2006 (7) TMI 700 - HC - Companies Law

Court Clarifies Right to 'Examine' Under Section 145(2) & Retrospective Application

The court clarified that the right to 'examine' under Section 145(2) includes cross-examination and re-examination but does not mandate oral ... - Issues Involved:1. Interpretation of Section 145(2) of the Negotiable Instruments Act, 1881.2. Retrospective application of the amended provisions of Section 145.3. Rights of the accused to tender evidence on affidavit.4. Procedure for handling objections to documents and evidence.5. Guidelines for trial courts handling cases under Section 138 of the Negotiable Instruments Act.Issue-Wise Analysis:1. Interpretation of Section 145(2) of the Negotiable Instruments Act, 1881:The court considered whether Section 145(2) confers an unfettered right on the complainant and the accused to apply for oral examination-in-chief of a person giving evidence on affidavit. The court held that the right to 'examine' under Section 145(2) includes cross-examination and re-examination but does not mandate oral examination-in-chief if evidence is given by affidavit. The Division Bench in KSL and Industries Ltd. clarified that once the complainant submits an affidavit of examination-in-chief, the accused can request the court to call the complainant for cross-examination.2. Retrospective Application of the Amended Provisions of Section 145:The court addressed whether the provisions of Section 145, as amended by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, apply to complaints under Section 138 pending on the amendment's effective date. The court held that the amended provisions are procedural and thus operate retrospectively. This was supported by the judgment in M/s. Indraprastha Holdings Ltd., which stated that procedural amendments apply to pending cases unless explicitly stated otherwise.3. Rights of the Accused to Tender Evidence on Affidavit:The court examined whether the accused could tender evidence on affidavit under Section 145(1). It was held that while Section 145(1) explicitly allows the complainant to give evidence on affidavit, the accused can also be permitted to do so under Sections 315 and 316 of the Code of Criminal Procedure, provided they make a written request. The court quashed the orders that denied the accused this right and directed that such requests should be allowed unless there are just and reasonable grounds for refusal.4. Procedure for Handling Objections to Documents and Evidence:The court discussed the procedure for handling objections to the admissibility of documents and evidence. It emphasized following the procedure laid down by the Supreme Court in Bipin Shantilal Panchal's case, which mandates that objections should be noted, and the documents marked tentatively as exhibits, with the decision on admissibility deferred to the final judgment. This approach avoids delays and ensures that the trial proceeds without unnecessary interruptions.5. Guidelines for Trial Courts Handling Cases under Section 138 of the Negotiable Instruments Act:The court issued several guidelines to streamline the process and expedite the disposal of cases under Section 138:- Courts should ensure compliance with the directions in KSL and Industries Ltd. and Bipin Shantilal Panchal's case.- Magistrates should scrutinize complaints at the inception to ensure all necessary material facts are present before issuing process.- Complainants should adopt all modes of service of summons as provided in Section 144 of the Act.- Summons should be served at the place where the accused or witness ordinarily resides or carries on business.- Complainants should avoid adding unnecessary parties as accused and making irrelevant averments to prevent delays caused by revisions and writ petitions.- Courts should call upon the accused to admit or deny the genuineness of documents before the complainant files an affidavit under Section 145(1).- Complainants should file relevant and necessary documents with the complaint and avoid unnecessary filings.- The court should allow the accused to tender evidence on affidavit if requested in writing under Section 315 of the Code.Orders Passed:- Applications under Section 145(2) seeking oral examination-in-chief were dismissed.- Objections to the retrospective application of Section 145 were dismissed.- Orders denying the accused the right to tender evidence on affidavit were quashed.- Applications for de-exhibiting documents were to be reconsidered in light of the judgment.The court's comprehensive analysis and guidelines aim to ensure uniformity in procedure, expedite trials, and uphold the rights of both complainants and accused in cases under Section 138 of the Negotiable Instruments Act.