Mr. Rajesh Bhalchandra Chalke vs State Of Maharashtra on 7 December, 2010

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           IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                   CRIMINAL APPELLATE JURISDICTION




                                                                              
               CRIMINAL WRIT PETITION NO. 2523 OF 2010




                                                      
                           ALONG WITH
                CRIMINAL APPLICATION NO. 3478 OF 2010

      CRIMINAL WRIT PETITION NO.2523 OF 2010




                                                     
      Mr. Rajesh Bhalchandra Chalke                                 )
      Age : 37 years, Occupation : Business                         )
      Indaga House, 82, Dr. Annie Basent Road                       )
      Worli, Mumbai 400 018.                                        ).. Petitioner




                                        
                  Versus   
      1)    State of Maharashtra                                    )
                          
      2)    M/s Emco Dynatorq Pvt. Ltd.                             )
            (Formerly known as Emco Lenze Pvt. Ltd.)                )
            having its office located at 1st Floor                  )
            Sita Mauli, Above Bank of Maharashtra                   )
        


            Madanlal Dhingra Road, Panch Pakhadi                    )
            Thane (W), 400 602.                                     ).. Respondents
     



      Mr. S.V. Marwadi i/b Mr. S.P. Narkar for the Petitioner.





      Mr. M.R. Tidke, Additional Public Prosecutor, for the State.



      ALONG WITH





      CRIMINAL APPLICATION NO. 3478 OF 2010

      1)    Nikhil Vasantlal Merchant, age 48 years                 )

            a) 347-A, Pancharatna, Opera House, M.P. Marg )
               Mumbai 400 004.                            )

            b) H-2, Breach Candy Apts., Bhulabhai Desai             )
               Road, Mumbai 400 026.                                )




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      2)    Manepanda Joyappa Subbaiah                    )
            a) 347-A, Pancharatna, Opera House, M.P. Marg )
               Mumbai 400 004.                            )




                                                                             
            b) 201, Skyline Apts., Langford Road,                  )




                                                     
               Shanthinagar, Bangalore, Karnataka 560025           )

      3)    Ashok Kumar Ram Gopal Doda                             )




                                                    
            a) 347-A, Pancharatna, Opera House, M.P. Marg )
               Mumbai 400 004.                            )

            b) A-203/204, Mt. Everest, Bhakti Park                 )
               Wadala (East), Mumbai 400031                        ).. Applicants




                                        
                  Versus   
      1)    The State of Maharashtra                               )
                          
      2)    Global Trade Finance Ltd.                              )
            through its Registered Office situated at              )
            Metropolitan Building, 6th Floor, Bandra-Kurla         )
            Complex, Bandra (East), Mumbai 400 051                 ).. Respondents
        
     



      Mr. Ashish Chavan for the Applicant.
      Mr. Jatin Shah for the Respondent in other matter.
      Mr. Yashpal Thakur i/b M/s Paras Kuhad and Associates





      for Respondent No.2.
      Mr. M.R. Tidke, Additional Public Prosecutor, for the State.


                               CORAM : MOHIT S. SHAH, C.J.,





                                      V.M. KANADE AND
                                      SMT. R.P.SONDURBALDOTA, JJ.


              JUDGMENT RESERVED ON : OCTOBER    12, 2010
              JUDGMENT PRONOUNCED ON : DECEMBER 07, 2010




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      JUDGMENT (Per Chief Justice)

This petition has been placed before the Full Bench for
considering the question about interpretation of Section 145 of the

Negotiable Instruments Act, 1881 read with Sections 118, 138, 139, 142,
143 and 146 of the Negotiable Instruments Act, 1881 (for short referred
to as “NI Act”) and its interplay with Section 200 of the Code of

Criminal Procedure, 1973 (for short referred to as “CrPC”).

2. Shortly put, the question is – “whether, in view of the

provisions of Section 145 NI Act (added by Act No.55 of 2002), a

Metropolitan Magistrate or Judicial Magistrate, First Class, taking up a
complaint under Section 138 of the NI Act, along with documents in

support thereof and a verification made in the affidavit in support of the
complaint, is still obliged to examine on oath the complainant and his
witnesses before issuing process on the complaint?

3. The reference has been made as the learned Single Judge
expressed the prima facie view that the judgment of a learned Single

Judge of this Court in Amarnath Baijnath Gupta and another vs Mohini
Organics Pvt Ltd and another, 2009 ALL MR CRI 184 = 2009 Crl LJ
995 and the judgment of a Division Bench of this Court in Maharaja
Developers and another vs Udaysing s/o Pratapsinghrao Bhonsale and

another, 2007 ALL MR CRI 1339 = 2007 Crl LJ 2207 require
reconsideration inasmuch as the said Benches have held that provisions
of Section 145 of the NI Act would not have an over-riding effect over
the provisions of Section 200 of Cr PC, and in so far as the said
judgments have held that before issuing process under Section 200
CrPC, it is mandatory for the Magistrate to examine the complainant,

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who has filed the complaint under Section 138 of the NI Act, even
though the complaint has been filed along with verification on solemn

affirmation.

4. The learned Single Judge, while referring the matter to the
Full Bench, also made the following observations in the order dated 20th

September 2010 :-

“4. Large number of cases have been filed in this
Court for quashing complaints on account of improper

verification. There are 3,44,000 cases pending in the
City of Mumbai alone and about 7,00,000 cases

pending in the State of Maharashtra. The judgment in
the case of Amarnath Baijnath Gupta (supra) was

passed since it was brought to the notice of this Court
that verification statements are not recorded in a proper
manner and mechanically process is being issued by the
learned Magistrates. Under these circumstances,
various guidelines were laid down in the case of

Amarnath Baijnath Gupta (supra). However, by that
time, in almost, most of the matters which were filed at

that time, the practice of accepting affidavits in lieu of
examination of the complainant was followed in the
State of Maharashtra. As a result of the judgment of

Amarnath Baijnath Gupta (supra), large number of
cases are being filed here for quashing all those cases.”

FACTS

5. The short facts leading to filing of the writ petition are as
under :-

Respondent No.2 M/s Emco Dynatorq Pvt Ltd (formerly
known as Emco Lenze Pvt Ltd) filed a complaint against M/s
Champagne Indage Ltd (now called Indage Vintners Ltd.), its Managing

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Director Mr. Ranjit S. Chougule and its Chief Financial Officer Mr.
Rajesh Chalke in the Court of learned Judicial Magistrate, First Class at

Thane (Case No.4743 of 2009) under Section 138 of the Negotiable
Instruments Act, 1881 pointing out that it was formerly known as M/s

Emco Lenze Pvt Ltd and is engaged in the business of manufacturing of
various electro magnetic clutches, brakes, clutch-brakes, etc. for their

different clients as per their requirement. Accused No.1 is a company
with its registered office at Worli, Mumbai and that accused Nos.2 and 3
are Managing Director and Chief Financial Officer respectively and,

therefore, they being in-charge, they are controlling the day to day
affairs and management of accused company.

