Karnataka High Court
Case BriefsHigh Courts

Karnataka High Court: M. Nagarprasanna J. allowed a petition filed under Section 482 of Criminal Procedure Code, 1973 (CrPC) seeking quashing of the impugned order passed by the Additional Chief Metropolitan Magistrate. Therefore, the magistrate court directed that interim compensation be given as per the “conduct of the accused” for the applications filed under Section 143-A of the Negotiable Instruments Act, 1881 (NI Act).

The observation came after the Court noticed that it was “flooded with litigation with regard to grant of compensation under Section 143-A of the NI Act by criminal courts”. Noticing that in several cases discretion is exercised for grant of compensation and in several other cases there are no reasons for exercise of such discretion, the Court found it necessary to direct Magistrates to consider the conduct of the accused at the outset while considering applications filed under Section 143-A of the Act.

“If the accused has been unnecessarily evading the proceedings by seeking adjournments, consideration of the application would become imperative as the amendment itself is introduced to compensate such payees of delay tactics adopted by unscrupulous drawers of cheques.”

Facts of the case

The petitioner and the respondent entered into an agreement in 2017 for the distribution of ice cream and frozen dessert products manufactured by the respondent. As per the agreement, the respondent had demanded the petitioner the issuance of blank cheques as security instead of the proposed supply to be made to the petitioner. Therefore, the petitioner issued several blank cheques to the respondent.

A complaint was filed invoking Section 200 of the CrPC for offences punishable under Section 138 of the NI Act when the cheque of Rs 5,56,71,208/- was dishonored on the grounds of want of sufficient funds in the account.

The trial court, after considering the facts, gave the impugned order of granting 10% interim compensation in terms of section 143-A of the NI Act.

Analysis of the court

Firstly, the court noted that Section 143-A of the Act was introduced for a specific purpose. The purport of the amendment was that the court may, in certain circumstances, award interim compensation which shall not exceed 20% of the amount of the cheque and such interim compensation can be permitted to be withdrawn in terms of the said amendment. Therefore, the court in such cases directs the accused to pay interim compensation under section 143-A. In circumstances when the accused would not deposit the amount directed by the Court, it is recoverable by initiating proceedings under Section 421 of the CrPC. Therefore, the provision which is a directory in the beginning snowballs into becoming mandatory and penal by the time the realization of the deposit amount is made.

The Court, further, explained the following “two-fold discretion” that are sine qua non for an order to be passed by the Magistrate while considering the application under Section 143-A of the NI Act.:

  • First: In a given case if the accused is cooperating with the trial without seeking any unnecessary adjournments, not absenting himself or his counsel on any date and cooperating with the conclusion of the trial in such cases, the learned Magistrate will have to apply his mind, exercise his discretion as to whether such applications should be entertained at all.

  • Second: In any given case, the compensation may vary from 1% to 20%. As the mandate of the statute is that it should not exceed 20%, in the cases where Magistrate proceeds to grant compensation, has to bear in mind the amount involved in the instrument, as certain transactions would run to several cores and the accused may have formidable defence against the complainant. In such cases, the Magistrate should exercise discretion in a cautious manner. Here again the conduct of the accused should be noticed.

The court opined that application of mind and passing of a reasoned order of grant of compensation becomes necessary in penal cases that ensue an accused who failed to comply with the order granting 20% compensation as the complainant is given several remedies of recovery which result in the accused being taken into custody. Hence, such orders which result in such penal consequences should be rendered by giving cogent reasons which would demonstrate the application of mind, and such orders should be passed only after hearing the accused in the matter.

Ruling on facts

In the case at hand, involving the amount of Rs. 55 Lakhs, it was observed that the order of the Magistrate did not bear any reason. Hence, the Court held that the Magistrate after analyzing the conduct of the accused should grant compensation which would vary from 1% to 20% after recording necessary reasons and therefore set aside the impugned order and remitted back the matter to the hands of themagistrate.

[V. Krishnamurthy v. Diary Classic Ice Creams Pvt. Ltd., 2022 SCC OnLine Kar 1047, decided on 01-06-2022]


Advocates who appeared in this case :

Maruthi, Joshna Hudson Samuel, Advocates, for the Petitioner;

Dinesh SK, Advocate, for the Respondent.

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J. refused to allow a petition filed under Section 482 CrPC seeking quashing of summoning order passed by the Metropolitan Magistrate, Patiala House Courts in complaint filed by the respondents 1 and 2 against the petitioner under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881.

A complaint was filed when the cheque issued by the petitioner for a sum of Rs 24 lakhs was dishonoured.

After the Trial Court had summoned the accused to face the trial for the offence under Section 138 of the NI Act, a petition under Section 482 CrPC was filed challenging the summoning order, which was disposed of vide orders by a Co-ordinate Bench of this Court, permitting the petitioner to raise all issues before the Trial Court before the Notice under Section 251 CrPC was served on the petitioner.

Thereafter, the petitioner moved an application “for recall of the summoning order/discharge of the accused”.

Analysis and Decision


High Court on perusal of the impugned order noted that it was a well-reasoned one and in respect of the contention that there was no averment in the complaint against the petitioner, the Trial Court noted that the ‘post-dated cheque’ was issued towards consultancy fees and was duly signed by accused 2 who was the petitioner before this Court.

The Supreme Court decision in SMS Pharmaceuticals v. Neeta Bhalla, (2007) 4 SCC 70, had made the signatory of the cheque responsible under Section 141(2) of the NI Act.

Plea that the cheque had been reported ‘lost’, it was for the petitioner to prove the same. He would have also gotten an opportunity to cross-examine the Bank Officials to establish that they had an obligation to have refused honouring the cheque on the ground that the cheque had been reported ‘lost’ by the drawer, to get the benefit of the decision in Raj Kumar Khurana v. State of (NCT of Delhi), (2009) 6 SCC 72. Hence, the trial Court was right in holding that the loss of cheque could be ascertained only during trial.

Therefore, since there was no error or perversity in the impugned order, no interference was called for by this Court in exercise of its inherent powers under Section 482 CrPC. [Rajeev Ranjan Sinha v. Sushil Kumar Saxena, 2022 SCC OnLine Del 1577, decided on 26-5-2022]


Advocates before the Court:

For the Petitioner:

Mr Siddharth Dutta and Ms Gunjan Malhotra, Advocates

For the Respondents:

Ms Manjeet Arya, APP for respondent No.3/State

Case BriefsDistrict Court

Dwarka Courts, New Delhi: Deeksha Sethi, MM (NI Act)—06, reiterated that, even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, 1881.

In the present matter, Raj Singh was referred to as ‘complainant’ and the accused were relatives as the marriage of the son of the complainant and daughter of the brother of the accused was solemnized.

The complainant’s case was that in the second week of April 2015 accused along with his brother approached him and requested a sum of Rs 12 lakhs and 8 lakhs respectively as they were in dire need of money. It was assured to the complainant that they would return the money within 12 months along with interest @ 2% per month.

It was stated that, the accused and his brother paid the interest only on two occasions and thereafter neither paid the interest nor principal amount despite repeated requests.

Thereafter, in the discharge of their liability accused’s brother gave a cheque amounting to Rs 8 lakhs as part payment and accused Yashpal Singh also gave a cheque amounting to Rs 12 lakhs.

Both the above cheques were dishonoured with the remarks ‘Insufficient Funds’.

The complainant had informed about the dishonouring of the cheque by the accused and his brother, however, the accused and his brother refused to return the amount and threatened the complainant with dire consequences.

Later, since the accused failed to make payment despite the notice, therefore liability to be tried and punished for an offence under Section 138 NI Act.

Analysis, Law and Decision

Court noted that the accused had admitted the fact that the cheque in question had his signatures and in such scenario, a presumption was raised under Section 139 read with Sections 118/20 of the NI Act, that cheque was issued in discharge of debt or liability.

With regard to the contention of the accused regarding certain particulars of the cheque were not filled by the accused and hence it was difficult to believe the complainant’s version, Court expressed that, even it was admitted for the sake of argument that blank cheque was given by the accused to the complainant, it is a well-settled principle of law that,

“…even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, 1881, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

Hence, the contention of the accused could not be accepted.

Misuse of Cheque

The Bench noted that the accused neither placed on record any complaint made to the police or bank in the said regard nor led any other evidence in support of the misuse of the cheque.

Further, the Bench added that, it is well settled that bare statements and story-telling would not help the accused to rebut the presumption raised under Sections 118 and 139 of the NI Act.

Whether the accused had been able to shake the version given by the complainant in his evidence affidavit and had been able to point out discrepancies or contradictions which may throw doubt on his version?

The only suggestion that had been given was that a blank signed cheque was issued by the accused to the complainant as it was agreed in Panchayat that the accused and his brother would give the cheque in question and the complainant’s son would take back the accused’s niece. Thus, no discrepancy had emerged out of the cross-examination which may demolish the complainant’s version even on the touchstone of preponderance of probabilities.

The Court concluded that the accused was not able to prove any probable defence and had failed to rebut the presumption raised under Sections 118/139 of the NI Act.

Therefore, Yashpal Singh was held guilty and convicted for the commission of an offence punishable under Section 138 of the NI Act in respect of the cheque in question. [Raj Singh v. Yashpal Singh Parmar, 2022 SCC OnLine Dis Crt (Del) 16, decided on 25-4-2022]

Case BriefsDistrict Court

Dwarka Courts, Delhi: Rahul Jain, Metropolitan Magistrate, while addressing a matter regarding dishonour of cheque, held that mere assertion of non-receipt of legal notice cannot help the accused in escaping liability under Section 138 Negotiable Instruments Act, 1881.

It was alleged in complaint that accused had approached the complainant to purchase a car. It was sold vide an agreement for Rs 7 lakhs only to be paid in 35 EMIs of Rs 20,000.

After default in the instalments, the accused issued a cheque which was returned dishonoured with remark “funds insufficient”. Thereafter, the complainant approached the accused repeatedly about the dishonour of the cheque and then the accused agreed to repay the consideration at one time and issue one cheque which was dishonoured.

Since no response was made within the statutory period regarding the demand notice, the present complaint was filed.

Analysis, Law and Decision


Legal Notice

The Court stated that the assertion of non-receipt of legal notice cannot help the accused in escaping liability under Section 138 NI Act, especially keeping in mind that firstly the accused has admitted his address mentioned on legal demand notice to be correct and secondly that the accused entered appearance in the court pursuant to service upon the same address as was mentioned in the legal demand notice.

It was settled in the decision of the Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555,  that an accused who claimed that he did not receive legal notice, can within 15 days on receipt of summons from the Court, make payment of the cheque amount, and an accused who does not make such payment cannot contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the General Clauses Act and Section 114 of the Evidence Act.

Legal Enforceable Debt

Bench noted that the initial defence of the accused had been that he had not purchased any car from the complainant and denied his signatures on the vehicle agreement. Further, he stated that car was purchased by his brother from the complainant, and he had just stood as a guarantor in the transaction and issued the cheque as security. The said defence was not even a defence but rather an admission to the liability to pay the cheques.

Liability of Guarantor under Section 138 NI Act

Section 138 NI Act uses the words “where any cheque” and therefore, the cheque could be drawn for whatever reason and the drawer would be liable if it is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability.

“The cheque could be issued for the discharge of the debt or liability of the drawer or of any other person including a guarantor.”

Section 128 of the Indian Contract Act provides that the liability of the surety is coextensive with that of the principal debtor, unless it is otherwise provided in the contract.

Hence, as per the Indian Contract Act, the liability of the guarantor is coextensive with that of the borrower which means that lender can enforce his right against either the principal borrower or the guarantor of the principal borrower.

Therefore,

On a joint reading of section 138 of Negotiable Instruments Act and Section 128 of Indian Contract act, it is now crystal clear that the liability of the guarantor of a loan fall within the provisions of Section 138 NI Act.

Court added that, with the presumption under Section 139 NI Act raised in the favour of the complainant as the accused admitted his signatures on the cheque, the burden of proof was on the accused to raise a probable defence.

Such burden is only to the extent of the preponderance of probabilities but mere verbal denial won’t discharge even this burden. The onus was on the accused to prove that the signatures on the agreement were not his.

In the absence of evidence for the above, Court used its power under Section 73 of the Evidence Act to compare his signatures on the vehicle agreement with the admitted signatures on the cheque.

In view of the above discussion, a presumption existed in the favour of the complainant, and it was the accused who had to discharge the onus, but he miserably failed to do so.

Therefore, the complainant duly proved his case against the accused for offence punishable under Section 138 NI Act, 1881 beyond the shadow of any reasonable doubt. [Anju Devi v. Mukesh, 2022 SCC OnLine Dis Crt (Del) 19, decided on 9-5-2022]

Tis-hazari
Case BriefsDistrict Court

Tis Hazari Courts, New Delhi: While addressing a decision revolving around Section 138 of Negotiable Instruments Act, 1881, Sanjay Sharma-II, Additional Sessions Judge-03, upheld the decision of the Trial Court and held that all the ingredients of Section 138 NI Act were fulfilled by the complainant.

A criminal appeal under Section 374 of the Criminal Procedure Code, 1973 was directed against the decision in case regarding Section 138 of the Negotiable Instruments Act, 1881, whereby the trial Court convicted the appellant for the said offence.

Factual Background


The complainant had filed a complaint under Section 138 of the NI Act that the appellant and her husband had friendly relations for 5 years and in the guise of the same, a friendly loan of Rs 1,00,000 was taken by the appellant.

