Negotiable Instruments Act, 1881 (26 of 1881), Section 56, 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 – Cheque bounce complaint -- Legally enforceable liability – Part payment of cheque amount -- Indorsement of part of sum due on cheque – Requirement of -- Cheque must be issued in discharge of any debt or other liability either in whole or in part -- After issuing the cheque, the drawer of the cheque made a payment of certain amount -- A sum of Rs. 6036.83/- was paid by the drawer of the cheque against bill No. 3537 on 3rd April, 1995 after the cheque was drawn on 29th March, 1995 and before it was returned on 24th April, 1995 – Held, the entire cheque amount cannot be said to be legally enforceable debt -- Accused persons cannot be said to have committed any offence within the meaning of Section 138 of the N.I. Act – Ld. appellate Court was not justified in affirming the order of conviction in view of Section 56 of the N.I. Act – Impugned judgment is liable to be set aside.

(Para 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 – Indian Penal Code, 1860 (45 of 1860), Section 174-A – Cheque bounce case – Quashing of FIR u/s 174-A of IPC -- Proclaimed person – Proceedings u/s 138 NI Act have culminated in a settlement with the withdrawal of the complaint – FIR u/s 174-A of IPC along with all subsequent proceedings quashed.

(Para 10, 11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Cheque bounce complaint -- Presumption – Rebuttal -- Account closed – Defence that accused misused the security cheque by filling up the name of wife -- Cheque was written and signed by the accused -- Return memo indicates that on the date when the cheque drawn, the bank account already closed -- Complainant caused notice, which was received by the accused -- In the cross examination it is elucidated from the complainant that her husband and sons are running business in wax printing and they have business transaction with the accused – Held, this fact is no way rebut the presumption enumerated under Section 139 of N.I.Act -- Accused cannot take a plea that the said cheque was given as a security for the transaction, which took place four years ago.

(Para 14-16)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Cheque bounce complaint -- Presumption – Rebuttal -- Capacity to pay -- As far as the source of income, the complainant in the cross examination has indicated her source and also though she is an house wife, her husband and son being the earning members, it cannot be ruled out that she has no wherewithal to lend Rs.5,00,000/- to the accused – Contention that subject cheque was given only as a security and the complainant has no wherewithal to advance Rs.5,00,000/-, both factually not proved even by preponderance of probability -- While there is a statutory presumption, mere denial or adducing evidence which does not shake the foundational fact proved by the complainant, can be taken as a probability.

(Para 17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Cheque bounce complaint -- Revision – Sentence of cheque amount – While suspending the sentence High Court imposed a condition that the petitioner shall deposit a sum of Rs.1,00,000/- -- Further, imposed condition that the petitioner shall deposit another sum of Rs.1,50,000/- within a period of four weeks after immediately coming out on bail – Both the conditions were duly complied with by the petitioner – Petitioner ready and willing to settle the remaining cheque amount within the stipulated time fixed by this Court – Conviction confirmed, sentence set aside on condition that the petitioner shall deposit the remaining cheque amount namely a sum of Rs.2,50,000/- on or before 29.05.2023.

(Para 5-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce complaint -- Validity of cheque – Quashing of complaint – Dishonor of cheque with the remarks “Insufficient Funds” -- It was not mentioned on the cheque that the same is valid for 3 months -- Controversy involved is totally a disputed question of facts and the same is to be appreciated by the learned Trial Court on the basis of evidence led by both the sides regarding the contentions raised that whether the cheque is valid for 3 months or not -- Petition for quashing dismissed.

(Para 1, 5, 6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Quashing of complaint -- Loss of cheques – Plea of – Inherent power u/s 482 Cr.P.C. -- FSL Report proving signatures on cheques -- Two cheques issued to repay debt – Petitioner did not deny the fact of execution of any deed of agreement on payment of such amount – Signature in the deed of agreement and two cheques are found to be similar – FSL report reveals that the signatures of the accused/petitioner in two cheques and in deed of agreement are similar in nature – Disputed question of facts cannot be adjudicated upon in a petition u/s 482 Cr.P.C.

(Para 11)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounced complaint -- Account Closed – Presumption -- Both the cheques were issued by the accused/ petitioner after closing of his account -- It transpires that the petitioner had knowledge regarding closer of his bank account and in spite of that he issued the cheques in favour of the respondent No.2/claimant -- Under such backdrop, it can be assumed that the presumption u/s 139 N.I. Act will come into play at this stage.

(Para 13)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Vicarious liability -- Vicarious liability is a specific species and assumes critical importance, particularly when there is criminal liability involved and therefore, cannot be taken lightly -- If such an extension of principle of vicarious liability were to remain, it would go against the very grain and texture.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Officer in Company -- Vicarious liability – Merely holding a designation or office in a company not sufficient for liability under section 141.