The complainant further stated that it had given Rs.
20,00,000/- (Rupees Twenty lakh only) as Inter Corporate Deposit to
accused No.1 for the period from 19/09/2008 to 18/12/2008 (for 90

days) with a view to earn interest on it at 13.75% as promised, and that
the said amount was paid by the complainant to accused No.1 company

by cheque dated 19th September 2008; that upon receipt of payment
accused No.2 had sent certified copy of the resolution of accused No.1 in

respect of borrowing the funds and also copy of a board resolution dated
29th May 2008 in respect of the authorized person who was competent to
sign the letter of undertaking for post-dated cheques, money receipts and

undertaking under Section 293 of the Companies Act wherein, names of
accused Nos.2 and 3 are shown, that the accused had also sent copy of
the letter in respect of the signature verification of the authorised person
vide letter dated 25th April 2006 and the letter dated 3rd June 2008, same
having been verified by the bankers of the accused, wherein the name
and specimen signatures of accused Nos.2 and 3 were shown. Copies of
the above resolutions and letters were produced along with complaint.

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Upon receipt of the payment of Rs.20,00,000/- from the complainant, the
accused issued two post-dated cheques dated 18th December, 2008, in

favour of the complainant – one for Rs.20,00,000/- towards the principal
amount and the other for Rs.46,661/- towards interest for 90 days.

However, in view of the letter dated 29th November 2008 sent by
accused No.2, the complainant did not deposit the said cheques with

their bankers and the accused issued two fresh cheques dated 28th March,
2009, in favour of the complainant – one for principal amount of Rs.
20,00,000/- and the other of Rs.53,392/- towards interest. The

complainant produced copies of the letters dated 29th November 2008
and 18th December 2008 with which the cheques dated 28th February

2009 were sent. In the said letter dated 18th December 2008, the
accused had also agreed and undertaken that the cheques dated 28th

February 2009 will not be dishonoured. In spite of such agreement and
undertaking, the cheques were dishonoured on account of “Exceeds

Arrangement”. Thereupon, the accused informed the complainant vide
letter dated 28th July 2009 to return the dis-honoured cheques so as to

issue fresh cheques. Accused again issued fresh cheque to the
complainant being cheque dated 29th August 2009 for Rs.20,00,000/-

towards principal amount. The said cheque of Rs.20,00,000/- was again
deposited by the complainant with its bankers. However, the cheque was
dishonoured vide memo of dishonour dated 10th September 2009 for the

reason “Funds Insufficient”. As the complainant’s bankers informed the
complainant on 11th September 2009, in view of the memo of dishonour
dated 10th September 2009 from the bankers of the accused, the
complainant sent a statutory notice dated 19th September 2009 within the
specified time to all the accused calling upon the accused to pay the
amount of cheque within a period of 15 days from the date of receipt of
the notice. The accused were also informed about the consequences of

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non-payment. The notices were sent to all the accused by registered post
with acknowledgments due as well as under certificate of posting. The

registered acknowledgments were received back by the complainant.
The complainant accordingly produced copies of all the above

documents and the acknowledgments. The complainant stated that the
cheques were tendered to the complainant towards the legal and

enforceable liability of the accused and that the accused had committed
an offence punishable under Section 138 of the Negotiable Instruments
Act, 1881. In all, 14 documents were produced along with the

complaint, as per the details given in the body of the complaint itself.
The complainant prayed that the Court may issue process, summon all

the accused and try and punish them for the offence punishable under

Section 138 of the Negotiable Instruments Act, 1881. The complainant
also gave the list of its witnesses. After the complaint was filed on 16th
November 2009, the complainant also gave verification under affidavit

dated 18th December 2009 of its Manager :-

“1. I say that, I am the Manager Legal &

Administration and POA Holder of the Complainant, I
am well conversant with the facts of this complaint.

2. I say that the Accused have issued cheques, in
favour of Complainant, towards the legal and
enforceable liability of the Complainant being the debt
i.e. a cheque No. 939127 dated 29-08-2009 for Rs.
20,00,000/- (Rs. Twenty Lac Only) drawn on Punjab

National Bank Large Corporate Branch, Cuffe Parade,
Mumbai-400 005.

3. I say that, I have deposited the said cheque in our
bank Axis Bank Ltd., Thane (W) Branch for
encashment, however, the same is returned dishonoured
with memo dated 10-09-2009 with remarks “Funds
Insufficient” and the same was intimated to the
Complainant by their banker vide letter of intimations
dated 11-09-2009.

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4. The Complainant has issued legal notice on
19-09-2009 to all the Accused by R.P.A.D. & U.C.P.
however the packet containing statutory demand notice

forwarded by Reg Post with acknowledgment due as
well as under the Certificate of Posting and same were

duly received by all the Accused on or about
08-10-2009, as the registered acknowledgment have
been duly received back by the Complainant.

I say that the Accused have failed to comply the
requisitions of the notice within the time stipulated.
Thus the Accuseds have committed an offence
punishable u/s 138 of N.I. Act.

I have filed the complaint on behalf of the Complainant
against all the Accused U/S 138 of N.I. Act. All the

Accused be tried and punished according to law.

Solemnly affirmed at Thane on this 18th day of

December 2009.

Filed in court on 18/12/09

Sd/-

Authorised signatory of complainant”

The complaint was numbered as Summary Criminal Case

No.4743 of 2009 and the learned Judicial Magistrate, First Class, Court
No.5, Thane, passed the following order on the said complaint on 18 th
December, 2009 :-

“Issue summons against the accused under section 138
of negotiable instrument Act.”

6. Accused No.3 Mr. Rajesh Balchandra Chalke filed Criminal
Writ Petition No.2523 of 2010 before this Court under Article 227 of the
Constitution of India and under Section 482 of the CrPC contending that

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the learned Magistrate was required to examine the authorised signatory
of the complainant on oath and reduce into writing the substance of his

examination as per Section 200 of CrPC; that such procedure is
mandatory but instead of examining the complainant on oath and

reducing into writing the substance of his examination in accordance
with Section 200 of CrPC, learned Magistrate accepted the affidavit and

on that basis passed the impugned order. Hence, the order is contrary to
law. It is, therefore, submitted that the learned Magistrate erred in taking
cognizance of the offence without following the procedure laid down by

Section 200 of CrPC.

7.

When the writ petition reached hearing before the learned

Single Judge, reliance was placed on behalf of the petitioner upon the
decisions of this Court in Amarnath Baijnath Gupta and another vs
Mohini Organics Pvt Ltd and another, 2009 ALL MR CRI 184 and the

judgment of a Division Bench of this Court in Maharaja Developers and
another vs Udaysing s/o Pratapsinghrao Bhonsale and another, 2007

ALL MR CRI 1339 holding that it is mandatory for the learned
Magistrate to examine the complainant on oath, when the complaint is

filed under Section 138 of the NI Act, even though the complainant has
filed verification on affirmation. While referring the matter to the
larger Bench, the learned Single Judge also made the observations

already quoted in paragraph 4 hereinabove.

RIVAL SUBMISSIONS

8. Mr. Marwadi, learned counsel for the petitioner accused,
made the following submissions :

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      8.1         Section 200 of CrPC mandates the learned Magistrate to

examine upon oath the complainant and his witnesses present, if any,

and to reduce the substance of such examination into writing, before the
Magistrate can take cognizance of an offence on complaint. There is no

other provision for taking cognizance of an offence except Sections 200
and 202 of CrPC. Section 200 uses the words “shall examine” and not

“may examine”. Hence, the procedure recording examination of the
complainant on oath is mandatory and not optional. Reliance is placed
on several decisions in support of the contention that examination of

complainant on oath is mandatory before issuing process under Section
200 of CrPC.