At the time of returning of loan money, two cheques were issued but were returned unpaid with the remark “FUNDS INSUFFICIENT”. On re-representation, the said cheques were returned unpaid with the remark ‘OTHER REASONS’. Despite the receipt of the demand appellant failed to make payment of cheque.

Hence, a complaint under Section 138 NI Act was filed and the trial court while convicting the appellant under Section 138 NI Act, pronounced the following decision:

(a) The appellant admitted that the said cheques were drawn on an account maintained by him;

(b) The said cheques were presented for encashment within period of their validity;

(c) The reason for dishonour of the said cheques i.e. ‘Other reasons’ is a specie covered under the genus ‘dishonour of cheque for insufficiency, etc., of funds in the account’;

(d) The appellant was duly served with the demand notice through his real brother, namely, Lokesh;

(e) There is a legal presumption that the said cheques were drawn for consideration and in discharge of debt or other liability; and

(f) The appellant failed to raise probable defence to rebut presumption of existence of legally enforceable liability.

On being aggrieved with the above, the present appeal was preferred.

Scope of Jurisdiction of First Appellate Court

Appellant Court’s jurisdiction is co-extensive with that of the trial court in the matter of assessment, appraisal and appreciation of the evidence and also to determine the disputed issues.

Points for Consideration

(a) Whether the complainant is required to prove that she received the said cheques in discharge of any debt or other liability? 

Once the signatures of the appellant on cheques were established, ‘reverse onus’ clauses under Sections 118 and 139 NI Act become operative.

The appellant must raise a ‘probable defence’ and the standard of proof is ‘preponderance of probabilities’.

The appellant can lead direct evidence or rely upon evidence adduced by the complainant to show that consideration or debt did not exist, or non-existence of consideration or debt is probable.

(b) Whether dishonour of the said cheques with remark ‘Other reasons’ is covered under Section 138 NI Act?

The appellant had neither attributed nor proved that the said cheques were dishonoured on account of any negligence of his banker. The appellant did not make payment of cheque amount despite receipt of demand notice. Therefore, this Court opined that dishonour of cheques with remark ‘other reasons’ was covered under Section 138 NI Act, as any other interpretation would defeat the object of provisions of Section 138 NI Act.

(c) Whether non-examination of husband of the complainant is fatal to her case?

In Court’s opinion, husband of the complainant was not a material witness. The complainant need not examine him to prove friendly relation with the appellant. Further, the complainant’s husband had no role in a transaction in question and if the appellant wanted to prove absence of the said relation, he could have examined him in defence.

(d) Whether the complainant was required to examine witness from bank to prove cheque returning memos?

It was contended that the complainant did not examine the witness from her bank to prove cheque returning memos and stamps.

Section 146 NI Act provides that bank’s memo is prima facie evidence of the fact of dishonour of cheque.

The complainant had filed original cheque returning memos pertaining to dishonour of the said cheques vide memos and appellant led no evidence to rebut the presumption that the said memos were not issued by his banker in relation to dishonour of the said cheques.

In the present matter, the appellant did not show that he had suffered any prejudice during trial by the Trial Court and neither contended that there was any miscarriage of justice.

Conclusion


In Court’s opinion, the complainant established all pre-requisites as required under Section 138 NI Act, hence the appellant was rightly convicted for committing offence under Section 138 NI Act.

The Bench directed the appellant to surrender before the trial Court. [Deepak Kumar v. Mehnaz, 2022 SCC OnLine Dis Crt (Del) 14, decided on 9-5-2022]

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., held that if no offence is attributed to the company, its Directors and other persons responsible for the conduct of its business cannot be saddled with any liability.

The petitioner had filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against the respondent. It was stated that, the commercial space owned by the petitioner had been let out upon terms and conditions in the Rent Agreement.

The above-said rent agreement was executed between the petitioner and the respondent’s company. Further, in March-April, 2013 the respondent was alleged to have issued five cheques duly signed by the Managing Director to discharge the company’s liability to pay the rent.

The above-said cheques were bounced; hence the complaint was filed.

Analysis and Decision

High Court observed that the Company upon which the primary liability rests and a person who is sought to be made vicariously liable for an offence of which the principal accused is a company, would need to have a role to play in relation to the incriminating act.

Section 141 of the N.I. Act operates only when the offence under Section 138 of the N.I. Act is committed by a company.

Further, Court stated that the Company being the primary accused must be found to have committed an offence. Thereafter, through the legal fiction created by Section 141 of the N.I. Act, the Directors and other persons responsible for the conduct of its business also become vicarious liable.

In the present matter, all the averments were against the respondent, who was described as Managing Director.

There was no pleading which suggested that the Company had committed any offence.

When no offence is attributable to the Company, it is not possible to attach liability on the Managing Director by the deeming provisions of Section 141 of the N.I. Act.

Bench added that, amendments of simple technical infirmities alone can be allowed but not the filing of a fresh complaint with improved pleadings in the garb of the amendment.

Hence, in view of the above discussion, Court denied grant permission to amend the complaint.

Therefore, the petition was dismissed. [Hari Shamsher Kaushik v. Jasbir Singh, 2022 SCC OnLine Del 1379, decided on 9-5-2022]


Advocates before the Court:

For the Petitioner: Mahesh K. Mehta, Advocate

For the Respondent: None

Case BriefsHigh Courts

Delhi High Court: Rajnish Bhatnagar, J., expressed that the Court in the exercise of its jurisdiction under Section 482 CrPC cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed question of facts.

Petitioner was a proprietorship and a civil and structural contractor carrying on its business in various states of the country.

As per the agreement between the petitioner and respondent, the petitioner was required to provide undated security cheque to the respondent to cover the full value of the material supply.

It was stated that 5 undated security cheques totalling an amount of Rs 63,00,000 and one current dated cheque amounting to Rs 2,63,700 were prepared. Further, the petitioner also sent an email to the respondent attaching the scanned copies of the cheques. After which the work started and during the course of work, the respondent asked for monies and on that basis, the petitioner issued a cheque which was returned by Bank.

In view of the above, a legal notice was sent out demanding the said amount, then the petitioner responded that it would make the necessary payment. Failing to which a complaint was filed by the respondent under Section 138 NI Act. Additional Chief Metropolitan Magistrate, Saket summoned the petitioner.

On being aggrieved with the above, an instant petition was filed.

Analysis, Law and Decision


Once a cheque is issued by a person, it must be honored and if it is not honored, 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.

Can High Court step into the shoes of the Metropolitan Magistrate?

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 NI Act. The said plea, as to why he should not be tried under Section 138 NI Act is to be raised by the accused before the Court of Metropolitan Magistrate under Sections 251 and 263(g) CrPC.

Bench further expressed that,

The offence under Section 138 of the N.I. 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 N.I. Act, he alone has to take the plea of defense and the burden cannot be shifted to complainant.

Recalling of Witness

Once the complainant has brought forward his case by giving his affidavit about the issuance of cheque, dishonor of cheque, issuance of demand notices etc., he can be cross-examined only if the accused makes an application to the Court as to, on what point he wants to cross-examine the witness (es) and then only the Court shall recall the witness by recording reasons thereto.

As per the procedure prescribed under CrPC, if the accused appears after service of summons, the Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during the trial and ask him to take notice under Section 251 CrPC and enter his plea of defence and fix the case for defence evidence, unless an application is made under Section 145(2) of NI Act for recalling a witness for cross-examination on by an accused of defence.

Bench in the present matter did not find any material which could be stated of sterling and impeccable quality warranting the invocation of the jurisdiction of this Court under Section 482 CrPC.

High Court observed that the issues in the instant matter involved the disputed question of facts and law and cannot be decided unless and until the parties go to trial and lead their respective evidence.

“…invariably the initial phase of a litigation under Section 138 of the N.I. Act depends on how well the pleadings or the allegations are laid down or articulated, by the complaint, in the ultimate analysis it is the trial that alone can bring out the truth so as to arrive at a just and fair decision for the parties concerned.” 

Therefore, the no flaw or infirmity in the proceedings pending before the Trial Court was found.[Awadh Constructions v. Amarpreeet Shuttering, 2022 SCC OnLine Del 1034, decided on 13-4-2022]


Advocates before the Court:

For the Petitioner: Amit Pawan, Advocate

Patiala House Courts, Delhi
Case BriefsDistrict Court

Patiala House Courts, New Delhi: Shreya Arora Mehta, Metropolitan Magistrate, while addressing a matter with regard to Section 138 of the Negotiable Instruments Act stressed the liability of a Director for such offences.

Accused Company through accused 2 – Chairman cum Managing Director along with accused 3 its Managing Director and accused 4 Deputy Managing Director approached the complainant in the year 2006 to engage their services for releasing advertisement of the accused company in various newspapers and publications.

The complainant agreed to extend a credit period of 60 days for payment of the bills with statutory taxes and services charges/commission. The accused persons sent a release order to the complainant for advertisement in various print media. Bills were raised on monthly basis for service provided.

It was stated that till the second quarter of 2008 the complainant received most of the payment but thereafter there was a default by the accused persons in making the time-bound scheduled payment. Later bills of 6 months were kept pending due to which the complainant was forced to ask the Indian Newspaper Society to issue a caution notice to its members regarding the accused company.

The accused company issued 84 cheques with the assurance that on presentation the same would be encashed, but all the cheques were dishonoured and returned unpaid for the reasons either “funds insufficient” and or exceeding arrangement.

Accused persons did not reply to the legal notice under Section 138 of the Negotiable Instruments Act, 1881. Hence the present complaint was filed.

Accused 3 admitted his signatures on all the cheques but stated that the same was done under the pretext of accused 2 who was the chairman cum director of the accused 1. The accused 4 submitted that he had no dealings whatsoever with the complainant company.

Section 141 of the Negotiable Instruments Act, 1881, does not say that a Director of a company shall automatically be vicariously liable for commission of an offence on behalf of the company.

“…the complainant has to make specific averments in the complaint that the accused persons were incharge or were responsible to the company or conduct of the business of the company. And prosecution could be launched not only against the company on behalf of which the cheque issued has been dishonoured, but it could also be initiated against every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company.”

In the present case, specific averments were made against accused 3 and 4 that they are in charge of and responsible to the accused 1 company for the conduct of the business of the company and were looking after the business of the company and the offence under Section 138 NI Act had been committed with the knowledge, consent and connivance of the accused 3 and 4 besides other and was attributable to neglect on their part.

“…under Section 139 of the Negotiable Instrument Act, 1881 there is a presumption in favour of the complainant that the cheques in question were issued by the accused in discharge of his lawful liability. It is mandatory for the court to draw a presumption against the drawer/accused. However, the said presumption is rebuttable.” 

Accused persons raised arguments that no work order, release order or publication bill was placed on record nor the complainant produce the details of the newspapers etc. To substantiate the same, the accused person had failed to prove on record any admissible and reliable evidence to discharge their onus of rebutting the initial presumption in favour of the complainant as enshrined under Section 139 NI Act.

In view of the above, the essentials of Section 138 NI Act stand duly established and accused persons failed to rebut the same.[Prominent Advertising Services v. Koutons Retail India Ltd., 2022 SCC OnLine Dis Crt (Del) 12, decided on 22-3-2022]

Case BriefsHigh Courts

Delhi High Court: Rajnish Bhatnagar, J., dismissed a matter revolving around the dishonour of cheque under Section 138 of the Negotiable Instruments Act.

Background


Respondent 2 had filed a complaint under Section 138 of the Negotiable instruments Act, 1881 against the revisionist stating that he had taken a friendly loan of Rs 4,80,000 from the respondent for a period of one month.

The revisionist had issued a cheque for the above-said amount, but the said cheque was returned with the remark “fund insufficient”. Thereafter, the respondent issued a legal notice, but the revisionist could not make the payment within a stipulated period, hence case under Section 138 NI Act was filed.

Analysis, Law and Decision


High Court expressed that, taking into consideration the various provisions of Cr.P.C. which have been discussed in various judgments time and again demonstrate that the Negotiable Instruments Act, provides sufficient opportunity to a person who issues the cheque.

Further, the Court observed that,

Once a cheque is issued by a person, it must be honored and if it is not honored, 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.

Trite Law

Once the issuance of a cheque and signature are admitted, the presumption of a legally enforceable debt in favour of the holder of the cheque arises.

Bench stated that while imposing sentence on the accused after his conviction, it is to be kept in mind that sentence for offence under Section 138 NI Act should be of such nature as to give proper effect to the object of the legislation and no drawer of the cheque can be allowed to take dishonour of cheque issued by him light-heartedly.

In the present matter, the revisionist submitted that the cheque was lost and he had filed a complaint of the same as well, but the original complaint was not placed on record.

Bench noted his malafides when it was found that he neither informed the bank concerned about the cheque nor requested the bank to get the payment stopped against the said cheque.

Lastly, while stating that mere statement by revisionist would not be sufficient to raise suspicion with the prosecution’s case, High Court found no infirmity in the decision of the trial court and upheld the same.[Sanjay Gupta v. State, 2022 SCC OnLine Del 822, decided on 24-3-2022]


Advocates before the Court:

For the Revisionist: Mr. Sudhanshu Palo and Mr. Surendra Kr. Roy, Advs.

For the Respondents: Ms. Manjeet Arya, APP for the State. Ms. Seema Sharma, Adv. for complainant.

Tis-hazari
Case BriefsDistrict Court

Central District, Tis Hazari Court, Delhi: Kratika Chaturvedi, DJS, while addressing a matter revolving around Section 138 of the Negotiable Instruments Act, 1881 expressed that,

“The presumptions raised under Sections 118(b) and 139 NI Act are rebuttable presumptions.