(Para 15)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Vicarious liability – Bald averment against petitioner – Some accused dropped -- Bald averments against Accused No. 3-8 being directors of Accused-Company and in-charge of and responsible for the conduct, affairs and business of the company -- No specific averment made that this was so at the time of the commission of the offence -- Signatory of the cheque was also the Managing Director of the Company would be deemed to be in-charge, it was not as if the complainant was remediless -- Considering that Accused No.4 to 8 were dropped by the complainant, there was no reason for the complainant to have continued with proceedings against Accused No.3.

(Para 18)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Incharge of Company – Vicarious liability – Letter head of company – Reliance upon -- Merely the mention of the name of Accused No.3 on the letter head as being the Head of the Group, does not ipso facto or ipso jure make him in-charge of and responsible for the affairs and business of the company at the time the offence was committed.

(Para 19)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Vicarious liability – Non-Executive Director – Non-executive director may be the custodian of governance of the Company but are not involved in the day-to-day affairs of running its business and only monitor executive activities of the Company -- Phraseology used in Section 141 of the Act of being in charge and responsible to the Company for the conduct of the business of Company is a reference to an “executive activity” which imports an element of running day-to-day affairs of the Company and would not be extended to a role which is essentially supervisory, policy oriented, of oversight or regulatory i.e. non-executive in character.

(Para 21)

F. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141, 142 -- Companies Act, 1956 (1 of 1956), Section 175 – Companies Act, 2013 (No. 18 of 2013), Section 104, 203 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Non-executive Co-chairman – Managing Director and executive directors are appointed for a company to ensure that all executive decisions – Non Executive Directors are to advice or oversight of the functioning of the company -- Even the role of ‘Chairman’/ ‘Chairperson’ is not typically of an executive nature -- Creeping up an escalating liability to Chairpersons of large conglomerates/ companies for cheques issued in day-to-day affairs of the business of a company would unfairly and unnecessarily expand the provisions of vicarious liability under the provisions of the Negotiable Instruments Act – No prejudice is caused to the complainant as the signatory of the cheque, the Managing Director is already arrayed as accused -- Proceedings quashed qua the petitioner.

(Para 13, 22-26)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 389, 482 -- Cheque bounce case -- Appeal against conviction – Suspension of sentence -- Non-appearance of accused on date fixed – Cancellation of bail – Ground taken that Car of petitioner stuck in heavy rain on the date fixed -- One opportunity granted to the petitioner to mend his ways – Petitioner ordered to surrender within three weeks and Court ordered to be released upon his furnishing fresh surety bonds/bail bonds subject to payment of cost of Rs. 10,000/- to be deposited in the concerned District Legal Services Authority.

(Para 9-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82 – Indian Penal Code, 1860 (45 of 1860), Section 174-A – Cheque bounce case – Quashing of Proclaimed person order/ FIR u/s 174-A IPC – Since the petitioner has joined the trial, order declaring proclaimed person has lost its significance -- Petitioner is no longer a proclaimed person and thus, continuing with the FIR would be oppressive -- Accordingly quashed.

(Para 1, 2)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Dishonour of cheques -- Demand notice -- Three cheques for an amount of Rs.14,00,000/- -- Legal notice to pay the cheque amount and in case of legal action, to bear the entire cost of the proceeding, interest on the amount besides legal fee – It is not a case that the opposite party demanded an amount more than the cheque amount of Rs.14,00,000/- -- Impugned notice cannot be said to be not in conformity with law.

(Para 4-7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Dishonour of cheques -- Demand notice with additional claim – Legality of -- Defect in notice cannot invalidate the proceeding when the demand is only for the cheque amount with additional claim towards the miscellaneous expenses.

(Para 8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounce case – Presumption of legal enforceable debt --  Complaint by Financier/ money lender – A presumption u/s 118 read with Section 139 of the N.I. Act cannot be rebutted on this count alone as the signature on the cheque stands admitted and there is no principle of law as per which a financier cannot initiate a complaint u/s 138 of the N.I. Act.

(Para 17)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 -- Cheque bounce case – Presumption of legal enforceable debt -- Financial capacity of the complainant -- There is no requirement that the complainant must show the necessary financial capacity to advance the loan in question to an accused -- Once the signatures are admitted, a statutory presumption arises that the cheque has been issued for the discharge of legally enforceable debt -- Nothing substantial has been brought on record to rebut the said presumption -- No reason to interfere in reasoned judgments of the Trial Court as well as the Appellate Court – Revision dismissed.

