Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 --  Code of Criminal Procedure, 1973 (2 of 1974), 482 – Cheque bounce case – Vicarious liability – Quashing of complaint -- Contention that the cheque in question not issued and signed by petitioner  – Fact of complaint are that he was director and authorized signatory and the firm issued cheque in question and upon presentation it was dishonoured with the remarks “Insufficient Funds” – Held, the petitioner has been summoned in view of Section 141 of Negotiable Instruments Act which imposes vicarious liability upon every person who at the time of offence was in charge of conducting the business of the company – No ground to quash the impugned complaint or to interfere with the well reasoned order of summoning.

(Para 2,8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Dishonour of cheque – Presumption of legal enforceable liability – Rebuttal of -- Complainant has not produced any document on record to show the loan transaction -- Neither income tax return nor any account books have been produced to show the transaction -- Agreement has not been proved on record as per law, but the oral statements support and corroborate the defence version -- Cheque is signed in Punjabi and filled by some other person of complainant side -- By raising probable defence, which is supported and corroborated by the cross-examination of the complainant's witnesses and by the defence witnesses, the presumption has been duly rebutted by the accused.

(Para 10)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 147 -- Seven cases u/s 138 of N.I. Act – Compounding of – Total amount of Cheques i.e. Rs.10,68,650/- paid and complainant has not objection in compounding of case – Petitioner shall together in all the seven cases pay compensatory non-refundable costs of Rs.50,000/- with the office of Deputy Commissioner within 15 days -- Conviction orders quashed by way of compounding/compromise.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141, 142 -- Cheque bounce case – Director of Company -- Vicarious liability – Acquittal in -- No mention that accused was in-charge of the respondent-Company and was responsible for the business and affairs of the company -- Cheque has been issued by other accused, who had already died -- No averment in the complaint that accused was also responsible for the day to day business of the Company -- Director can only be held as liable if he is actively doing and taking part in the business of the company and this fact is to be specifically pleaded in the complaint – Accused has been rightly acquitted by the Court below.

(Para 9-11)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Complaint u/s 138 of N.I. Act – Quashing of -- Loan agreement nowhere shows that cheques in question have been taken by the respondent as security cheques -- Whether the respondent has taken blank signed cheques as security or post-dated cheques for payment of loan installments in case of default as security is to be decided by the trial Court on the basis of the evidence produced before it -- Finding of fact cannot be given at this stage by High Court without any evidence – No ground is made out for quashing the complaints.

(Para 5, 7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Arbitration clause -- Complaint u/s 138 of N.I. Act – Quashing of -- Contention that there is arbitration clause in the agreement, therefore, complaints are not maintainable – Held, this argument has no force -- When the cheques have been dishonoured and returned back unpaid by the Bank and legal notices have been sent, then non-payment of the amount within prescribed period gave cause of action to file the complaints under Section 138 of the Negotiable Instruments Act.

(Para 6, 7)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 311 – Cheque bounce case -- Application for additional witness -- Complaint was filed by Prop. of Firm through G.P.A. -- During the pendency of the proceedings, an application u/s 311 Cr.P.C. was filed to the effect that proprietor of firm was inadvertently not examined during the evidence of complainant – Held, filing of application u/s 311 Cr.P.C. is nothing but has been filed to fill up the lacuna in this case -- If application is allowed and the complainant is allowed to fill up the lacuna, then it will cause prejudice to the case of the accused – Application rightly dismissed.

(Para 6-9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Conviction u/s 138 of N.I. Act – Moral turpitude – Dismissal from service -- Dispute was of private nature -- Offence at best, though has a criminal colour to it cannot be held to be an offence involving moral turpitude – Dismissal from service simplicitor on the ground of conviction u/s 138 of the Act without holding a regular inquiry, as envisaged under the Rules, is not sustainable and deserves to be set aside -- Removal from service is set aside -- Petitioner would be deemed to be in service with all consequential benefits.

(Para 6-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 --  Code of Criminal Procedure, 1973 (2 of 1974), Section 357(3), 421(1), 431 – Indian Penal Code, 1860 (45 of 1860), Section 70 – Cheque bounce case – Compensation not paid – Default sentence undergone -- Whether the compensation still recoverable -- High Court held that despite the fact that the default sentence was undergone, yet, under the provisions of the Code of Criminal Procedure, compensation was recoverable – Held, object of the legal fiction created by Section 431 is to extend for the purpose of recovery of compensation until such recovery is completed and this would necessarily take not only to Section 421 of the Cr.P.C. but also to Section 70 of the Penal Code – Judgment of High Court, upheld.

(Para 4, 29)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Cheque amounting to Rs. 1,30,000/- -- Trial Court convicted the accused for 2 years and fine of Rs.2,000/- -- Keeping in view the facts and circumstances of the case, the sentence is reduced to 1 year and 3 months but the fine is enhanced to Rs.10,000/-.

(Para 1,9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 82, 438, 482 -- Indian Penal Code, 1860 (45 of 1860), Section 174-A -- Cheque bounce case – Proclamation u/s 82 Cr.P.C. – FIR u/s 174-A – Quashing of – Inherent jurisdiction of High Court -- Held, looking to the nature of the prosecution against the petitioner-accused under Section 138 of the Act, it would make no difference if he allowed a chance to participate in the prosecution against him, without finding any fault with the trial Court's order -- Petitioner will have to furnish bail bonds with the trial Court on his appearance before the trial Court and shall attend the trial with promptitude for its disposal in accordance with law – In that view of the matter, proclamation order and consequent FIR u/s 174-A of IPC are quashed under the inherent powers of High Court.