A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability.”

Complainant filed a complaint through SPA holder, Mohinder Singh Jadhav against the accused persons Narinder Kaur and Lucky Bajaj under Section 138 of the Negotiable Instruments Act, 1881.

Accused 1 had taken a loan of Rs 3,50,000 from the complainant and the mortgage agreement was executed between the complainant and Narinder Kaur, thereafter accused 2 Lucky Bajaj issued a cheque with the assurance that the said cheque would be duly honoured after its presentation, however, the said cheque was returned with unpaid remarks “effect not cleared, present again”.

Thereafter, the cheque was again dishonoured with the remarks “funds insufficient”. After which, the complainant issued a legal demand notice for the cheque in question which was duly served upon the accused as the registered post was received back with the report of refusal.

Despite the service as stated above, the accused failed to pay the cheque amount, hence the present complaint was filed under Section 138 of the NI Act.

Analysis, Law and Decision

The Bench noted that the accused raised a probable defence that the cheque in question was given as a security cheque and the same was to be presented when the physical possession of the premises would be handed over.

In Court’s opinion, the accused raised a probable defence by bringing a record of facts and circumstances in order to rebut the presumption raised under Section 139 NI Act and that the non-existence of the consideration and debt is so probable that a prudent man would under the circumstances of the case, act upon the plea as it did not exist.

The Bench held that no legal liability existed in favour of the complainant as the second ingredient of Section 138 NI Act did not stand proved as the accused had been successful in establishing a probable defence on a standard of preponderance of probabilities to rebut the presumption under Sections 118 and 139 of the NI Act by punching the holes in the case of the complainant.

Cogent evidence is required to be proved beyond reasonable doubt to secure conviction in a criminal trial.

In view of the above discussion, accused 2 was acquitted. [Prabhjot Kaur v. Narinder Kaur, 2022 SCC OnLine Dis Crt (Del) 10, decided on 11-3-2022]


Advocates before the Court:

Bhagat Singh, Counsel for the Complainant

Mukesh Sharma, Counsel for the accused

Case BriefsHigh Courts

Delhi High Court: While addressing a matter revolving around Section 138 of the Negotiable Instruments Act, 1881, Subramonium Prasad, J., held that Courts should primarily proceed on the averments in the complaint, and the defence of the accused cannot be looked at the stage of issuing summons unless it can be shown on admitted documents which the Supreme Court described as “unimpeachable in nature and sterling in quality” to substantiate that there was no debt due and payable by the person who has issued the cheque or that the cheque amount is large than the debt due.

Petitioner sought to call for record and quash complaint about the offence under Section 138 of the Negotiable Instruments Act, 1881.

Averments made in the complaint were:

Petitioner had approached the complainant/respondent and requested for a friendly loan of Rs 9,00,000, later after a few months he again approached for a loan of Rs 6,00,000 and in the said amount, Rs 4,90,000 was given through RTGS and Rs 1,10,000 was given in cash.

Further, while returning the amount, the petitioner issued a cheque, which was returned by the bank with the remark “Exceeds Arrangement”. Even after notice, the petitioner did not pay the amount, hence a complaint under Section 138 of the NI Act was registered.

Petitioner submitted that he had given instructions to his nephew who deposited a sum of Rs 2,69,000 through UP in the bank account of the wife of the complainant, hence the cheque of Rs 15,00,000 presented by the complainant was greater than the amount due, hence the complaint shall be quashed.

Analysis, Law and Decision

High Court expressed that the purpose of inserting Chapter XVII in the Negotiable Instruments Act, 1881 was to bring out sanctity in commercial transactions.

In the present matter, it was noted the petitioner had issued a cheque for a sum of Rs 15,00,000.

Section 139 of the Negotiable Instrument Act, 1881, creates a presumption that unless contrary is proved, the holder of a cheque has received the cheque for discharge in whole or in part of any debt or other liability.

The Supreme Court’s decision in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, was also cited.

Petitioner contended that the cheque deposited by the complainant was for a greater amount as a sum of Rs 2,69,000 had already been paid.

Further, it was stated that the details of the UPI (Unified Payment Interface), which has been filed by the petitioner, show that the amounts deposited in the bank account of the wife of the complainant by the nephew of the petitioner cannot be taken as evidence which is unimpeachable in nature and sterling in quality so as to demolish the case of the respondent and to substantiate the contention of the petitioner that the proceedings initiated under Section 138 of the Negotiable Instrument Act, 1881 is a complete abuse of the process of law.

The Bench stated that the Courts should primarily proceed on the averments in the complaint, and the defence of the accused cannot be looked at the stage of issuing summons unless it can be shown on admitted documents which the Supreme Court described as “unimpeachable in nature and sterling in quality”.

“It is well settled that the inherent powers should be exercised sparingly, with circumspection and in the rarest of rare cases when the Court is convinced, on the basis of material on record, that allowing the proceedings to continue would be an abuse of process of law or if the ends of justice is required that the proceedings ought not to be quashed.”

Hence, High Court denied accepting that the amounts deposited by the nephew of the petitioner in the bank account of the wife of the complainant was towards the debt incurred by the petitioner.

Therefore, no case for quashing the complaint was made out. [Satinderjeet Singh v. Sameer Sondhi, 2022 SCC OnLine Del 635, decided on 28-2-2022]


Advocates before the Court:

For the Petitioner: Deepak Kohli, Advocate

For the Respondent: None

High Court Round UpLegal RoundUp

82 reports on High Court Judgments to read from February 2022.


Allahabad High Court


 Bail

 22-year-old woman, burnt and buried due to demand of dowry: All HC denies bail to accused husband

Noting the brutality with wife a 22-year-old lady and mother of a one year’s infant child in causing her death, beating her cruelly by “her husband” Vikas Kunvar Srivastav, J. held that the said act was not only grave in nature but heinous also.

Read report, here…

Law on S. 311 CrPC

Power to the Court to summon a material witness or to examine a person present in Court or to recall a witness already examined: All HC discusses

Sanjay Kumar Pachori, J., while addressing a matter with regard to recalling of the witnesses expressed that, Section 311 of the Code confers a wide discretion on the Court to act as the exigencies of justice require.

Read report, here…

Law on Recovery of Maintenance

Limitation of 1 year for recovery of maintenance under S. 125(3) of CrPC and the law on enforcement to claim order of maintenance under S. 128 CrPC: All HC explains

Dr Yogendra Kumar Srivastava, J., while addressing a matter regarding recovery of maintenance amount, expressed that,

“Sentencing to jail can only be seen as a means of recovering the amount of arrears and not a mode of discharging liability.”

Read report, here…


Andhra Pradesh High Court


If the de facto complainant feels insulted as he was beaten in front of public and if he takes a hasty decision to commit suicide; will the accused be held responsible in the eyes of law?

Cheekati Manavendranath Roy J. partly allowed the petition by quashing FIR for the offence punishable under Sections 306 r/w 116 IPC.

Read report, here…

Bail

AP HC considered alleged attempt to threatening witness as a vague allegation; Cancellation of bail sought was rejected

“…nothing was brought to the notice of the police or the investigating agency stating that the accused are interfering with course of investigation by way of threatening the witnesses through their men.”

Read report, here…


Bombay High Court


 Law on Voluntarily Causing Grievous Hurt

In a land dispute, a person subjected to grievous injury with the use of ‘Khurpi’: Will he be punished under S. 326 or 325 Penal Code, 1860? Bom HC explains

The Division Bench of S.S. Shinde and N.R. Borkar, JJ., upheld the decision of the Trial Court in a case of causing grievous injury voluntarily.

Read report, here…

Bail

Constant quarrels between husband and wife: Bom HC observes while granting bail to husband accused of dowry and cruelty

Sarang V. Kotwal, J., on noting that the husband and wife cannot live together and there were constant quarrels between them, granted bail to the husband who was accused under the provisions of Dowry Prohibition Act and Penal Code, 1860. 

Read report, here…

Provocation by Wife

Wife subjected husband to humiliation by publicly calling him impotent and abusing him resulting in assault by husband: Husband will be convicted for murder or culpable homicide? Bom HC analyses

The Division Bench of Sadhana S. Jadhav and Prithviraj K. Chavan, JJ., modified the conviction of a husband who in provocation by wife on being subjected to abuses assaulted wife.

Read report, here…

Abetment to Suicide

Employer setting big targets, not granting leave and not accepting resignation would be acts in normal course of business: Bom HC grants anticipatory bail to employer accused of abetting suicide committed by employee

 Sarang V. Kotwal, J., addressed a matter wherein an employer was accused of abetting the suicide of an employee.

Read report, here…

Law on Custody

9-year-old child prefers to stay with mother’s father and his family members and shows animosity towards father: Whether father will get custody of child or not? Bom HC decides 

Addressing a matter wherein a child’s mother was diagnosed with cancer due to which she started living at her parental home with the child, and after the passing of the mother, a custody battle arose between the father of the child and the father and brother of wifeDivision Bench of S.S. Shinde and N.J. Jamdar, JJ., noted animosity of the child towards his father, to which the Court expressed that, the same must have occurred due to ‘parental alienation syndrome’.

Read more, here…

Appeal

Appellate court can reverse the finding and sentence of the trial court ordering re-trial

The Division Bench of S.S. Shinde and Milind N. Jadhav, JJ. allowed an appeal against conviction of the Appellant by the Trial Court. The appellant was convicted of the offence punishable under Section 302 of the Penal Code, 1860, (“IPC”) read with Section 34 IPC. He was sentenced to suffer life imprisonment and to pay a fine of Rs. 15,000.

Read report, here… 

Transparency in Functioning

Disqualification of Sarpanch in suspicion of benefitting her close relations by allotting work under Panchayat’s order, without establishment of direct or indirect involvement as per S. 14(1)(g) of Maharashtra Village Panchayats Act: Is it correct? Bom HC analyses

Quoting a phrase from a story of a Roman Ruler Julius Caesar that, “Caesar’s wife should be above suspicion”, Bharati H. Dangre, J., remarked that,

“…those who are vested with the powers are to be made more accountable and transparent in their functioning and subjected to social audit with a view to minimize their discretionary decisions.”

Read report, here…

COVID-19 

Cinema Halls, Theaters, Malls, Restaurants, etc. permitted to carry on business with 50% capacity but banquet halls/Mangal Karyalaya & lawns not permitted with same capacity: Bom HC issues notice

The Division Bench of Sunil B. Shukre and Anil L. Pansare, JJ., addressed a petition wherein a grievance was filed stating that an unreasonable classification resulting in impermissible discrimination had been made by the respondents as Cinema Halls, Theaters, Malls, Restaurants and also other establishments have been permitted to carry on their business or operations with 50% capacity of the customers or attendees, provided customers or attendees are armed with two doses of vaccination, and whereas, Mangal Karyalaya/ Banquet Halls and Lawns where marriage functions are held and solemnised are not being permitted to carry on their business and operations with the same capacity of persons who have taken both the doses of vaccination. 

Read report, here… 

Consumer Protection

Consumer Protection Act requires State Government to constitute a State Consumer Disputes Redressal Commission and create circumstances to its effective functioning: Bom HC at Goa directs State of Goa to ensure filling up of vacant positions expeditiously

Stating that the State Administration comprises several IAS Officers, the least expected out of them is to find the solution to problems, so that State Consumer Disputes Redressal Commission functions effectively, The Division Bench of M.S. Sonak and R.N. Laddha, JJ., directed the State of Goa to ensure that the post of President and 3 other members of the Commission which are vacant be filled expeditiously.

Read report, here…

Dead Person

Notice to a dead person under S. 148 of Income Tax Act cannot be issued: Bom HC

The Division Bench of K.R. Shriram and N.J. Jamdar, JJ., reiterated that notice under Section 148 of the Income Tax Act, 1961 to a dead person cannot be issued.

Read report, here…

Legal Profession

“Notaries operating from public taxis around vicinity of Court”: Dignity of the profession needs to be maintained and the legal profession cannot be allowed to function from the streets | Bom HC

The Division Bench of S.J. Kathawalla and Milind N. Jadhav, JJ., requested the Department of Legal Affairs to give due consideration to this Court’s Order and the Report dated 9-12-2021 submitted by Nausher Kohli, Advocate whilst enacting the Draft Bill.

Read report, here…

Murder or Culpable Homicide?

Husband killed wife brutally in a heat of passion leaving husband with a wounded pride: Bom HC decides whether the said offence will come under “Murder” or “Culpable Homicide not amounting to Murder

Stating that, in the moment of anger spouses almost forgot about the two children who were hardly three years old at the time of incident, the Division Bench of Sadhana S. Jadhav and Prithiviraj K. Chavan, JJ., found that the case of a husband killing wife with a knife was a case of culpable homicide not amounting to murder.

Read report, here…

Arbitration

Bombay HC rejects argument that a dispute cannot be referred for arbitration on account of fraud: Read why

B.P. Colabawalla, J., addressed an arbitration application filed under Section 11 of the Arbitration and Conciliation Act, 1996

Read report, here…

Gangubai Kathiawadi

Can after certification granted by Board, public exhibition of a film be prohibited? Bom HC answers 

In respect to petitions with regard to the release of movie Gangubai Kathiawadi, Division Bench of Dipankar Datta, CJ and M.S Karnik, J., while expressing that “Once the film is granted a certificate by the competent statutory authority, i.e. the Board, the producer or distributor of the film has every right to exhibit the film in a hall unless, of course, the said certificate is modified/nullified by a superior authority/Court”, held that, there cannot be any kind of obstruction for the exhibition of a film, which is certified, unless the said certificate is challenged and Court stays its operation.

