Case Laws on Dishonour of cheque under the Negotiable Instruments Act

DISHONOUR OF CHEQUE – CASE LAWS

RELEVANT SECTIONS

Section 7 – Payer and Payee; Section 8 – Holder; Section 9 – Holder in due-course; Section 15 – Indorsement; Section 16 – Indorsement ‘in blank’, ‘in full’; Section 18 – in case of difference amount stated in word shall be taken; Section 56 – Indorsement for part of sum due.

Section 138 to 148 – Procedure in case of dishonour of cheque.

Section 25 of The Payment and Settlement Systems Act, 2007 – in case of Electronic Clearance System procedure is same as in NI Act. Section 31 talks about compounding of the offence under ECS.

INDEX

Filing/Pre-summoning Stage – Cases 1 to 39

Post-Summoning Stage – Cases 40 to 45

Trial Stage – Cases 46 to 53

Final Stage – Cases 54 to 66

Sentencing Stage – Cases 67 to 69

Miscellaneous Stage – Cases 70 to 71

CITATIONS

·      Filing/ Pre-summoning Stage Cases

1.         A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC 790 : 2013 SCC OnLine SC 839 at page 803 [Full Bench, reference]

POA holder can file, PSE, personal knowledge of POA, due knowledge…

Five point of reference were framed –

21.1. Whether a power-of-attorney holder can sign and file a complaint petition on behalf of the complainant?/Whether the eligibility criteria prescribed by Section 142(a) of the NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque?

33.1. Filing of complaint petition under Section 138 of the NI Act through power of attorney is perfectly legal and competent.

21.2. Whether a power-of-attorney holder can be verified on oath under Section 200 of the Code?

33.2. The power-of-attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint. However, the power-of-attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.

21.3. Whether specific averments as to the knowledge of the power-of-attorney holder in the impugned transaction must be explicitly asserted in the complaint?

33.3. It is required by the complainant to make specific assertion as to the knowledge of the power-of-attorney holder in the said transaction explicitly in the complaint and the power-of-attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case.

21.4. If the power-of-attorney holder fails to assert explicitly his knowledge in the complaint then can the power-of-attorney holder verify the complaint on oath on such presumption of knowledge?

33.4. In the light of Section 145 of the NI Act, 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 NI Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the NI Act.

21.5. Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the NI Act which was introduced by an amendment in the year 2002?

33.5. The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.

2.         Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. & Ors.; (2000) 2 SCC 745

Complaint u/S. 138 NI Act not maintainable if before the offence, the company is declared sick by BIFR under SICA.

3.         Rajat Pharmachem Ltd & Ors. v. State Trading Corporation of India Ltd; 24.07.2009 – Delhi High Court

Offence is made out even when the return memo states “account frozen”

4.         Vinita S. Rao v. Essen Corporate Services (P) Ltd., (2015) 1 SCC 527 : (2015) 1 SCC (Cri) 726 : (2015) 1 SCC (Civ) 558 : 2014 SCC OnLine SC 731 at page 530 [Division Bench]

Complainant need not file a separate pre-summoning evidence by way of affidavit in addition to that filed by the power of attorney holder. Complainant can also at the trial stage be a witness and need not examine the power of attorney holder.

5.         Prakash Jewellers vs A.K. Jewellers; 99 (2002) DLT 244

S.138 does not specify any mode of service of demand notice

6.         BSI Ltd. v. Gift Holdings (P) Ltd., (2000) 2 SCC 737 : 2000 SCC (Cri) 538 at page 743 [Division Bench]

Maintainability of proceeding against SICK Company

If the offence under section 138 is committed before the commencement of proceedings under Section 22(1) of SICA, the proceeding shall continue.

7.         M.L. Gupta & Anr. vs. CEAT Financial Services Ltd, 2016 [Division Bench]

Complaint filed after winding up Order, is not maintainable.

8.         M/s Sri Krishna Agencies v. State of A.P.& Anr.; 11.11.2008 – Supreme Court

Arbitration Agreement, does not bar complaint under the NI Act

9.         Sunil Gupta v. State & Anr.; 27.07.2018 – Delhi High Court

There is presumption of holder in due course. He can file a complaint even without specifying that how the cheque came to be endorsed.

10.      Munoth Investment Ltd. v. Puttukola Properties Ltd. & Anr.; (2001) 6 SCC 582

Limitation for issuance of notice from the date of receipt of information of dishonour and not the date of dishonour

11.      Indra Kumar Patodia & Anr. vs Reliance Inds. Ltd & Ors., 2012

Complaint without signature is maintainable since the provisions only provides for complaint in writing

12.      Surender Sanganeria v. Ramesh Rijhumal & Ors.; 15.12.2009 -Supreme Court

Complaint must plead the facts of delivery of demand notice

13.      Kamlesh Kumar v. State of Bihar, (2014) 2 SCC 424 : (2014) 2 SCC (Civ) 83 : (2014) 1 SCC (Cri) 839 : 2013 SCC OnLine SC 1090 at page 431 [Division Bench]

Notice not sent in 15 days, cannot be condoned

11. It is thus clear that period of limitation is not to be counted from the date when the cheque in question was presented in the first instance on 25-10-2008 or the legal notice was issued on 27-10-2008, inasmuch as the cheque was presented again on 10-11-2008. For the purposes of limitation, insofar as the legal notice is concerned, it is to be served within 30 days of the receipt of information by the drawee from the bank regarding the return of the cheque as unpaid. Therefore, after the cheque is returned unpaid, notice has to be issued within 30 days of the receipt of information in this behalf. That is the period of limitation provided for issuance of legal notice calling upon the drawer of the cheque to make the payment. After the sending of this notice 15 days' time is to be given to the noticee, from the date of receipt of the said notice to make the payment, if that is already not done. If the noticee fails to make the payment, the offence can be said to have been committed and in that event the cause of action for filing the complaint would accrue to the complainant and he is given one month's time from the date of cause of action to file the complaint.