(Para 18)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint – Legal notice -- Service of -- Postal authorities made several attempts to serve legal notice on the accused on several days, as the door was locked it was returned -- Complainant also sent a legal notice under certificate of posting -- If the registered notice was sent to the correct address of the accused with proper postage and when the accused was not available at his house without any instructions to the inmates, it can be taken as a proper service.

(Para 19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint -- Quashing of complaint against partner/ wife – Vicarious liability – Partnership firm -- Cheque from personal account of husband -- Petitioner is not a signatory to the cheque and the said cheque was issued on personal account of accused No.1/ husband – Though the petitioner is a partner in the partnership firm and amounts were taken from the finance firm, it would not be proper for the complainant to prosecute the petitioner, who is not a signatory to the said cheque – Petitioner is not vicariously liable u/s 138 of Negotiable Instruments Act -- Petition allowed.

(Para 3-6)

Insolvency and Bankruptcy Code 2016 (31 of 2016) Section 14, 31, 38, 39, 40, 41 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Moratorium under IBC -- Approval of resolution plan – Approval of claims – Effect on proceedings u/s 138 of NI Act – Signatory/ Promoter/ Managing Director of Company – Criminal liability :

-- Nature of proceedings which have to be kept in abeyance do not include criminal proceedings, which is the nature of proceedings u/s 138 of the N.I. Act – Proceedings u/s 138 of the N.I. Act are not recovery proceedings, they are penal in character.

-- It cannot be said that the process under the IBC whether under Section 31 or Sections 38 to 41 which can extinguish the debt would ipso facto apply to the extinguishment of the criminal proceedings – Appellant has been roped in as a signatory of the cheque as well as the Promoter and Managing Director of the Accused company, which availed of the loan -- Loan agreement was also signed by him on behalf of the company.

Criminal liability and the fines are built on the principle of not honouring a negotiable instrument, which affects trade -- This is apart from the principle of financial liability per se -- Plea that if proceedings against the company come to an end then the appellant as the Managing Director cannot be proceeded against, not accepted.

(Para 16-18)

Indian Penal Code, 1860 (45 of 1860), Section 174-A -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 482 – Cheque bounce case -- Proclaimed person – Quashing of FIR u/s 174-A of IPC – Surrender and bail – Effect of -- Petitioner was declared proclaimed person, however, surrendered before the Trial Court and after noticing that he had not appeared earlier and since the offence in question is bailable, he was admitted to regular bail -- Later on, FIR u/s 174-A IPC was registered against the petitioner on the basis of the order declaring him proclaimed person -- FIR and all the consequent proceedings arising out of the same quashed. Rahul Dureja’s case, 2022(1) R.C.R.(Criminal) 248 relied.

(Para 2-5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 251 -- Cheque bounce complaint – Substance of accusation – Personal appearance of accused – Requirement of -- Since the petitioner/ accused being represented by a duly authorized pleader, his duly authorized pleader can be examined u/s 251 Cr.P.C. -- Personal appearance of the petitioner/ accused at the stage of Section 251 Cr.P.C. examination is not required.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 374, 397 -- Revision against conviction – Maintainability of -- Judgment and order passed is appealable before the court of the Session Judge or Additional Session Judge, thereafter, if aggrieved, the party may move the High Court on an application for revision u/s 397 Cr.P.C. -- Petitioner has forgo one forum and has directly approached this Court which is not proper -- Petition is deemed not maintainable -- Petitioner may approach the competent court and considering the fact that the issues raised deserved to be heard on merits, the time period consumed while pursuing the matter before High Court condoned.

(Para 16-21)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque by Company – Vicarious liability of person responsible – Pleadings -- In order to make a person vicariously liable for an offence committed by company u/s 138 of the NI Act, the first and foremost pre-condition is that the said person should either be a signatory of the cheque or should be holding a position in the company and should also be responsible for the conduct of the business of the company while holding such designation -- Complainant also has to plead the exact role and the manner by which the said person is alleged to be responsible for the commission of the alleged offence.

(Para 12-14)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheques by Partnership Firm – Quashing of complaint -- Petitioner is not an authorised signatory -- Cheques were handed over by other partner -- Only allegation against the petitioner is that she had participated in the negotiations along with other partner and was also responsible for conduct of the business and accused company was working through the petitioner -- It is, however, not mentioned that in what capacity, the petitioner was working -- Petitioner is the wife of other partner in the accused firm -- On the date when the alleged offence was committed, the petitioner was not a partner – Holding a Trial against the petitioner u/s 138 read with Section 141, is utmost abuse of the process of law and the Ld. Trial Court has passed the summoning order without any application of mind – Impugned order and complaint in relation to the petitioner is quashed.