Read report, here…

Divorce 

If husband and wife get their marriage registered under Special Marriage Act & under Parsi Marriage and Divorce Act, 1936 as well, would this require them to get nullity of marriage under both Acts or one? Court decides

G.S. Kulkarni, J., expressed that, there is no provision under legislations, that if a marriage between the same couple is annulled under a competent law as enacted by the Parliament, it can as well be of a legal effect in the corresponding enactment.

Read report, here…


Calcutta High Court


Bail

S. 37 of the NDPS Act mandates a more stricter approach than an application for bail sans the NDPS Act: Cal HC

The Division Bench of Bibhas Ranjan De and Debangsu Basak, JJ., while addressing a bail application in a case under NDPS Act, remarked that,

Section 37 of the NDPS Act mandates a more stricter approach than an application for bail sans the NDPS Act.

Read report, here…

Sexual Assault

14-yr old girl subjected to penetrative sexual assault by man who called her grand daughter: Is girl’s complaint vital to form basis of conviction? Cal HC explains

The Division Bench of Joymalya Bagchi and Bivas Pattanayak, JJ., in a penetrative sexual assault case of a 14-year-old girl, expressed that,

“Crime against woman is increasing as a whole. Such type of crime is a direct insult to the human dignity of the society and therefore imposition of any inadequate sentence not only results in injustice to the victim and the society in general but also stimulates criminal activities.”

Read report, here…

Trademark

Disparagement or mere puffery? Court decides in matter of offending/misleading advertisements [Dabur India v. Baidyanath Ayurved]

Saraf, J. decided on a petition which was filed seeking remedy against impugned advertisements disparaging the goodwill and reputation of the petitioner and its product.

Read report, here…


Chhattisgarh High Court


 Jurisdiction

 Limited jurisdiction has been given to the High Court confined to the substantial question of law only

Anoop Kumar Dhand J. dismissed the appeal as it does not fulfill the requirement mandated under Section 30 of Workmen’s Compensation Act, 1923.

Read report, here…

If the party is able to make out an exceptional case and the court finds irretrievable injustice would occur if writ jurisdiction is not invoked, High Courts do have the power to entertain the writ petition

Sam Koshy J. partly allowed the petition and partly disposed of the petition expressing no opinion on the termination notice issued against the petitioner.

Read report, here…

Child Custody

Due to father’s field job, mother granted custody of child: Did Chh HC also grant contact and visitation right to father? Read

In a child custody battle, the Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., reiterated the position of law in the Supreme Court’s decision of Yashita Sahu v. State of Rajasthan(2020) 3 SCC 67, wherein it was held that the court cannot provide one happy home with two parents to the child then let the child have the benefit of two happy homes with one parent each, further this Court granted visitation and contact right to the father.

Read report, here…

Desertion 

If husband brings home concubine due to which wife leaves house, would that lead to desertion by wife? Chh HC explains

The Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., expressed that,

“If the husband keeps another lady; gives shelter to her; and proceeds to have child with the said lady and for that reason if the first wife has to leave the matrimonial home because of physical and mental torture meted out to her it cannot be presumed as a desertion on the part of wife.”

Read report, here…


Delhi High Court


Trademark Dispute

Baazi v. WinZo | Trademark is used by a manufacturer or service provider to distinguish products from those of competitors: Here’s how Winzo appeared dishonest and unfair in adopting Baazi

“When people are satisfied with the products supplied by a manufacturer or service provider, they buy them on the basis of the trade mark and over time it becomes popular and well known. Thus, the use of a similar or identical trademark by a competitor in the same product would lead unwary customers to believe that it originates from the same source.”

Read report, here…

Deadly Weapons

Whether a ‘blade’ would be covered under S. 397 IPC as a deadly weapon? Del HC explains in view of settled position of law

Mukta Gupta, J., explained under what circumstances would Section 397 of penal Code, 1860 would be attracted.

Read report, here…

Law on Bail

Investigation complete, charge sheet filed, accused in jail since 6 months: Read whether Del HC grants bail

Dhari Singh, J., granted bail while referring to a catena of Supreme Court decisions with regard to the law on bail.

Read report, here…

4 years as undertrial, 2 witnesses examined out of 14, no probability of trial to be concluded in near future: Whether Del HC will grant bail to accused under S. 37(b)(ii) of NDPS Act? Read

Chandra Dhari Singh, J., granted bail to an accused on being satisfied with “reasonable grounds” as per Section 37 (b)(ii) of the NDPS Act, 1985.

Read report, here…

Judicial Separation 

Can judicial separation be granted instead of divorce for which party has approached the Court? Read what Del HC says

Expressing that the Family Court’s decision was based on optimism and hope rather than the actual factual matrix of the case, the Division Bench of Vipin Sanghi and Jasmeet Singh, JJ., while addressing a matter wherein matrimonial dispute occurred between the parties, observed that,

“..a decree of judicial separation can be rescinded by the same court; but a decree of divorce can be reversed only by a judicial order: either in review or in appeal. If it is passed ex parte, it may be recalled on an application being made for that purpose.” 

Read report, here…

Money Laundering

Money laundering offence under PMLA is, layered and multi-fold and includes stages preceding and succeeding offence of laundering money: Del HC

While expressing the object of PMLA Act Chandra Dhari Singh, J., expressed that, offence of money laundering is threefold including the stages of placement, whereby the criminals place the proceeds of crime to the general and genuine financial system, layering, whereby such proceeds of crime are spread into various transactions within the financial system and finally, integration, where the criminals avail the benefits of crime as untainted money.

Read report, here…

Uphaar Case

Manner in which judicial records tampered revealed well-planned & methodical attempt to subvert justice system: Suspending sentence of Ansal brothers would amount eroding faith of public? Read Del HC’s decision

Stating that the manner in which Court records tampered was insidious and revealed a well-planned and methodical attempt to subvert the justice system in order to escape conviction in the Main Uphaar CaseSubramonium Prasad, J., held that since the matter relates to tampering of judicial record, the same has to be decided expeditiously in order to ensure faith of the public in the judicial system.

Read report, here…

Law on Review

Can review be sought wherein Court has to delve into materials, apply its mind afresh after re-evaluating materials? Del HC throws light

Expressing that, Minor mistakes of inconsequential importance are insufficient to seek a review, Asha Menon, J., elaborated that, while seeking review of orders passed in a Civil Suit, the grounds mentioned in Order XLVII Rule 1 of the CPC have to be satisfied, which would not equate the hearing with the original hearing of the case or a hearing in an appeal 

Read report, here… 

Eviction

Group of leading artistes asked to vacate Government allotted premises under Discretionary Quota: Right to continue in public premises infinitely? Detailed report

Expressing that a state of indecision could not have given rise to a legitimate expectation, Yashwant Varma, J., held that, while the petitioners undisputedly were illustrious and pre-eminent exponents in their respective fields of the classical arts, the Court was not shown any material which may justify the continued retention of public premises in Delhi or that they would be unable to propagate the classical arts in any other State or city of the nation.

Read report, here… 

Shared Household

Where the residence is a shared household, would it create any embargo upon owner to claim eviction against his daughter-in-law? Read what Del HC says

Yogesh Khanna, J., held that right of residence under Section 19 of the Domestic Violence Act is not an indefeasible right of residence in a shared household, especially when the daughter-in-law is pitted against aged father-in-law and mother-in-law.

Read report, here…

Section 138 NI Act

Vicarious Liability of Directors of Company for offences committed under S. 138 NI Act: Person claiming to not being able to manage business due to his age, could this be accepted as defence? Del HC answers

Subramonium Prasad, J., addressed a matter pertaining to vicarious liability of directors of the company alleged for offences under Section 138 NI Act.

Read report, here…

Passport

Adoptive Father of a minor girl seeks issuance of her passport with details of adoptive parents so that she could write her TOEFL examination: Here’s what Del HC directed

Kameswar Rao, J., addressed a matter wherein a minor child was not able to apply for a passport either in the name of her biological parents or in the name of her adoptive parents, was unable to pursue her academics in the USA.

Read report, here…

Other

Power under Article 227 of Constitution of India cannot be exercised to upset conclusions, howsoever erroneous they may be, unless there was something grossly wrong or unjust: Del HC

Asha Menon, J., while expressing the scope of power under Article 227 of the Constitution of India dismissed the present petition. 

Read report, here…


Gujarat High Court


Will

Opportunity of being heard needs to be granted; Court decided in matter of the Will of Guru Ranchhoddas

A.P. Thaker, J. decided over a petition wherein the case of the petitioner was that the properties in question were originaly private properties of Guru Keshavdas, and after the death of Guru Keshavdas, Guru Karsandas became the Mahant and succeeded the properties under his Will. On the death of Guru Karsandas his chela Guru Atmaram became Mahant and succeeded to the properties of Guru Karsandas under his Will dated 08.12.1941. Thereafter, Guru Atmaram died leaving his Will dated 06-05-1947, appointing Guru Ranchhodas as Chela.

Read report, here…


Himachal Pradesh High Court


Couples have to make their choice at the threshold between career prospects and family life; HP HC observes in a case where a mother seeks job transfer to be with her daughter

“…mandamus is a public remedy and this remedy lies, when a public authority fails to perform the duty entrusted to it by law.”

Read report, here…


Jammu and Kashmir and Ladakh High Court


Inherent Power

Instead of filing an appeal before the Sessions Court petitioner rushed to this Court invoking its inherent power. Can High Court exercise its inherent power? Read J&K and Ladakh HC’s decision

Mohd. Akram Chowdhury, J., reiterated the settled position of law that if an alternate efficacious remedy is available under the statute, the inherent power of this Court cannot be invoked.

Read report, here…


Jharkhand High Court


Lokayukta 

Does Lokayukta have power to pass directions upon disciplinary authority to take action against erring officials? Jharkhand HC elaborates in light of Jharkhand Lokayukta Act, 2001

Sujit Narayan Prasad, J., addresses a very pertinent question of whether the Jharkhand Lokayukta Act, 2001 provides power for issuance of direction upon the disciplinary authority to take action against erring officials or can it’s order be limited to a recommendation.

Read report, here…


Kerala High Court


Cruelty

Is not taking treatment for mental illness to bring out a peaceful family atmosphere a form of cruelty and thus, a ground for divorce? HC answers

In an interesting case the Division Bench of A.Muhamed Mustaque and C.R. Sophy Thomas, JJ., held that not taking treatment for mental illness in order to bring out a peaceful and harmonious family atmosphere can also be counted as cruelty to the persons at the receiving end.

Read report, here…

If Court finds that marriage failed due to incompatibility, but one of the parties withholds consent for mutual separation, would that be ‘Cruelty’? Kerala HC elaborates

Expressing that, “If the conduct and character of one party causes misery and agony to the other spouse, the element of cruelty to the spouse would surface, justifying grant of divorce”, the Division bench of A. Muhamed Mustaque and Sophy Thomas, JJ., held that, Court cannot leave the life of a spouse to the mercy of the opposite spouse.

Read report, here…

Constitutional & Statutory Obligation

Whether State empowered to reject medical reimbursement for treatment being from unrecognized department of recognized hospital? HC decides

Murali Purushothaman, J., held that there is a Constitutional as well a statutory obligation on the part of the State to bear the expenses for treatment of the government servant and his family.

Read report, here…

Reservation

“Marrying a Christian man would not wipe off the benefit of reservation granted to a scheduled caste persons”, HC reiterates caste of a person is to be decided on the basis of birth

Raja Vijayaraghavan V, J., held that marrying a Christian man would not wipe off the benefit of a reservation granted to scheduled caste persons.

Read report, here…

Corporal Punishment

Teacher administering moderate and reasonable force to enforce discipline in classroom, can be exposed to criminal prosecution? Kerala HC answers 

While explaining that inflicting corporal punishment on a Child by a parent or teacher is forbidden, Dr Kauser Edappagath, J., observed that,

“Hurt of a less serious crime is not forbidden when inflicted in the reasonable chastisement of a child by a parent or by a school teacher.”

Read report, here…

Registration of Marriage

If a foreign embassy doesn’t issue ‘Single Status Certificate’ or NOC of an OCI card holder, can Declarations and Certificates be accepted for registration of marriage in India? Ker HC answers

While addressing a matter wherein an Indian Citizen intended to soleminse and register his marriage with a British Citizen, an OCI card holder, N. Nagaresh, J., held that f a foreign Embassy does not issue a Single Status Certificate or NOC due to the law, rules and regulations prevailing in that country, Declarations or Certificates evidencing the same should be accepted in India for registration of marriage.

Read report, here…

Tobacco at residence

If a person keeps tobacco at residence, would that amount to being an offence? Ker HC answers

While addressing a matter for an offence alleged under Cigarettes and Other Tobacco Products Act, Juvenile Justice Act and Kerala Police Act, Dr Kauser Edappagath, J., expressed that mere keeping tobacco at residence would not amount to being an offence.

Read report, here…

Admin of WhatsApp Group

Can an Admin of a messaging service group be held criminally liable for the offensive content posted by member of a group? Kerala HC addresses

While addressing the question of whether the creator or administrator of a WhatsApp group is criminally liable for offensive content posted by a group member, Dr Kauser Edappagath, J., held that a person can be criminally liable for the acts of another if they are party to the offence.

