2021 (5) TMI 846 - HC - Indian Laws

Dishonor of Cheque - application of criminal law in the absence of mens-rea - validity of the demand notice issued by the respondent - HELD THAT - The complaint filed by the respondent, supported by the relevant documents i.e. three original dishonoured cheques, demand notice and reply to the demand notice given by the petitioner, do make out the ingredients of Section 138 of the N.I.Act. It is not the case of the petitioner that the ingredients of Section 138 of the N.I. Act are not made out and, therefore, the impugned order is bad in law and the complaint itself not maintainable. Though Section 138 NI Act penalizes the dishonour of cheque, yet dishonour of cheque by itself is not an offence under Section 138 and to become an offence the ingredients are required to be fulfilled - the stage of taking cognizance of an offence upon receiving a complaint precedes the examination of complainant and his witness under Section 200 Cr.P.C. It is thus incorrect to say that the cognizance of offence upon receiving a complaint of facts constituting such offence is taken only after examination of the complainant and his witness present, if any on oath. The preliminary statement of the complainant and his witness in attendance is recorded only with a view to decide taking further steps in the complaint, like issuance of process for securing the presence of the accused. There is no denying the proposition that in a case involving the dispute purely of a civil nature, the criminal law cannot be set in motion but, it is equally well settled that certain offences like the offences of cheating, criminal breach of trust, criminal misappropriation and offence under section 138 of the NI Act do arise out of the civil transactions and if the ingredients of offence/offences are made out, criminal law too can be set in motion alongside the civil remedy for resolution of the dispute - Generally, in the criminal law, mens rea is an essential component of crime but dishonour of cheque is a criminal offence where there is no need to prove a mens rea. The offence under Section 138 would be made out only if the dishonoured cheque is drawn by the drawer in favour of the drawee for discharge of legally enforceable debt or liability. Essentially, there is element of civil liability between the drawer and drawee of the cheque but if the ingredients of Section 138 are made out, it is a criminal offence to be tried in the manner provided under Section 142 of the NI Act. The conclusion that the complaint filed by the respondent and the impugned summoning order issued by the trial court are fully in consonance with law and do not deserve to be interfered with in exercise of inherent jurisdiction vested in this court by Section 482 of the Cr. P.C. - Petition dismissed.

Summary

Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act (NI Act).
2. Validity of the demand notice issued under Section 138 of the NI Act.
3. Whether the dishonoured cheques were issued towards discharge of any legal debt or liability.
4. The role and procedure followed by the Magistrate in taking cognizance and issuing the process.

Detailed Analysis:

1. Maintainability of the Complaint under Section 138 of the NI Act:
The petitioner argued that the complaint was of a civil nature and hence not maintainable under Section 138 of the NI Act. The court clarified that Section 138 penalizes the dishonour of cheques, but for it to be an offence, certain ingredients must be fulfilled: the cheque must be for a legally enforceable debt, presented within its validity period, returned unpaid due to insufficient funds, and the drawer must fail to make payment within 15 days of receiving a demand notice. The court found that these conditions were met. The petitioner did not dispute the issuance and dishonour of the cheques, the receipt of the demand notice, or the timeliness of the complaint. Thus, the complaint was maintainable.

2. Validity of the Demand Notice:
The petitioner contended that the demand notice was invalid because it included an additional amount beyond the cheque amounts. The court referred to the Supreme Court judgment in Suman Sethi vs Ajay K. Churiwal, which held that a demand notice must be read as a whole, and if the cheque amount is clearly separable from additional claims, the notice is valid. The court found that the demand for ?22 lakhs represented by the three cheques was separable from the additional ?20 lakhs, making the notice valid.

3. Legal Debt or Liability:
The petitioner claimed to have paid more than what was owed, arguing that the dishonoured cheques were not for any legal debt. The court held that this argument could constitute a defence during the trial but was not a ground for quashing the proceedings at the outset. The court emphasized that the complaint and supporting documents made out the ingredients of Section 138, establishing a prima facie case.

4. Role and Procedure of the Magistrate:
The petitioner argued that the Magistrate did not properly consider the preliminary statements of the complainant and his witness before issuing the process. The court explained that taking cognizance under Section 190 Cr.P.C. precedes the examination of the complainant and his witness under Section 200 Cr.P.C. The Magistrate's role is to determine whether the allegations in the complaint are substantiated, which can be supported by documentary evidence. The court found that the trial court had taken cognizance correctly and issued the process based on sufficient material, including the preliminary statements and documentary evidence.

Conclusion:
The court concluded that the complaint and the summoning order were in accordance with the law. The petition was dismissed as it lacked merit, affirming the trial court's decision to proceed with the case under Section 138 of the NI Act.