(Para 16-23)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce complaint – Quashing – Inherent power of High Court u/s 482 Cr.P.C -- High Court is not to conduct a mini trial by considering the defence of the accused or holding an inquiry into the merits of the matter -- However, if, on the face of the documents which are beyond suspicion or doubt, the accusations against the petitioner are found to be frivolous, in order to prevent the injustice and abuse of the process of law, it is incumbent that appropriate relief is granted by exercising power under Section 482 of the Cr.P.C. -- Where ingredients of an offence are lacking against an accused, it is the duty of the Court to discharge such accused.

(Para 20-22)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case -- Handwriting expert – Comparing the writing filled in the body of the cheque -- Once the signature on the cheque is admitted by the accused-respondent, it is immaterial as to who had filled in the details in the cheque and therefore, no purpose is going to be served by allowing the application for appointing the handwriting expert.

(Para 4, 12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 406 – Transfer of complaint u/s 138 of NI Act – Notwithstanding the non obstante clause in Section 142(1) of the Act of 1881, the power of Supreme Court to transfer criminal cases u/s 406 Cr.P.C. remains intact in relation to offences u/s 138 of the Act of 1881.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142(2) – Jurisdiction to try complaint u/s 138 of NI Act -- Section 142(2)(a) of the Act of 1881 vests jurisdiction for initiating proceedings for an offence under Section 138 in the Court where the cheque is delivered for collection, i.e., through an account in the branch of the bank where the payee or holder in due course maintains an account.

(Para 12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Complaint through authorised representative of attorney holder -- Maintainability of – General power of attorney holder cannot delegate his powers to another person but the same can be delegated when there is a specific clause permitting sub-delegation – The use of the words “to appoint counsels or special attorneys” would not mean that he was authorised only to appoint counsel or special counsel for the purpose -- Power of attorney holder was authorised to appoint special attorney other than the counsel for the purposes for conducting and prosecution of cases on behalf of the appellant-company -- The said power of attorney do provide for the sub-delegation of the functions of the general power of attorney holder and thus the filing of the complaint on behalf of the appellant company through its authorised representative of attorney is not at all illegal or bad in law.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case -- Affidavit of GPA – Capacity to depose -- Personal affidavit stating that he is general power of attorney holder of the appellant company and that since he is also a director, he is fully conversant with the facts of the case and hence is competent to pursue the litigation on behalf of the appellant company -- As the power of attorney holder is said to be having due knowledge about the transactions, he has the capacity to depose.

(Para 14)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Cheque bounce case -- Interim compensation – Trial court directed accused to deposit 20% of cheque amount – Challenge to -- Trial Court found the case appropriate wherein cheque of Rs.10 lakh was issued by the accused-petitioner to the complainant, however, the same was dishonored on its presentation -- Trial Court has not exceeded the upper limit of 20% -- Weighing the facts and circumstances on the anvil of the law settled, court found no merit in the petition and the same is accordingly dismissed.

(Para 1, 9, 10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Acquittal of accused -- Legal enforceable liability -- No direct transaction between the complainant and the accused-petitioner -- Entire story runs around the mother of the complainant, who is a vital witness, but she has not been produced and examined as a witness before the trial Court -- During obtaining loan from the bank, involvement of a third party witness was spoken by the complainant, but said person has not been examined as witness – Held, disputed question of facts and crucial persons like mother of the complainant and third party witness not being examined, conviction based on sole deposition of PW-1, the complainant, cannot be appreciated -- Complainant failed to establish "legally enforceable debt" -- Revision allowed, impugned judgment and order of sentence quashed.

(Para 8, 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce case – Quashing of complaint and summoning order – Cheque was issued by brother of petitioner no.2 -- Said cheque was not issued by him as an authorized signatory of the petitioner-firm -- Petitioners admittedly are neither signatory to the cheque in question, nor was it drawn from their bank account -- Petitioners cannot be prosecuted for an offence u/s 138 of the NI Act -- Even if the loan amount had been deposited in the bank account of petitioner No.2, it would still not be sufficient enough ground to fasten his liability u/s 138 of the NI Act – Petition allowed, complaint and summoning order quashed qua the petitioners.

(Para 6,7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 311, 313, 482 – Legal Services Authorities Act, 1987 (39 of 1987), Section 12 -- Cheque bounce case – Handwriting expert – Closure of defence evidence -- Delay substantially attributable to the procedural formalities within the office of State Legal Services Authority for seeking production of handwriting expert – Even impugned orders shall cause serious prejudice to the rights of the petitioner, amounting to denial of fair trial -- Two effective opportunities granted -- State Legal Services Authority requested to take decision for the purpose of granting necessary financial assistance at the earliest so that the petitioner be able to avail her chance to defend herself.

