under Section 138 of the N.I. Act is technical in nature and defences, which an accused can take, are inbuilt; for instance, the cheque was given without consideration, the accused was not a Director at that time, accused was a sleeping partner or a sleeping Director, cheque was given as a security etc., etc., the onus of proving these defences is on the accused alone, in view of Section 106 of the Indian Evidence Act, 1872

Burden of Proving

Offence under Section 138 NI Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial under Section 138 NI Act, he alone had to take the plea of defense and the burden cannot be shifted to complainant.

“…no presumption that even if an accused fails to bring out his defense, he is still to be considered innocent.”

If an accused has a defense against dishonour of the cheque in question, it is he alone who knows the defense and responsibility of spelling out this defense to the Court and then proving this on the accused.

In the instant case, respondent 2/complainant stated that under Section 138 of N.I. Act has made specific averments that while Accused’s 2 and 3 were directors of the company, accused 4 had been handling finance and accounts of the accused 1 company and responsible for its day to day operations alongwith other accused persons.

Court stated that the plea raised for the petitioner that Summy Bhasin never participated in any negotiations with the complainant cannot be considered at this preliminary stage since such defense can only be considered during the trial stage.

Prosecution under Section 138 of the Act can be launched for vicarious liability against any person, who at the time of commission of offence was in charge and responsible for the conduct of the business of the accused company.

Petitioners plea that the offences were committed without his knowledge cannot be considered at this stage considering the fact that the Complainant specifically averred that negotiations had taken place with him along with other co-accused persons and they were prima facie aware about the whole series of transaction.

Lastly, Bench expressed that the deal with the complainant was not a trivial or a routine case of marketing, sale or purchase of goods or services.

When such a huge investment was being sought from the complainant and applied for the running of the affairs of the company, it is not fathomable that the accused persons were unaware of the financial implications for themselves and for the accused company.

In exercise of jurisdiction under Section 482 CrPC, Court cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed questions of facts.

Therefore, it can be concluded from the above discussion that, Section 138 of the NI Act spells out the ingredients of the offence and the said ingredients are to be satisfied mainly on the basis of documentary evidence, keeping in mind the presumptions under Sections 118 and 139 of NI Act and Section 27 of the General Clauses Act as well as the provisions of Section 146 of the Act.

“…trial that alone can bring out the truth so as to arrive at a just and fair decision for the parties concerned.”[Summy Bhasin v. State of NCT of Delhi, 2021 SCC OnLine Del 1189, decided 10-03-2021]

Case BriefsHigh Courts

Kerala High Court: K. Haripal, J., addressed the instant complaint instituted by the appellant alleging offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The Bench remarked,

“The degree of proof expected from the accused is not as rigorous as that of the complainant. He can discharge his onus by making dents in the case of the complainant.”

 The appellant alleged that, in consideration of a sum of Rs.1,75,000 lend by him to the respondent, a cheque for Rs.1,75,000 dated 25-06-2009 was drawn on Bayar Service Co-operative Bank by the respondent. When the cheque was represented for collection, it got dishonoured due to insufficiency of funds. Although the matter was duly intimated to the respondent, he neither paid the amount nor replied to the notice, aggrieved by the same, he moved the complaint u/s 138 of NI Act. The respondent denied the allegation that he had borrowed Rs.1,75,000 and issued the cheque in consideration of the same. However, he admitted to have borrowed Rs.30,000 from the complainant but denied the other handwritings on the cheque. According to him, he had given a signed blank cheque to the appellant, which had been misused by incorporating a huge amount as consideration; he argued that there was no legally enforceable liability to pay Rs.1,75,000. Considering the above mentioned, the Trial Court acquitted the respondent finding him not guilty.

Noticing that the respondent had disputed the financial capacity of the appellant to lend that much money, the Bench observed that the monthly income of the appellant was Rs.2,000. He had to take care of his family with two children for whom he had to earmark Rs.750/- from the monthly income. Even though he had 3 acres and 5 cents of land, there was no yield from the property. The Bench further expressed, “It is a  matter of common knowledge that, as far as rubber plant is concerned, initial years are very tough for the planter; he has to incur huge expenses for nourishing and nursing the plants. He will start to get earnings only when the trees are tapped after six or seven years.”

