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 138, 141 – Sick Industrial Companies (Special Provisions) Act (1 of 1986), Section 22 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 – Constitution of India, Article 227 -- Dishonour of Cheque -- Prosecution of the Company/ Directors – SICA proceedings -- Maintainability of complaint u/s 138 of NI Act -- Section only creates an embargo against disposal of assets of the company for recovery of its debts -- Purpose of such an embargo is to preserve the assets of the company from being attached or sold for realisation of dues of the creditors -- Section does not bar payment of money by the company or its directors to other persons for satisfaction of their legally enforceable dues -- Section 22 SICA does not create any legal impediment for instituting and proceeding with a criminal case on the allegations of an offence u/s 138 of the NI Act against a company or its Directors.

(Para 18)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 141 – Sick Industrial Companies (Special Provisions) Act (1 of 1986), Section 22-A – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Constitution of India, Article 227 -- Dishonour of Cheque -- Prosecution of the Company/ Directors – Company declared Sick -- Maintainability of complaint u/s 138 of NI Act -- In a case in which the BIFR has submitted its report declaring a company as ‘sick’ and has also issued a direction u/s 22-A restraining the company or its directors not to dispose of any of its assets except with consent of the Board then the contention raised that a criminal case for the alleged offence u/s 138 NI Act cannot be instituted during the period in which the restraint order passed by the BIFR remains operative cannot be rejected outright -- Whether the contention can be accepted or not will depend on the facts and circumstances of the case -- For instance, before the date on which the cheque was drawn or before expiry of the statutory period of 15 days after notice, a restraint order of the BIFR u/s 22-A was passed against the company then it cannot be said that the offence u/s 138 NI Act was completed -- In such a case it may reasonably be said that the dishonoring of the cheque by the bank and failure to make payment of the amount by the company and/or its Directors is for reasons beyond the control of the accused -- In such circumstances it would be unjust and unfair and against the intent and purpose of the statute to hold that the Directors should be compelled to face trial in a criminal case.

(Para 19, 20)