(Para 7, 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138(b) -- Demand notice – Nature of -- Notice contains a clear demand but in a soft and unconventional language which is in conformity with the object of statute -- Statute does not indicate ‘clear’, ‘specific’ and ‘unambiguous’ demand of payment of dishonoured cheque – Ld. Appellate Court had taken the pains of rewriting a statute by importing the words like ‘clear’, ‘specific’ and ‘unambiguous’ demand which is contrary to all rules of construction to read words into an act which are not there unless it is absolutely necessary.

(Para 27-29)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Cheque bounce case – Compounding after conviction -- Quashing of conviction and sentence after backout from compromise – In revision double of the cheque amount was accepted by the complainant in terms of a settlement and it was agreed that an application u/s 147 of the N.I. Act for compounding of the offences shall be moved -- However, complainant reneged from the compromise -- Not only does the complainant choose not to appear but his counsel too has chosen not to appear in Court despite this matter having been adjourned on two earlier occasions -- This conduct is reprehensible to say the least – Conviction and order of sentence and all proceedings against the petitioner quashed.

(Para 8-15)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case – Fraud alleged -- FIR u/s 419, 420, 465, 467, 468 & 471 IPC against complainant -- Registration of an FIR simplicitor does not prove fraud – Submission that an FIR having been registered against the complainant, the proceedings thereof should have transferred to the Court, where, proceedings u/s 138 of the Act were pending – This argument is mis-conceived -- Even on principle, the petitioner could not have sought the transfer of the case arising out of FIR got registered by him -- Conviction order upheld.

(Para 1, 8-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Constitution of India, Article 136 -- Cheque bounce case – Conviction of accused – Compromise at revisional stage – Compounding of offence – Lack of filing of compromise petition led the High Court to dismiss the Revision and confirm the conviction – Held, appellants cannot be convicted, as the settlement is nothing but a compounding of the offence – Respondent No.2 was duty bound to file a compromise petition before the High Court led to an unwarranted confirmation of the Appellants’ conviction – Appeals allowed and order of conviction set aside – It is kept open to the parties to settle their dispute as per the terms of the Memorandum Of Understanding.

(Para 5-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200, 202 -- Accused residing beyond jurisdiction – Issuance of process -- Enquiry u/s 202 Cr.P.C – Requirement of – Magistrate did not comply with the provision of Section 202 Cr.P.C., even though the petitioners reside outside the jurisdiction of the court – Non-compliance of Section 202 Cr.P.C. by the Magistrate before issuance of process is prima facie an abuse of process of Court/ law – Impugned order set aside/ quashed -- Matter remitted to the learned Magistrate for considering the matter afresh as per the relevant provision of law.

(Para 19-26)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Cheque bounce complaint – Objection as to maintainability – Ground that Proprietor of the Company made accused, without impleading the Company – Trial Court directed to consider the objection of the petitioner within a period of 15 days from the date of receipt of a copy of the order.

(Para 2-5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint -- Joint account of husband-wife – Section 138 of the N.I. Act does not speak about the joint liability -- Apropos unless both the persons are liable to pay debt jointly, they cannot be prosecuted except when they maintained joint account and they both have drawn the cheque duly signed by them if it is dishonoured -- Though the dishonoured cheque was said to be drawn from the joint account of both the accused, it was signed only by A1 and not by the petitioner who is A2 in the complaint before the trial Court -- Hence, the petitioner cannot be proceeded with for the offence u/s 138 of the N.I.Act – Petition allowed, proceedings qua appellant no.2 quashed.

(Para 2, 10, 16-18)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Advance payment cheque – Dishonour of – Legal enforceable liability -- To attract an offence u/s 138, there should be a legally enforceable debt or other liability subsisting on the date of the drawal of the cheque -- If a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise, and material or goods for which purchase order was placed is not supplied, the cheque cannot be held to have been drawn for an existing debt or liability.

(Para 11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 438 -- Cheque bounce case – Conditional bail in Appeal subject to deposit 20% amount -- Non-payment of – Anticipatory bail – Maintainability of -- A person released on bail is already in constructive custody of law – Anticipatory bail is not maintainable. Manish Jain’s case 2022(1) SCC(Cri) 676 relied.

(Para 5-7)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheque bounce case – Presumption of legal enforceable liability – Rebuttal – Onus of proof -- Once the execution of cheque is admitted, Section 139 of the N.I. Act mandates a presumption that the cheque was for the discharge of any debt or other liability, however it is rebuttable presumption and the onus is on the accused to raise the probable defence -- Standard of proof for rebutting the presumption is that of preponderance of probabilities -- To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence -- Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheque bounce case – Non-disclosure of loan amount in Income Tax Return (ITR) -- Trial Court found that the ITRs of the complainant did not disclose that he lent amount to the accused, and that the declared income was not sufficient to give loan of Rs.3 lakh -- Therefore, the case of the complainant that he had given a loan to the accused from his agricultural income was found to be unbelievable by the learned Trial Court – Trial Court acquitted however High Court convicted the appellant – Appeal allowed,  conviction set aside.