Further, the Bench stated that though the appellant had submitted that he had arranged the amount by availing a loan from a bank and also by pledging gold ornaments, unless the presumption was rebutted, it could not be taken that the cheque was issued in discharge of a legally enforceable liability. While relying on Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, the Bench said, it must be stated, “even if a signed blank cheque is issued towards a payment, the payee is entitled to fill up the amount and other particulars that will not invalidate the cheque.”

The question before the Bench was whether, the reason that the appellant did not respond the lawyer notice nor did enter the box, should an adverse inference be drawn against him. Relying on Basalingappa v. Mudibasappa, (2019) 5 SCC 418, the Bench quoted,

“(ii) Presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.  

(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 

(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.”

Lastly, the Bench said once execution of the promissory note was admitted, or proved, the presumption under Section 118(a) of the Act would arise that it was supported by consideration. However,

Merely for the reason that the respondent did not adduce any evidence to prove a negative fact, no adverse inference could be drawn against him. The degree of proof expected from the accused was not as rigorous as that of the complainant. He could discharge his onus by making dents in the case of the complainant.

Consequently, the Bench held that the appellant had not taken care in adducing evidence to support his ability to pay that much money. The complainant was expected to prove his case to the hilt and he could not take advantage of the failure on the part of the accused respondent. Hence, the appeal was dismissed.[Ramakrishna B.K. v. Narayana Bhat, 2021 SCC OnLine Ker 1151, decided on 09-03-2021]


Appearance before the Court by:

For Appellant: Senior Adv. V.V.ASOKAN, Adv. P.P.Ramachandran and Adv. M. Ramanya Gayathri

For Respondents: Adv. M. Sasindran and Sr. Public Prosecutor M. S. Breez


Kamini Sharma, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): The Division Bench of Venugopal M (Judicial Member) and Alok Srivastava (Technical Member) held that a demand notice is a forerunner to the commencement of insolvency proceedings against a corporate debtor. Unpaid demand notice is good enough to exhibit the debtor’s inability to pay its debts for bankruptcy proceedings. If a bonafide dispute is established then an ‘Insolvency’ petition is not the appropriate proceeding to determine the validity of a disputed debt.

On being aggrieved with the decision of National Company Law Tribunal, Mumbai, the present Company Appeal was preferred by the appellant.

Appellant submitted that no ‘Demand Notice’ was ever served on the Corporate Debtor/Second Respondent as per Section 8 of the Insolvency and Bankruptcy Code.

Tribunal’s Assessment

Tribunal noted that the appellant’s plea stated that the alleged Demand Notice of the respondent 1 was sent to an address and the same was not registered address of the ‘Corporate Debtor’ as per the master data of the ‘Corporate Debtor’ on MCA website.

Further, it was submitted by the appellant that the Demand Notice was knowingly addressed to the wrong address of the ‘Corporate Debtor’ by respondent 1.

Tribunal expressed that:

As per Section 8 of the I&B Code an Operational Creditor is required to deliver a demand notice on the occurrence of the default within ten days from the receipt of the demand notice, the Corporate Debtor shall bring to the notice of the Operational Creditor ‘the existence of the dispute’, if any, and the record of the pendency of the suit or arbitration proceedings before the receipt of such notice or invoice in relation to such dispute.

While proceeding with discussion in the above matter, Bench also stated that a change in address of the registered office of the ‘Corporate Debtor’ cannot be a ruse for the failure of the party concerned to send/issue a ‘Demand Notice’ as per Section 8 of the I&B Code. In fact, serving the demand notice to the corporate debtor is mandatory.

“If a demand notice payment under the code is issued, the ‘Corporate Debtor’ will appreciate in right earnest the consequences flowing on account of failure to pay the ‘operational debt’. Also, that . after transfer of the case form High Court to Tribunal (in respect of winding up petition) an Operational Creditor is required to submit all information including the details of the proposed Insolvency Professional.”

Tribunal opined that service of ‘Demand Notice’ to the second respondent is mandatory as per Section 8 of the Code.

Further the Bench while making observations in the present matter also added that it cannot be forgotten that the proceedings under Section 138 NI Act pertain to criminal liability for dishonour of cheques issued and do not bar an application under Section 9 of the Code. Likewise, the pendency of proceedings under Order 37 of the civil Procedure Code will not prohibit an application under Section 9 of the Code.

