2022 (11) TMI 1077 - HC - Indian Laws

Dishonor of Cheque - statutory compliance of conduct of Inquiry under section 202 of IBC or not - HELD THAT - Section 202 of the Code nowhere puts restriction on the Court of taking cognizance without holding an inquiry. The amendment to Section 202 only convey that if accused resides outside the jurisdiction of Magistrate, it is incumbent on the Magistrate to hold inquiry either himself or through Police. Thus, the restriction is on issuance of process under Section 204 and not on taking of cognizance. The Supreme Court in above referred case Suo Moto Criminal Petition (CRL.) No. 2 of 2020 2021 (4) TMI 702 - SUPREME COURT has clarified that during inquiry under Section 202 of the Code evidence of witnesses can be taken on affidavit in terms of Section 145 of the N.I. Act. Thus, there is no requirement to hold separate inquiry nor the Code provides as to in which manner the inquiry has to be conducted. The only requirement of amended Section 202 of the Code is that when the accused is residing at a place beyond the jurisdiction of the Magistrate, either he shall inquire into the case himself or direct an investigation to be made by the Police Officer - filing of affidavit under Section 145 of the N.I. Act can be treated as an evidence and therefore, perusal of affidavit along with documents amounts to holding an inquiry for the purposes to find out whether a case is made out for issuence of process. It is totally a factual aspect to see whether the Magistrate has followed the mandate of conducting inquiry. Though the reasons are required for issuance of process however at this stage it is expected to record the reasons in brief to satisfy about the sufficiency of material to proceed further. Elaborate reasoning is not necessary but order of issuance of process must reflect due application of mind. Thus, it is apparent that the Magistrate has complied the mandatory requirement of Section 202 of the Code of holding inquiry and the impugned orders reflect due application of mind therefore, the challenge raised in this petition is untenable - petition dismissed.

Summary

Issues:
Challenge to order of issuance of process and consequential order passed by Revisional Court; Compliance with Section 202 of the Code of Criminal Procedure.

Analysis:
The petition challenged the order of issuance of process dated 11.08.2017 and the subsequent order by the Revisional Court declining interference in the rejection of the application for discharge by the Magistrate on 13.08.2019. The main contention was the lack of mandatory inquiry under Section 202 of the Code due to the accused residing outside the territorial jurisdiction of the Magistrate. The respondent filed a complaint under Section 138 of the Negotiable Instruments Act for dishonor of a cheque worth Rs.25 lakhs. The Magistrate issued process after personal satisfaction, leading to the petition for discharge and subsequent criminal revision. The Revisional Court held that the inquiry under Section 202 was conducted based on affidavit and documents, making the issuance of process legally sustainable.

The core issue revolved around the statutory compliance of Section 202 of the Code, considering the accused resided outside the jurisdiction where the complaint was filed. Citing precedents like the Sunil Todi case, the Supreme Court clarified the mandatory nature of the inquiry under Section 202 when the accused is beyond the court's jurisdiction. The Court ruled that evidence on affidavit suffices for the inquiry, with the possibility of restricting it to document examination in certain cases.

The judgment analyzed whether the Magistrate fulfilled the necessary requirements, emphasizing that the affidavit was filed before the issuance of process, even though the order did not explicitly mention it. The legality of the affidavit being sworn before a notary public was challenged, but it was deemed acceptable under the Code. The Court also addressed the timing of the affidavit filing concerning the complaint and highlighted that Section 202 does not restrict the court from taking cognizance without a formal inquiry.

Additionally, the judgment discussed the decision-making process for issuing process, noting that while reasons are necessary, elaborate reasoning is not mandatory at the initial stage. The Magistrate's perusal of the affidavit and documents was deemed sufficient to form an opinion on the case's merits, despite the absence of explicit mention of the affidavit in the order. Ultimately, the Court concluded that the Magistrate complied with the mandatory requirements of Section 202, dismissing the challenge raised in the petition for lack of merit.

In conclusion, the judgment upheld the legality of the process issuance and subsequent orders, emphasizing the importance of complying with statutory requirements, especially regarding inquiries under Section 202 of the Code, when the accused resides outside the court's jurisdiction.