(Para 14-32)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint -- Quashing of Complaint -- Company not impleaded as party – Demand notice to wrong company – Cheque was issued in the capacity of an authorized signatory of BSR Health Ventures Private Limited and was not issued from a personal account -- However, the notice was issued and the complaint was filed against the Director of BSR Super Specialty Hospitals Ltd. – Held, since a wrong notice has been served and a wrong party has been made and further, the Company has also not been arrayed as an accused, the continuation of the criminal proceeding against the petitioner would amount to abuse of the process of law -- Criminal proceedings against the petitioner quashed.

(Para 9, 10)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque by company -- Vicarious liability of officer – Officer,  Non-signatory to cheque -- Pleadings as to role of Officer -- Specific averments must be made in the complaint itself highlighting the role of the said officer as to how he was either responsible for day-to-day affairs and conduct of business of the company or as to how and in what manner the officer was guilty of consent and connivance or negligence in the commission of the offence.

(Para 13)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque by company -- Vicarious liability of Chief Account officer – Officer,  Non-signatory to cheque -- Pleadings as to role of Officer -- Specific averments that, the petitioner persuaded the complainant to enter into the transaction with the Company by showing the financial position of the Company as well as making them believe in the capacity of the same to repay the debts -- Complainant has fulfilled the basic criteria of carving out the role of present petitioner in the complaint, for the commission of offence u/s 138 and 141 of NI Act.

(Para 13, 14)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque by company -- Vicarious liability of Chief Account officer – Company master data – Non-showing of resignation – Effect of -- In Company Master Data, the petitioner was a part of the Company on the date the alleged offence took place and when the complaint was filed before the learned Trial Court – Contentions of the petitioner that he had already resigned from the Company prior to dishonor of cheque – High Court in a petition u/s 482 Cr.P.C. cannot decide the genuineness of such records -- No case for quashing of complaint -- Petition dismissed.

(Para 15-17)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque by company -- Vicarious liability of Chief Account officer – Officer,  non-signatory to cheque -- Pleadings as to role of Officer – Specific averment that petitioner/ accused persuaded the complainant to enter into the transaction with the Company by showing the financial position of the Company as well as making them believe in the capacity of the same to repay the debts – Held, complainant has fulfilled the basic criteria of carving out the role of present petitioner in the complaint, for the commission of offence u/ss 138 and 141 of NI Act, 1881.

(Para 13, 14)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque by company -- Vicarious liability of Chief Account Officer – Resignation by Officer – Contention that petitioner had already resigned from the Company prior to dishonor of cheque and that his resignation was not accepted because of which his name continued to appear on the ROC records – Held, High Court in a petition u/s 482 Cr.P.C. cannot decide the genuineness of such records and these contentions of the petitioner can be raised and appropriately dealt with during the course of trial -- No case for quashing of complaint -- Petition dismissed.

(Para 14-17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Chhattisgarh Moneylenders Act, 1934 (13 of 1934), Section 11-H -- Code of Criminal Procedure, 1973 (2 of 1974), Section 251, 254, 482 -- Cheque bounce complaint – Challenge to order framing charge -- Contention that demand notice was never served on the petitioner; there is no legally enforceable debt; and the petitioner is under the category of money lender, therefore, the suit is barred under Section 11-H of the Chhattisgarh Money Lenders Act, 1934 – Held, defence taken by the petitioner/ accused may be seen during the trial -- Section 11-H of the Act, does not attract in the case -- Petition dismissed.

(Para 2-7)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 256, 397 -- Complaint u/s 138 of N.I.Act – Dismiss in default – Revision -- Case was fixed for furnishing the complete particulars of the accused -- Summoning order had already been passed -- Accused had not put in appearance even once by that time -- Resorting to the step of axing down the complaint by dismissing it in default cannot be held to be a proper exercise of power envisaged under Section 256 Cr.P.C. -- Complaint restored by Ld. A.S.J in revision – Order upheld.

(Para 1, 13, 16)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 256, 397 -- Complaint u/s 138 of N.I.Act – Dismiss in default – Maintainability of revision -- Summoning order already passed -- Presence of the accused not secured by the date of dismissal of complaint in default, as he had not been served by that time – Held, discretion was not exercised by the Magistrate judiciously, fairly and without impairing the cause of administration of criminal justice in dismissing the complaint -- Revision in the facts and circumstances of the case, held maintainable.