While concluding, the Tribunal held that:

Since the ‘Service of notice’ at the registered address of the ‘Corporate Debtor’ was not established to the subjective satisfaction of the Tribunal and the admitted fact being that the notice sent to the second respondent at its registered office got returned, the said admission of debt and the reference with regard to NI Act that a holder of cheque received the cheque for the discharge either in whole or in part of any debt or other liability will not in any way heighten or improve the case of appellant.

Since the notice as per Section 8 of I&B Code was not served upon the corporate debtor and the same got returned, NCLT’s decision is to be set aside.

Hence NCLT’s order is to be declared as illegal in appointing the ‘Interim Resolution Professional’ declaring moratorium and all other orders passed.  Corporate Debtor is therefore released from all the rigour of law and is allowed to function independently through its Board of Directors.

Before parting, Tribunal granted liberty to the Operational Creditor to issue a fresh notice under Section 8 of I&B Code and on receipt of such notice of service if there is ‘Debt and Default’ to file a fresh application under Section 9 IBC. [Shailendra Sharma v. Ercon Composites, 2021 SCC OnLine NCLAT 3, decided on 13-01-2021]

Op EdsOP. ED.

On 8-6-2020, the Ministry of Finance sought public comments with respect to a proposal to decriminalise several minor offences to decrease the burden of potential criminal liability on businesses, reduce the pendency of cases and enhance the ease of doing business in India[1]. One of the offences sought to be decriminalised was that of cheque dishonouring under Section 138 of the Negotiable Instruments Act, 1881 (“the Act”). The proposal immediately attracted widespread opposition from both within the legal fraternity, and without. We, however, believe that the decriminalisation of cheque dishonouring would not have the overwhelmingly adverse impact that most detractors of the proposal feel it will. Instead, we see the decriminalisation of the offence as leading to a simplification and consolidation of the law relating to debt recovery.

If a cheque, issued by a drawer pursuant to the discharge of a liability to the payee, is returned by the drawee bank due to the drawer not having sufficient credit/funds in his bank account, the drawer is deemed to have committed the offence of dishonouring a cheque. This imposition of criminal liability, as per Section 138 of the Act, on a person issuing bad cheques is not an age-old concept. In fact, prior to the introduction of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, the only remedy available to the payee of a dishonoured cheque lay in civil law. It is only after 1988 that the law of the land, seeking “to enhance the acceptability of cheques in settlement of liabilities.[2], brought drawers of bounced cheques under the purview of criminal law, while leaving the jurisdiction of civil courts, to also give remedy to the payees of such cheques, unaffected. Though an act is usually criminalised for the purpose of punishing the offender, rather than compensating the victim; in the case of cheque dishonouring, practical experience and the scheme of the Act shows us that the compensatory aspect of the crime takes precedence over the punitive. This predominantly compensatory object of the provisions of Chapter 17 of the Act is evidenced by the fine imposable by the court being linked to the cheque amount[3], the compoundability of the offence[4], cognizance of the offence only being taken on written complaint by the payee[5], and the summary trial procedure applicable to Section 138 proceedings[6].

The scheme of the law governing the offence of cheque dishonour seems to encourage the parties to settle the dispute by having the offender pay the cheque amount and avoid penal confinement. The Supreme Court has even devised a scheme for the graded increase in fines levied to encourage early compounding of the offence[7]. Even if the accused refuses to compromise, the Court can impose a fine up to double the cheque amount and apply it to compensate the payees of the bad cheque[8]. This primary objective of giving compensatory relief to the payee of the cheque is essentially civil in nature. Section 138 of the Act, thus, seeks to provide a civil remedy through the criminal justice apparatus. The Supreme Court has on several instances recognised that cheque dishonour cases “are really civil cases masquerading as criminal cases”.[9] The pre-eminent role of compensatory, rather than punitive considerations, while disposing of cases of cheque dishonour is evident from the Supreme Court’s decision in Meters and Instruments (P) Ltd. v. Kanchan Mehta[10], wherein the Court allowed the discharging of the accused even if the cases were not compounded with the consent of both parties; so long as the criminal court found that the complainant was duly compensated[11]. In fact, the question of decriminalising cheque dishonouring was first hinted at by the Supreme Court in an order passed by it in March of 2020.[12] When we look at the basic end that the law relating to cheque dishonour aims to serve, as well as the operation of the law in practice, it is clear that the decriminalisation of the offence would not drastically alter the substantive rights of the payee of a dishonoured cheque.