14.      MSR Leathers v. S. Palaniappan, (2013) 1 SCC 177 : (2013) 1 SCC (Civ) 424 : (2013) 2 SCC (Cri) 458 : 2012 SCC OnLine SC 791 at page 188 [Full Bench]

Re-presenting cheque is legal

15.      B. Surendra Rao v. State of Kerala & Ors.; Crl. MC No. 3289/2015; Kerala HC Single Judge Bench 20.05.2019

If the legal demand notice does not specify the nature of debt, it is not defective notice

16.      Charashni Kumar Talwani v. Malhotra Poultries, 2013 SCC OnLine P&H 26656 : (2014) 3 BC 135 : 2014 Cri LJ 2908 : (2014) 1 RCR (Cri) 233 : (2014) 1 RCR (Civil) 282 : (2014) 2 CCC 284 at page 143 [Single Judge Bench]

More than 3 cheque in single case is maintainable, if arising from single transaction

17.      Dinesh B. Chokshi v. Rahul Vasudeo Bhatt, 2012 SCC OnLine Bom 1585 – Bombay High Court

Issuance of a cheque in repayment of a time barred debt amounts to a written promise to pay the said debt within the meaning of section 25(3) of the Indian Contract Act, 1872 and by itself, create any legally enforceable debt or other liability as contemplated by section 138 of the Negotiable Instruments Act, 1881

18.      Yogendra Pratap Singh v. Savitri Pandey, (2014) 10 SCC 713 : 2014 SCC OnLine SC 744 at page 729 [Full Bench, reference]

Premature Complainant before 15 days of notice period; accrual of cause of action is on expiry of 15 days of receipt of notice period

…38. Rather, the view taken by this Court in Sarav Investment & Financial Consultancy [Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund, (2007) 14 SCC 753 : (2009) 1 SCC (Cri) 935] wherein this Court held that service of notice in terms of Section 138 proviso (b) of the NI Act was a part of the cause of action for lodging the complaint and communication to the accused about the fact of dishonouring of the cheque and calling upon to pay the amount within 15 days was imperative in character, commends itself to us. As noticed by us earlier, 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. We approve the decision of this Court in Sarav Investment & Financial Consultancy [Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund, (2007) 14 SCC 753 : (2009) 1 SCC (Cri) 935] and also the judgments of the High Courts which have taken the view following this judgment that the complaint under Section 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 the law and criminal proceedings initiated on such complaint are liable to be quashed.

…

41. Section 142 of the NI Act prescribes the mode and so also the time within which a complaint for an offence under Section 138 of the NI Act can be filed. A complaint made under Section 138 by the payee or the holder in due course of the cheque has to be in writing and needs to be made within one month from the date on which the cause of action has arisen under clause (c) of the proviso to Section 138. The period of one month under Section 142(b) begins from the date on which the cause of action has arisen under clause (c) of the proviso to Section 138. However, if the complainant satisfies the court that he had sufficient cause for not making a complaint within the prescribed period of one month, a complaint may be taken by the court after the prescribed period. Now, since our answer to Question (i) is in the negative, we observe that the 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. This direction shall be deemed to be applicable to all such pending cases where the complaint does not proceed further in view of our answer to Question (i). As we have already held that a complaint filed before the expiry of 15 days from the date of receipt of notice issued under clause (c) of the proviso to Section 138 is not maintainable, the complainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the court of sufficient cause. Question (ii) is answered accordingly.

19.      A.V. Murthy v. B.S. Nagabasavanna, (2002) 2 SCC 642 at page 643 [Division Bench]

Section 25(3) Indian Contract Act, 1872- cheque in lieu of time barred debt is maintainable

If the cheque was drawn in discharge of any debt or liability payable under wagering contract, the debt would not be recoverable.

20.      Lalit Kumar Sharma v. State of U.P., (2008) 5 SCC 638 : (2008) 2 SCC (Cri) 682 at page 642 [Division Bench]

Cheque issued in Compromise and if complaint still pending, does not create a new cause of action

14. Evidently, therefore, the second cheque was issued in terms of the compromise. It did not create a new liability. As the compromise did not fructify, the same cannot be said to have been issued towards payment of debt.

21.      HDFC Bank Limited v. Amit Kumar Singh, 2009 SCC OnLine Del 1559 : (2009) 160 DLT 478 : (2010) 3 AIR Kant R (NOC 298) 120 at page 488 [Single Judge, Delhi High Court]

Affidavit of personal verification of address of accused

26.          What is happening is that without the complainant being put to any trouble in finding out the correct address of the complainant, the burden is shifted to the court. Our Magistrates are stuck with several such complaints which they are unable to dismiss and are yet unable to proceed with because the accused has not been served. This was perhaps not the intention of the legislature when it introduced penal provisions into the NI Act. While on the one hand a penal statute should be strictly construed, at the same time the construction to be placed on the statue, and in particular Section 138 (b) and (c) should be that which advances the cause of justice keeping in view the object of the provision. The construction that commends itself to be adopted is that the Court must at the pre-summoning stage insist on the complainant showing to it some proof of delivery of notice in the form of the returned cover with the endorsement, or an internet generated delivery report or a delivery certificate stating inter alia that the drawer refused or has left or is not available. Anything short of this it would be unsafe for the Court to accept and proceed on a presumption of deemed service in terms of Section 27 GC Act.