(Para 15)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Dismissed for want of prosecution – Petitioner/ complainant was continuously appearing before the Court, but on 08.08.2022, neither he nor his lawyer were present – Dismissal for want of prosecution should not have been done, instead another opportunity could have been granted to the petitioner for his appearance and the case should have been decided on merits -- Impugned order set-aside, Trial Court directed to proceed with the case after appearance of the complainant and the case shall be decided on merits in accordance with law.

(Para 1-6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 204 – Cheque bounce complaint – Cognizance by Magistrate -- Issue of process – Recalling of -- After completion of Section 204 of the Code of Criminal Procedure there is no provision for reverting back and question the taking of cognizance and dismissing the same.

(Para 1, 8, 9, 17)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Cheque bounce complaint – Delay in complaint – Condonation of delay -- Ample power has been given by the legislature by inserting the provisions of Section 142 of the N.I. Act to protect the person who has given money from technicalities -- Proper explanation was given in the petition of complaint supported by medical papers which was overlooked by the Ld. Magistrate – Order passed by Ld. Judicial Magistrate set aside/quashed -- Criminal Proceedings in complaint restored -- Petitioner is permitted to file an application for condonation of delay before the trial court and if such an application is filed, the Trial Court shall be at liberty to consider the same on its own merits.

(Para 13-29)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque by Proprietorship firm – Complaint against Proprietor only – Amendment for impleading Proprietorship Firm as party/ accused allowed by Ld. Trial Court – Amendment upheld,  

-- firstly; the very factum of the petitioner not having even raised any objection or challenge to the complaint or the summoning order on the ground, either that petitioner was arraigned in individual capacity or that the proprietorship firm was not arraigned as an accused;

-- secondly, the application for impleading the proprietorship firm as an accused was soon after the summoning order was passed;

-- thirdly, the petitioner does not dispute her signatures on the cheque, as are also discernible therefrom, were on behalf of the proprietorship firm itself, raising the presumption under Sections 118 and 138 NI Act, though rebuttable by preponderance of probabilities;

-- fourthly, curable infirmities, can be cured by filing for amendment at any stage, which in the present case was right at the very outset of the proceedings.

-- Fifthly, and above all, the settled law being that in case of a proprietorship concern, the same would not come within the ambit of Section 141 of NI Act as it is only the sole proprietor, who is liable.

No illegality or perversity in the impugned order, the petition being sans merit, dismissed.

(Para 2, 23, 17-19)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Amendment of complaint u/s 138 of NI Act -- In the complaint, the date of cheque was mentioned as 22.07.2010 whereas as per the petitioner, the correct date of cheque is 22.07.2012 – If amendment of complaint is not permitted, it may prove fatal to the case of the complainant -- On account of clerical mistake substantial claim of the drawer may be defeated -- An accused cannot be let free just because there is some mistake on the part of complainant -- Mistake in question cannot be called as incurable mistake – Amendment allowed.

(Para 14-16)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 29, 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378 -- Cheque bounce complaint -- Son’s criminal liability – Appeal -- Accused is none other than the son of the deceased-father who borrowed the loan from the complainant and the accused agreed to repay the same and he has issued the cheque -- Such being the case, as a legal representative of the father, the accused is liable to repay the loan to the complainant – First Appellate Court not considered Section 29 of the N.I. Act and has erred in acquitting the accused -- Judgment of the First Appellate Court set aside -- Judgment of the trial Court convicting the respondent-accused upheld.

(Para 8-12)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 29, 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378 -- Cheque bounce complaint -- Son’s criminal liability – Time barred debt – Deceased father of accused borrowed loan in the year 2003, the cheque was issued by son after four years -- Accused once paid Rs.10,000/- by cash and subsequently, he issued a cheque to discharge the liability, he is liable for discharging his liability of his father -- Judgment of the trial Court convicting the respondent-accused upheld.

(Para 8-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Indian Penal Code, 1860 (45 of 1860), Section 174-A -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce case – Quashing of FIR u/s 174-A IPC -- Complaint u/s 138 of the Act was compromised and the complaint stood dismissed as withdrawn – Held, continuation of proceedings u/s 174-A IPC shall be an abuse of process of law -- Petition allowed and FIR u/s 174-A IPC along with all the subsequent proceedings arising therefrom quashed.

(Para 8, 9)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Cheque bounce complaint – Interim compensation – Discretion of Court -- Court trying a complaint for offence u/s 138 of NI Act has discretion to order the drawer of the cheque to pay interim compensation to the complainant -- Amount of compensation has not to exceed 20% of the amount of the cheque – Held, grant of interim compensation is a discretionary power and such order has to be based on reason and logic.