Under present law, upon dishonour of a cheque, the payee of the cheque can approach both civil and criminal fora. The payee can move civil courts by means of a suit for recovery linked to the liability sought to be discharged by the cheque. He or she can also approach criminal courts writing a complaint to a Magistrate of an offence under Section 138 of the Act. Though the liberty accorded to the payee of a dishonoured cheque to move multiple fora for remedy would, prima facie, appear to best serve the ends of justice, it does pose some problems, namely—

(i) If the payee proceeds against the accused both in criminal and civil courts, the cost incurred by both parties in contesting such simultaneous proceedings tends to create an undue burden. This would be especially true for the defendant who would be forced to contest two separate proceedings in two different fora pertaining to the alleged dishonour of a single cheque. Moreover, this would lead to a multiplicity of proceedings in relation to essentially the same subject-matter, seeking essentially the same relief. The Law Commission in its 213th Report, noted that approximately 38 lakhs Section 138 cases were pending in criminal courts nationwide[13]; while a more recent Supreme Court order put the figure closer to 35 lakhs, constituting more than 15% of criminal cases pending in District Courts.[14] Decriminalising the offence of cheque dishonouring would, at the very least, remove from the national pending cases roster those criminal cases where a corresponding civil proceeding has also been instituted, leaving the civil court to adjudicate the dispute.

(ii) If the complainant chooses to move only the criminal courts via Section 138 of the Act, the proceedings may not be concluded as expeditiously as required by the Act[15], and the civil right of action may be lost in the meantime due to the limitation period expiring. This problem came to the fore in R. Vijayan v. Baby[16], where the criminal case against the accused resulted in the Magistrate levying an inadequate amount of fine, while the limitation period for the civil action expired during the pendency of the appeal from the Magistrate’s judgment. This left the complainant with no means of recovering the cheque amount. The following obiter dicta of the Supreme Court encapsulates the problem—

  1. 19. In same type of cheque dishonour cases, after convicting the accused, if some courts grant compensation and if some other courts do not grant compensation, the inconsistency, though perfectly acceptable in the eye of the law, will give rise to certain amount of uncertainty in the minds of litigants about the functioning of courts. Citizens will not be able to arrange or regulate their affairs in a proper manner as they will not know whether they should simultaneously file a civil suit or not. The problem is aggravated having regard to the fact that in spite of Section 143(3) of the Act requiring the complaints in regard to cheque dishonour cases under Section 138 of the Act to be concluded within six months from the date of the filing of the complaint, such cases seldom reach finality before three or four years let alone six months. These cases give rise to complications where civil suits have not been filed within three years on account of the pendency of the criminal cases.[17]

Decriminalisation of the offence would do away with such exigencies, leaving the payee of a dishonoured cheque with recourse solely in civil courts. It must also be noted here that, civil courts have one advantage over criminal courts when it comes to affording relief to the payee – claiming of interest. While the scheme of Chapter 17 of the Act allows the criminal court to levy fines up to double the cheque amount and the general provisions of the Code of Criminal Procedure, 1973 also allows the criminal courts to award compensation if no such fine is levied[18], the awarding of such fines/compensation equivalent to the cheque amount together with reasonable interest accrued thereon is discretionary. The need for uniformity in the fines levied, which should include the cheque amount with 9% per annum interest thereon, was noted by the Supreme Court[19]. Civil courts, on the other hand, have a well-developed jurisprudence surrounding Section 34 of the Code of Civil Procedure, 1908, which allows for interest pre-institution of the suit, pendente lite and post-decree.

Apart from resolving the issues associated with giving the payee of a dishonoured cheque rights of action in multiple fora, decriminalising the offence leaves intact the rights of the parties to seek redressal of their disputes pertaining to such cheques by means of alternative dispute resolution processes. Under the current law, cases with regard to compoundable offences, such as the offence of cheque dishonouring, are capable of being referred to alternative dispute resolution mechanisms like arbitration, mediation, conciliation and Lok Adalats[20] for settlement, akin to references permitted under Section 89 of the Code of Civil Procedure, 1908[21]. Moreover, such alternative dispute resolution processes are usually utilised by parties to settle disputes pre-litigation, hence the rights of the parties in relation to such processes would not be affected by decriminalisation of the offence. Indeed, even without decriminalisation, alternative dispute resolution has been generally acknowledged as the key to reducing the huge backlog of cases arising out of minor wrongs such as cheque dishonouring[22].

