Cheque dishonour complaints can proceed on prima facie documents; Section 202 CrPC enquiry was not treated as mandatory here.
A cheque-dishonour complaint under the Negotiable Instruments Act may proceed against a person shown as borrower in the loan documents even if the cheques were signed as an authorised signatory of a proprietary concern, where the documents prima facie show personal borrowing and liability to repay. The Court treated the special procedure under Chapter XVII of the Act as governing such complaints and held that non-compliance with Section 202 CrPC did not, on these facts, invalidate issuance of process. The complaint, affidavit and supporting documents were sufficient for the Magistrate to form a prima facie view.
Issues: (i) whether a person who signed cheques as an authorised signatory of a proprietary concern, but who was shown on the loan documents as a borrower, could be prosecuted under Section 138 of the Negotiable Instruments Act, 1881; (ii) whether non-compliance with Section 202 of the Code of Criminal Procedure, 1973 in a complaint under Section 138 of the Negotiable Instruments Act, 1881 vitiated the issuance of process.
Issue (i): whether a person who signed cheques as an authorised signatory of a proprietary concern, but who was shown on the loan documents as a borrower, could be prosecuted under Section 138 of the Negotiable Instruments Act, 1881
Analysis: The complaint, loan application, loan agreement and promissory note showed that the applicant had applied for and availed the loan in an individual capacity and had undertaken liability to repay it. The cheques were issued in discharge of that liability. The circumstance that the account stood in the name of the business concern and that the cheques were signed as authorised signatory did not, on the facts found, negate the applicant's status as the drawer for the purpose of Section 138. The authorities on a mere authorised signatory of a company or distinct juristic entity were held inapplicable because the facts prima facie disclosed personal liability.
Conclusion: The applicant was held liable to be proceeded against under Section 138 of the Negotiable Instruments Act, 1881.
Issue (ii): whether non-compliance with Section 202 of the Code of Criminal Procedure, 1973 in a complaint under Section 138 of the Negotiable Instruments Act, 1881 vitiated the issuance of process
Analysis: The statutory scheme of Chapter XVII of the Negotiable Instruments Act, 1881, especially Sections 142 to 147, was treated as a special procedure intended for speedy disposal of cheque dishonour cases. In complaints under Section 138, the Magistrate may act on the complaint, affidavit and supporting documents, and the enquiry contemplated by Section 202 of the Code of Criminal Procedure, 1973 was held not to be mandatory so as to invalidate process in every case. The Court preferred the view that such complaints are governed by the special mechanism of the Act and that a further enquiry under Section 202 would, on these facts, be unnecessary.
Conclusion: Non-compliance with Section 202 of the Code of Criminal Procedure, 1973 did not vitiate the process issued in the complaints under Section 138 of the Negotiable Instruments Act, 1881.
Final Conclusion: The challenge to the orders issuing process and refusing revision failed, and the applications were dismissed.
Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the Magistrate may issue process on the basis of the complaint, affidavit and supporting documents if a prima facie case is made out, and the enquiry under Section 202 of the Code of Criminal Procedure, 1973 is not invariably mandatory where the special scheme of the Act governs the proceeding.