(Para 3,4)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case – Alteration in cheque -- Report from F.S.L., show that in the cheque in question '0' has been inserted to make the cheque from Rs.48,000/- to Rs.4,80,000/- -- In another cheque, digit '2' has been added, Rs.20,000/- converted to Rs.2,20,000 -- Nothing on the record to rebut this report – Held, cheque itself becomes void instrument even if the liability exists towards the accused – Acquittal order upheld.

(Para 10-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce case – Acquittal in – Friendly loan amounting to Rs.11,30,000/- to the accused – However, there is no evidence that the complainant had the capacity to advance Rs.11,30,000/- or that amount allegedly given on loan to the respondent is shown in the Income Tax Return – Respondent-accused stated that the appellant had misused the cheque which he gave to his (appellant) brother, this fact is duly proved by the statement of independent witness -- Except self serving statement of the appellant there is no material evidence on record to prove the factum of advancement of loan – Ld. Trial Court acquitted the respondent -- Even if a second view on appreciation of evidence is possible, the Court will not interfere in the acquittal of the accused -- In the cases of acquittal, there is double presumption in his favour; first the presumption of innocence, and secondly the accused having secured an acquittal, the Court will not interfere until it is shown conclusively that the inference of guilt is irresistible.

(Para 5,6)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- General Clauses Act, 1897 (10 of 1897), Section 27 -- Indian Evidence Act, 1872 (1 of 1872), Section 114 – Cheque bounce case – Notice by registered post – Presumption of -- Once notice is sent by registered post by correctly addressing to the drawer of the cheque, the service of notice is deemed to have been effected -- Then requirements under proviso (b) of Section 138 stands complied, if notice is sent in the prescribed manner -- However, the drawer is at liberty to rebut this presumption -- Notice sent by registered post and is returned with postal endorsement “refused” or “not available in the house” or “house locked” or “shop closed” or “addressee not in station”, due service has to be presumed

(Para 13-15)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case – Second notice – Meaning of -- First notice was effective and notice was deemed to have been served on the first respondent -- Second notice could be construed as a reminder of respondent’s obligation to discharge his liability -- As the complaint, was filed within the stipulated time contemplated under Clause (b) of Section 142 of the N.I. Act, therefore Section 138 r/w 142 of N.I. Act is attracted.

(Para 16)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Acquittal in cheque bounce case – Leave to appeal – Appellant secured loan amount of Rs.2,00,000/- from one person and handed over to the accused -- However, there is no evidence that said person had the capacity to advance Rs.2,00,000/- or that amount allegedly given on loan to the appellant is shown in the Income Tax Return or in any other record maintained by said person -- Appellant has not even examined that person -- In his cross-examination, the appellant had stated that he had given the loan amount to the respondent on interest -- However, the appellant does not hold any licence for money lending -- No document was accepted by the appellant regarding advancing of loan or that respondent has furnished any security for repayment of amounting to Rs.2,00,000/- appears to be highly improbable – Acquittal order upheld.

(Para 5-7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Acquittal in cheque bounce case – Leave to appeal -- Except self serving statement of the appellant there is no material evidence on record to prove the factum of legally enforceable debt of the respondent towards appellant – No oral or documentary evidence to prove the advancement of loan – In the cases of acquittal, there is double presumption in accused’s favour; first the presumption of innocence, and secondly the accused having secured an acquittal, the Court will not interfere until it is shown conclusively that the inference of guilt is irresistible – Keeping in view the above, the finding of acquittal recorded by the trial court cannot be said to be perverse or contrary to the material on record.

(Para 7)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Post dated security cheque – Dishonour of – Offence u/s 138 of NI Act -- Whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the transaction -- If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Post dated security cheque – Dishonour of – Offence u/s 138 of NI Act -- Though the word “security” is used in the agreement, the said expression refers to the cheques being towards repayment of installments -- Repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due -- Disbursement of loan was prior to the date of the cheques -- Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act.

(Para 11)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Post dated security cheque – Dishonour of – Offence u/s 138 of NI Act -- Cheques undoubtedly represent the outstanding liability -- Dishonour of cheque issued for discharge of later liability is clearly covered by the statute in question.

(Para 11-12)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Post dated Security cheque – Dishonour of – Offence u/s 138 of NI Act -- Crucial question to determine applicability of Section 138 of the Act is whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability.

(Para 13)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Post dated security cheque – Dishonour of – Offence u/s 138 of NI Act – Quashing of Complaint -- Reference to the complaint shows that as per the case of the complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of the dues under the loan agreement – While dealing with a quashing petition, the Court has ordinarily to proceed on the basis of averments in the complaint -- Defence of the accused cannot be considered at this stage -- Court considering the prayer for quashing does not adjudicate upon a disputed question of fact.

(Para 17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) -- Cheque bounce case – Acquittal of – Leave to appeal -- Cheque amounting to Rs.5 lacs -- No date, month or years has been mentioned in the complaint as to when the loan was given -- Neither the place where the loan was given nor any fact has been mentioned as to in whose presence, the loan was given -- Even no security document has been taken from the accused at the time of granting loan nor receipt was taken -- No document of any type has been placed on record to show the loan transaction and withdrawal of huge amount from any bank etc. -- Presumption u/s 139 of the Negotiable Instruments Act has been rebutted -- No ground to grant leave to the applicant to file an appeal.