8.2 Section 145 of NI Act, upon which reliance is placed by the
complainant, provides that the evidence of the complainant may be
given by him on affidavit, but what the Magistrate records under Section

200 CrPC is not evidence. The stage of recording evidence will be after
commencement of trial and not at the stage when the Magistrate is yet to

decide whether process should be issued or not. What the Magistrate
is required to do under Section 200 CrPC is examination of the

complainant on oath. This is the duty of the Court and, therefore,
examination by the Magistrate under Section 200 CrPC is different from
examination of the witness by prosecution/ complainant.

8.3 Section 145 of the NI Act is the same as Section 296 of Cr
PC. Part I of each section deals with examination in chief as
contemplated in Section 137 of the Evidence Act and, therefore, permits
evidence in the form of examination in chief led by the affidavit. But
neither of the said two Sections deal with any stage prior to issuance of
process under Section 200 of Cr PC. (Section 137 of the Evidence Act).

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      8.4         Section 145 gives right to the complainant to file an

affidavit in lieu of evidence, but Section 200 of CrPC does not give any

such right to complainant or discretion to the Court.

8.5 Section 142 of NI Act places restrictions on power of Court
under Section 200 CrPC in respect of (i) complaint under Section 138 of

NI Act has to be in writing; (ii) only the payee or the holder in due
course of the cheque has a locus to file a complaint unlike the ordinary
criminal law under which any person can set the law in motion and (iii)

the complaint under Section 138 has to be filed within the time limit
specified in Section 142, unlike complaint under the ordinary criminal

law. Section 142 does not expand the powers of taking cognizance.

8.6 Sections 143 to 147 added by the amending Act of 2002
only deal with the stage of trial and none of them deals with the pre-trial

stage.

9. The learned Counsel for the petitioner further submitted that
Issuance of process by the Magistrate on the complaint is not so

innocuous as is being contended on behalf of the complainant. Serious
prejudice is caused to the accused as he is required to appear before the
Magistrate at every hearing and during pendency of the complaint for

years together and the accused is also required to give bond.

10. It is also vehemently contended on behalf of the accused
that there may be cases where the complainant may have suppressed
material documents. It is only by examining the complainant on oath
that the Magistrate can get the complainant to produce such documents.
If the complainant suppresses the documents and the Magistrate issues

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process on the complaint merely on the basis of his verification on
affidavit and without examining the complainant on oath, thereafter the

accused has no other option but to participate in the trial which will
remain pending for a number of years. There is no provision enabling

the accused to file an application for discharge. Once the plea of the
accused is recorded under Section 252 of CrPC, the procedure laid down

in Chapter XX for summary trial has to be followed and the entire trial is
required to be taken to its logical conclusion. Our attention is also
invited to the decision of the learned Single Judge of this Court in

Peacock Industries Ltd. and others vs M/s Budhrani Finance Ltd. and
another, 2006 ALL MR CRI 2233, decided on 14th July 2006.

Referring to the various guidelines laid down in the said decision, it is

submitted that on account of non-observance of these guidelines, serious
prejudice is being caused to the accused.

11. Mr. Chavan for accused in Criminal Writ Petition No.3478
of 2010 reiterated the above submissions and further submitted that the

ingredients of the offence punishable under Section 138 of the NI Act
can be brought out only by examination of the complainant on oath by

the Magistrate and not by mere verification on affidavit which may be
like examination-in-chief of the complainant. The learned counsel
further submitted that the Directors of a company are very often

harassed by filing complaints against all the accused without the
Magistrate making proper inquiry before issuing process and that puts
even those persons who have already resigned as Directors, to avoidable
hardship and inconvenience and compels such Directors to invoke the
powers of this Court under Article 227 of the Constitution of India and
Section 482 of the Cr PC.

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12. On the other hand, Mr.Thakur and Mr. Jatin Shah, learned
counsel for the complainants opposed the writ petitions and submitted

that the very object for which the Legislature added Sections 143 to 147
and particularly Sections 143, 145 and 147 would be defeated if the

petitioner’s contentions were to be accepted.

Relying on the Statement of Objects and Reasons for the
Amending Act 55 of 2002, it was submitted that the Legislature noticed
the alarming state of affairs about huge pendency of complaints under

Section 138 of NI Act and, therefore, the Legislature was keen to ensure
that the complaints under Section 138 of the NI Act were taken up and

tried and decided at the earliest. That is why the Legislature prescribed

procedure for dispensing with the stage of preliminary evidence in the
form of examination of complainant under Section 200 CrPC and
achieved this object by providing at the commencement of Section

145(1) of NI Act, “Notwithstanding anything contained in the Code of
Criminal Procedure, 1973”, which would include Section 200 of the

Criminal Procedure Code. The evidence of the complainant may be
given by him on affidavit and may be read in evidence in any enquiry,

trial or other proceeding under the CrPC. It was submitted that the stage
prior to issuance of process under Section 200 of CrPC may not be trial
but it would certainly be enquiry or other proceeding and even in such

inquiry or other proceeding, the complainant is permitted to give his
evidence on affidavit.

13. It is further submitted on behalf of the complainants that in
order to expedite the decision on the complaint under Section 138 of NI
Act, Section 143 thereof provides that notwithstanding anything
contained in the Cr PC. the complaints under Section 138 of NI Act shall

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be tried by a Metropolitan Magistrate or by a Judicial Magistrate of the
First Class as summary trial under Sections 262 to 265 of CrPC. The

very fact that the Legislature specifically provided in sub-section (3) of
Section 143 that every trial shall be conducted as expeditiously as

possible and an endeavour shall be made to complete the trial within six
months from the date of filing of the complaint clearly indicates the

legislative intent that issuance of process was also intended to be
expedited after filing of the complaint.

14. Sections 138 to 147 in Chapter XVII of the NI Act are a
Code by itself and the very fact that the Legislature specifically provided

for the non-obstante clause in Sections 143, 144 and 145 of NI Act that

those provisions were “Notwithstanding anything contained in the Code
of Criminal Procedure, 1973”, the said provisions added on the statute
book by Amending Act 55 of 2002 with effect from 6th February 2003

were obviously intended to give over-riding effect over Section 200 of
CrPC which is on the statute book since the date of coming into force of

the Code in 1974.

15. Strong reliance is placed on decisions of the Karnataka
High Court in K. Srinivasa vs Kashinath, (2004) Cri LJ 4566, Kerala
High Court in K. Vasudevan vs State of Kerala, 2005 BGLKS (Doc) 113

decided on 24th June 2004 and H.D.F.C. vs Anilesh, 2008 (2) Crimes
164 (Ker.), the Special Leave Petition against which was dismissed by
the Apex Court on 13th September 2004.

16. The learned counsel for the complainants have submitted
that the decisions relied upon by the learned counsel for the accused deal
with cases which were filed prior to the addition of Section 145 on the

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statute book or such decisions relied on previous decisions of the Apex
Court which were rendered prior to Section 145 of NI Act coming on the

statute book.

17. The learned counsel for the respondent accused have also
submitted that the decision of the learned Single Judge of this Court

deprecating “pre-conceived format” of the complaint is not at all in
consonance with the provisions of NI Act as amended in 2002 and that
such approach has resulted into gross delay even in examination of the

complainant on oath under Section 200 CrPC, resulting into pendency of
almost three lakh complaints under NI Act in spite of as many as 32

Magistrates trying such complaints.