32. To recapitulate, a complainant in a case under Section 138, NI Act has at the pre-summoning stage to satisfy the learned MM that the legal notice in terms of the Section 138(b), NI Act was in fact “served” on the drawer of the dishonored cheque. If some proof of delivery, or an internet generated or postal delivery report or a signed acknowledgement due card of the drawer, or the unserved cover with the postal endorsement is produced before the learned MM, it will be in the discretion of the learned MM to form an opinion if a presumption of service should be drawn. If the complainant chooses to file an affidavit, the deponent should state that he either went personally and found that the accused was residing at the address or is able to produce some postal certificate or an endorsement by a courier service agency that the accused is in fact residing at the address and yet refusing to accept the notice. If the affidavit merely states that the accused is residing at the address without giving any further documentary proof in support thereof such an affidavit cannot be accepted as satisfying the requirement of Section 138(b) read with Section 138(c) of the NI Act.

22.      C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555 : (2007) 3 SCC (Cri) 236 at page 564 [Full Bench, reference]

Presumption of service of summons; pay within 15 days of summons

14. 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. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a 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. (Vide Jagdish Singh v. Natthu Singh [(1992) 1 SCC 647 : AIR 1992 SC 1604] ; State of M.P. v. Hiralal [(1996) 7 SCC 523] and V. Raja Kumari v. P. Subbarama Naidu [(2004) 8 SCC 774 : 2005 SCC (Cri) 393] .) It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 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.

…

17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. 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 under Section 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 under Section 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 GC Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran case [(1999) 7 SCC 510 : 1999 SCC (Cri) 1284] if the “giving of notice” in the context of Clause (b) of the proviso was the same as the “receipt of notice” a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.

23.      S.R. Sukumar v. S. Sunaad Raghuram, (2015) 9 SCC 609 : 2015 SCC OnLine SC 594 at page 620 [Division Bench]

Cognizance meaning explained; amendment of complaint before taking cognizance

9. Mere presentation of the complaint and receipt of the same in the court does not mean that the Magistrate has taken cognizance of the offence. In Narsingh Das Tapadia v. Goverdhan Das Partani [(2000) 7 SCC 183 : 2000 SCC (Cri) 1326 : AIR 2000 SC 2946] it was held that the mere presentation of a complaint cannot be held to mean that the Magistrate has taken the cognizance.

…

19. What is discernible from U.P. Pollution Control Board case [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] is that an easily curable legal infirmity could be cured by means of a formal application for amendment. If the amendment sought to be made relates to a simple infirmity which is curable by means of a formal amendment and by allowing such amendment, no prejudice could be caused to the other side, notwithstanding the fact that there is no enabling provision in the Code for entertaining such amendment, the court may permit such an amendment to be made. On the contrary, if the amendment sought to be made in the complaint does not relate either to a curable infirmity or the same cannot be corrected by a formal amendment or if there is likelihood of prejudice to the other side, then the court shall not allow such amendment in the complaint.

24.      Kirshna Texport & Capital Markets Ltd. v. Ila A. Agrawal, (2015) 8 SCC 28 : (2015) 3 SCC (Civ) 742 : 2015 SCC OnLine SC 426 at page 37 [Division Bench]

Notice of Company is notice to directors, vicarious liability

25.      DSC Ltd.  V. Dada Jeetu Buildcon Pvt. Ltd.; 2018 SCC OnLine Del 12383 : (2018) 254 DLT 284 [Single Judge Bench; 16.11.2018]

Notice to Managing Director is notice to Company

26.      Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380 : 2000 SCC (Cri) 414 at page 384 [Division Bench]

Incidental amount claimed, but cheque amount stated is valid notice; para 8

27.      Malook Chand Agroils Ltd. v. Prakash Industries Ltd., 2004 SCC OnLine Del 657 : (2005) 27 AIC 534 : (2005) 1 ALD (Cri) (NOC 70) 45 at page 538 [Single Judge Bench]

Incidental amount claimed, but cheque amount stated is valid notice

28.      Rahul Builders v. Arihant Fertilizers & Chemicals, (2008) 2 SCC 321 : (2008) 1 SCC (Cri) 703 at page 322 [Division Bench]

Cheque amount not claimed, invalid notice

29.      M/s Alliance Infrastructure Project Pvt. Ltd. and Ors. v. Vinay Mittal; 2010 SCC OnLine Del 182 [Single Judge Bench; 18.01.2010]

Failure to acknowledge part payment made, 138 not made out.

30.      N.M. NABEESA v. State of Kerala & Ors. Crl.M.C. No. 3799, 3801, 3804, 3827, 3832, 3843, 3844, 3847, 3852 of 2018 [Kerala HC Single Judge Bench, 06.02.2019]

Sec.138 Complainant not maintainable against Trust, its neither a person, nor association of person, relied on Pratibha Pratisthan & Ors. v. Manager, Canara Bank & Ors.; (2017) 3 SCC 712

31.      B. Sunitha vs. State of Telengana, Criminal Appeal no. 2068 of 2017 [Division Bench SC, 05.12.2017]

Lawyer's Claim for Fee Based On Percentage Of The Decretal Amount Cannot Be The Basis Of A Complaint Under Section 138 NI Act

32.      Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd., (2002) 7 SCC 655 : 2003 SCC (Cri) 151 at page 65. [Division Bench]

Partners liable if involved in function of the firm

5. In short the partner of a firm is liable to be convicted for an offence committed by the firm if he was in charge of and was responsible to the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of the partner concerned.