It must be noted here that, though the decriminalisation of cheque dishonouring can make the law relating to the same more consistent, uniform and just to all litigants, it does not, in and of itself, mean that the disputes will be adjudicated more expeditiously. In fact, most critics of the decriminalisation proposal have pointed out that under the present legal framework, the remedy available to the payee of a dishonoured cheque in civil courts is by means of a general suit for recovery of money. Unlike in criminal law, there are currently no special provisions in civil law in relation to dishonoured cheque actions. However, it must be mentioned that, despite special provisions being available to payees of dishonoured cheques in criminal courts, such matters are hardly ever disposed of expeditiously, let alone within the statutory time-limit of 6 months.[23] The root cause of this problem does not relate to nature of the wrong, rather, it stems from the large-scale judicial vacancy in lower courts generally. With cheque dishonouring cases being destined to be tried in lower courts, and the large number of such cases filed, the pendency statistics of cheque dishonouring cases will continue to be aggravated for want of a sufficient number of Judges to hear them – whether civil or criminal. It has been reported that every 10 lakh Indians have access to just 19 Judges.[24] This apart, the Supreme Court has noted that, as on 22-10-2018, there were 5133 judicial vacancies out of a total of 22,036 such posts.[25] Regardless of whether cheque dishonouring is decriminalised, if the problem of judicial vacancies in the lower courts is not addressed, a mechanism for more expeditious disposal of such cases will remain elusive.

Apart from increasing the number of Judges in the lower courts, in order to ensure truly efficacious remedy to payees of dishonoured cheques, procedural provisions equivalent to those contained in Chapter 17 of the Act must be incorporated into civil law. Resultantly, suits for recovery of money arising out of dishonoured cheques must be made compulsorily summarily triable under Order 37 of the Code of Civil Procedure, 1908, with statutory time-limits for disposal of such suit and appeals therefrom. Parties to such proceedings should also be made to undergo mandatory pre-institution mediation to encourage early settling of the matter without going into litigation. Special Courts or Tribunals may also be designated the fora of recourse for all civil proceedings in relation to cheque dishonouring. If such changes to the civil law governing cheque dishonouring are effected, decriminalising the wrong would reduce the number of pending cases in criminal courts, and create one consolidated and equitable legal framework for dishonoured cheque related disputes. These changes would have the effect of bringing essentially civil wrongs out of the jurisdiction of criminal courts and bring them into the fold of the civil law system which would provide equally, if not more efficacious relief to victims of cheque dishonouring.


* Principal Associate, Khaitan and Co., e-mail: anunoy.basu@khaitanco.com. [Views are personal only and not of the Firm.]

** 5th-year student, Department of Law, University of Calcutta, e-mail:shounakmukherjee96@gmail.com.

[1] Notice Seeking Public Comment dated 8-6-2020, Department of Financial Services, Ministry of Finance, Government of India, <https://financialservices.gov.in/sites/default/files/Decriminalization%20-%20Public%20Comments.pdf>.

[2] Statement of Objects and Reasons of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 <http://www.scconline.com/DocumentLink/It14gm48>.

[3] S. 138 of the Negotiable Instruments Act, 1881.

[4] S. 147 of the Negotiable Instruments Act, 1881.

[5] S. 142(1)(a) of the Negotiable Instruments Act, 1881.

[6] S. 143 of the Negotiable Instruments Act, 1881.

[7] Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663.

[8] S. 357(1)(b) of the Code of Criminal Procedure, 1973

[9] R. Vijayan v. Baby, (2012) 1 SCC 260, para 16; see also, Rangappa    v. Sri Mohan, (2010) 11 SCC 441, para 14; Meters and Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560, para 18.

[10] (2018) 1 SCC 560.

[11] Id., at para 18.

[12] Makwana Mangaldas Tulsidas v. State of Gujarat, (2020) 4 SCC 695, para 18.

[13] Law Commission of India, Report No. 213 on Fast Track Magisterial Courts for Dishonoured Cheque Cases, Para 2.18.