STATUTORY PROVISIONS

18. Before dealing with the rival submissions, we may briefly
note the relevant statutory provisions.

Section 118 of the NI Act, which is on the statute book

since 1881, provides as under :-

“118. Presumptions as to negotiable instruments –
Until the contrary is proved, the following presumptions
shall be made :-

(a) of consideration – that every negotiable
instrument was made or drawn for consideration, and
that every such instrument, when it has been accepted,
indorsed, negotiated or transferred, was accepted,
endorsed, negotiated or transferred for consideration;

(b) as to date – that every negotiable instrument
bearing a date was made or drawn on such date; ”

(emphasis supplied)

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Sections 138, 139 and 140 of the NI Act added by
Amending Act No.66 of 1988 read as under:

“138. Dishonour of cheque for insufficiency, etc., of

funds in the account – Where any cheque drawn by a
person 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 the discharge, in whole or

in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount

arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to

have committed an offence and shall, without prejudice
to any other provision of this Act, be punished with
imprisonment for a term which may be extended to two

years, or with fine which may extend to twice the
amount of the cheque, or with both :

Provided that nothing contained in this section

shall apply unless –

(a) the cheque has been presented to the bank
within a period of six months from the date on which it
is drawn or within the period of its validity, whichever
is earlier;

(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice
in writing, to the drawer of the cheque, within thirty

days of the receipt of information by him from the bank
regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the
payment of the said amount of money to the payee or as
the case may be, to the holder in due course of the
cheque within fifteen days of the receipt of the said
notice.

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Explanation – For the purposes of this section,
“debt or other liability” means a legally enforceable
debt or other liability.

139. Presumption in favour of holder – It shall be

presumed, unless the contrary is proved, that the holder
of a cheque received the cheque, of the nature referred
to in section 138, for the discharge, in whole or in part,
of any debt or other liability.

140. Defence which may not be allowed in any
prosecution under section 138 – It shall not be a
defence in a prosecution for an offence under section
138 that the drawer had no reason to believe when he

issued the cheque that the cheque may be dishonoured
on presentment for the reasons stated in that section. ”

(emphasis supplied)

19. Section 142 of NI Act lays down that cognizance can be
taken of an offence punishable under Section 138 of the NI Act only

upon a complaint in writing made by a payee or the holder of due course

of the cheque, that such complaint has to be made within one month of
the date on which the cause of action arose under clause (c) or the

proviso to Section 138, provided that the cognizance may be taken if the
complainant satisfies the Court that he has sufficient cause for not
making a complaint within such period.

20. Section 143(1) of NI Act, relevant for the purposes of the
present controversy, reads as under :-

“143. Power of Court to try cases summarily. – (1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), all offences
under this Chapter shall be tried by a Judicial
Magistrate of the first class or by a Metropolitan

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Magistrate and the provisions of sections 262 to 265
(both inclusive) of the said Code shall, as far as may be,
apply to such trials: ”

As per the proviso to Section 143(1), a sentence of
maximum one year and fine upto Rs.5,000/- can be imposed in a
summary trial, but for imposing any higher sentence or if the Magistrate

considers appropriate for any other reason, the Magistrate may hear the
case otherwise than summarily. Sub-section (2) of Section 143 requires
the Magistrate to conduct the trial from day to day except for reasons to

be recorded in writing. Sub-section (3) of Section 143 further provides

that the trial shall be conducted expeditiously and preferably within six
months from the date of filing of the complaint. Sub-section (3) reads as

under :-

(3) Every trial under this section shall be conducted

as expeditiously as possible and an endeavour shall be
made to conclude the trial within six months from the

date of filing of the complaint.”

(emphasis supplied)

Section 144 of NI Act provides for expeditious mode of
service of summons by permitting such service to be made even by
speed post or courier services. Even if the endorsement by the postal

department or the courier services states that the accused refused to take
delivery of summons, the Court may declare that the summons has been
duly served.

21. Sections 145 and 146 of NI Act read as under :-

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“145. Evidence on affidavit – (1) Notwithstanding
anything contained in the Code of Criminal Procedure,
1973 (2 of 1974), the evidence of the complainant may

be given by him on affidavit and may, subject to all just
exceptions be read in evidence in any enquiry, trial or

other proceeding under the said Code.

(2) The Court may, if it thinks fit, and shall, on
the application of the prosecution or the accused,

summon and examine any person giving evidence on
affidavit as to the facts contained therein.

146. Bank’s slip prima facie evidence of certain
facts. – The Court shall, in respect of every proceeding

under this Chapter, on production of bank’s slip or
memo having thereon the official mark denoting that

the cheque has been dishonoured, presume the fact of
dishonour of such cheque, unless and until such fact is

disproved.”

(emphasis supplied)

22. Time and again the Apex Court has held that the object of

bringing Section 138 on the statute book is to inculcate faith in the
efficacy of banking operations and credibility in transacting business on

negotiable instruments. (See Kusum Ingots & Alloys Ltd vs Pennar
Peterson Securities Ltd, (2002) 2 SCC 745). It has also been held by
the Apex Court that Section 138 of NI Act was enacted to punish those
unscrupulous persons who purported to discharge their liability by

issuing cheques without really intending to do so, which was
demonstrated by the fact that there was no sufficient balance in the
account to discharge the liability. At the same time, the proviso to
Section 138 protects honest drawers whose cheques may have been
dishonoured for the fault of others, or who may have genuinely wanted
to fulfil their promise but on account of inadvertence or negligence

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failed to make necessary arrangements for the payment of the cheque,
the law treats such lapses induced by inadvertence or negligence to be

pardonable, provided the drawer after notice makes amends and pays the
amount within the prescribed period.(See Vinod Shivappa vs Nanda

Belliappa, (2006) 6 SCC 456).

Again in Mosaraf Hossain Khan vs Bhagheeratha Engg.
Ltd., (2006) 3 SCC 658, the Apex Court held that dishonour of a cheque
by the bank causes incalculable loss, injury and inconvenience to the

payee and the entire credibility of the business transactions within and
outside the country suffers a serious setback. Remedy available in a

civil Court is a longdrawn process and an unscrupulous drawer normally

takes various pleas to defeat the genuine claim of the payee.

23. Section 138 was thus introduced in the public interest to

enhance the faith in the efficacy of banking operations of negotiable
instruments. This object can be achieved by punishing the unscrupulous

persons who issue cheques without really intending to discharge their
liability. At the same time, Section 138 provides adequate safeguard by

giving an opportunity to the honest drawer for his lapse induced by
inadvertent or negligence by permitting him to pay the amount within
the prescribed limit.

24. The Law Commission in its Report No. 213 sent on 24th
November 2008, took note of the fact in paragraph 1.5 of the Report that
over 38 lakh cheque bouncing cases were pending in various courts in
the country as on 1st June 2008. The Law Commission specifically
noted as under :-

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“… The number of complaints which are pending in
Bombay Courts (5,91,818 cases pending in subordinate
Courts of State of Maharashtra) seriously cast shadow

on the credibility of our trade, commerce and business.
Immediate steps have to be taken by all concerned to

ensure restoration of the credibility of trade, commerce
and business.”

The Parliament, therefore, enacted Amending Act No.55 of 2002 adding

Sections 143 to 147 in NI Act. The Statement of Objects and Reasons
appended to the Bill leading to the enactment of the said Amending Act
is set out in the decision dated 11th January 2010 of the Apex Court in

M/s Mandvi Co-op Bank Ltd vs Nimesh B Thakore, 2010 ALL MR CRI

599 = (2010) 3 SCC 83. The relevant portions thereof read as under :-

“14. …… the procedure prescribed for the courts to
deal with such matters has been found to be
cumbersome. The courts are unable to dispose of such
cases expeditiously in a time bound manner in view of

the procedure contained in the Act.