33.      Associated Cement Co. Ltd. v. Keshvanand, (1998) 1 SCC 687 : 1998 SCC (Cri) 475 at page 695 [Division Bench]

Complaint by company through proper authorization; on mere non-appearance of complainant, the accused not to be acquitted if the attendance was not required on the particular date

17. Reading the section in its entirety would reveal that two constraints are imposed on the court for exercising the power under the section. The first is, if the court thinks that in a situation it is proper to adjourn the hearing then the Magistrate shall not acquit the accused. The second is, when the Magistrate considers that personal attendance of the complainant is not necessary on that day the Magistrate has the power to dispense with his attendance and proceed with the case. When the court notices that the complainant is absent on a particular day the court must consider whether personal attendance of the complainant is essential on that day for the progress of the case and also whether the situation does not justify the case being adjourned to another date due to any other reason. If the situation does not justify the case being adjourned the court is free to dismiss the complaint and acquit the accused. But if the presence of the complainant on that day was quite unnecessary then resorting to the step of axing down the complaint may not be a proper exercise of the power envisaged in the section. The discretion must therefore be exercised judicially and fairly without impairing the cause of administration of criminal justice….

23. The above scheme of the new Code makes it clear that complainant must be a corporeal person who is capable of making physical presence in the court. Its corollary is that even if a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court and it is that natural person who is looked upon, for all practical purposes, to be the complainant in the case. In other words, 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 former in court proceedings.

34.      M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd., (2002) 1 SCC 234 : 2002 SCC (Cri) 121 at page 239 [Division Bench]

Company can appoint proper representative even at later stage, even when complaint filed without authorization, the same can be rectified at later stage. Onus is on accused to disprove existence of any liability

35.      Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 : 2001 SCC (Cri) 174 at page 10 [Division Bench]

Prosecution against Company, even if no one appears for company but impleading of company as accused is necessary

21. We, therefore, hold that even if the prosecution proceedings against the Company were not taken or could not be continued, it is no bar for proceeding against the other persons falling within the purview of sub-sections (1) and (2) of Section 141 of the Act. In the light of the aforesaid view we do not consider it necessary to deal with the remaining question whether winding-up order of a company would render the company non-existent.

36.      Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 2 SCC (Cri) 1113 : (2010) 1 SCC (Civ) 677 at page 336 [Division Bench]

Specific averments against the Director is required

13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.

37.      V. Ravikanth v. State of Andhra Pradesh; 2020 SCC OnLine AP 4

Notice be issued to respondent before condonation of delay application is allowed

38.      BSI Ltd. and Anr. v. Gift Holdings Pvt Ltd and Anr.; 2000 SCC (Cri) 538

Unregistered Partnership firm can file complaint under section 138 NI Act

39.      S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 : 2005 SCC (Cri) 1975 at page 103 [Full Bench]

Specific averment against each Director, But Managing Director, Joint Managing Director are liable and also the signatory of the cheque

19. In view of the above discussion, our answers to the questions posed in the reference are as under:

 (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

 (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

 (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.

Ø Post Cognizance Stage Cases

40.      Nitin Gupta v. M/s. Aakash Metal Industrial; 4.11.2019 – Delhi High Court

Non-framing of formal notice under section 251 not fatal if the substance of accusation has been sufficiently explained

41.      Amol Shripal Sheth v. Hari Om Trading Co., 2012 SCC OnLine Bom 1466 : (2014) 6 Mah LJ 222 : (2013) 3 AIR Bom R 820 : 2013 Cri LJ (NOC 451) 163 : (2013) 2 BC 1 at page 228

Amendment of complaint; Sec.319 in NI Act cases

16. The aforesaid provisions of Criminal Procedure Code show that if the Magistrate takes cognizance of the offence, he needs to ascertain as to who has committed the offence. In the case like present one, the complainant may not be in a position to get the correct name of the accused. A tight schedule of time limit created by the provisions of N.I. Act also needs to be kept in mind in such a case. Due to such tight schedule of time limit, which is mandatory in nature, in many cases the complainant may not be able to get the complete and correct name of the responsible persons for dishonour of cheque at the time of filing of the complaint. So in view of these circumstances and the aforesaid provisions of Criminal Procedure Code, the Magistrate can take cognizance of the offence and he may issue process even against the persons whose name is not correctly described by the complainant. If after appearance of accused, the defence taken like in the present case is there, the Magistrate needs to ascertain as to whether there is doubt about the identity of the person described by the complainant in the complaint and as to whether the person who appeared as accused is the same or not. That can be done even during trial. If the accused points out the defects in the name given in the complaint, but he is not in a position to show that he is a different person, he cannot take benefit of such defects. There is no provision in Criminal Procedure Code providing for dismissal of the complaint due to such defect. Complaint can be returned only under section 201 of Criminal Procedure Code, if the Magistrate finds that he is not competent to take cognizance of such a case. So, if there is no doubt about the identity of the accused described in the title and in the body of the complaint, such person cannot get acquittal by taking such defence. For such defence, the complaint also cannot be dismissed under section 203 of Criminal Procedure Code. The burden to establish the identity of accused and involvement of the accused in the crime is always on the prosecution and the opportunity to establish both the things cannot be taken away from the prosecution, if there is such defect. Thus, in one way, it can be said that the accused does not get any benefit due to such defect. Then, the question arises as to what needs to be done or what can be done in such cases to correct such mistake.