Read report, here…


Karnataka High Court


 Hijab Case

When Karnataka High Court temporarily restrained students from wearing hijab, religious flags, saffron shawls, etc.: Read Court’s interim order

While expressing that, “Endless agitations and closure of educational institutions indefinitely are not happy things to happen”, the Bench of Ritu Raj Awasthi, CJ and Krishna S Dixit and JM Khazi, JJ., restrained all the students regardless of their religion or faith from wearing saffron shawls (Bhagwa), scarfs, hijab, religious flags or the like within the classroom, until further orders.

Read report, here…

Sentence

Conviction sentence not to affect career and not be treated as a remark for employment; Kar HC confined the sentence to fine only in accordance with Ss. 279 and 337 IPC

Sreenivas Harish Kumar, J., disposed of the petition and modified the judgment of the appellate court.

Read report, here…

GST Exemption 

Whether GST exemption can be claimed for leasing out residential premises as hostel to students and working professionals? Kar HC answers 

The Division Bench of Alok Aradhe and M.I. Arun, JJ., addressed whether GST exemption can be claimed for leasing of residential premises as a hostel to students and working professionals.

Read report, here…


Madras High Court


Negotiable Instruments Act

Whether proceedings under Ss. 138 and 141 of NI Act can be initiated against corporate debtor during moratorium period? Madras HC answers

Sathish Kumar, J., while addressing a matter with regard to the dishonour of cheques under Section 138 of Negotiable Instruments Act, 1881, held that the moratorium provision contained in Section 14 of the Insolvency and Bankruptcy Code, would apply only to corporate debtor, but the natural persons mentioned in Section 141 of Negotiable Instruments Act continue to be statutorily liable under Chapter XVII of the Negotiable Instrument Act.

Read report, here…

Religious Practice

“One of the basic tenets to be followed by every Hindu is tolerance. Tolerance must be his own community or religion and in particular, to also to every other religious practice”: Madras HC

“Fundamental Rights and Duties are sacrosanct and binding on the Courts which adjudicate issues relating to the religion.”

Read report, here…


Madhya Pradesh High Court


 MBBS Seat

CBI’s self-contained note cannot form basis for rejecting application for increase of MBBS Seat; HC directs NMC to consider the application afresh 

The Division Bench of Sujoy Paul and Arun Kumar Sharma, JJ., quashed the National Medical Commission’s decision rejecting L.N. Medical College & Research Centre’s application for increase of MBBS seats.

Read report, here…

Writ of Mandamus

Provision for redressal of grievance in matter of radiation by mobile tower exists; Permission for installation can’t be revoked

Nandita Dubey, J. heard a petition which was filed seeking issuance of the writ of mandamus to the respondents to take appropriate effective steps against the Reliance Telecom Services not to permit them for installation of the mobile tower in the premises of Jai Hind School, V.V. Giri Ward, Pipariya.

Read report, here…

Departmental Inquiry

Desirable to stay the departmental proceedings till conclusion of the criminal case; Court prohibits Department to continue inquiry

Atul Sreedharan, J. decided on a petition which was filed by the petitioner who was aggrieved by the departmental proceedings against him on the identical charges by the CBI in the criminal case. 

Read report, here…

Land Acquisition

What would be an appropriate factor by which market value of land was to be multiplied to assess the compensation in the case where the land was situated in the rural area? [NH- 148N land acquisition] 

The Division Bench of Vivek Rusia and Rajendra Kumar Verma, JJ. took up a bunch of petitions which had similar facts that the petitioners were owners of agricultural land that came under the acquisition for construction of 12 lanes Delhi-Mumbai Expressway i.e. NH-148N under the provisions of the National Highways Act, 1956 (‘the NH Act of 1956’). 

Read report, here…

Acquittal

Unless the acquittal in criminal trial is honourable/clean, the employer has enough discretion to find a candidate to be unfit for employment

The Division Bench of Sheel Nagu and Sunita Yadav, JJ. while hearing a petition under Article 227 against order the Central Administrative Tribunal, Jabalpur Bench., dismissed the petition.

Read report, here…


Meghalaya High Court


Meghalaya Civil Service and the Meghalaya Police Service

There is no question of apples and orange being put in the same basket: Court calls State’s action foolish and justification of such act real tragedy

Sanjib Banerjee, CJ. while deciding in the matter between groups of persons in the Meghalaya Civil Service and the Meghalaya Police Service, pertaining to seniority between or among them, disposed the writ petition in favour of petitioners.

Read report, here…

Rape Case | Confession

Unequivocal confession leads to dismissal of appeal in a Rape case with minor

The Division bench of Sanjib Banerjee, CJ. and W. Diengdoh, J. dismissed the appeal which was filed on behalf of the convict with counsel engaged by the Legal Services Authority.

Read report, here…

Police Service 

“It is elementary that when the law requires a certain thing to be done in a particular manner, it has to be done in such manner or not at all”; Court upholds the dismissal of police official for passing information to outlaws 

“….the appellant had links with the banned outfit and had passed on information about police movements and operations to the outlawed organisation” 

Read report, here…


Orissa High Court


Ever-growing stock of seized vehicles

PIL filed about the ever-growing stock of seized vehicles and other properties in the various police stations in the State of Odisha; Directions issued

Muralidhar, CJ. issued directions regarding the ever-growing stock of seized vehicles and other properties in the various police stations in the State of Odisha

Read report, here…


Punjab and Haryana High Court


 Drug Menace

“Drug menace has become deep rooted and is taking its toll like a slow poison for the young generation”; HC expresses anguish over callously casual approach of officers

In a case exposing callous attitude of authorities while dealing with drug menace in the State of Punjab, Meenakshi I. Mehta, J., observed that in some paras of the Statu sreports/Reply, the police officers concerned had mentioned the tablets, allegedly recovered as ‘CLAVIDOL-100 SR’ whereas in certain other paras the same had been described as ‘CLOVIDOL-100 SR’. Criticizing the lackadaisical attitude of officers, the Bench remarked…

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State of Punjab which was known as one of the prosperous States is now at the brink of drug-trafficking

Expressing that, State of Punjab which was known as one of the prosperous States is now at the brink of drug-trafficking, Harnaresh Singh Gill, J., held that in order to curb the menace of drug trafficking the accused person are to be dealt with stringently even at the stage of granting her/him bail in NDPS Act cases involving commercial quantity.

Read report, here…


Patna High Court


Mental Health 

Mental health of a person and/or treatment of those who are in need, more so during the time of Covid-19, is the least priority of the State Government

The Division Bench of Sanjay Karol, CJ and S. Kumar, J., directed the Chief Secretary, Government of Bihar to take all steps ensuring the establishment of State Mental Health Authority as per Section 45 of the Mental Health Care Act, 2017.

Read report, here…


Rajasthan High Court


 Compensation | Motor Vehicle

Money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity in approach; Court observes in a MV accident case demanding higher compensation 

Birendra Kumar J. allowed the appeal and enhanced the award considering the settled guidelines in the subsequent judgments to reach at “just compensation”.

Read report, here…

Customs Act 

DRI officer is not Competent Authority to issue show cause notice and adjudicate the same as “proper officer”; Show cause notice set aside 

A Division Bench of Akil Kumar, CJ and Sameer Kureshi, J. allowed the writ petition and set aside the proceedings issued by show cause notice and subsequent demands confirmed by OIO. 

Read report, here…

Rajasthan Public Service Commission

It would be open for RPSC to conduct written main examination on the rescheduled date, Single Judge bench order stayed

A Division Bench of Akil Kureshi CJ and Sudesh Bansal J. stayed the impugned judgment and left it open for RPSC to conduct a written main examination on the rescheduled date.

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Compassionate Appointment

“…on the ground of delay itself, the heir of the deceased employee shall not be entitled to appointment on compassionate ground.”; Raj HC observes in a case where delay is of almost 13 years 

A Division Bench of Manindra Mohan Srivastava and Anoop Kumar Dhand, JJ. dismissed the petition on the ground that the writ petition filed by the petitioners is without any substance. 

Read report, here…

Transfer

Accepting requests for inter-district transfer can lead to chain reaction and at times considerable administrative difficulties; Raj HC observes while dealing a case related to inter-district transfer

A Division bench of Akil Kureshi CJ and Madan Gopal Vyas J. dismissed the petition stating that nothing would come in the way of the petitioner in seeking inter-district transfer if the Government rules and regulations recognize any such policy.

Read report, here…


 Tripura High Court


 Qualifying Examination

No grievance for non-selection; Court finds criteria fixed by ONGC clear and categorical

Indrajit Mahanty, CJ. dismissed a petition which was filed by the petitioner who was appointed as Junior Security Supervisor at (A-1 Level) in the category of Scheduled Tribe and had appeared for the computer-based test and physical standard test conducted by the ONGC. It was alleged that in the selection process the petitioner was awarded 72 marks but was not selected whereas the candidate (respondent 3) who got only 66.10 marks was wrongly and illegally selected by the respondent 2.

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Conjugal Rights

Whether maintenance granted to the wife under S. 125 CrPC can be cancelled in view of husband’s obtaining a decree for restitution of conjugal rights and wife’s refusal for the same?

S.G. Chattopadhyay, J., decided on a petition which was filed by the petitioner challenging order passed by the Additional Judge, Family Court which stated that the petitioner was not entitled to any maintenance allowance under section 125 Cr.P.C from her husband in view of her refusal to restore conjugal relationship with her husband pursuant to the judgment and decree passed by the District Judge for restitution of conjugal rights.

Read report, here…

Bail

Tests provided under S.37(1)(ii) of the NDPS Act should qualify in order to seek bail; Court rejects application 

S.G. Chattopadhyay, J., rejected a bail application which was filed for releasing the accused on bail who had been undergoing imprisonment since 16-09-2021 under NDPS Act, 1985. Successive applications of the accused for pre-arrest bail were rejected.

Read report, here…

Die-in-Harness Scheme

Exclusion of married daughters from the die-in-harness scheme of the State Government discriminatory? Court discusses

The Division Bench of Indrajit Mahanty, CJ. and S.G. Chattopadhyay, J. decided over a bunch of petitions which had a similar question pertaining to exclusion of married daughters from the die-in-harness scheme of the State Government. 

Read report, here…

Migratory Birds

More than 1000 ‘Rare’ Birds dead, no carcasses found; Court directs committee inspection 

The Division Bench of S.G. Chattopadhyay and Indrajit Mahanty, JJ., took up a PIL which was filed on the basis of press reports that in the Sukhsagar water body of Udaipur, Khilpara, large number of migratory birds of more than 1000 in numbers were found dead. Notices were issued and following the directions of this Court a report had come to be filed by the State wherein the State had taken note of the fact that many migratory birds come and find sanctuary in water bodies in the State of Tripura and they come all the way from Spain, Portugal, South East France, Italy and North Western Africa and have all been listed as “Rare” birds by the European Union, but it seems that the same has been detailed as localized by the State.

Read report, here…


Uttaranchal High Court


Right to Information

Husband seeking personal information such as salary of wife under Right to Information Act, 2005; Whether acceptable or not?

“….The only exception as to the information given under the Act under Section 8 of the RTI Act, is an exemption from disclosure of information.”

Read report, here…

Termination of Pregnancy

Compelling to continue pregnancy, infringement under Art. 21; Rape victim allowed to terminate Intrauterine Fetus of 28 weeks 5 days

Alok Kumar Verma, J., decided on a petition which was filed by the father of the minor petitioner to issue a writ in the nature of mandamus commanding and directing the respondent to ensure immediate medical termination of petitioner’s pregnancy after taking all precautions as required to be taken medically and legally.

Read report, here… 

Bail

Denial of bail on sole ground of apprehension that he may commit crime again, overturned by the Court

R.C. Khulbe, J. granted bail in a criminal revision petition moved against the order of Juvenile Justice Board (JJB), Dehradun as well as a judgment by Addl. Sessions Judge (POCSO)/FTC, Dehradun against the petitioner.

Read report, here…



8 Legal Stories of the Week: From High Courts to District Courts

7 Legal Stories of the Week: From High Courts to District Courts

11 Legal Stories of the Week: From Hijab ban to a Sexual Harassment complaint from an employee in ScoopWhoop & more

8 Legal Stories of the Week: From the release of movie Gangubai Kathiawadi to WhatsApp Admin’s liability if a member of group shares objectionable content on group and many more such stories

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., addressed a matter pertaining to vicarious liability of directors of the company alleged for offences under Section 138 NI Act.

Petitioner sought to quash a criminal complaint which was filed under Section 138 of the Negotiable Instruments Act, 1881 along with this, he also sought to quash an order passed by the trial court issuing summons to the petitioner.

Respondent 2 had filed a complaint under Section 138 read with Section 142 of the NI Act before the Court of Metropolitan Magistrate, Saket Court.

Respondent 2 was appointed as CFO of India Ahead News Private Ltd. which was engaged in the business of running a TV news channel. Petitioner and accused 2 were the directors of India Ahead News Pvt. Ltd. and they were responsible for the day-to-day affairs of the company.

The complainant was taken in service by respondent 1 at a fixed salary of Rs 10,00,000 per month plus GST less TDS along with monthly expenditure and reimbursement if Rs 1,50,000 per month, along with this a stake of 10% was also assured to the complainant.

In the year 2019, the salaries of the staff along with complainant’s started getting delayed and even the statutory obligations like PF, ESI, etc., were not being fulfilled by the company. Since the dues and the arrears of salary were mounting up at the request of petitioner’s son the complainant offered to take a salary cut.

Further, when the cheques for payment of arrears of salary were presented for encashment the same were returned with remark “insufficient fund”. Hence, a legal notice was issued in compliance with to mandate of Section 138 NI Act demanding payment.