(Para 8,9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378 (4) – Cheque bounce case – Acquittal of -- Post dated cheques – Stipulation in the sale deed itself shows that if the post dated cheques are not encashed in time then without the intervention of the Court, the sale deed shall be deemed to be cancelled – Thereafter compromise arrived between the parties to the effect that the post dated cheques were to be returned by the complainant to the accused, which apparently he did not return -- It was also mentioned in the sale deed that in case cheques are not encashed by the seller, he shall be entitled to 28% of the developed land – Held, post dated cheques, issued at the time of sale deed, were not for discharge of legal debt or liability -- As such, offence u/s 138 of N.I. Act is not made out -- Application under Section 378(4) Cr.P.C. for grant of leave to appeal being devoid of any merit is dismissed.

(Para 12-17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Cheque bounce case – Acquittal in -- Rebuttal of presumption – Leave to appeal -- In the reply to legal notice, the accused has specifically mentioned that he had borrowed an amount of Rs.10,000/- from complainant and not Rs.4 lacs and the cheque was handed over to the complainant as security cheque – Nothing in the complaint or in the evidence as to on which date and in which month and year, what amount was given to the accused as loan -- It was necessary, specifically, when the accused is alleging that he has taken loan of Rs.10,000/- only -- One pen has been used for signing the cheque, other pen has been used for putting the date on the cheque and third pen has been used for filling the amount in words as well as in figure -- No cogent evidence on the record to show as to why a huge amount of Rs.4 lacs was given without getting any receipt or getting executed any security document i.e. pronote etc. from the accused -- Nothing on the record to show that from where Rs.4 lacs was withdrawn and paid to the accused – Presumption u/s 139 stand rebutted – Order of acquittal passed by the Ld. Trial Court upheld.

(Para 8-12)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 20, 118 -- Security cheque – Filling of cheque by drawee – Validity of -- Negotiable Instruments Act raises a presumption u/s 118 that a negotiable instrument is presumed to be fully supported by consideration -- If a cheque is issued as security or with an authority given to the drawee that it could be filled up or used for certain claims which are later ascertained, it is still a valid instrument as per Section 20 of the Negotiable Instruments Act which states that document which is inchoate with authority granted to the drawee to fill up the recitals, the document would become the full-fledged enforceable negotiable instrument, the moment the recitals were filled up by the drawee of the negotiable instrument.

(Para 9)

B. Code of Civil Procedure, 1908 (V of 1908), Order 37 – Summary suit by public limited company – Leave to defend – Condition for deposit of security, while granting leave to defend – Validity of --  Held, suits filed by a Company through a power of attorney could hardly be a matter of serious defence -- Plea that the cheques are issued as security is not really a stout plea that admits of any serious consideration; at least prima facie so -- As regards the contention that there is no privity of contract with the plaintiff or some of the defendants and that the liability to Punjab Tractors cannot be enforced through the plaintiff, it is not a defence worthy of substance if the High Court has passed an order of amalgamation empowering the transferee Company to claim all rights of transferor Company -- Non-production of the original cheques also would not assume significance in these cases, for, it has been explained that the dishonour of cheques resulted in actions for offences under Section 138 of the Negotiable Instruments Act before court of competent jurisdiction and that therefore certified copies of cheques have been filed along with the plaints – Held, none of the defenses in any of the cases of the defendants has any prima facie merit and if the defendants are given an opportunity to defend, it is by way of mercy and, therefore, the condition imposed was tenable – Defendants are directed to deposit security of 50% of the suit amount.

(Para 9-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974),  Section 311, 399, 482 --  Summon to witness u/s 311 of Cr.P.c. -- Intermediatory order -- Inherent Powers of High Court – Revision -- Maintainability of -- Complaint under Section 138 of N.I. Act -- Application of complainant to examine two witnesses rejected by Magistrate -- It is an Intermediatory order and is clearly a revisable order -- In the scheme of hierarchy, the party should seek invocation from the lowest court if there is concurrent jurisdiction -- Petitioner should seek redressal of his grievance before Court of Session under Section 399 Cr.P.C. as it would be more appropriate.

(Para 11-15)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4) – Cheque bounce case – Acquittal in – Leave to appeal -- No agreement to sell for harvesting combine -- No document regarding ownership of the harvesting combine -- Nothing on the record regarding the payment of Rs.10 lacs by the complainant to the accused – Accused has also appeared as defence witness and stated that she had litigation with “AS” and after received full and final payment he withdrew the complaint and complainant misused the cheque by taking the same from “AS” – In cross-examination, the accused admitted that he has taken cheque from “AS” – Presumption u/s 139 of the Act has been duly rebutted -- Nothing to show the capacity of the complainant to pay such a huge amount -- Amount in question has not been shown in the income tax return nor bank record has been produced to show from where this amount has been withdrawn – Finding of Trial Court acquitting the accused upheld.

(Para 8-12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Conviction of accused – Compromise between parties -- Compounding of offence after conviction -- Hon’ble Apex Court in Damodar S. Prabhu’s case 2010(2) RCR (Criminal) 851 has held that in a case of dishonour of cheques, compensatory aspect of the remedy should be given priority over the punitive aspect – As the matter has been finally settled and the liability is discharged and the petitioner has also deposited 15% of the cheque amount with the Punjab State Legal Services Authority, necessary permission to compound the offence u/s 138 of the Act is granted -- Conviction and order of sentence are set aside and the petitioner is acquitted of the charge levelled against him.