42.      Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324 : 2005 SCC (Cri) 242 at page 330 [Full Bench]

Once plea of accused is recorded, no provision to discharge

17. As observed by us in Adalat Prasad case [(2004) 7 SCC 338 : 2004 SCC (Cri) 1927 : (2004) 7 Scale 137] the only remedy available to an aggrieved accused to challenge an order in an interlocutory stage is the extraordinary remedy under Section 482 of the Code and not by way of an application to recall the summons or to seek discharge which is not contemplated in the trial of a summons case.

43.      Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 : 2004 SCC (Cri) 1927 at page 343 [Full Bench]

Once cognizance is taken and summons are issued, only remedy is Section 482 CrPC

15. It is true that if a Magistrate takes cognizance of an offence, issues process without there being any allegation against the accused or any material implicating the accused or in contravention of provisions of Sections 200 and 202, the order of the Magistrate may be vitiated, but then the relief an aggrieved accused can obtain at that stage is not by invoking Section 203 of the Code because the Criminal Procedure Code does not contemplate a review of an order. Hence in the absence of any review power or inherent power with the subordinate criminal courts, the remedy lies in invoking Section 482 of the Code.

44.      Shree Lalit Fabrics Pvt. Ltd. And vs Linkers Associates Ltd. And Ors - 62 (1996) DLT 507

Clubbing of cases – for cutting time taken and litigation expenses, all complaint arising out of same transaction can be clubbed and statement, evidence, etc. be recorded in one case, however the copy of the said recordings has to be made part of each case

45.      ICDS Ltd. v. Beena Shabeer, (2002) 6 SCC 426 : 2002 SCC (Cri) 1342 at page 430 [Division Bench]

Sec.138 is attracted cheque issued for other liability, including as guarantor.

11. The issue as regards the coextensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. “Any cheque” and “other liability” are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. Any contra-interpretation would defeat the intent of the legislature. The High Court, it seems, got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the true intent and purport of Section 138 of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus do not lend any assistance to the contentions raised by the respondents.

Ø Trial Stage Cases

46.      Meters and Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 : 2017 SCC OnLine SC 1197 : (2018) 1 SCC (Cri) 477 : (2018) 1 SCC (Civ) 405 at page 571 [Division Bench]

Procedure to be followed, account number of complainant, email id of accused even can be called from the Bank

18. From the above discussion the following aspects emerge:

18.1. Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on the accused in view of presumption under Section 139 but the standard of such proof is “preponderance of probabilities”. The same has to be normally tried summarily as per provisions of summary trial under CrPC but with such variation as may be appropriate to proceedings under Chapter XVII of the Act. Thus read, principle of Section 258 CrPC will apply and the court can close the proceedings and discharge the accused on satisfaction that the cheque amount with assessed costs and interest is paid and if there is no reason to proceed with the punitive aspect.

18.2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court.

18.3. Though compounding requires consent of both parties, even in absence of such consent, the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused.

18.4. Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the court has jurisdiction under Section 357(3) CrPC to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 CrPC. With this approach, prison sentence of more than one year may not be required in all cases.

18.5. Since evidence of the complaint can be given on affidavit, subject to the court summoning the person giving affidavit and examining him and the bank's slip being prima facie evidence of the dishonour of cheque, it is unnecessary for the Magistrate to record any further preliminary evidence. Such affidavit evidence can be read as evidence at all stages of trial or other proceedings. The manner of examination of the person giving affidavit can be as per Section 264 CrPC. The scheme is to follow summary procedure except where exercise of power under second proviso to Section 143 becomes necessary, where sentence of one year may have to be awarded and compensation under Section 357(3) is considered inadequate, having regard to the amount of the cheque, the financial capacity and the conduct of the accused or any other circumstances.

19. In view of the above, we hold that where the cheque amount with interest and cost as assessed by the court is paid by a specified date, the court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 CrPC. As already observed, normal rule for trial of cases under Chapter XVII of the Act is to follow the summary procedure and summons trial procedure can be followed where sentence exceeding one year may be necessary taking into account the fact that compensation under Section 357(3) CrPC with sentence of less than one year will not be adequate, having regard to the amount of cheque, conduct of the accused and other circumstances.

47.      Dayawati v. Yogesh Kumar Gosain, 2017 SCC OnLine Del 11032 : (2017) 243 DLT 117 (DB) : (2017) 205 Comp Cas 231 : (2017) 4 BC 492 (DB) : (2017) 4 DLT (Cri) 164 (DB) [Division Bench, reference]

Mediation and procedure thereof – statement on oath, recovered as fine 421 and 2(b)contempt of courts act

48.      Shah Ispat Pvt Ltd v P Mohanraj & Others: 2018 SCC OnLine NCLAT 415

NCLT, Moratorium period, does not bar 138 NI Act

49.      Geeta Marine Services Pvt. Ltd. v. State & Anr.: 2009 (2) Mh.L.J. 410

Document which is admitted under Section 294(3) CrPC can be read in evidence as genuine without formal proof of the said document

50.      Ravi Chopra v. State & Anr.: 2008 SCC OnLine Del 351 : (2008) 102 DRJ 147 : (2008) 3 BC 136 : (2009) 1 ALD (Cri) (NOC 13) 13

When signature is admitted, no need to send to FSL for examination of other details being in different handwriting. Material altercation in negotiable instrument explained.