2. A large number of cases are reported to be
pending under sections 138 to 142 of the Negotiable
Instruments Act in various courts in the country.

Keeping in view the large number of complaints under
the said Act pending in various courts, a Working Group
was constituted to review section 138 of the Negotiable
Instruments Act, 1881 and make recommendations as to
what changes were needed to effectively achieve the

purpose of that section.

xxxxx xxxxx xxxxx

4. Keeping in view the recommendations of the
Standing Committee on Finance and other
representations, it has been decided to bring out, inter
alia, the following amendments in the Negotiable
Instruments Act, 1881, namely :-

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                      .......           ........           .......

(iv) to prescribe procedure for dispensing with

preliminary evidence of the complainant;

xxxxx xxxxx xxxxx

(vi) to provide for summary trial of the cases under
the Act with a view to speeding up disposal of cases;

               (vii) to (xi)            xxxxx              xxxxx              xxxxx
                            .

5. The proposed amendments in the Act are aimed at
early disposal of cases relating to dishonour of cheques,

enhancing punishment for offenders, introducing
electronic image of a truncated cheque and a cheque in

the electronic form as well as exempting an official
nominee director from prosecution under the Negotiable

Instruments Act, 1881.

6. The Bill seeks to achieve the above objects.”

(emphasis added)

25. The principal question for our consideration is whether
affidavit referred to in sub-section (1) of Section 145 of NI Act would be
sufficient for the Magistrate to issue process under Section 200 of CrPC,

without orally examining the complainant on oath in each and every
case.

26. The important point to be noted is that sub-section (1) of
Section 145 begins with the non-obstante clause, “Notwithstanding
anything contained in the Code of Criminal Procedure, 1973”. It is,
therefore, clear that interpretation of Section 145 cannot be controlled by
Section 200 CrPC. On the contrary, the legislative intent is absolutely
clear that in complaints under Section 138 of NI Act, interpretation of
Section 200 CrPC has to be controlled by Section 145 of NI Act. Sub-

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section (1) of Section 145 specifically provides that the evidence of the
complainant may be given by him on affidavit and, subject to all just

exceptions, may be read in evidence in any enquiry, trial or other
proceeding under the CrPC.

27. It is true that the trial has not yet commenced at the stage

when the Magistrate is to decide whether or not to issue process on the
complainant under Section 138 of NI Act, but sub-section (1) of Section
145 permits the complainant to give on affidavit not merely the evidence

during trial, but also evidence in any enquiry or other proceeding under
CrPC. Obviously, the stage at which the Magistrate considers whether

or not to issue process on complaint under Section 138 of NI Act is

either an enquiry or a proceeding under CrPC other than trial. Sub-
section (1) of Section 145, therefore, is all comprehensive and permits
the complainant to submit on affidavit what he would have otherwise

been required to state before the Magistrate in the course of examination
upon oath under Section 200 of CrPC.

28. The contention of the learned Counsel for the accused is

that sub-section (2) of Section 145 contemplates that on the application
of the accused , the Court shall summon and examine any person giving
evidence on affidavit as to the facts contained therein and that, therefore,

this stage can come only after issuance of process and not before
issuance of process.

29. The argument is thoroughly misconceived. Sub-section (2)
of Section 145 is as comprehensive as sub-section (1) thereof. While it
is true that the question of the accused giving an application for
summoning and examining the complainant would arise after issuance

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of the process and after service of summons on the accused, it is open to
the Magistrate before whom affidavit is tendered by the complainant in

support of his complaint, to summon and examine the complainant as to
the facts contained in the affidavit filed by the complainant in support of

the complaint, because such affidavit is permissible in the enquiry or
other proceeding when the Magistrate is yet to decide whether or not to

issue the process. The Magistrate certainly has the discretion to decide
whether to rely on the affidavit given by the complainant in support of
the complaint and on the documents and issue process on the basis

thereof or to summon and examine the complainant on oath as to the
facts contained in the affidavit. This, however, does not mean that in

each and every case the Magistrate is bound to call the complainant and

examine him on oath before issuing process. The very purpose of
introducing Section 145 on the statute book would be defeated if the
Court over-looks the non-obstante clause with which Section 145 begins

– “Notwithstanding anything contained in the Code of Criminal
Procedure, 1973…”. The Statement of Objects and Reasons appended to

the Bill clearly provides that it was decided to bring out, inter alia, the
following amendments in the Negotiable Instruments Act, 1881, namely,

“(iv) to prescribe procedure for dispensing with preliminary evidence of
the complainant”. The expression “preliminary evidence” obviously
refers to examination of the complainant by the Magistrate before

issuance of the process.

30. The learned counsel for the accused would submit that
evidence would only mean examination in chief or cross-examination or
re-examination as contemplated by Section 137 of the Indian Evidence
Act, 1872. This argument is also misconceived. Section 3 of the Indian
Evidence Act, 1872, defiances “evidence” as under :-

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“Evidence – “Evidence means and includes –

(1) all statements which the Court permits or
requires to be made before it by witnesses, in relation to

matters of fact under inquiry;

such statements are called oral evidence;

(2) all documents including electronic records

produced for the inspection of the Court,
such documents are called documentary evidence.”

The words “Proved”, “Disproved” and “Not proved” are

defined as under :-

“Proved” – A fact is said to be proved when, after

considering the matters before it, the Court either
believes it to exist, or considers its existence so
probable that a prudent man ought, under the
circumstances of the particular case, to act upon the

supposition that it exists.

“Disproved” – A fact is said to be disproved when,
after considering the matters before it, the Court either
believes that it does not exist, or considers its non-
existence so probable that a prudent man ought, under

the circumstances of the particular case, to act upon the
supposition that it does not exist.

“Not proved” – A fact is said not to be proved when it is
neither proved nor disproved.”

31. It is thus clear that “evidence” as defined by the Indian
Evidence Act is not confined to examination in chief, cross-examination
or re-examination of a witness under Section 137. Evidence means and
includes all statements which the Court permits or requires to make
before it in relation to matters of fact under enquiry. What would come

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on record by way of examination upon oath of the complainant or
witnesses under Section 200 of CrPC would as much be evidence as

contemplated by Section 145 of NI Act, as examination in chief, cross-
examination and re-examination of a witness under Section 137 of the

Indian Evidence Act. There is nothing in the provisions of Section 145
or any other section of NI Act to adopt the narrow meaning of the word

“evidence”, as is canvassed by the learned Counsel for the accused.

32. It is, therefore, clear that as per the provisions of Section

145 of NI Act added by Amending Act 55 of 2002 with effect from 6th
February 2003, the statement which the Court would require the

complainant to make before it for the purpose of enabling the Court to

decide whether or not to issue process under Section 200 of CrPC is also
“evidence” as contemplated by sub-section (1) of Section 145 of NI
Act.

33. It is even the case of the accused that, as held by the Apex

Court in Nirmaljeet Singh Hoon vs The State of West Bengal and
another, (1973) (3) SCC 753): (AIR 1972 SC 639) :-

“……. The object of such examination is to
ascertain whether there is a prima facie case against the
person accused of the offence in the complaint and to

prevent the issue of process on complaint which is
either false or vexatious or intended only to harass such
a person. Such examination is provided, therefore, to
find out whether there is or not sufficient ground for
proceeding.”