[14] Makwana Mangaldas Tulsidas v. State of Gujarat, (2020) 4 SCC 695, para 4.

[15] S. 143(3) of the Negotiable Instruments Act, 1881.

[16] (2012) 1 SCC 260.

[17] Id., at 268, para 19.

[18] S. 357(3) of the Code of Criminal Procedure, 1973.

[19] R. Vijayan v. Baby, (2012) 1 SCC 260, para 18.

[20] S. 20 of the Legal Services Authorities Act, 1987; see K.N. Govindan Kutty Menon v. C.D. Shaji, (2012) 2 SCC 51.

[21] Dayawati v. Yogesh Kumar Gosain, 2017 SCC OnLine Del 11032.

[22] Law Commission of India, Report No. 213 on Fast Track Magisterial Courts for Dishonoured Cheque Cases, Para 5.5.

[23] S. 143(3) of the Negotiable Instruments Act, 1881.

[24] <https://thewire.in/law/india-has-19-judges-per-10-lakh-people-law-ministry-data>.

[25] Filling up of Vacancies, In re, 2018 SCC OnLine SC 3648 para 2

Case BriefsHigh Courts

Allahabad High Court: Ravi Nath Tilhari, J., addressed a matter wherein a person being the director of the company signed a cheque on behalf of the company and since the said cheque got dishonoured, he was made liable, without the company being made liable under the offence of Section 138 of Negotiable Instruments Act, 1881.

The instant petition was filed under Section 482 of the Code of Criminal Procedure, 1973 for quashing of summoning order passed by Additional Chief Judicial Magistrate under Section 138 of the Negotiable Instruments Act.

Facts as stated by the applicant

Applicant has been stated to be the Director of a Company and complainant/OP 2, an employee in the railways, by giving assurance of contract of road construction from his superior officers in favour of applicant’s company obtained post-dated cheque of 5 lakh rupees in terms of security money.

Complainant had assured the applicant that once he starts earning profits from the said contract work he would return the post-dated cheques.

However, applicant without any prior notice to the company, complainant presented the cheque in the bank which was dishonoured due to non-availability of funds. One of the legal notice, though was not received by the applicant, but the second notice was served.

Points that arose for consideration:

High Court formulated the following points of consideration:

  • Whether criminal prosecution against the person in charge of, and responsible for conduct of the business of the company under Section 138 NI Act, can be maintained, in the absence of any prosecution of the Company for such offence and without making the company an accused, in view of Section 141 of the NI Act?
  • Whether the cheque in question was issued by the applicant in his personal capacity or in the capacity of director of the company?
  • Whether the orders under challenge and the criminal proceedings against the applicant deserve to be quashed in the exercise of jurisdiction under Section 482 CrPC?

Analysis of the above points:

In order to consider the first point, Court referred to Sections 138 and 141 of the Negotiable Instruments Act, 1881.

On perusal of the said provisions, the essential ingredients of offence under Section 138 NI Act as laid down by the Bench were:

  • The person drew a cheque on an account maintained by him with the banker
  • When such a cheque is presented to the bank is returned by the bank unpaid
  • such cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity, whichever is earlier;
  • the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to the payee
  • Such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding return of the cheque, as unpaid and
  • Inspite of the demand notice the drawer of the cheque failed to make the payment within a period of 15 days from the date of receipt of the demand notice

For the offence to be constituted under Section 138 NI Act, all the above ingredients need to co-exist.

Supreme Court decision in Aneeta Hada v. Godfather Travels and Tours (P) Ltd., (2012) 5 SCC 661, held that Section 141 of NI Act is concerned with the offences by the company. It makes the other persons, vicariously liable for commission of an offence on the part of the company.

The vicarious liability gets attracted when the condition precedent laid down in Section 141 NI Act stands satisfied. There can be no vicarious liability unless there is a prosecution against the company. For maintaining a prosecution under Section 141 NI Act, arraying of the company as an accused is imperative.

 In Supreme Court’s decision of Standard Chartered Bank v. State of Maharashtra, (2016) 6 SCC 62, it was held that there cannot be any vicarious liability unless there was a prosecution against the Company.

In Harihara Krishnan v. J Thomas, (2018) 13 SCC 663, Supreme Court held that Section 141 stipulates the liability for the offence punishable under Section 138 NI Act when the person committing such an offence happens to be a company.