(Para 9-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case -- Security cheque – Dishonour of -- Conviction of accused -- Promissory note executed contained an unequivocal acknowledgment of not only the debt/liability but promised to liquidate the same within one month with interest at the bank rate -- Five cheques handed over were to be returned but only upon payment of the amount in question -- Such being the fact situation, it cannot be said that the cheques had nothing to do with any debt or other liability -- In case the amount was not paid within the period stipulated, the cheques were liable to be presented for otherwise there was no logic or reason for their having been issued and handed over in the first instance and delivery of any such cheques would be meaningless and futile if not absurd – High Court fell in error in upsetting the conviction recorded by the Courts below – Conviction order restored.

(Para 11, 12)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139, 142 -- Cheque bounce case -- Friendly loan of Rs. 21 lacs -- Held, such a huge amount of Rs.21 Lakhs cannot be given by a person without executing any document – Complainant-property dealer has not produced the account books to show the lending of this amount of Rs.21 Lakhs -- No document to show that this amount had been withdrawn from any bank account – Fact that the complainant borrowed Rs.21 Lakhs to give it a friendly loan to another person also creates doubt in the version of the complainant – Ld. Trial Court acquitted the accused – No ground to grant leave to appeal.

(Para 6-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Conviction in Cheque bounce case – Compounding of -- Offence under Section 138 of NI Act is compoundable -- This offence, as per the statutory provision of law contained in NI Act itself, is compoundable at every stage of litigation -- Once the parties have arrived at an amicable settlement and the complainant has received the agreed amount, conviction and sentence of the petitioner cannot be sustained any further – Amicable settlement arrived between the parties -- Petitioner is acquitted of the charges framed against him.

 (Para 11-17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Cheque amounting to Rs.2,50,000/- -- Trail Court convicted the petitioner for 1 year – Sentence is ordered to be reduced to already undergone (10 months-appox).

(Para 2, 15,16)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case -- Compounding of offence – Accused paid the cheque amount alongwith 6% interest per annum to complainant -- Compounding is allowed on deposit of costs @ 7.5% instead of 15% of cheque amount.

(Para 5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 427 – Cheque bounce case -- Concurrent running of sentences -- Basic thumb rule is that concurrent sentences are to be awarded in a case of single transaction -- It is only in those circumstances when different transactions relating to offences are involved, sentences may not be allowed to run concurrently – Held, there is only one transaction i.e. storage of paddy and misappropriation thereof -- Prosecution has invoked two different remedies available with it i.e. registration of FIR u/s 420/406 IPC and to invoke proceedings in complaint u/s 138 of the Negotiable Instruments Act -- Sentence in complaint u/s 138 NI Act is ordered to run concurrently with the sentence awarded in FIR case. Jang Singh’s case 2008(1) RCR (Criminal) 323 relied.

(Para 8-11)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Cheque bounce case – Territorial jurisdiction to try case -- Cheque in question was presented for encashment by the complainant at Sangrur -- Hence, the Court at Sangrur has the jurisdiction to try the complaint.

(Para 5)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 372, 378(4) -- Cheque bounce case -- Acquittal of accused – Appeal before Session Court – Maintainability of -- Complainant could have approached High Court seeking leave to appeal against the order of acquittal passed by the Trial Court -- However, the appeal before the Sessions Court was not maintainable.

(Para 5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case -- Liability to pay amount – Drawer of cheque -- Appellant-complainant supplied goods to M/s. Shah Agencies – Accused carried their business in the names of M/s. Shah Enterprises and M/s. Shah Agencies -- In part discharge of the liability of M/s. Shah Agencies, two cheques for Rs. 5 lakhs each were issued by the accused on an account maintained by M/s. Shah Enterprises – Cheques were dishonoured due to insufficient fund -- Case made out in the complaint was that the goods were sold and supplied to M/s. Shah Enterprises and the liability was of M/s. Shah Enterprises -- While in the affidavit in lieu of examination-in-chief, the Complainant came out with a case that the liability was that of M/s. Shah Agencies as goods were sold and supplied to M/s. Shah Agencies and it was not the case of the appellant that the accused had agreed to take over and discharge the liabilities of M/s. Shah Agencies – Acquittal of accused upheld.

(Para 1, 4, 11)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Liability to pay amount – Drawer of cheque -- First and foremost essential ingredient for attracting a liability under this Section is that the person who is to be made liable should be the drawer of the cheque and should have drawn the cheque on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge, in whole or part, of any debt or other liability.

(Para 9)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce case – Acquittal in – Accused demanded friendly loan of Rs.1,50,000/- -- Complainant stated that at the relevant time he was not having Rs.1,50,000/- and was having only Rs.1,35,000/-, rather has got Rs.1,35,000/- from his Mamaji by mortgaging the gold -- Petitioner-complainant could not tell the name of his Mamaji, from whom he has borrowed the money -- It shows that the story formulated by the petitioner is pulpably false -- Moreover, the petitioner has admitted the fact that the cheques issued by the accused were returned to him after receiving the payment from him – Acquittal order upheld.

(Para 8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142(b) -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Complaint u/s 138 of NI Act within 15 days of notice of demand – Maintainability of – Quashing of -- Complaint was premature and not maintainable -- Impugned complaint and subsequent proceedings taken therein are quashed – Permission given to complainant to file fresh complaint within one month -- Delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the Act.