If, on going through the complaint, the documents and the
affidavit verifying the facts stated in the complaint, the learned

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Magistrate finds that a prima facie case against the accused is made out
and that, prima facie, the complaint is neither false nor vexatious or

intended only to harass the accused person, we see no reason why the
learned Magistrate cannot issue process on the complaint and must insist

upon personal examination of the complainant, particularly when
sections 118, 139 and 146 raise presumptions in favour of the holder of

the cheque (that the cheque was drawn for consideration; that the holder
of the cheque received the cheque, for the discharge, in whole or in part,
of any debt or other liability; that on production of bank’s slip or memo

having thereon the official mark denoting that the cheque has been
dishonoured, presume the fact of dishonour of such cheque) and Section

140 denies the accused the defence (that he had no reason to believe,

when he issued the cheque, that the cheque may be dishonoured on the
presentment for the reasons stated in section 138) and when Sections
143 to 147 are specifically added on the statute book to make the

procedure less cumbersome and to expedite disposal of the case within
six months from the date of filing the complaint.

34. As per the settled principle of interpretation of statute, a

statutory provision is not to be interpreted in such a manner as to yield
absurd results. All that the Magistrate is required to consider while
considering whether or not to issue process on a complaint under

Section 138 of the NI Act is to ascertain whether the complainant has
made out a prima facie case. It would be absurd if, on the basis of the
affidavit of complainant submitted after issuance of process, the accused
can be convicted and sentenced to imprisonment upto one year in a
summary trial, but on the basis of an affidavit in support of the
complain, the Magistrate cannot even say that the complainant has made
out a prima facie case for issuance of process.

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35. After addition of section 145 NI Act in the statute book, it is

open to the Magistrate to issue process on the basis of the contents of the
complaint, the documents in support thereof and the affidavit submitted

by the complainant in support of the complaint. Once the complainant
files an affidavit in support of the complaint before issuance of the

process under Section 200 CrPC, it is thereafter open to the Magistrate,
if he thinks it fit, to call upon the complainant to remain present and to
examine him as to the facts contained in the affidavit submitted by the

complainant in support of his complaint. But then it is a matter of
discretion and the Magistrate is not bound to call upon the complainant

to remain present before the Court and to examine him upon oath for

taking decision whether or not to issue process on the complaint under
Section 138 of NI Act.

CASE LAW

36. Having thus examined the matter on first principles, we
proceed to refer to and rely upon the decision in M/s Mandvi Co-op

Bank Ltd vs Nimesh B Thakore, 2010 ALL MR CRI 599 = (2010) 3
SCC 83 decided on 11th January 2010. The Apex Court considered the
provisions of Section 145 of NI Act in a slightly different context but

held in unmistakable terms as under:-

“16. It may be noted that the provisions of sections
143, 144, 145 and 147 expressly depart from and
override the provisions of the Code of Criminal
Procedure, the main body of adjective law for criminal
trials. The provisions of section 146 similarly depart
from the principles of the Indian Evidence Act. Section
143 makes it possible for the complaints under section

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138 of the Act to be tried in the summary manner,
except, of course, for the relatively small number of
cases where the Magistrate feels that the nature of the

case is such that a sentence of imprisonment for a term
exceeding one year may have to be passed or that it is,

for any other reason, undesirable to try the case
summarily. It is, however, significant that the procedure
of summary trials is adopted under section 143 subject
to the qualification “as far as possible”, thus, leaving

sufficient flexibility so as not to affect the quick flow of
the trial process. …….”

“17. It is not difficult to see that sections 142 to 147
lay down a kind of a special code for the trial of

offences under Chapter XVII of the Negotiable
Instruments Act and 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.” (emphasis supplied)

37. The Apex Court also referred in paragraph 18 of the said

judgment to 213th Report of the Law Commission submitted to the
Union Minister for Law and Justice on November 24, 2008 and noted
the alarming number of complaints under Section 138 of the NI Act in

various Courts including in the subordinate Courts in the State of
Maharashtra (5,91,818 complaints as on 1st June, 2008).

38. The Apex Court further made the following pertinent
observations in paragraph 32 of the said judgment :-

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“…… the High Court was in error in drawing an analogy
between the evidences of the complainant and the
accused in a case of dishonoured cheque. The case of

the complainant in a complaint under section 138 of the
Act would be based largely on documentary evidence.

The accused, on the other hand, in a large number of
cases, may not lead any evidence at all and let the
prosecution stand or fall on its own evidence. In case
the defence does lead any evidence, the nature of its

evidence may not be necessarily documentary; in all
likelihood the defence would lead other kinds of
evidences to rebut the presumption that the issuance of
the cheque was not in the discharge of any debt or
liability. This is the basic difference between the nature

of the complainant’s evidence and the evidence of the
accused in a case of dishonoured cheque. ……”

ig (emphasis supplied)

39. The contention of the learned counsel for the accused that
the Amending Act of 2002 only intended to expedite the stage of trial

after issuance of process, without expediting the stage prior to issuance

of process also, cannot be accepted. The very fact that when Parliament
provided for time limit of six months for concluding the trial, it did not
provide that the six months period would begin from the date of issuance

of process. Parliament has specifically provided that endeavor shall be
made to conclude the trial within six months from the filing of the
complaint. Thus, having regard to the language of all the provisions

added by the Amending Act of 2002 and the reasons in the Statement of
Objects and Reasons, it is clear that Parliament had noted that Courts
were unable to dispose of cases under Section 138 of NI Act
expeditiously and in a time bound manner on account of the
cumbersome procedure prescribed under CrPC for the Courts to deal
with such matters. It is thus clear that Parliament added Sections 143 to
147 for making the procedure simpler and gave these provisions over-

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riding effect over CrPC by enacting the the non-obstante clause. The
view that appeals to us makes the procedure simpler and the view which

is being canvassed on behalf of the accused would mean that the
cumbersome procedure would still remain cumbersome.

40. We may now refer to decision of the Apex Court in
National Small Industries Corporation Limited vs State (NCT of Delhi)
and others. (2009) 1 SCC 407 strongly relied upon by the learned

counsel for the accused and particularly paragraphs 15 and 16 of the
judgment in support of the contention that Section 200 of the Code

mandatorily requires examination of the complainant before issuance of

process.

41. Reliance placed on the aforesaid decision is misconceived
for the simple reason that in the above case before the Apex Court, the

Magistrate took cognizance on 4th February 2002 without examining
the complainant and its witnesses under Section 200 of CrPC. The

Amending Act 55 of 2002, however, came into force from 6th
February 2003 and, therefore, in National Small Industries Corporation
Ltd. (supra), the Apex Court was not required to apply the provisions of

Section 145 of NI Act inserted by the Amending Act 55 of 2002. In that
case, the only question the Apex Court examined was, as indicated in
paragraph 13 of the judgment, who should be examined as the
complainant under Section 200 of CrPC, where the complainant is an
incorporeal body. The Court held that when the complainant is a body
corporate, it is the de jure complainant and it must necessarily associate
a human being as de facto complainant to represent the de jure

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complainant in Court proceedings. Usually, where the complainant is an
incorporeal body represented by one of its employees, the employee who

is a public servant is a de facto the complainant and in presenting
complaint, he acts in the discharge of his official duties. Therefore, in

such cases, the exemption under clause (a) of provide to Section 200 of
CrPC will be available. The following observations in paragraph 13 of

the judgment highlight the scope of the controversy which was resolved
by the Apex Court :-

“13. ……. When an offence is committed in regard to a
transaction of the government company, it will be

illogical to say that a complaint regarding such offence,
if made by an employee acting for and on behalf of the
company will have the benefit of exemption under

clause (a) of the proviso to Section 200 of the Code, but
a complaint in regard to very same offence, if made in
the name of the company represented by the said
employee, will not have the benefit of such exemption.