(Para 9)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Cheque bounce complaint – Interim compensation – Discretion of Court -- No guidelines for grant of interim compensation have been laid down in Section 143-A of the NI Act -- it is a settled law that whenever a discretionary power is to be exercised by a Court, the same has to be exercised on well-recognized principles supported by reasons -- Court has to spell out the reasons for grant of interim compensation in favour of the complainant and it has also to justify in its order with reasons the quantum of interim compensation that is being awarded by him as the said quantum can vary from 1% to 20% of the cheque amount.

-- Some of the reasons for granting interim compensation may be that the accused absconds and avoids to appear before the Court despite service or there is overwhelming material on record to show that the accused is liable to pay an enforceable debt or that the accused is guilty of protracting the proceedings by avoiding to cross-examine the witnesses or producing his evidence.

(Para 10, 11)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143-A – Code of Criminal Procedure, 1973 (2 of 1974), Section 251 -- Cheque bounce complaint – Interim compensation – Discretion of court -- Reasoned order – Requirement of -- Magistrate is empowered to grant interim compensation in favour of a complainant ranging from 1% to 20% of the cheque amount -- Trial Magistrate has granted interim compensation in the maximum range of 20% without assigning any reason – Order impugned is devoid of any reasons and no discussion is made in the impugned order as to why interim compensation is being awarded – Ld. Magistrate has not dealt with the aspect of the matter relating to denial of execution of the cheque by the accused in his statement recorded u/s 251 of the Cr. P. C – Order is not sustainable in law, quashed.

(Para 14, 15)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce case – Partnership firm not arrayed as an accused – Quashing of complaint u/s 138 of N. I. Act -- Cheque in question bears signature of the petitioner being authorized signatory of partnership firm -- The expression ‘company’ also includes a firm, as is provided in Explanation to Section 141 of the Act – There cannot be any vicarious liability of the partner of a partnership firm unless there is a prosecution against the partnership firm -- Thus, the complaint filed by the respondent is not maintainable and it is bad in law and entire proceedings in pursuance thereof are nothing but an abuse of process of the Court and are liable to the quashed -- Petition allowed and criminal complaint, summoning order and the order passed by the Revisional Court and all the subsequent proceedings arising therefrom quashed.

(Para 11-18)

Code of Criminal Procedure, 1973 (2 of 1974), Section 311 – Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Indian Evidence Act, 1872 (1 of 1872), Section 54 -- Cheque bounce case – Additional evidence -- Certified copy of judgment of previous conviction -- Evidence showing any previous conviction is also relevant as evidence of bad character -- Thus the evidence relating to previous conviction (past actions of a person) in a case of similar nature would be relevant -- However, the evidentiary value of the same would be evaluated by the ld. trial Court at the time of final disposal of a case – No prejudice would be caused to the accused if the aforesaid judgment is taken on record as the petitioner would get an opportunity to rebut the same – Impugned order in allowing application u/s 311 Cr.P.C. not suffering from illegality and infirmity – No interfere is called for.

(Para 11,12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce case -- Compounding of offence – Consent of complainant – Requirement of -- Section 147 of NI Act coupled with inherent power of the High Court u/s 482 Cr.P.C., in the interest of justice, High Court is not precluded from compounding the case in absence of consent of complainant where complainant is duly compensated as Section 138 of the NI Act does not provide that it is mandatory for the Court to sentence for imprisonment in all eventualities but there is option to the Court to impose sentence of imprisonment or fine or both.

(Para 9)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Cheque bounce case -- Compounding of offence – No-consent case -- Petitioner is 52% handicapped and has deposited in the Court 10% over and above the amount of compensation – Held, complainant has been compensated adequately and therefore, substantive sentence of imprisonment is not necessary -- Accordingly complaint filed by the respondent compounded, impugned judgments/ orders set-aside and petitioner acquitted of the offence charged.

(Para 9-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143 – Code of Criminal Procedure, 1973 (2 of 1974), Section 397, 401 -- Cheque bounce complaint – Summary case – Regular trial – Specific order of Magistrate – Requirement of -- When the evidence of the parties, in the chief examination, cross-examination and re-examination (if any) were recorded in verbatim and was faithfully placed on record then for merely not recording the order observing that the matter would be tried as a summons case or as a regular trial would not itself vitiate the trial conducted by the Magistrate of the Trial Court, when it has not resulted in miscarriage of justice – Ld. Sessions Judge’s Court only on technicalities set aside the judgment passed by the Trial Court and ordered for a de-novo trial -- Sessions Judge's Court ought to have decided the appeal before it on its merit – Revision allowed, judgment passed by ld. ASJ set aside, matter remanded to ld. ASJ for its fresh disposal, in accordance with law.

(Para 18)