(Para 11-13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 438 – Proclaimed offender in cheque bounce case – Anticipatory bail -- Point for determination is whether the petitioner has been rightly declared proclaimed offender -- Otherwise also, the offence u/s 138 of the Act is bailable in nature -- Petitioner has already given an undertaking that he would submit to the process of law and would furnish the bail bonds to the satisfaction of the trial Court – Direction given to the petitioner to appear before trial court and furnish bail bond has been complied with – Interim order is made absolute.

(Para 6-8)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Offence by Company – Vicarious liability of Director – Quashing of complaint:

(i)    In order to make the company liable u/s 138 of the Act vicariously, the Director can be prosecuted if there is specific recital that the Directors thereof were at the time when offence the offence committed, were responsible for the conduct and day to day business of the complaint -- Director, who had resigned long back before the cheque was presented cannot be prosecuted --  One of the Director in the array of accused was never Director of the company since its incorporation and still he has been arrayed as accused in the capacity of Director -- The certification to this effect is computerized information, which is perse admissible under Section 65-B of the Evidence Act, rather this document has not been denied with reference to any evidence to the contrary.

(ii)   Averments even if made in the complaint that the Director was in-charge, the same can be negated if the High Court comes across some unimpeachable/acceptable circumstance, which may lead to the conclusion that the Director could never have been in-charge of and responsible for the conduct of business of the company at the relevant time and therefore, making such Director as an accused to stand trial would be an abuse of process of law.

(iii)  It is mandatory in terms of Section 138 and 141 of the Act to specifically aver in the complaint that Director was in-charge of and responsible for the conduct of the business of the company at the relevant time, when the offence was committed and he was responsible for day to day functioning of the company -- Role of the Director in a company is a question of fact depending upon the nomenclature of the company and other circumstances prevailing therein -- There cannot be any universal application of the rule that a Director of company is in-charge of its day to day affairs.

(iv)   Section 141 of the Act is a penal provision creating criminal liability -- As per nature of the offence it has to be strictly construed -- It is not sufficient to make bald cursory statement in a complaint that Director/Directors is/are in-charge of and are responsible for the conduct of the business of the company without specifying anything more as to the role of the Director/Directors -- It is requirement of law that the complainant must spell out as to how and in what manner the accused are in-charge of the affairs of the company in the conduct of its business and thus responsible for the same.

(v)    Some times a Director is not the active Director and he may be non executive Director, who was no doubt a custodian of governance of the company, but at the same time was not involved in day to day affairs running of its business -- For making such a Director liable there must have been specific averment in the complaint as to how and in what manner such a Director was responsible for conduct of business of the company -- In the absence of such plea the Court can definitely come to rescue of such Director against whom the proceedings are nothing but a pure abuse of process of law.

(vi)   “no criminal proceedings shall be initiated against the Director/accused unless specific allegations should comeforth in complaint, earmarking unambiguous role in the context of charge and responsibility in discharge of day to functioning of the company so as to prevent embarking on a fishing expedition to try and unearth material against the Director.

Complaint is liable to quashed being abuse of process of law and is deficient in formulising vicarious liability of the petitioners in terms of Section 141 of the Act.

(Para 9-19)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200, 204 -- Complaint u/s 138 of N.I. Act – Power of attorney – Cognizance by Magistrate – Power of -- Magistrate had taken cognizance of the complaint without prima facie establishing the fact as to whether the Power of Attorney existed in first place and whether it was in order – Complaint against the appellant was not preferred by the payee or the holder in due course and the statement on oath of the person who filed the complaint has also not stated that he filed the complaint having been instructed by the payee or holder in due course of the cheque – Held, it was not open to the Magistrate to take cognizance -- Proceedings in question against the appellant are quashed.

(Para 16, 19)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200, 204 -- Section 138 – Complaint u/s 138 of N.I. Act – Power of attorney – Cognizance by Magistrate – Power of -- Except mentioning in the cause title there is no mention of, or a reference to the Power of Attorney in the body of the said complaint nor was it exhibited as part of the said complaint -- In the list of evidence there is just a mere mention of the words “Power of Attorney”, however there is no date or any other particulars of the Power of Attorney mentioned in the complaint -- Even in the verification statement, there is not even a whisper that she is filing the complaint as the Power of Attorney holder of the complainant -- Even the order of issue of process does not mention that the Magistrate had perused any Power of Attorney for issuing process – Magistrate wrongly took cognizance in the matter and the Court below erred in putting the onus on the appellant rather than the complainant -- Proceedings in question against the appellant are quashed.

(Para 17-19)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Complaint u/s 138 of N.I. Act – Power of attorney – Complaint was filed by one claiming to be General Power of Attorney of the complainant company – Complaint was not signed either by Managing Director or Director of the Company -- PW-1/R gave evidence on behalf of company who is only the employee of the Company -- As per Resolution of the Company i.e. Ex.P3 Managing Director and Director are authorized to file suits and criminal complaints against the debtors for recovery of money and for prosecution and they were authorized to appoint or nominate any other person to appear on their behalf in the Court and engage lawyer etc. -- But nothing on the record suggest that an employee is empowered to file the complaint on behalf of the Company -- Managing Director and Director are authorized persons of the Company to file the complaint by signing and by giving evidence -- At best the said persons can nominate any person to represent themselves or the Company before the Court –Employee of the Company signed the complaint and the Deputy General Manager of the Company/ PW-1 gave evidence as if he knows everything though he does not know anything -- Nothing on the record to suggest that he was authorized by the Managing Director or any Director -- Magistrate rightly acquitted the appellant.