51.      S.W. Palanitkar v. State of Bihar, (2002) 1 SCC 241 : 2002 SCC (Cri) 129 at page 250 [Division Bench]

Criminal Proceeding maintainable even though the agreement contains Arbitration Clause

22. Looking to the complaint and the grievances made by the complainant therein and having regard to the agreement, it is clear that the dispute and grievances arise out of the said agreement. Clause 29 of the agreement provides for reference to arbitration in case of disputes or controversy between the parties and the said clause is wide enough to cover almost all sorts of disputes arising out of the agreement. As a matter of fact, it is also brought to our notice that the complainant issued a notice dated 3-10-1997 to the appellants invoking this arbitration clause claiming Rs 15 lakhs. It is thereafter the present complaint was filed. For the alleged breach of the agreement in relation to commercial transaction, it is open to Respondent 2 to proceed against the appellants for his redressal for recovery of money by way of damages for the loss caused, if any. Merely because there is an arbitration clause in the agreement, that cannot prevent criminal prosecution against the accused if an act constituting a criminal offence is made out even prima facie.

52.      Ripudaman Singh v. Balkrishna, Criminal Appeal no. 483 of 2019: [Division Bench SC, 13.03.2019]

Cheque Issued in Pursuance of Agreement To Sell-Section 138 Complaint Maintainable

53.      N. Parameswaran Unni v. G. Kannan, (2017) 5 SCC 737 : 2017 SCC OnLine SC 293 at page 741 [Division Bench]

Demand Notice sent at correct address is a presumption of delivery, unless rebutted by the accused

13 [Ed.: Para 13 corrected vide Official Corrigendum No. F-3/Ed.B.J./48/2017 dated 4-9-2017.] . It is clear from Section 27 of the General Clauses Act, 1897 and Section 114 of the Evidence Act, 1872, that 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 stand complied, if notice is sent in the prescribed manner. However, the drawer is at liberty to rebut this presumption.

Ø Final Stage Cases

54.      Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 : (2008) 2 SCC (Cri) 166 at page 62 [Division Bench]

Onus of Proof, presumption and test of proof of innocence

31. The courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.

…

32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.

…

34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is “preponderance of probabilities”. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies.

55.      Goaplast (P) Ltd. v. Chico Ursula D'Souza, (2003) 3 SCC 232 : 2003 SCC (Cri) 603 at page 234 [Division Bench]

Presumptions u/S. 118/139 NI Act must be raised

3. The learned counsel for the appellant has submitted that mere writing of letter to the bank stopping payment of the post-dated cheques does not take the case out of the purview of the Act. He has invited our attention to the object behind the provision contained in Chapter XVII of the Act. For appreciating the issue involved in the present case, it is necessary to refer to the object behind introduction of Chapter XVII containing Sections 138 to 142. This chapter was introduced in the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act 66 of 1988) with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions and in order to promote efficacy of banking operations. With the policy of liberalisation adopted by the country which brought about increase in international trade and commerce, it became necessary to inculcate faith in banking. World trade is carried through banking operations rather than cash transactions. The amendment was intended to create an atmosphere of faith and reliance on banking system. Therefore, while considering the question of applicability of Section 138 of the Act to a situation presented by the facts of the present case, it is necessary to keep the objects of the legislation in mind. If a party is allowed to use a cheque as a mode of deferred payment and the payee of the cheque on the faith that he will get his payment on the due date accepts such deferred payment by way of cheque, he should not normally suffer on account of non-payment. The faith, which the legislature has desired that such instruments should inspire in commercial transactions would be completely lost if parties are as a matter of routine allowed to interdict payment by issuing instruction to banks to stop payment of cheques. In today's world where use of cash in day-to-day life is almost getting extinct and people are using negotiable instruments in commercial transactions and plastic money for their daily needs as consumers, it is all the more necessary that people's faith in such instruments should be strengthened rather than weakened. Provisions contained in Sections 138 to 142 of the Act are intended to discourage people from not honouring their commitments by way of payment through cheques. It is desirable that the court should ban in favour of an interpretation which serves the object of the statute. The penal provisions contained in Sections 138 to 142 of the Act are intended to ensure that obligations undertaken by issuing cheques as a mode of payment are honoured. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. A cheque is a well-recognized mode of payment and post-dated cheques are often used in various transactions in daily life. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. If stoppage of payment of a post-dated cheque is permitted to take the case out of the purview of Section 138 of the Act, it will amount to allowing the party to take advantage of his own wrong.

56.      Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375 : (2012) 4 SCC (Cri) 283 : 2012 SCC OnLine SC 970 at page 390 [Division Bench]

Sec.138 attracted for all reasons

16. The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in Magma case [(1999) 4 SCC 253 : 1999 SCC (Cri) 524] that the 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. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also 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.

[* Various Judgments are available on non-maintainability of complaint under section 138 NI Act if reason for dishonour is account frozen or account blocked, however all are before the above judgment of 2012.