Since there was nothing on record to show that the accused’s 2 & 3 were the directors of the company, the complainant was directed to place on record the Master Data of the company. After the pre-summoning evidence, summons was issued and the said order of the Court has been challenged before this Court.

Despite several attempts to settle the dispute, the parties could not arrive at a settlement.

Supreme Court has in a number of decisions laid down the factors necessary to be kept in mind before making a person vicariously liable for the offences committed by the company under Section 138 of the NI Act:

(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.

(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.

(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position, they are liable to be proceeded with.

(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint.

(vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.

[Refer Gunmala Sales Private Limited v. Anu Mehta, (2015) 1 SCC 103; National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330; S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89; S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2007) 4 SCC 70; Saroj Kumar Poddar v. State (NCT of Delhi), (2007) 3 SCC 693; N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481; N. Rangachari v. BSNL, (2007) 5 SCC 108; Paresh P. Rajda v. State of Maharashtra, (2008) 7 SCC 442; K.K. Ahuja v. V.K. Vohra, (2009) 10 SCC 48.]

The complaint read as a whole indicated that at the time of cheques being issued by the company and returned by the bank, the son of the petitioner and the petitioner were the only directors of the company and were responsible for the conduct of the business of the company. Hence, this Court was not inclined to interfere with the order issuing summons to the petitioner.

High Court stated that the petitioner should have established in trial that he was not responsible for the conduct of the business of the company owing to his age and the mere ipsi dixit of the petitioner that he was 80 years of age and was unable to manage the affairs of the company and the same cannot be accepted at present stage.

Supreme Court’s decision in Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., 2021 SCC OnLine SC 915 squarely covers the present case.

Lastly, the Court concluded that the observations of this Court are limited to the issue as to whether the complaint should be quashed or not because of the fact that the complaint does not state the exact role of the petitioner in the conduct of the business of the company.

“…it is always open for the petitioner to substantiate his assertion that he was not responsible for the conduct of the business of the company by leading evidence which should be considered on its own merits without being influenced by the observations made in this order.”

Therefore, the petition was dismissed. [Gopala Krishna Mootha v. State Govt of NCT of Delhi, 2022 SCC OnLine Del 530, decided on 21-2-2022]


Advocates before the Court:

For the Petitioner: Neeraj Malhotra, Senior Advocate with Shiv Gupta, Devahuti Tamuli, Advocates

For the Respondents: Neelam Sharma, APP for the State

Kamlesh Mahajan, Advocate for R-2

Tis-hazari
Case BriefsDistrict Court

Tis Hazari Courts, New Delhi: While deciding a matter under Section 138 of the negotiable Instruments Act, 1881, Devanshu Sajlan, MM-05 (NI Act) reiterated the settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does not have a separate legal identity from its proprietor.

A complaint was filed under Section 138 of the Negotiable Instruments Acts, 1881.

The complaint proceeded against the accused firm, accused persons 1 and 2. Though, later the proceedings against accused 1 were abated pursuant to her death. Thereafter, the matter proceeded only against an accused firm and accused 2.

It was stated that the accused firm was a partnership firm of which accused 1 was a partner and accused 2 was an authorized signatory/attorney.

The accused partnership firm had purchased Kirana Goods from the complainant and the parties had settled their accounts and pursuant to the said settlement, the accused firm issued two cheques in favour of the complainant and the said cheques were signed by accused 2.

The said cheques were returned dishonoured with remarks ‘Funds Insufficient’. After which, the firm sent a legal demand notice, but the accused persons allegedly failed to pay the cheque amount, due to which the present complaint was filed.

The stance of accused 2 was that the accused firm was a sole proprietorship concern, and he was merely the authorized signatory of accused 1, who was the sole proprietor of the accused firm.

Analysis, Law and Decision

High Court expressed that in order to establish the offence under Section 138 NI Act, the prosecution must fulfil all the essential ingredients of the offence. In addition to this, the conditions stipulated under Section 142 NI Act have to be fulfilled.

“Liability of authorised signatory of a proprietorship concern.”

The Bench held that the accused 2’s contention that the accused firm was a sole proprietorship concern and he was merely the authorized signatory of accused 1 who was the sole proprietor of the accused firm was indeed correct.

“It is a settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does not have a separate legal identity from its proprietor and therefore, it does not fall within the ambit and scope of Section 141 NI Act.”

The above-said position of law was laid down by the Supreme Court in Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC 103.

The Court remarked that as far as a sole proprietorship was concerned, it was only the sole proprietor who could be held liable under Section 138 NI Act for dishonour of a cheque drawn on the account of the sole proprietorship.

Adding to the above, Court stated that vicarious liability cannot be fastened on the employees/authorized signatories of a sole partnership firm, by taking aid of Section 141 NI Act. Hence, if the accused firm is proved to be a sole proprietorship concern, accused 2 would have no liability.

Though, in case the accused firm will be proved to be a partnership firm, then accused 2 would be liable under Section 141 NI Act since he is the signatory of the cheques.

“It is a settled position of law that the signatory of the cheque is vicariously liable in terms of 141 of the NI Act in case the accused is a company or a partnership firm.”

  • Who has the burden of proof to establish that the accused firm is a proprietorship concern or a partnership firm?

The Court stated that it needs to be proved by the complainant that the accused firm was a proprietorship concern or a partnership firm because the legal status of a firm is the very identity of the said firm and without establishing the said legal status, the identity of the firm as a “person” cannot be verified/confirmed/established.

Hence, without the proof of the above-said fact, the statutory presumption under Section 139 NI Act cannot be raised in a casual manner. Therefore, the burden of proof to establish that the accused firm is a partnership firm lies upon the complainant.

  • Whether it has been proved that the accused firm is a partnership firm?

The complainant could not conclusively establish that the accused firm was a partnership firm.

Decision

In view of the above discussion, accused 2 was acquitted from the charge of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881.  Hence, accused 2 was directed to furnish bail bond and surety bond in terms of Section 437-A CrPC.

Note: The span of the present case was almost 21 years (beginning from the year 1999). 

[Durga Traders v. Saraswati Trading Co., 7538 of 2016, decided on 24-12-2021]


Advocates before the Court:

Sh. Vikas Aggarwal, Counsel for the complainant.

Sh. Pankaj Chawla, Counsel for the accused.

Case BriefsDistrict Court

Rohini Court, North-West, Delhi: Ritika Kansal, MM(NI) reiterated the settled position of law that,

“…an accused has to prove his defence by preponderance of probabilities, but a defence would be considered probable only if it appeals to the Court as probable and reasonable keeping in mind the natural course of conduct of a prudent human being of reasonable intelligence.”

Present complaint was filed against the accused under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

Complainant on account of good friendly relations advanced a loan of Rs 80,000 to the accused as the latter was in dire need of the money for her parlour with a promise by the latter to repay the same within 6 months.

It was alleged by the complainant that after much insistence in the month of August 2020, the accused sought some time “due to financial crisis” and “lockdown” but thereafter issued two cheques each of Rs 40,000 in the complainant’s favour which were dishonoured due to insufficiency of the funds in her bank account, leading to the complainant issuing a legal demand notice and eventually the present complaint.

Analysis, Law and Discussion

High Court observed the following significant points:

(a) Initially, it is upon the complainant to prove foundational facts.

(b) Once foundational facts are proved, it is mandatory upon the court to raise presumption under Section 118 r/w Section 139 of NI Act i.e., cheque has been issued/drawn for consideration by the accused to discharge a debt or a liability in favour of the holder of cheque. In other words, it shall be presumed that the accused/drawer of the cheques owes any legal liability or debt to the holder of the cheque/complainant.

(c) Accused can rebut the presumption.

(d) The burden of proof upon accused is not to prove his defence beyond all reasonable doubts but raise a probable defence

(e) Accused needn’t examine himself to prove his defence. He can do so with help of material already on record i.e. by cross-examining the complainant and/or his witnesses.

(f) Though, rebuttal does not have to be conclusively established, nevertheless, the evidence must be such that the court either believes the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man.

In the present matter, the complainant had established by virtue of Sections 118(a) and 139 NI Act, that a presumption arises in his favour and against the accused.

While adjudging whether in a case the presumption of consideration has been rebutted, it becomes important to underscore that a mere denial of liability or vague defence of blank cheque as security, cannot be taken at the mere ipse dixit of the accused. 

In the instant case, the whole defence of the accused was based upon the existence of a document marked as “A” and “B”. She had deposed that the same had been signed by the complainant in her presence. It was on the basis of said document, that the accused claimed that she has made payment in monthly instalments. Thus, clearly the initial burden to prove the alleged factum of issuance of the said documents lied upon the accused.

Cheques Issued as Security cheques

The question of maintainability of complainant under Section 138 in case of security cheque was examined by Delhi High Cout in judgement of Suresh Chandra Goyal v. Amit Singhal Crl.L.P. No. 607.2014.

It was observed: “There is no magic in the word “security cheque”, such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a “security cheque”, the Magistrate would acquit the accused. The expression “security cheque” is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a ‘security cheque’ to say that a complaint in respect of such a cheque would not be maintainable…”

The Court opined that, merely because cheques in question were security cheques, would not save accused from clutches of law, latter having admitted taking loan against the cheques.

Decision

The Bench held that the accused failed miserably to prove the alleged factum of repayment.

Accused failed to prove that the documents “A” & “B” purportedly the money lending cards, bear the signature of the complainant/appellant, also no witness was examined by her who may have seen the accused’s husband making payment in installments.

Further, the accused testified in her evidence that she made repayments in monthly instalments in cash. However, to substantiate the same, neither she has placed on record any bank account statement reflecting withdrawals nor examined any witness

With regard to the contention that the complainant was engaged in money lending business without a licence, the accused did not place on record any material to substantiate the same and it is well settled that for an activity to be called money lending, there should be a systematic business of money lending which should be repetitive and continuous, and the loans are granted to a large number of persons. Even if the said contention was accepted, the accused’s sinking ship could not be saved in light of the settled position of law.

Accused in response to the legal notice did not even insist on taking back the cheques in question, rather stated therein that she had returned 80% of the amount and expressed anguish over the cheques being presented without her knowledge.

Bench also noted that,

“…the accused didn’t issue any “stop payment” instructions to the bank. Despite opportunity, she didn’t place on record any police complaint as referred to by her during her evidence. Even if everything is taken out of the purview, I fail to understand how a reasonably prudent person who has paid a sum of money more than she borrowed would wait in silence, and not protest over her cheques not being returned.”

Noting the sheer lack of even an iota of material on the record, lead to the irresistible conclusion that the defence of the accused was a sham and nothing but an implausible story.

Accused had miserably failed to probablise lack of legal liability with respect to the cheques in question. The presumption of legal liability, therefore, has gone unrebutted.

Therefore, accused was convicted of an offence under Section 138 of the NI Act. [Manmohan Bansal v. Saroj Sharma, CC NI Act No. 119 of 2021, decided on 7-2-2022]

Case BriefsHigh Courts

Madras High Court: N. Sathish Kumar, J., while addressing a matter with regard to the dishonour of cheques under Section 138 of Negotiable Instruments Act, 1881, held that the moratorium provision contained in Section 14 of the Insolvency and Bankruptcy Code, would apply only to corporate debtor, but the natural persons mentioned in Section 141 of Negotiable Instruments Act continue to be statutorily liable under Chapter XVII of the Negotiable Instrument Act.

Petitioner’s case was that the petitioner was arrayed as one of the accused in cases pending before the lower courts for the offences under Section 138, 141 and 142 of the Negotiable Instruments Act, 1881.

As per the request of the petitioners ‘company, the complainant company agreed to supply the “Wet Blue Cow Hides” and supplied the same. During the course of business, the accused Company was due and payable to the respondent Company for the supply made. For the said purpose 2nd accused had issued various cheques but the said cheques were dishonoured with an endorsement of “Payment Stopped by the Drawers”. Hence, the respondent had filed the complaints before Judicial Magistrates’ Court.

Petitioners alleged that no legal notice was served by the respondent, hence the complaint under Section 138 NI Act was legally unsustainable and in view of the same while challenging the said complaint present petition was filed.

Analysis, Law and Decision

High Court reiterated a settled position of law that, the criminal liability of natural persons in case of a complaint filed under Sections 138 and 141 of the Negotiable Instruments Act, 1881 would survive, but would not be attracted against the company.

Bench noted that in the present case, the insolvency process was initiated by NCLT, and a moratorium had been declared under the Insolvency and Bankruptcy Code.

Therefore, referred to the Supreme Court decision in P. Mohanraj v. Shah Brothers Ispat (P) Ltd., (2021) 6 SCC 258, wherein it was held that the moratorium provision contained in Section 14 of the Insolvency Bankruptcy Code, would apply only to corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instrument Act,

High Court expressed that, the moratorium was only in respect of the corporate debtor and not in respect of the directors/management and therefore the petitioners 2 and 3 as natural persons were liable for prosecution. However, in view of the declaration of moratorium by NCLT, the prosecution against the company cannot be allowed to continue.

In view of the above, Court quashed the proceedings in respect of 1st petitioner and with regard to petitioners 2 and 3, Court opined that the issue was triable and required an appreciation of evidence and this Court cannot decide the same in exercise of its jurisdiction under Section 482 of CrPC.