(Para 20)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Complaint against Director of the Company – Partial quashing of Complaint – Petitioner is alleged to have issued cheque – Cheque placed on the file does not bear the signature of the petitioner – Form No.32 show that he had joined the said company as Director on 11.07.2009 and another Form No.32 to show that he resigned from the post of Director of the Company on 24.07.2009, which means that on the date of issuance of the cheque i.e. 29.12.2012, he had nothing to do with the said company – It being so, the complaint qua the petitioner along with the summoning order stands quashed.

(Para 2,3)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Director of company – Resignation of – Dishonour of cheque – Liability of – Quashing of complaint -- One of the petitioner /accused / Director of company had resigned from the Company on 16.02.2013 and the Board of Directors have accepted her resignation on 18.02.2013 and the other had tendered his resignation on 21.02.2013 i.e before the cheque was issued -- Registrar of Companies was informed about resignation on 16.09.2013 and June, 2013 respectively -- This gap would not make the petitioners liable for dishonor of the cheques, which was presented on 27.05.2013 and was dishonored – Petitioners were not involved in day to day affairs of the company and no liability can be thus fastened upon them – Complaint and summoning order are quashed.

(Para 27, 28)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Pre-mature complaint – Complaint within 15 days of notice – Maintainability of – No complaint can be maintained against the drawer of the cheque before the expiry of 15 days from the date of receipt of notice because the drawer/accused cannot be said to have committed any offence until then – Complaint u/s 138 of the NI Act filed before the expiry of 15 days of service of notice could not be treated as a complaint in the eye of law and criminal proceedings initiated on such complaint are liable to be quashed.

(Para 1, 39, 40)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Pre-mature complaint – Complaint within 15 days of notice – Dismissal of – Second complaint – Maintainability of – Condonation of delay -- Payee or the holder in due course of the cheque may file a fresh complaint within one month from the date of decision in the criminal case and, in that event, delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the NI Act.

(Para 1, 42)

Negotiable Instruments Act, 1881 (26 of 1881), Section 9, 85(2), 138 – Self cheque -- Bearer cheque – Maintainability of complaint u/s 138 of NI Act -- Holder in due course -- There a presumption in favour of the holder in due course that the instrument was drawn for consideration, unless the contrary is proved -- Bank is bound to make payment to the bearer -- Dishonour of the cheque was for the reason that the account of the petitioner did not carry sufficient funds -- Plea that the cheque being a self cheque would not attract Section 138 of the NI Act, is not tenable.

(Para 5)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint -- Account closed – Payment stopped – Referred to drawer -- Signature do not match – Image is not found -- Expression “amount of money …………. is insufficient” appearing in Section 138 of the Act is a genus and dishonour for reasons such “as account closed”, “payment stopped”, “referred to the drawer” are only species of that genus – Dishonour on the ground that the “signatures do not match” or that the “image is not found”, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act.

-- Question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration.

(Para 15)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Payment Stopped -- Dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract the provisions of Section 138.

(Para 16)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint -- Fraud – Allegations of fraud and the like are matters that cannot be investigated by a Court under Section 482 Cr.P.C. and shall have to be left to be determined at the trial after the evidence is adduced by the parties.

(Para 17)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Indian Penal Code, 1860 (45 of 1860), Section 420 -- Constitution of India, Article 20(1) -- Code of Criminal Procedure, 1973 (2 of 1974), Section 300(1) -- Double jeopardy – Conviction u/s 138 of NI Act – Trial and punishment under Section 420 IPC – Permissibility of – Section 300(1) of Cr.P.C. is wider than Article 20(2) of the Constitution -- While, Article 20(2) of the Constitution only states that 'no one can be prosecuted and punished for the same offence more than once' -- Section 300(1) of Cr.P.C. states that no one can be tried and convicted for the same offence or even for a different offence but on the same facts – Held in the case although the offences are different but the facts are the same -- Hence, Section 300(1) of Cr.P.C. applies -- Consequently, the prosecution u/s 420, IPC was barred by Section 300(1) of Cr.P.C.

(Para 7, 8)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 -- Cheque bounce complaint – Cognizance by Magistrate – Evidence of complainant – Affidavit of complainant in evidence -- For the purpose of issuing process u/s 200 of the Cr. P.C., it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint u/s 138 of the NI Act, 1881 and the Magistrate is not obliged to call upon the complainant to remain present before the Court, nor to examine the complainant or his witnesses upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the Negotiable Instruments Act, 1881.

-- It is only if and where the Magistrate, after considering the complaint under Section 138 of the Negotiable Instruments Act, 1881 and the documents produced in support thereof and the verification in the form of affidavit of the complainant, is of the view that examination of the complainant or his witness is required, that the Magistrate may call upon the complainant to remain present before the Court and examine the complainant and/or his witness upon oath for taking decision whether or not to issue process on the complaint under Section 138 of the Negotiable Instruments Act, 1881.

(Para 59)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 145 – Code of Criminal Procedure, 1973 (2 of 1974), Section 200 -- Cheque bounce complaint – Cognizance by Magistrate – Evidence of complainant -- Affidavit of complainant in evidence -- Nothing wrong with filing the affidavit in support of the complaint in a format indicating all the essential facts satisfying the ingredients of Section 138 of the NI Act, 1881 for the purpose of enabling the Magistrate to decide whether or not to issue process on the complaint u/s 138 of the NI Act, 1881.

