2011 (9) TMI 918 - SC - Companies Law

Whether the accused is innocent or guilty? Whether conviction of the appellants for the offence under Section 138 of Negotiable Instruments Act, 1881 is hereby set aside?

Summary

Issues Involved:
1. Validity of the conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Application of Section 326 of the Code of Criminal Procedure (Cr. P.C.) in summary trials.
3. Competency of the Magistrate to proceed with the trial based on evidence recorded by a predecessor in summary trials.
4. Impact of procedural irregularities and the applicability of Section 461 and Section 465 of the Cr. P.C.

Issue-wise Detailed Analysis:

1. Validity of the Conviction under Section 138 of the Negotiable Instruments Act, 1881:
The appellants were convicted under Section 138 of the Negotiable Instruments Act, 1881, by the learned Metropolitan Magistrate, which was upheld by the learned Additional City Sessions Judge. However, the High Court set aside the sentence and remanded the matter for passing an appropriate order regarding sentence and compensation. The Supreme Court noted that the conviction was challenged on procedural grounds rather than on the merits of the evidence.

2. Application of Section 326 of the Cr. P.C. in Summary Trials:
Section 326 of the Cr. P.C. allows a succeeding Magistrate to act on evidence recorded by a predecessor, but this does not apply to summary trials as per Section 326(3). The Supreme Court emphasized that the prohibition in Section 326(3) is absolute, meaning that in summary trials, the succeeding Magistrate cannot rely on evidence recorded by the predecessor and must conduct a de novo trial.

3. Competency of the Magistrate to Proceed with the Trial Based on Evidence Recorded by a Predecessor in Summary Trials:
The Supreme Court held that the learned Metropolitan Magistrate's reliance on evidence recorded by his predecessor in a summary trial was not permissible under Section 326(3). The Court reiterated that this procedural misstep vitiated the trial, necessitating a de novo trial. The Court also highlighted that no amount of consent by the parties could confer jurisdiction where it does not exist.

4. Impact of Procedural Irregularities and the Applicability of Section 461 and Section 465 of the Cr. P.C.:
The Supreme Court discussed the implications of procedural irregularities under Section 461, which lists irregularities that vitiate proceedings. The Court found that the trial conducted by the succeeding Magistrate based on the predecessor's recorded evidence was void under Section 461(l). The Court clarified that Section 465, which deals with curing procedural irregularities, does not apply to void proceedings resulting from a lack of jurisdiction. The Court cited precedent, including the Privy Council's decision in Pulukuri Kotayya Vs. Emperor, to support its stance that a trial conducted in a manner not prescribed by the Code is invalid and cannot be cured under Section 465.

Conclusion:
The Supreme Court set aside the High Court's judgment and remanded the matter to the learned Metropolitan Magistrate for a retrial in accordance with the law, emphasizing the need for the appellant to cooperate and the trial to be completed expeditiously. The Court directed that the trial should be completed preferably within five months from the receipt of the writ from the Supreme Court.