2016 (2) TMI 1140 - HC - Indian Laws

Offence under Section 138 of the Negotiable Instruments Act - non compliance of provisions of Section 202 of Cr.P.C. - mandatory provision to hold a preliminary enquiry contemplated by section 202 Cr.P.C. - Held that - Section 142 of the Negotiable Instrument underlines the procedure for taking cognizance of offences under the Act. Departing from the general rule that the criminal law can be set in motion by any person either by written complaint or oral information, the provision of section 142 of the Act mandates that the complaint under section 138 N.I.Act should be in writing and should be filed and signed by the payee or the holder in due course, as the case may be, before the concerned court. There is thus no scope to refer the case for police investigation or enquiry. The exception engrafted in section 142 serves as a safeguard against false and frivolous complaints and thus eliminates the need to hold a preliminary enquiry contemplated by section 202 Cr.P.C. In the complaints under section 138 NI Act, the Magistrate is not obliged to examine the complainant under section 200 Cr.PC and can rely on affidavit filed along with the complaint. The Magistrate can take cognizance and issue summons if upon scrutinizing the complaint, the affidavit and the documents he is satisfied that prima facie offence has been made out against the accused. Section 143 of the Act empowers the Court to try cases under the Act summarily and thus, reinforces that every trial shall be conducted as expeditiously as possible. Sub-section (3) of Section 143 mandates that the trial would proceed, as far as practicable, on a day-to-day basis and sub-section (4) of the section requires the Magistrate to make the endeavour to conclude the trial within six months from the date of filing of the complaint. Section 144 makes the process of service of summons simpler and cuts down the long time ordinarily consumed in service of summons. whereas Section Section 146 contemplates that bank slip or memo having official mark denoting that the cheque has been dishonoured, shall constitute prima-facie evidence of dishonour of the cheque, unless and until, such fact is disapproved. The legislature has inserted these provisions and has provided a special procedure with an object of expeditious disposal of the cases under section 138 of the Act. The very object of the Act will stand defeated if the enquiry under subsection (1) of section 202(1) of Cr,P.C. is held to be mandatory in complaints under section 138 of N.I.Act.

Summary

Issues Involved:
1. Quashing of the impugned orders dated 24.4.2015.
2. Liability under Section 138 of the Negotiable Instruments Act.
3. Applicability of Section 202 Cr.P.C. to complaints under Section 138 of the N.I. Act.

Issue-wise Detailed Analysis:

1. Quashing of the Impugned Orders Dated 24.4.2015:
The applicant sought to quash the impugned orders dated 24.4.2015, whereby the learned Sessions Judge, Greater Mumbai, dismissed the revision applications for quashing the process against the applicant under Section 138 of the Negotiable Instruments Act. The applicant argued that the cheques were drawn on the account maintained by Jeevandeep Hospital, a proprietorship concern, and not on the applicant's account. The applicant claimed she signed the cheques only as an authorized signatory of Jeevandeep Hospital and was not liable for prosecution. However, the court noted that the applicant and Ketan had applied for and availed the loan in their individual capacity, and the loan account statement was in the applicant's name. The court concluded that the applicant had issued the cheques towards the discharge of her personal liability, and thus, the principles laid down in Bimal Singh were not applicable.

2. Liability Under Section 138 of the Negotiable Instruments Act:
The court examined whether the applicant could be prosecuted under Section 138 of the N.I. Act. It was noted that the applicant was a signatory to the subject cheques drawn on the account of Jeevandeep Hospital. The complaint alleged that the cheques issued by the applicant towards repayment of the medical equipment loan were dishonoured and that the applicant had not paid the amount despite statutory notices. The court referred to the Apex Court's decision in Aparna Seth vs. Sheth Developers, which held that under Section 138 of the N.I. Act, only the drawer of the cheque could be prosecuted. The court found that the applicant had issued the cheques towards the discharge of her personal liability, and thus, the essential ingredients of the offence under Section 138 of the N.I. Act were prima facie disclosed.

3. Applicability of Section 202 Cr.P.C. to Complaints Under Section 138 of the N.I. Act:
The applicant contended that the learned Magistrate issued the process without complying with the mandatory provisions of Section 202 Cr.P.C., which requires an inquiry or investigation before summoning an accused residing beyond the Magistrate's jurisdiction. The court analyzed the relevant provisions of Sections 200 and 202 of the Cr.P.C. and noted that the object of Section 202 is to ensure that innocent persons are not harassed by false complaints. The court referred to various judgments, including Vijay Dhanuka v. Najima Mamtaj, which held that an inquiry or investigation is mandatory before issuing summons against an accused residing beyond the Magistrate's jurisdiction.

However, the court also considered the special provisions of the N.I. Act, including Sections 142 to 147, which provide a special procedure for the trial of offences under the Act. The court noted that Section 145 of the N.I. Act allows the complainant to give evidence by affidavit, and the Magistrate can issue process based on the affidavit and documents without examining the complainant on oath. The court concluded that the provisions of Section 202 Cr.P.C. are not mandatory for complaints under Section 138 of the N.I. Act, as the special procedure under the N.I. Act overrides the general provisions of the Cr.P.C. The court held that the non-compliance with Section 202 Cr.P.C. does not vitiate the issuance of process if there is material to indicate that the Magistrate applied his mind to the complaint and supporting documents.

Conclusion:
The court dismissed the applications, holding that the applicant's liability under Section 138 of the N.I. Act was prima facie established, and the non-compliance with Section 202 Cr.P.C. did not invalidate the issuance of process. The court discharged the rule and upheld the impugned orders dated 24.4.2015.