(Para 59)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 374(3), 378(4), 397, 401 – Constitution of India, Article 136 -- Cheque bounce case – Remedies available -- Offence u/s 138 triable by a Judicial Magistrate First Class (JMFC) -- After trial, the progression of further legal proceedings would depend on whether there has been a conviction or an acquittal.

-- In the case of conviction, an appeal would lie to the Court of Sessions under Section 374(3)(a) of the CrPC; thereafter a Revision to the High Court under Section 397/401 of the CrPC and finally a petition before the Supreme Court, seeking special leave to appeal under 136 of the Constitution of India. Thus, in case of conviction there will be four levels of litigation.

-- In the case of acquittal by the JMFC, the complainant could appeal to the High Court under Section 378(4) of the CrPC, and thereafter for special leave to appeal to the Supreme Court under Article 136. In such an instance, therefore, there will be three levels of proceedings.

(Para 14)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 143, 147 -- Cheque bounce case – Framing of Guidelines for compounding of offence :

THE GUIDELINES

(a) That directions can be given that the Writ of Summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused.

(b) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the Court deems fit.

(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.

(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount.

Competent Court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance.

(Para 15, 17)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case – Multiple complaints – Controlling of -- It should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction -- Such a disclosure should be made on a sworn affidavit which should accompany the complaint filed u/s 200 of the CrPC -- If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice. These directions should be given effect prospectively.

(Para 16)

D. Constitution of India, Article 142 -- Negotiable Instruments Act, 1881 (26 of 1881), Section 138, Section 147 – Code of Criminal Procedure, 1973 (2 of 1974), Section 320 -- Guidelines could be seen as an act of judicial law-making and therefore an intrusion into the legislative domain – It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act -- Scheme contemplated u/s 320 of the CrPC cannot be followed in the strict sense -- In view of the legislative vacuum, no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act -- Competent Court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance.

(Para 17)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 143, 145 -- Affidavit of complainant in evidence – Absence of accused -- Section 145 allows for the evidence of the complainant to be given on affidavit, that is, in the absence of the accused -- Accused, however, is fully protected, as under sub-section (2) of section 145 he has the absolute and unqualified right to have the complainant and any or all of his witnesses summoned for cross-examination.

(Para 16)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 143, 144, 145, 146, 147 – Object of Amendment Act, 2002 -- Sections 143 to 147 were inserted in the Act by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to do away with all the stages and processes in a regular criminal trial that normally cause inordinate delay in its conclusion and to make the trial procedure as expeditious as possible without in any way compromising on the right of the accused for a fair trial.

(Para 17)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 143, 145, 147 -- Indian Evidence Act, 1872 (1 of 1872), Section 137 – Affidavit of complainant in evidence – Examination-in-chief – Requirement of -- Whether it is also open to the accused to insist that before cross-examining him as to the facts stated in the affidavit he must first depose in examination-in-chief and be required to verbally state what is already said in the affidavit ? – Nothing in section 145(2) to suggest that -- Deponent of the affidavit (the complainant or any of his witnesses) can only be subjected to cross-examination as to the facts stated in the affidavit -- Prosecution may also have to summon a witness whose evidence is given on affidavit in case objection is raised by the defence regarding the validity and/or sufficiency of proof of some document(s) submitted along with the affidavit.

(Para 21, 22)

D. Negotiable Instruments Act, 1881 (26 of 1881). Section 143, 145(1) -- Affidavit of accused in evidence – Permissibility of -- High Court held that subject to the provisions of sections 315 and 316 of the Code of Criminal Procedure the accused can also give his evidence on affidavit – Held, High Court overreached itself and took a course that amounts to taking over the legislative functions.

-- On a bare reading of section 143 it is clear that the legislature provided for the complainant to give his evidence on affidavit and did not provide for the accused to similarly do so. But the High Court thought that not mentioning the accused along with the complainant in sub-section (1) of section 145 was merely an omission by the legislature that it could fill up without difficulty. Even though the legislature in their wisdom did not deem it proper to incorporate the word ‘accused’ with the word ‘complainant’ in section 145(1), it did not mean that the Magistrate could not allow the accused to give his evidence on affidavit by applying the same analogy unless there was a just and reasonable ground to refuse such permission.

High Court was in error in taking the view, that on a request made by the accused the magistrate may allow him to tender his evidence on affidavit.

(Para 30-32)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 142 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Second notice – Cause of action – Complaint u/s 138 of NI Act -- Maintainability of –Respondent issued notices, although, the notice was duly served, the Respondent did not take any steps to file the complaint within the period prescribed – Held, a cheque may be presented several times within the period of its validity, the cause of action for a complaint u/s 138 of the Act arises but once, with the issuance of notice after dishonour of the cheque and the receipt thereof by the drawer – Ld. Magistrate erred in taking cognizance on the complaints filed on the basis of the second notices, High Court also wrongly affirmed the same – Appeal allowed, impugned orders set aside.

(Para 4, 15-18)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Cheque bounce case -- Offence by Company – Vicarious liability of Managing Director/ Joint Managing Director -- If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company -- It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time.

(Para 20 (i))

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 -- Cheque bounce case -- Offence by Company – Signature on cheque by Director/ Officer of Company – In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence -- The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.