High Court directed the petitioners and respondent to co-operate with the trial court for the early completion of trial.[Nag Leathers (P) Ltd. v. Muzain Hides, 2022 SCC OnLine Mad 205, decided on 3-1-2022]


Advocates before the Court:

For Petitioner in all Crl.O.P.s :  Mr T.P. Prabakaran

For Respondent in all Crl.O.P.s : Mr M. Guruprasad

Hot Off The PressNews

In compliance with the Supreme Court’s decision dated 16-4-2021, passed in (2021) 10 SCC 598 “In Re: Expeditious Trial of Cases under Section 138 of Negotiable Instrument Act 1881”, the Chief Justice of Bombay High Court has issued the following practice directions: –

1. The magistrates having jurisdiction to try offences under the Negotiable Instruments Act, 1881, shall record cogent and sufficient reasons before converting a complaint under Section 138 of the N.I. Act from summary trial to summons trial in the exercise of power under the second proviso of Section 143 of N.I.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 any complaint under Section 138 of N.I. Act, wherever it is found that any accused is resident of the area beyond the territorial jurisdiction of the magistrate concerned, an inquiry shall be conducted by the magistrate to arrive at sufficient grounds to proceed against the accused as prescribed under Section 202 of Cr.P.C.

3. While conducting any such inquiry under Section 202 of Cr.P.C., the evidence of witnesses on behalf of the complainant shall be permitted to be taken on affidavit. In suitable cases, the magistrate may restrict the inquiry to the examination of documents without insisting for examination of witnesses 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 of the N.I. Act forming part of a transaction, as deemed service in respect of all complaints filed before the same Court relating to the dishonor of cheques issued as a part of the same transaction.

5. Trial Courts have no inherent power to review or recall the issue of summons in relation to complaints filed under Section 138 of N.I. Act. However, the same shall not affect the power of the Trial Court under Section 322 of Cr.P.C 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 Cr.P.C. has no applicability to complaints under Section 138 of the N.I.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 the N.I. Act are pending are directed to make an effort to settle the dispute through mediation.

The above said practice directions are to come into effect from immediate effect. High Court also directed for strict compliance of the directions.


Bombay High Court

Circular No. Rule/P.1605/2022

[Circular dt. 27-1-2022]

Saket Court
Case BriefsDistrict Court

Saket District Court, Delhi: Sonam Singh, MM (NI Act) acquitted the accused who was charged with an offence under Section 138 of the Negotiable Instruments Act, on finding that he raised sufficient doubt about the existence of a legally sustainable liability.

Factual Background

Complainant was the daughter-in-law of the accused. She alleged that in August 2020, the accused who was her father-in-law promised to pay her maintenance of Rs 45,000 every month for his grandson.

Further, she alleged that in lieu of the promised amount he handed over a cheque. On not receiving the amount in her bank account, she enquired with the bank and got to know that initially the cheque was cleared but due to the accused being hand-in-glove with certain officials from the said bank, the amount of Rs 45,000 which was credited in her account was subsequently debited from her account.

Complainant alleged that since she suspected that the accused had cheated her, she requested the bank to disclose the status of her cheque and after much inconvenience, the bank told her that due to the difference between words and figures written on the cheque, it was wrongly cleared by them initially.

Adding to the above allegations, she also stated that the amount was debited from her account as the accused had conspired with the bank official and alleged that she was appalled when she got to know that the cheque was dishonored on the ground of “CHEQUE IRREGULARLY DRAWN/AMOUNT IN WORDS AND FIGURES DIFFERS” and further on contacting the accused, he refused to pay the amount of cheque in question.

It was also alleged by her that she got to know from the Bank that the accused had personally asked the bank to stop the payment of the cheque in question and he had deliberately written the wrong amount in words on the cheque.

Since the accused did not pay the complainant within 15 days of service of legal notice, the present complaint was filed seeking prosecution of the accused of the offence punishable under Section 138 NI Act.

Analysis, Law and Decision

After referring to the provisions of Negotiable Instruments Act, Bench referred to the Supreme Court decision in Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745, wherein the Court discussed the conditions of Section 138 NI Act which are to be fulfilled for a cause of action to arise in favour of the complainant.

Court expressed that,

The object underlying Section 138 of the NI Act is to promote faith in the efficacy of the banking system and give credibility to negotiable instruments, in business transactions. The intention is to punish those unscrupulous persons, who issued cheques for discharging their liabilities, without really intending to honour the promise.

Issues in the present matter:

  • Service of legal demand notice
  • Cheque being valid and return memo being fabricated
  • Whether the cheque in question can be said to have been issued in discharge of a legally enforceable debt or liability or not

Service of legal demand notice

Court stated that considering the presumption of due service, the accused was under an obligation to lead evidence to prove that the notice was not served on him. However, he has failed to bring any evidence to rebut the presumption of due service of legal demand notice.

Mere denial of not receiving the legal demand notice would not amount to proving his defence.

 Validity of Cheque and genuineness of the return memo

It was proved that the cheque was dishonoured on the instructions of the accused who gave instructions to the bank to reverse the entry, admitted by him in his statement under Section 313 CrPC.

The Court witness brought a letter issued by the bank that erroneously the cheque number mentioned in the return memo dated 11.09.2020 was 682148 instead of 682146. He further explained in his cross-examination conducted by the counsel for the complainant that the typographical mistake of the cheque number in the return memo is a “clerical mistake and should not have occurred.”

 Accused did not bring any evidence to show that there was any conspiracy between the complainant and the bank to issue a fabricated return memo. The Bench stated that it was relevant to note that the accused had admitted having signed the cheque on a bank account maintained in his name and filled all the particulars of the cheque except the name of the complainant.

Question of Liability

It is well-settled position of law that when a negotiable instrument is drawn, two statutory presumptions arise in favour of the complainant, one under Section 139 NI Act and another under Section 118(a) of the NI Act, which is a presumption of the cheque having been issued in discharge of legal liability and drawn for good consideration, arises.

Bench observed that it is explicit that on proof of foundational facts, the Court will presume that cheque was made or drawn for consideration and that it was executed for discharge of debt or liability, once the execution of negotiable instrument is either proved or admitted and the burden of proof lies upon the accused to rebut the said presumption.

This is an example of the rule of ‘reverse onus’ in action, where it is an obligation on the accused to lead what can be called ‘negative evidence’. The accused is not to prove a fact affirmatively, but to lead evidence to demonstrate the non-existence of debt or liability. Since, this rule is against the general principle of the criminal law of ‘presumption of innocence in favour of the accused’ and considering that such negative evidence, by character is difficult to lead, the threshold for the accused to rebut the presumption is on the scale of the preponderance of probabilities.

Court opined that, in the present matter, the accused succeeded in rebutting the presumption of legal liability, by exposing the inherent improbability of the case of the complainant.

Bench stated that, the improbability of the complainant’s story was further manifest from the fact that she had not filed any case for maintenance and only a case under DV Act had been filed. She failed to bring on record any document or court order to show that the accused promised her the maintenance of Rs 45,000 for his grandson.

Further, the accused, in his defence had argued that the cheque was not handed over to the complainant. In his statement under Section 313 CrPC, he stated that only when he received a message from his bank that an amount of Rs 45,000 was debited from his account, then he contacted his bank and told the bank he had not issued any such cheque. Any reasonable man would do as what accused did and direct his bank to stop the payment or reverse the entry.

The reason for not filing a police complaint with respect to misuse of the cheque by the accused was not filed as the complainant was his daughter-in-law and in Court’s opinion the said explanation was believable as the same could have caused him social embarrassment.

Conclusion

Accused raised sufficient doubt about the existence of a legally sustainable liability, which the complainant failed to prove after the onus shifted on her and therefore the end result was that the accused was acquitted of offence under Section 138 NI Act.

In view of the above complaint was dismissed. [Shakun Singh v. Chandeshwar Singh, CC No. 397 of 2020, decided on 24-12-2021]

Case BriefsDistrict Court

XVIII Addl. Chief Metropolitan Magistrate, Bengaluru City: Manjunatha, XVII Addl. C.M.M., found the accused guilty for the offence under Section 138 of the Negotiable Instruments Act, on his failure to rebut the statutory presumption in favour of the holder of cheque.

Background

The complainant had filed the instant complaint under Section 200 of Code of Criminal Procedure read with Section 138 of the Negotiable Instruments Act against the accused alleging that, she had committed the offence punishable under Section 138 NI Act.

Complainants and the accused were well known to each other as they were residing in the same locality and in 2018, the accused had approached the complainant for a loan of Rs 4,00,000 for the purpose of urgent legal and domestic necessities and promised to repay the same within 6 months.

Considering her request the complainant had paid Rs 4,00,000 to the accused by way of cash.

The accused and her husband had executed an undertaking by acknowledging the receipt of the amount, but she failed to keep up her promises. On repeated demand and request, the accused issued a cheque but the same was returned unpaid with an endorsement “Funds Insufficient” in the drawer’s account.

Further, despite the notice, the accused had not paid the cheque amount and thereby she had committed an offence punishable under Section 138 NI Act.

Court had issued summons and later, the accused was enlarged on bail.

As per the direction of the Supreme Court in Indian Bank Assn. v. Union of India, (2014) 5 SCC 590, this Court treated the sworn in statement of the complainant as complainant evidence.

Analysis, Law and Decision

Court cited the decision of Sukur Ali v. State of Assam, (2011) 4 SCC 729, in which the Supreme Court opined that even assuming that the counsel for the accused does not appear because of the counsel’s negligence or deliberately, even then the Court should not decide a criminal case against the accused in the absence of his counsel since an accused in a criminal case should not suffer for the fault of his counsel and in such a situation the Court should appoint another counsel and in such a situation the Court should appoint another counsel as amicus curiae to defend the accused.

In the decision of K.S. Panduranga v. State of Karnataka, (2013) 3 SCC 721, Supreme Court held that, “regard being had to the principles pertaining to binding precedent, there is no trace of doubt that the principle laid down in Mohd. Sukur Ali (supra) by the learned Judges that the court should not decide a criminal case in the absence of the counsel of the accused as an accused in a criminal case should not suffer for the fault of his counsel and the court should, in such a situation, must appoint another counsel as amicus curiae to defend the accused and further if the counsel does not appear deliberately, even then the court should not decide the appeal on merit is not in accord with the pronouncement by the larger Bench in Bani Singh” .

The Court further held that in view of the aforesaid annunciation of law, it can safely be concluded that the dictum in Mohd. Sukur Ali (supra) to the effect that the court cannot decide a criminal appeal in the absence of counsel for the accused and that too if the counsel does not appear deliberately or shows negligence in appearing, being contrary to the ratio laid down by the larger Bench in Bani Singh (supra), is per incuriam. Furthermore, the transaction alleged in the case is purely a commercial transaction enetered into between two private individuals and the accused is not in judicial custody and he is not fall under any of the parameter under legal services authorities Act to get free legal aid. Under such circumstance question of appointing advocate for accused at the state cost may not arise at all.”

 Question for Consideration:

Whether the complainant proves that, accused issued cheque for Rs 4,00,000 towards discharge of her liability, which was returned unpaid on presentation for the reason “Fund Insufficient” and despite of notice she had not paid the cheque amount and thereby committed an offence punishable under Section 138 of NI Act?

Analysis, Law and Decision

Court stated that, Sections 118 and 139 of NI Act raises a presumption in favour of the holder of the cheque that he had received the same for discharge in whole or in part of any debt or other liability.

Further, it was added that the accused can take probable defence on the scale of the preponderance of probability to rebut the presumption available to the complainant.

Whether the accused had successfully rebutted the said presumptions of law?

Court observed that the accused had not disputed the issuance of cheque and her signature in the cheque.

When the drawer has admitted the issuance of the cheque as well as the signature present therein, the presumptions envisaged under section 118 read with section 139 of NI Act, would operate in favour of the Complainant.

 The Bench added that the above-said provisions laid down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder the court shall presume that the instrument was endorsed for consideration.

“…when the complainant has relied upon the statutory presumptions enshrined under section 118 read with section 139 of NI Act, it is for the accused to rebut the presumptions with cogent and convincing evidence.”

It is worth noting that, Section 106 of Indian Evidence Act postulates that, the burden is on the accused to establish the fact which was especially within his special knowledge.

Hence, the burden is on the accused to prove that the cheque in question was not issued for discharge of any liability.

With regard to proof of existence of legally enforceable debt was concerned, Court referred to the decision of Supreme Court in Rangappa v. Mohan, (2010) 11 SCC 441, wherein it was observed that,

“In the light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by section 139 of the Act does indeed include the existence of the legally enforceable debt or liability”

 In another decision in, T. Vasanthakumar v. Vijayakumari, (2015) 8 SCC 378, it was held that once the accused has admitted the issuance of Cheque, as well as signature on it, the presumption under Section 139, would be attracted.

In the present matter, despite giving sufficient time, the accused neither led defence evidence nor cross-examined PW1, therefore the evidence placed by the complainant remained unchallenged and there was no reason to disbelieve the version of the complainant.

The complainant had not produced any document regarding the lending of the amount to the accused, but in the absence of any contrary evidence, the unchallenged testimony of the complainant had to be believed. As such there was no rebuttal evidence on behalf of the accused to rebut the presumption available under Sections 118 and 139 of the NI Act.

Therefore, the complainant’s case was acceptable.

The complainant proved that, for discharge of liability accused had issued a cheque and she had intentionally not maintained a sufficient amount in her account to honour the said cheque.

In view of the above discussion, the complainant had proved the guilt of the accused punishable under Section 138 NI Act.

Supreme Court in a decision of H. Pukhraj v. D. Parasmal, (2015) 17 SCC 368, observed that having regard to the length of the trial and date of issuance of cheque, it was necessary to award reasonable interest on the cheque amount along with cost of litigation.