-Vijay Chaudhary v. Gyan Chand Jain (06.05.2008-Delhi High Court)-account blocked

-Standard Chartered Bank & Anr. v. State & Anr. (17.08.2007-Delhi High Court)-account attached by IT Authority

-Onkar Nath Goenka v. Gujarat Lease Finance Ltd. (16.05.2008-Delhi High Court)- account frozen by CBI

-Ashish Parekh v. State of Maharashtra (22.03.2011-Bombay High Court)-account attached by Crime Branch]

57.      K. Subramani v. K. Damodara Naidu, (2015) 1 SCC 99 : 2014 SCC OnLine SC 899 at page 102

Acquittal wherein money advance could not be proved

9. In the present case the complainant and the accused were working as Lecturers in a government college at the relevant time and the alleged loan of Rs 14 lakhs is claimed to have been paid by cash and it is disputed. Both of them were governed by the Government Servants' Conduct Rules which prescribes the mode of lending and borrowing. There is nothing on record to show that the prescribed mode was followed. The source claimed by the complainant is savings from his salary and an amount of Rs 5 lakhs derived by him from sale of Site No. 45 belonging to him. Neither in the complaint nor in the chief-examination of the complainant, is there any averment with regard to the sale price of Site No. 45. The sale deed concerned was also not produced. Though the complainant was an income tax assessee he had admitted in his evidence that he had not shown the sale of Site No. 45 in his income tax return. On the contrary the complainant has admitted in his evidence that in the year 1997 he had obtained a loan of Rs 1,49,205 from LIC. It is pertinent to note that the alleged loan of Rs 14 lakhs is claimed to have been disbursed in the year 1997 to the accused. Further the complainant did not produce bank statement to substantiate his claim. The trial court took into account the testimony of the wife of the complainant in another criminal case arising under Section 138 of the NI Act in which she has stated that the present appellant-accused had not taken any loan from her husband. On a consideration of entire oral and documentary evidence the trial court came to the conclusion that the complainant had no source of income to lend a sum of Rs 14 lakhs to the accused and he failed to prove that there is legally recoverable debt payable by the accused to him.

58.      Sheela Sharma v. Mahendra Pal: CRL.L.P. 559/2015 [Single Judge Bench; 02.08.2016]

No documentary proof, Sec.269SS becomes relevant

59.      Suresh Chandra Goyal VS Amit Singhal: Crl.L.P 708/2014 [Single Judge Bench; 14.05.2015]

Security cheque attracts Sec.138 if the liability falls due on the date of cheque

60.      Basalingappa v. Mudibasapp, Criminal Appeal no.636 of 2019 [Divison Bench SC, 09.04.2019]

Complainant Bound To Explain Financial Capacity When Questioned

61.      Rohitbhai Jivanlal Patel v. State of Gujarat & anr., Criminal Appeal no. 508 of 2019 [Division Bench SC, 15.03.2019]

Complainant Need Not Prove Source of Fund, Once Section 139 Presumption Is Drawn

62.      Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2011) 1 SCC (Cri) 184 : (2010) 4 SCC (Civ) 477 at page 454 [Full Bench]

Extent of proof on parties

28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of “preponderance of probabilities”. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.

63.      N. Harihara Krishnan v. J. Thomas, (2018) 13 SCC 663 : (2018) 4 SCC (Civ) 440 : (2018) 3 SCC (Cri) 826 : 2017 SCC OnLine SC 1017 at page 674 [Division Bench]

Sec. 138 is person specific, complaint must state the name of accused, Sec.319 can be invoked only for sufficient reasons and ingredients of Sec.138 must be satisfied

27. By the nature of the offence under Section 138 of the Act, the first ingredient constituting the offence is the fact that a person drew a cheque. The identity of the drawer of the cheque is necessarily required to be known to the complainant (payee) and needs investigation and would not normally be in dispute unless the person who is alleged to have drawn a cheque disputes that very fact. The other facts required to be proved for securing the punishment of the person who drew a cheque that eventually got dishonoured is that the payee of the cheque did in fact comply with each one of the steps contemplated under Section 138 of the Act before initiating prosecution. Because it is already held by this Court that failure to comply with any one of the steps contemplated under Section 138 would not provide “cause of action for prosecution”. Therefore, in the context of a prosecution under Section 138, the concept of taking cognizance of the offence but not the offender is not appropriate. Unless the complaint contains all the necessary factual allegations constituting each of the ingredients of the offence under Section 138, the Court cannot take cognizance of the offence. Disclosure of the name of the person drawing the cheque is one of the factual allegations which a complaint is required to contain. Otherwise in the absence of any authority of law to investigate the offence under Section 138, there would be no person against whom a court can proceed. There cannot be a prosecution without an accused. The offence under Section 138 is person specific. Therefore, Parliament declared under Section 142 that the provisions dealing with taking cognizance contained in the CrPC should give way to the procedure prescribed under Section 142. Hence the opening of non obstante clause under Section 142. It must also be remembered that Section 142 does not either contemplate a report to the police or authorise the Court taking cognizance to direct the police to investigate into the complaint.

28. The question whether the respondent had sufficient cause for not filing the complaint against Dakshin within the period prescribed under the Act is not examined by either of the courts below. As rightly pointed out, the application, which is the subject-matter of the instant appeal purportedly filed invoking Section 319 CrPC, is only a device by which the respondent seeks to initiate prosecution against Dakshin beyond the period of limitation stipulated under the Act.

64.      Rajesh Agarwal v. State, 2010 SCC OnLine Del 2511 : ILR (2010) 6 Del 610 : (2010) 171 DLT 51 : (2010) 3 MWN (Cri) DCC 13 : (2010) 94 AIC 431 : (2010) 3 CCR 433 : (2011) 2 CCC (SN) 504 at page 616 [Single Judge Bench Delhi HC]

Affidavit of complainant under section 145 can be read at all stages

5. In order to ensure that the cases u/s 138 N.I. Act are tried before the Court of MM/JM in an expeditious manner, Legislature provided for summary trial. Section 145 of N.I. Act provides that evidence of complainant may be given by him by way of affidavit and such affidavit shall be read in evidence in any inquiry, trial or other proceedings in the court. This also makes clear that a complainant is not required to examine himself twice i.e. one after filing the complaint and one after summoning of the accused. The affidavit and the documents filed by the complainant along with complaint for taking cognizance of the offence are good enough to be read in evidence at both the stages i.e. pre-summoning stage and the post summoning stage. The complainant is not required to be recalled and re-examined after summoning of accused unless the MM passes a specific order as to why the complainant is to be recalled. Such an order is to be passed on an application made by the accused or under section 145(2) of N.I. Act suo moto by the Court.