(Para 20 (ii))

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Companies Act, 1956 (1 of 1956), Section 5(a)(b)(c)(d)(e)(f)(g) -- Cheque bounce case -- Offence by Company – Vicarious liability of Deputy General Manager -- A Deputy General Manger is not a person who is responsible to the company for the conduct of the business of the company -- He does not fall under any of the categories (a) to (g) listed in section 5 of the Companies Act -- Therefore the question whether he was in charge of the business of the company or not, is irrelevant -- He cannot be made vicariously liable under Section 141(1) of the Act -- If he has to be made liable u/s 141(2), the necessary averments relating to consent/connivance/negligence should have been made -- No such averment made -- Hence Deputy General Manger could not be prosecuted either u/s (1) or u/s (2) of Section 141 of the Act.

(Para 22)

A. Indian Evidence Act, 1872 (1 of 1872), Section 4 -- May presume – Shall Presume – Section 4 of Evidence Act inter-alia defines the words ‘may presume’ and ‘shall presume as follows:-

“(a) ‘may presume’ – Whenever it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved or may call for proof of it.

(b) ‘shall presume’ – Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved.”

In the former case the Court has an option to raise the presumption or not, but in the latter case, the Court must necessarily raise the presumption. If in a case the Court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved.

(Para 9)

B. Negotiable Instruments Act (26 of 1881), Section 118, 139 – Indian Evidence Act, 1872 (1 of 1872), Section 3 – Cheque against consideration -- Legally enforceable debt or liability – Presumption -- Rebuttal – In a trial u/s 138 of the Act a presumption will have to be made that every negotiable instrument 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 -- As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused -- Presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability -- A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

(Para 10)

C. Negotiable Instruments Act (26 of 1881), Section 118, 138, 139 – Indian Evidence Act, 1872 (1 of 1872), Section 4 – Cheque against consideration -- Legally enforceable debt or liability – Presumption -- Rebuttal – Phrase “until the contrary is proved” read with definitions of “may presume” and “shall presume” as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable.

(Para 11)

D. Negotiable Instruments Act (26 of 1881), Section 118, 138, 139 – Indian Evidence Act, 1872 (1 of 1872), Section 4, 114 – Rebuttal of presumption – Accused in a trial u/s 138 of the Act has two options – He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed – To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial – Court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated – At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused – Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant.

-- To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.

-- Accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant – Accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.

-- Accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial.

Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant’s rescue.

(Para 11)

E. Negotiable Instruments Act (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 378(4), 386 -- Acquittal by trial court – Conviction in appeal by High Court – Sentence to accused -- High Court, after convicting the appellant u/s 138 of the Act, remitted the matter to the learned Magistrate for passing appropriate order of sentence – Held, this course, is unknown to law -- Powers of the Appellate Court, in an appeal from an order of acquittal, are enumerated in Section 386(a) of the Code of Criminal Procedure, 1973 -- Powers do not contemplate that an Appellate Court, after recording conviction, can remit the matter to the trial court for passing appropriate order of sentence -- Judicial function of imposing appropriate sentence can be performed only by the Appellate Court when it reverses the order of acquittal and not by any other court -- Procedure adopted by the High Court not approved.

(Para 13)

Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint -- Cause of action – Third demand notice -- First notice having not been served and the second notice having been withdrawn in terms of the reply of appellants/ accused, the complainant cannot be said to have committed any illegality in presenting the cheque for the third time and issuing the third notice upon the defaulter -- Issuance of a valid notice calling upon the drawer of the cheque to pay the amount in question and the appellants' failure to pay to the complainant the amount in question within a period of 15 days from the date of receipt of a copy of the said notice upon them, a cause of action arose for filing a complaint petition – Held, cause of action for filing a complaint arose only once and not more than once.

(Para 33)

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Demand Notice for payment – Mandatory in nature -- Object of – Object of the proviso is to avoid unnecessary hardship to an honest drawer -- Giving a notice to the drawer before filing complaint u/s 138 of the Act is a mandatory requirement.

(Para 6)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- General Clauses Act, 1897 (10 of 1897), Section 27 -- Indian Evidence Act, 1872 (1 of 1872), Section 114 -- Demand Notice for payment – Serviced of notice -- Presumption of – Cause of action -- Where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted -- Requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque -- Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address.

(Para 10)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- General Clauses Act, 1897 (10 of 1897), Section 27 -- Indian Evidence Act, 1872 (1 of 1872), Section 114 – Demand Notice for payment – Service of notice – Presumption of -- Pleadings – Requirement of -- Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post – It is not necessary to aver in the complaint u/s 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved -- Complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque.

(Para 14, 15)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- General Clauses Act, 1897 (10 of 1897), Section 27 -- Indian Evidence Act, 1872 (1 of 1872), Section 114 -- Demand Notice for payment – Service of notice – Presumption of – Rebuttal of -- At the time of taking cognizance of the complaint u/s 138 of the Act, the Court is required to be prima facie satisfied that a case under the said Section is made out and the mandatory statutory procedural requirements have been complied with -- It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect.

(Para 15)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- General Clauses Act, 1897 (10 of 1897), Section 27 -- Indian Evidence Act, 1872 (1 of 1872), Section 114 -- Demand Notice for payment – Service of notice – Presumption of – Rebuttal of – Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint u/s 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected -- A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint u/s 138 of the Act, cannot obviously 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 G.C. Act and Section 114 of the Evidence Act.

(Para 17)