The Bench held that rather than imposing punitive sentence if sentence of fine is imposed with a direction to compensate the complainant for its monetary loss, by awarding compensation under Section 357 CrPC, would meet the ends of justice.

Lastly, Court opined that it was just and proper to impose fine of the amount of Rs 4,55,000 which included interest and cost of litigation. [N. Muniraju v. Manjula, Criminal Case No. 25494 of 2019, decided on 1-1-2022]


Advocates before the Court:

For the complainant: S.K

For the accused: G.V.K

Banking and Negotiable InstrumentsOp EdsOP. ED.

Sections 138 to 142 of the Negotiable Instruments Act, 1881[1] (for short, “the NI Act, 1881”) were inserted in the year 1988 by amending the principal Act of 1881 with the intent of encouraging the culture of use of cheques and credibility of the instrument. “Section 138[2]” became a mostly used common term in business, friends and family circles as majority of the financial transactions, despite the massive digitalisation post-demonetisation, still take place through issuance of cheques and in case of failure of the drawer (the one who owes money and issues the cheque) to honour the amount specified in cheque, the payee (the one to whom drawer owes money and whose name is written on the cheque) turns foe and invokes prosecution under that section. As economics is sine qua non of an individual from cradle to cremation and as Section 138 is thing closely related to economic activities, Section 138 cases have a lion’s share of dockets filed up in their name in India.

Section 138 punishes the person who fails to honour the amount specified in the cheque, which he has issued towards the discharge of his debt or liability towards another person, with up to two years of imprisonment or/and with fine up to double the cheque amount.

Unlike other statues, the Amendment Act of 1988[3] did not expressly specify territorial jurisdiction of the court in which Section 138 cases are to be filed by the aggrieved complainant. As the legislature has left fallow the area of territorial jurisdiction of cheque bounce cases, different Benches of the Supreme Court at different times started cultivation into that area by using their own divergent methods, which made the area so much infertile that when in 2015, the legislature entered into that area, it also got confused and failed to meet the object with which Sections 138 to 142 were inserted in the NI Act, 1881 and also failed to cope up the present demand casted by digitalisation and globalisation.

The first case on territorial jurisdiction aspect of cheque bounce cases was of a two-Judge Bench in K. Bhaskaran v. Sankaran Vaidhyan Balan,[4] wherein, after observing that offence under Section 138 can be completed only after concatenation of the following acts:

(1) drawing of cheque;

(2) presentation of cheque to the bank;

(3) returning the cheque unpaid by the drawee bank;

(4) giving notice to drawer by demanding payment; and

(5) failure of drawer to make payment within 15 days of receipt of notice,

the Court held that the complainant can file case in any of court having jurisdiction over any of those local areas within the territorial limits of which any one of aforesaid five acts was done. To arrive at this conclusion, the Court relied upon Sections 177 to 179 of the Code of Criminal Procedure, 1973[5] (for short, “CrPC”). Thus, a liberal, and in my opinion, substantially proper approach was adopted by the Supreme Court in K. Bhaskaran case[6].

But, in Harman Electronics (P) Ltd. v. National Panasonic (India)(P) Ltd.,[7]a 2-Judge Bench held that the court within whose limits, notice was issued cannot have territorial jurisdiction as it is the communication of notice which would give rise to a cause of action, and not issuance of notice. Thus, one of the acts laid in K. Bhaskaran case[8] was plucked out in Harman Electronics case[9]. It is to be noted that before Harman Electronics case[10], in Shamshad Begum v. B. Mohammed,[11] another 2-Judge Bench by following K. Bhaskaran case[12] held that the court from whose limits, notice was sent has jurisdiction. Shamshad Begum case[13] was not even discussed in Harman Electronics case[14].

Nonetheless, in Nishant Aggarwal v. Kailash Kumar Sharma,[15] Escorts Ltd. v. Rama Mukherjee,[16]and FIL Industries Ltd. v. Imtiyaz Ahmed Bhat,[17] the 2-Judge Bench followed K. Bhaskaran case[18] and held that the court within whose limits cheque has been presented by the payee through his account has jurisdiction.

Hence, as the ratio decided in K. Bhaskaran case[19] was shifting like pendulum from one corner to another over territorial jurisdiction of courts to deal with cheque bounce cases, a 3-Judge Bench was called upon to solve this conundrum. Therein came the judgment of a 3-Judge Bench in Dashrath Rupsingh Rathod v. State of Maharashtra,[20] which made matters worse by holding that only that court will have jurisdiction wherein the drawer maintains the bank account i.e. the drawee bank.

To overrule the ratio laid in K. Bhaskaran case[21], Dashrath Rupsingh[22] observed that the moment when cheque is dishonoured by the drawee bank (bank of the drawer), offence under Section 138 gets attracted, hence as the offence is committed at the place of drawee bank, the court situated therein will have jurisdiction. For arriving at this conclusion, it gained much of the strength from a previous judgment of a 3-Judge Bench in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.,[23] which held that  the word “bank” in Section 138 means only a drawee bank and the cheque has to be presented by the payee within the  limitation period of six months at such drawee bank. Although Ishar Alloy case[24] was not on the point of territorial jurisdiction, which was observed even in Dashrath Rupsingh case[25], but still it relied upon Ishar Alloy case[26] by stating that “when a court interprets any statutory provision, its opinion must apply to and be determinate in all factual and legal permutations and situations”[27]and “that Ishar Alloy[28] is only case … which was decided by a three-Judge and therefore was binding on all smaller Benches”[29] and it is “logically correct”.[30] In my opinion, reliance on Ishar Alloy case[31] was wholly untenable as firstly, Ishar Alloy[32]never discussed the point of territorial jurisdiction nor it was called to do so and it is well-settled rule that only that case can be relied by a subsequent Bench, which was decided on similar facts or atleast similar legal proposition, hence Ishar Alloy[33] interpretation of the word “bank” was purely for limitation period purposes, for which I gain strength from the 2015 Amendment which allowed jurisdiction in court where the payee maintains an account. Secondly, even assuming reasons given by Dashrath Rupsingh[34] for reliance on Ishar Alloy[35] to be correct, it should be noted that  K.T. Thomas, J.  who wrote for the 2-Judge Bench in K. Bhaskaran case[36] also part of 3-Judge Bench in Ishar Alloy case[37], the judgment of which was authored by  R.P. Sethi, J. Hence, if  K.T. Thomas, J. wanted to reverse his own opinion expressed in K. Bhaskaran case[38] or if he wanted to dissent from  R.P. Sethi, J.’s opinion, then he would have authored his own judgment, which could not be found. It is for the reason that the 3-Judge Bench in Ishar Alloy case[39] knew that it was deciding the aspect of limitation and not territorial jurisdiction. Thirdly, now for practical purposes the ratio of Ishar Alloy[40] became infructuous because in that case of 20th century, cheque was presented by the payee in his account but it did not reach the drawer’s account within six months, which now, in the 21st century, is not the case due to digitalisation of entire banking system wherein cheque reaches the drawee bank, through electronic mode, within 2 to 4 days of presenting.

Although Dashrath Rupsingh [41]is partly correct in saying that an offence is committed the moment cheque is dishonoured at the drawee bank, but it is to be noted that as per Section 142(1)(b) of the NI Act, 1881[42], prosecution can be initiated only after accrual of “cause of action” under clause (c) of the proviso to Section 138 i.e. when drawer fails to make payment within fifteen days of receipt of the notice. The whole purpose of mandatory issuance of “statutory notice” by the payee is to inform the drawer that the cheque which he gave got dishonoured and if he pays back the cheque amount, then the payee will not initiate any case against him and cause of action does not survive. This can be found from the fact that the payee can present the cheque any number of times despite dishonour within six/three months from date of issuance. But Dashrath Rupsingh[43] would take none of these and held that civil law concepts like “cause of action” cannot be applied into criminal law. In my opinion, this interpretation was wholly wrong as Section 138 of the NI Act, 1881 is a hybrid version of civil and criminal law. It is exactly for this reason, the legislature in its wisdom has used the civil law term of “cause of action” for the offence under Section 138 of the NI Act, 1881, which cannot be found in other penal statues. My views gain strength from the observations of the Supreme Court in R. Vijayan v. Baby,[44] wherein it was observed that:

  1. 16. … cases arising under Section 138 of the Act are really civil cases masquerading as criminal cases.… Chapter XVII of the Act is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. It provides a single forum and single proceeding, for enforcement of criminal liability (for dishonouring the cheque) and for enforcement of the civil liability (for realisation of the cheque amount)….[45]

Also, in Harman Electronics case[46] the Court gave a go-by only to one of the principles of K. Bhaskaran case[47] i.e. place from where notice was issued does not give rise to cause of action, which was correct because under no branch of law, place from where notice is issued gives rise to cause of action,and Harman Electronics case[48] did not overrule the rest of the four principles of K. Bhaskaran case[49], which held the field till Dashrath Rupsingh[50] was decided.

Even the legislature has not accepted the Dashrath Rupsingh[51]view, that immediately within a year of the judgment, it came up with an amendment in the year 2015 stating that only that court will have jurisdiction where the payee maintains his account if he presents through his account (generally happens with cross-cheques) or where it is not presented through the payee’s account, then the court where the drawer maintains his account has jurisdiction.

Now the problem with the 2015 Amendment is that it has not been drafted as per the present practical needs. Till a decade ago, for all of the bank transactions, an individual had to physically visit the bank, therefore for his/her convenience whenever the account-holder shifted his/her residence or place of business he/she used to transfer his/her bank account from one branch to another or open a new account in the bank nearer to their locality, but, now after digitalisation, most of the banking transactions are taking place digitally and online through service providers like, PhonePe, Paytm, Google Pay, etc. Hence, people are not showing much interest in transferring or opening new bank account. For example, if A maintains an account in a bank having a branch in Chennai but due to job/business purposes he has shifted to Delhi, he can easily do banking transactions online and also, present even the cross-cheque at par in all branches of that bank without compulsorily going to his branch in Chennai. But, if the cross-cheque is dishonoured, as per the 2015 Amendment, he has to initiate Section 138 complaint only in the court where his bank branch is located in Chennai, which means he has to bear the legal expenses for the lawyers in Chennai, spend his time and money in travelling from Delhi to Chennai each time he is summoned to attend the court, which one cannot say how many times he has to attend.

Now, as the statute has conferred the territorial jurisdiction and as it is well settled that once the statute confers jurisdiction, courts cannot dilute it but are bound to follow it, hence, it is urged that Parliament comes up with an amendment to the NI Act, 1881 and confers the territorial jurisdiction on the courts trying cheque bounce cases by following the principles set out in K. Bhaskaran case[52], with only the court from where notice is issued being the exception as declared in Harman Electronics case[53]. Also, if the creditor initiates complaint against the same drawer from multiple courts just to harass him, such accused always has the remedy of transfer application  as enunciated in Chapter 31 from Sections 406 to 412 CrPC[54].


 *Advocate, Telangana High Court and co-author of Consumer Protection Act: A Commentary, (Eastern Book Company).  Author can be reached at akashbaglekar@gmail.com.

[1]http://www.scconline.com/DocumentLink/wgV2j1VM.

[2]http://www.scconline.com/DocumentLink/1g6m30k5.

[3]Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988.

[4](1999) 7 SCC 510.

[5]http://www.scconline.com/DocumentLink/onWy2d4F.

[6](1999) 7 SCC 510.

[7](2009) 1 SCC 720.

[8](1999) 7 SCC 510.

[9](2009) 1 SCC 720.

[10](2009) 1 SCC 720.

[11](2008) 13 SCC 77.

[12](1999) 7 SCC 510.

[13](2008) 13 SCC 77.

[14](2009) 1 SCC 720.

[15](2013) 10 SCC 72.

[16](2014) 2 SCC 255.

[17](2014) 2 SCC 266.

[18](1999) 7 SCC 510.

[19](1999) 7 SCC 510.

[20](2014) 9 SCC 129.

[21](1999) 7 SCC 510.

[22](2014) 9 SCC 129.

[23](2001) 3 SCC 609.

[24](2001) 3 SCC 609.

[25](2014) 9 SCC 129.

[26](2001) 3 SCC 609.

[27]Dashrath Rupsingh case, (2014) 9 SCC 129, 146, para 10.

[28](2001) 3 SCC 609.

[29](2014) 9 SCC 129, 146, para 10.

[30](2014) 9 SCC 129, 160-161, para 31.

[31](2001) 3 SCC 609.

[32](2001) 3 SCC 609.

[33](2001) 3 SCC 609.

[34](2014) 9 SCC 129.

[35](2001) 3 SCC 609.

[36](1999) 7 SCC 510.

[37](2001) 3 SCC 609.

[38](1999) 7 SCC 510.

[39](2001) 3 SCC 609.

[40](2001) 3 SCC 609.

[41](2014) 9 SCC 129.

[42]http://www.scconline.com/DocumentLink/W705Y641.

[43](2014) 9 SCC 129.

[44](2012) 1 SCC 260.

[45](2012) 1 SCC 260, 266.

[46](2009) 1 SCC 720.

[47](1999) 7 SCC 510.

[48](2009) 1 SCC 720.

[49](1999) 7 SCC 510.

[50](2014) 9 SCC 129.

[51](2014) 9 SCC 129.

[52](1999) 7 SCC 510.

[53](2009) 1 SCC 720.

[54]http://www.scconline.com/DocumentLink/72Mk5H3P.