65.      R. Mohan vs A.K. Vijaya Kumar, (2012) 8 SCC 721 [Division Bench]

The order to pay compensation may be enforced by awarding sentence in default.

66.      Johny Wilson v. State of Rajasthan, 1985 SCC OnLine Raj 310 : 1985 RLW 444 : 1985 RLR 784 : (1985) 2 WLN 19 at page 444

Procedure on forfeiture of bonds for appearance

When a bond for appearance in a case of a person is forfeited for breach of a condition, his bond and surety bond shall stand cancelled and such person will not be entitled as of right to be released on bail upon the execution of fresh personal or surety bond. It would be within the, discretion of the court to release him or not to release him upon the execution of fresh personal or surety bond. In case, the court releases him, the fresh security may be demanded from him in accordance with the directions of the original order or the court may order for higher amount

Ø Quantum of Sentence

67.      Ram Deo Chauhan vs State of Assam AIR 2001 SC 2231

Order on sentence can be passed on the same day as that of conviction

68.      Kumaran v. State of Kerala, (2017) 7 SCC 471 : 2017 SCC OnLine SC 545 at page 484 [Division Bench]

Compensation recoverable even after sentence undergone

27. These two judgments make it clear that the deeming fiction of Section 431 CrPC extends not only to Section 421, but also to Section 64 of the Penal Code. This being the case, Section 70 IPC, which is the last in the group of sections dealing with sentence of imprisonment for non-payment of fine must also be included as applying directly to compensation under Section 357(3) as well. The position in law now becomes clear. The deeming provision in Section 431 will apply to Section 421(1) as well, despite the fact that the last part of the proviso to Section 421(1) makes a reference only to an order for payment of expenses or compensation out of a fine, which would necessarily refer only to Section 357(1) and not Section 357(3). Despite this being so, so long as compensation has been directed to be paid, albeit under Section 357(3), Section 431, Section 70 IPC and Section 421(1) proviso would make it clear that by a legal fiction, even though a default sentence has been suffered, yet, compensation would be recoverable in the manner provided under Section 421(1). This would, however, be without the necessity for recording any special reasons. This is because Section 421(1) proviso contains the disjunctive “or” following the recommendation of the Law Commission, that the proviso to old Section 386(1) should not be a bar to the issue of a warrant for levy of fine, even when a sentence of imprisonment for default has been fully undergone. The last part inserted into the proviso to Section 421(1) as a result of this recommendation of the Law Commission is a category by itself which applies to compensation payable out of a fine under Section 357(1) and, by applying the fiction contained in Section 431, to compensation payable under Section 357(3).

69.      V.K. Bansal v. State of Haryana, (2013) 7 SCC 211 : (2013) 3 SCC (Civ) 498 : (2013) 3 SCC (Cri) 282 : 2013 SCC OnLine SC 578 at page 218

Concurrent running of sentence in different complaints arising from single transaction

18. Applying the principle of single transaction referred to above to the above fact situations we are of the view that each one of the loan transactions/financial arrangements was a separate and distinct transaction between the complainant on the one hand and the borrowing company/appellant on the other. If different cheques which are subsequently dishonoured on presentation, are issued by the borrowing company acting through the appellant, the same could be said to be arising out of a single loan transaction so as to justify a direction for concurrent running of the sentences awarded in relation to dishonour of cheques relevant to each such transaction. That being so, the substantive sentence awarded to the appellant in each case relevant to the transactions with each company referred to above ought to run concurrently. We, however, see no reason to extend that concession to transactions in which the borrowing company is different no matter the appellant before us is the promoter/Director of the said other companies also. Similarly, we see no reason to direct running of the sentence concurrently in the case filed by State Bank of Patiala against M/s Sabhyata Plastics and M/s Rahul Plastics which transaction is also independent of any loan or financial assistance between the State Financial Corporation and the borrowing companies. We make it clear that the direction regarding concurrent running of sentence shall be limited to the substantive sentence only. The sentence which the appellant has been directed to undergo in default of payment of fine/compensation shall not be affected by this direction. We do so because the provisions of Section 427 CrPC do not, in our opinion, permit a direction for the concurrent running of the substantive sentences with sentences awarded in default of payment of fine/compensation.

MISCELLANEOUS STAGE

70.      G.J. Raja v. Tejram Surana; 2019 SCC OnLine SC 989

Section 143A is only prospectively applicable and shall apply only in cases when the cause of action arose after 01.09.2018

[Arising of cause of action is an issue. Act says the cause action arises when the drawer fails to make the payment after expiry of 15 days from the receipt of demand notice. In Dashrath Rupsingh Rathod Case (2014) 9 SCC 129, the Hon’ble Supreme Court however held that offence is complete when the cheque is dishonoured]

71.      Surinder Singh Deswal @ Col. S.S. Deswal v. Virender Gandhi; (2019) 8 SCALE 445

Section 148 NI Act shall be applicable retrospectively