The contention of the second respondent, if accepted,
would mean that whereas a complaint by “the

Development Officer, NSIC” as the complainant can
avail the benefit of exemption, the same complaint by
“NSIC represented by its Development Officer” as the
complainant will not have the benefit of exemption.

Such an absurd distinction is clearly to be avoided.”

42. The learned counsel for the accused also placed heavy

reliance upon decision of the Apex Court in Sabitha Ramamurthy and
another vs R.B.S. Channabasavaradhya. (2007) 1 SCC CRI 621. It is
true that in the said decision Apex Court held that, in terms of Section
200 of the Code of Criminal Procedure, the complainant is bound to
make statement on oath as to how the offence has been committed and
how the accused persons are responsible therefore. However, this case

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also dealt with pre-amendment period i.e. prior to insertion of Section
145 in NI Act.

43. Similarly, reliance placed by learned counsel for the

accused on decision of the Apex Court in Pankajbhai Nagjibhai Patel vs
State of Gujarat and another, AIR 2001 SC 567=(2001) 2 SCC 595,

would not carry the petitioner’s case any further, because in the said
decision also the Apex Court had no occasion to consider the provisions
of Section 145 of NI Act which were added with effect from 6th February

2003 by the Amending Act 55 of 2002.

44.

Reliance placed on the decision of the Apex Court in

Associated Cement Co. Limited vs Keshvanand, (1998) 1 SCC 687, is
also misconceived as in the said decision rendered on 16th December
1997 also the Apex Court could have had no occasion to deal with

Section 145 of the NI Act added with effect from 6th February 2003 by
Amending Act 55 of 2002.

45. The learned counsel for the accused also relied on the

decision of the Karnataka High Court in Smt. B.R. Premakumari vs
Supraja Credit Co-op. Society Ltd., (2010) All MR CRI Journal 151.
The learned Single Judge of the Karnataka High Court appears to have

followed the view of the High Court in an earlier decision that recording
of sworn statements means the statement of the complainant to be
recorded by the Magistrate, not by way of an affidavit and that accepting
the affidavit in the place of sworn statement is deprecated by the said
Court. Since the reported decision does not make any reference to
Section 145 of NI Act, we would be justified in proceeding on the basis
that the earlier decisions of the Karnataka High Court did not deal with a

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case arising after 6th February 2003 when Section 145 of the NI Act
came to be added. For the same reason, reliance placed on a decision of

a Division Bench of the Kerala High Court in N. Harihara Iyer vs State
of Kerala, rendered on 10th December 1999 and reported in 2000 CRI

LJ 1251 would not take the case of the accused any further.

46. As regards the decision of the learned Single Judge of this
Court in Peacock Industries Ltd. and others vs M/s Budhrani Finance
Ltd. and another, 2006 All MR (CRI) 2233, learned counsel for the

accused relied upon the guidelines laid down in the said decision. It is
true that the judgment of the learned Single Judge was rendered after

considering Section 145 of the NI Act. The learned Single Judge

considered two questions. Question (a) was whether sub-section (2) of
Section 145 of the NI Act confers an unfettered right on the complainant
and the accused to apply to the Court seeking direction to give oral

examination in chief of a person giving evidence on affidavit, even in
spite of the facts stated therein and that if such a right is exercised,

whether the Court is obliged to examine such a person inspite of a
mandate of Section 145(1) of the Act. Question (b) was whether Section

145 of the NI Act was applicable to complaints under Section 138 of the
Act pending on the date on which the amendment came into force i.e. 6th
February 2003.

47. It is obvious that since question (b) does not arise in this
case and question (a) has already been completely answered by the Apex
Court in Mandvi Co-op. Bank Limited vs Nimesh B. Thakore. (2010) 3
SCC 83, it is not necessary to discuss the judgment of the learned Single
Judge.

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48. We may also note that the Karnataka High Court in K.
Srinivasa vs Kashinath, (2004) CRI LJ 4566, Kerala High Court in K.

Vasudevan vs State of Kerala, 2005 BGLKS (Doc) 113 decided on 24th
June 2004 and H.D.F.C. vs Anilesh, 2008 (2) Crimes 164 (Ker.) and

Delhi High Court in Radhey Shyam Garg vs Naresh Kumar Gupta,
2008 Crimes 4 570, decided on 9th May 2008 and in Basab Ghosh vs

M/s Outlook Publishing (India) Pvt. Ltd., CDJ 2010 DHC 693, have
taken the same view which has appealed to us.

JUDGMENTS UNDER CONSIDERATION

49.

The learned counsel for the accused, however, submits that

the Division Bench in Maharaja Developers and another vs Udaysing
s/o Pratapsinghrao Bhonsle and another. 2007 ALL MR (CRI) 1339,
vide paragraph 127 has held as under :-

“27. From the above discussion, we are of the

considered view that the non-obstante clause in Section
142 or 145 of the N.I. Act does not override the
provisions of Section 200 of Cr.P.C. and it is mandatory

for the Magistrate to examine the complainant who has
filed the same under Section 138 of the N.I. Act though
with an affirmation as regards truthfulness of the
contents of the complainant. It, therefore, follows that
the Magistrate is obliged and duty bound to examine

upon oath the complainant and his witnesses before
issuance of process under Section 204 of Cr.P.C.
though there is a solemn affirmation at the foot of the
complaint by the complainant.”

50. With respect, we are unable to concur with the view of the
Division Bench in Maharaja Developers case (supra).

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51. The Division Bench has not at all referred to the legislative
object of the amendment particularly as set out in the Statement of

Objects and Reasons. The Division Bench proceeded on the footing that
Section 200 CrPC continues to control the inquiry or trial of an offence

punishable under Section 138 of NI Act, without discussing the over-
riding effect given by Parliament to Section 145 of the NI Act by

providing the non-obstante clause “Notwithstanding anything contained
in the Code of Criminal Procedure”.

52. The Division Bench posed the following question, in
paragraph 16 of the judgment :-

“16. In order to ascertain whether it is mandatory for
the Magistrate to examine the complainant in a
complaint under Section 138 of the N.I. Act with
affirmation as regards truthfulness of the facts
mentioned in the complaint before issuance of process

under Section 200 of Cr.P.C. it is necessary to examine
whether the provisions of Sections 142 and 145 of the

N.I. Act which is special enactment dispenses with the
said requirement of Section 200 of Cr.P.C.”

(emphasis supplied)

53. It is settled legal position that ordinarily the provisions of a
subsequently enacted special legislation with a non-obstante clause

would prevail over the provisions of a previously enacted general law.