In Aneeta Hada v. Godfather Travels and Tours (P) Ltd., (2012) 5 SCC 661, it was settled that for maintaining a prosecution against the person in charge of and responsible for conduct of the business of the company under Section 138 NI Act, arraigning of the Company as an accused is imperative in view of Section 141 of the Act, as such a person can only be held vicariously liable.

With regard to point 1, hence Court held that such a person, cannot be prosecuted unless there was prosecution of the company.

Second Point

 Whether the cheque in question was issued by the applicant in his personal capacity or in the capacity of the Director of the Company?

The above-stated question can be determined from perusal of the cheque itself. It is one of the essential ingredients to constitute an offence under Section 138 NI Act, that the person drew a cheque on an account maintained with the Banker and the existence of this ingredient is to be proved from the document itself, i.e. the cheque, and for its proof no other evidence is required. Hence, Court could determine if the cheque was issued as authorized signatory or in personal capacity by the applicant by exercising its jurisdiction under Section 482 CrPC.

On perusal of the copy f the cheque it was found that the said was signed by Sanjay Singh, the applicant for Udit Infraheights Private Limited, as its authorized signatory.

Hence the cheque was not issued in the applicant’s personal capacity.

In the absence of the company, as accused, any offence was not made out, even prima facie, against the applicant for his summoning under Section 138 read with Section 141 of the NI Act.

While referring to the Supreme Court decision in Ashoke Bafna v. Upper India Steel Manufacturing and Engineering Company Ltd., (2018) 14 SCC 202, it was held that before summoning an accused under Section 138 NI Act, the Magistrate is expected to examine the nature of the allegations made in the complaint and the evidence, both oral and documentary, in support thereof, and then to proceed further with the proper application of mind to the legal principle of the issue.

Last Point

 With regard to the last point of consideration, Bench referred to the decision of Supreme Court in Rishipal Singh v. State of U.P., (2014) 7 SCC 215, Supreme Court, while considering the scope of Section 482 CrPC held that when a prosecution at the initial stage is asked to be quashed, the test to be applied is as to whether the uncontroverted allegations as made in the complaint prima facie establish the case.

In Pooja Ravinder Devidasani v. State of Maharshtra, (2015) 88 ACC 613, Supreme Court held that the Superior Court should maintain purity in the administration of justice and should not allow the abuse of process of the Court.

Therefore, Court opined that the complaint was not filed against the company, as the company was not made a party accused and no vicarious liability could be imposed upon the accused applicant.

Since, the cheque was not signed by the applicant in his personal capacity, the complaint could not have proceeded against him and no offence could be made out against the applicant.

Petition was allowed and the orders challenged were quashed. [Sanjay Singh v. State of U.P., 2021 SCC OnLine All 120, decided on 10-02-2021]

Case BriefsHigh Courts

Madras High Court: P.N. Prakash, J., decided a criminal original petition addressing an issue with regard to an offence under Section 138 of Negotiable Instruments Act, 1881.

Sree Gokulam Chits and Finance Corporation Private Limited initiated prosecution in the Court of Judicial Magistrate for the offence under Section 138 of the Negotiable Instruments Act, 1881 against Jaishankar (A1) and Nagalakshmi (A2).

Gokulam’s case was that Jaishankar (A1) joined some chit groups floated by them and became a subscriber. Jaishankar was given chit amounts towards which, he issued some cheques as security while so, Jaishankar defaulted on the repayment of the chits and when Jaishankar was informed that legal action would be taken against him, he and his wife came for settlement. His wife issued cheque, which on presentation at the bank was returned unpaid with endorsement “payment stopped by the drawer”.

Gokulam after the above incident issued a statutory demand notice and on non-completion of the said demand, Gokulam initiated a prosecution under Section 138 of the NI Act against them.

Decision

Bench noted that the impugned cheque in the present case was issued by the accused 2, i.e. Nagalakshmi from her personal bank account in discharge of the debt of her husband Jaishankar (A1).

Court added that the said cheque was not issued from the bank account of any juristic entity for invoking vicarious liability provisions viz. Section 141 of the NI Act.

If a cheque is issued by a person in discharge of the liability of another person and if the cheque is dishonored, the person, who issued the cheque can be prosecuted under Section 138 NI Act.

 High Court stated that just because Jaishankar (A1) was the beneficiary of the loan, he could not be prosecuted under Section 138 of the NI Act for the dishonour of the cheque issued by his wife Nagalakshmi (A2).

Hence, in view of the above discussion, Court while partly allowing the petition issued the following directions:

  • Prosecution against Jaishankar (A1) quashed.
  • Nagalakshmi was asked to appear before the Judicial Magistrate.
  • Nagalakshmi shall file a bail petition and cooperate in the expeditious disposal of the case without adopting any dilatory tactics.
  • If Nagalakshmi absconds, a fresh FIR can be registered under Section 229 A.

[M. Jaishankar v. Sree Gokulam Chits and Finance Corpn. (P) Ltd., 2020 SCC OnLine Mad 5550, decided n 04-12-2020]

Case BriefsHigh Courts

Delhi High Court: Suresh Kumar Kait, J., reversed the order of the lower court issuing summons against the accused in a case under Section 138 of the Negotiable Instruments Act, holding that the lower courts fell in error while computing the period of limitation.

Factual Matrix

Petitioner had borrowed a sum of Rs 10 Lacs from respondent 2 who had lent the same vide two cheques amounting to Rs 5 lacs each. Further, it was stated that after approximately 3 years, respondent 2 approached petitioner for repayment of the loan amount, petitioner assured that he will return the entire amount and in order to discharge his part liability he issued a cheque amounting to Rs 10 lacs, which was dishonored with remarks “funds insufficient”.

Complainant stated that when the above-said was informed to the petitioner, he paid no heed to his complaint and thereafter, a legal demand notice was served upon him, yet petitioner failed to make payment, therefore a complaint was filed under Section 138 NI Act.

In view of the above complaint, summons were directed to be issued against the petitioner.

The above Order was challenged and the revisional court dismissed the said petition which has been challenged.

Contentions

Petitioners Counsel submitted that the Metropolitan Magistrate had no jurisdiction to take cognizance under Section 138 NI Act without that being accompanied by application under Section 142 (1) (b) NI Act for condoning the delay in filing the complaint.

Further, while taking cognizance of the complaint, Metropolitan Magistrate did not take note of the fact that the complaint was filed beyond the limitation period and did not rightly calculate the days and therefore, directed to issue summons to the petitioner was illegal and without jurisdiction.

Analysis and Decision

Bench referred to the decision of Supreme Court in Econ Antri Ltd. v. Rom Industries Ltd., (2014) 11 SCC 769, while deciding the issue of calculation of limitation period with regard to proviso (c) to Sections 138 and 142(b) of the NI Act.

Further, the Court added that the ratio of the decision in Saketh India Ltd. v. India Securities Limited, (1999) 3 SCC 1 has to be applied to the case in hand.

Crux in the instant case was that the 15 days period with regard to legal demand notice lapsed. In terms of Supreme Court decision in Saketh India Ltd. v. India Securities Limited,  (1999) 3 SCC 1 one day has to be excluded for counting the one month limitation period and therefore, excluding the day of 19-06-2019, the limitation period started from 20-06-2019 and the limitation period expired with the day in the succeeding month immediately preceding the day corresponding to the date upon which the period started.

Consequently, the limitation period in this case, which commenced on 20-06-2019, expired in the succeeding month on a day preceding the date of commencement i.e. 19-07-2019. Admittedly, the complaint, in this case, was instituted on 20-07-2019 i.e. 01 day after the limitation period had expired.

Hence, Bench held that both the courts below have fallen in error while computing the period of limitation. Moreover, at the time of filing, the complaint was not even accompanied by an application under Section 142(1) (b) NI Act for condoning the delay.

Adding to the above, Court stated that the Revisional Court erroneously took into consideration two different dates for service of demand notice while computing the limitation period.

Therefore, the lower courts orders were set aside. [Simranpal Singh Suri v. State,  2021 SCC OnLine Del 236, decided on 01-02-2021]


Advocates for the parties:

Petitioner: M.S. Oberoi, Siddharth Khattar and Gaurav Rohilla, Advocates

Respondents: Izhar Ahmed, Additional Public Prosecutor for respondent 1

Anil Kumar Dhupar, Advocate for respondent 2