The Division Bench, however, relied upon reasoning of the Apex Court
in Pankajbhai Nagjibhai Patel Vs. State of Gujarat and another (2001) 2
SCC 595, interpreting the scope of Section 142 of NI Act vis-à-vis
Section 200 Cr PC. With respect to the Division Bench, the following
important aspects were not noticed in the decision in Maharaja
Developer’s case:-

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      (i)         The controversy on Pankajbhai Nagjibhai Patel's case was




                                                                             

about powers of the Judicial Magistrate, First Class, to impose a
sentence of fine exceeding Rs.5,000/- the ceiling of fine having been

fixed by Section 29 Cr PC. The Apex Court held that section 142 did
not expand the powers of the Magistrate but imposed restrictions on his

powers and therefore, notwithstanding the non-obstante clause with
which Section 142 begins, the Magistrate did not have powers to impose
a sentence of fine exceeding Rs.5,000/-.

Parliament, however, did not accept the above view

(Section 138 added on the statute book alongwith section 142 in 1988

already empowered the Magistrate of the First Class to pass sentence of
fine which may extend to twice the amount of the cheque, and/or with
sentence of imprisonment upto one year) and by Amending Act No.55 of

2002, added Section 143 and expressly provided in the proviso to
Section 143 that it will be lawful for the Magistrate to pass a sentence of

fine for an amount exceeding five thousand rupees even in a summary
trial under Sections 262 to 265 Cr PC. It is only in the matter of passing

a sentence of imprisonment that Parliament provided a ceiling of one
year in a summary trial, though empowering the Magistrate to pass
sentence of imprisonment upto two years.

(ii) Even otherwise the Division Bench also did not appreciate
that while Section 142 added in the NI Act in the year 1988 placed
restrictions on powers of the Court to issue process under Section 200 Cr
PC, it was by subsequent amendment made in 2002 (w.e.f. 6th February,
2003) that Parliament added Section 145 to enlarge the powers of the
Court hearing complaints under Section 138 NI Act by making the

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procedure less cumbersome and particularly dispensing with the stage
of preliminary evidence (i.e. examination of complainant under Section

200 CrPC) as expressly indicated in the Statement of Objects and
Reasons for the Amending Act 55 of 2002. With respect, the legislative

object clearly evident in the non-obstante clause in Section 145 (to
dispense with the stage of preliminary evidence i.e. requirement of

personal examination of the complainant in Section 200 CrPC) has been
frustrated by the view taken by the Division Bench that the said
requirement in Section 200 CrPC continued notwithstanding the non-

obstante clause in Section 145 of NI Act, which is a subsequently
enacted special enactment.

54. The Division Bench referred to the decisions of the Apex
Court and other Courts which were dealing with cases when Section 145
of the NI Act was not brought on the statute book. The Division Bench

did not at all consider the celebrated “Mischief Rule” of interpretation,
which we have applied in the foregoing discussion and which reads as

under :

“1st – What was the law before making of the Act,

2nd – What was the mischief and defect for which the
previous law did not provide.

3rd – What remedy the Parliament had resolved and
appointed to cure the disease of the
commonwealth, and

4th – The true reason of the remedy”

(Principles of Statutory Interpretation by Justice G.P.
Singh, 11th Edition 2008).

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55. For the elaborate reasons given in paragraphs 19 onwards,
therefore, we over-rule the decision of the Division Bench in Maharaja

Developers case (supra).

56. When it was brought to notice of the Division Bench in
Maharaja Developers case (supra) that the procedure of Magistrate

personally examining the complainant on oath before issuing process
will take considerable time, the Division Bench was of the view that this
procedure would not take much time, if the verification statement of the

complainant is recorded on the same day on which the complaint is filed
or on the following day when the matter is fixed. No where did the

judgment refer to the number of complaints being filed or to huge

pendency of complaints under Section 138 of NI Act before the
Magistrates in the State of Maharashtra and particularly in the
Metropolitan city of Greater Mumbai. As per figures furnished by the

learned Chief Metropolitan Magistrate, the inflow of complaints under
Section 138 in Greater Mumbai is as under :-

                 Year                      Cases Instituted





                 2008                      1,28,012
                 2009                      1,29,985
                 2010                       59,689
                 (Upto 30th November)

49,412 matters are still pending before 32 Metropolitan Magistrates
Courts at the stage of examining the complainant before issuance of
process, in view of the law laid down in the aforesaid decision of
Division Bench. Pendency of Section 138 complaints in Greater
Mumbai has come down to 2,97,487 as on 30th November 2010 partly on
account of success of Lok Adalats and filing substantially going down.

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57. As regards decision of the learned Single Judge of this

Court in K.K. Enterprises vs M/s Nirmal Udyog Office, 2010 of ALL
MR (CRI) 825, rendered on 6th November 2009, the said decision

merely follows the Division Bench judgment in Maharaja Developers
vs Udaysing s/o Pratapsinghrao Bhonsle, 2007 of All MR (CRI) 1339 =

2007 CRI. LJ 2207. Since, we have over-ruled the above Division
Bench decision, we have no hesitation in over-ruling the said decision of
the learned Single Judge as well. We also disapprove of the observations

of the learned Single Judge deprecating the practice of complainant
filing affidavit in support of the complaint under Section 138 of NI Act

in a pre-conceived format. We see no reason why the affidavit in a

format based upon the ingredients of the offence under Section 138 of
NI Act should be frowned upon, when the complaint read with the
affidavit in support thereof and the documents produced with the

complaint constitute sufficient material for the learned Magistrate to
determine whether the complainant has made out a prima facie case.

58. As regards the submission of learned counsel for the

accused about alleged harassment to accused who have resigned as
directors of an accused company, we are of the view that ordinarily
when such directors produce documentary evidence to show that the

resignation was electronically communicated to the Registrar of
Companies in the prescribed form before the date of the cheque in
question, the Magistrate would grant such directors exemption for
personal appearance and exemption for giving bond as a matter of
course for the complaint in respect of the particular cheque.

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      CONCLUSIONS




                                                                            

59. In view of the above discussion, our conclusions are as
under :

(i) For the purpose of issuing process under Section 200 of the
Code of Criminal Procedure, 1973, 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 under Section 138 of the Negotiable Instruments

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.

(ii) We are also of the view that there is nothing wrong in the
complainant under Section 138 of the Negotiable
Instruments Act, 1881 filing the affidavit in support of the
complaint in a format indicating all the essential facts

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satisfying the ingredients of Section 138 of the Negotiable
Instruments Act, 1881 for the purpose of enabling the

Magistrate to decide whether or not to issue process on the
complaint under Section 138 of the Negotiable Instruments

Act, 1881.

(iii) The decision of a Division Bench of this Court in Maharaja
Developers and another vs Udaysing P Bhonsale and
another, 2007 ALLMR (CRI) 1339 = 2007 Crl LJ 2207

and the decision of a learned Single Judge of this Court in
Amarnath Baijnath Gupta and another vs Mohini Organics

Pvt. Ltd. and another, 2009 ALL MR (CRI) 184 = 2009 Crl

LJ 995 are hereby over-ruled.

60. Criminal Writ Petition No.2523 of 2010 is dismissed.

61. A copy of this judgment shall be circulated amongst all the

Metropolitan Magistrates in the city of Greater Mumbai and all the
Judicial Magistrates in the States of Maharashtra and Goa and also in the

Union Territories of Daman, Diu, Dadra & Nagar Haveli.

CHIEF JUSTICE

V. K. KANADE, J.

SMT. R.P. SONDURBALDOTA, J.

uday/judgments2010/fb-criwp2523-10

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