Section 138 cheque dishonour liability upheld where implied authority, territorial jurisdiction, and statutory presumptions were established.

A complaint under Section 138 of the Negotiable Instruments Act was treated as maintainable when filed by a company's branch manager on implied authority, since no separate written authorisation was required at institution. Territorial jurisdiction was found where the cheque was presented for encashment at the payee bank, and an arbitration clause in the underlying agreement did not bar a criminal prosecution under Section 138. The cheque, loan agreement, dishonour for account closure, statutory notice, and timeline compliance established the ingredients of the offence; once execution and signature were admitted, the presumptions under Sections 118(a) and 139 operated, and the drawer failed to rebut them.

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Issues: (i) Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 was maintainable when filed by the branch manager of a company without separate written authorisation at the time of institution; (ii) whether the criminal court had territorial jurisdiction and whether the arbitration clause barred the prosecution; (iii) whether the cheque was issued in discharge of a legally enforceable debt and whether the statutory ingredients of Section 138 were satisfied.

Issue (i): Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 was maintainable when filed by the branch manager of a company without separate written authorisation at the time of institution.

Analysis: A corporate body must act through a human agency, and the Negotiable Instruments Act, 1881 does not prescribe any mandatory form of express written authorisation for a complaint on behalf of a company. The complainant was the branch manager and was connected with the affairs of the company, which furnished implied authority to initiate the proceedings. The absence of a separate written authorisation at the very inception did not render the complaint void.

Conclusion: The complaint was maintainable, and this issue was decided against the petitioner.

Issue (ii): Whether the criminal court had territorial jurisdiction and whether the arbitration clause barred the prosecution.

Analysis: The cheque was presented for encashment at the payee bank within the jurisdiction of the trial court, which conferred territorial jurisdiction. An arbitration clause in the underlying agreement could not exclude the jurisdiction of a criminal court to try an offence under Section 138 of the Negotiable Instruments Act, 1881. The agreement could not operate to defeat the statutory criminal remedy.

Conclusion: The trial court had territorial jurisdiction, and the arbitration clause did not bar the prosecution; this issue was decided against the petitioner.

Issue (iii): Whether the cheque was issued in discharge of a legally enforceable debt and whether the statutory ingredients of Section 138 were satisfied.

Analysis: The execution of the loan agreement, the issuance of the signed cheque, and the dishonour for account closure were established. Once the cheque and signature were admitted, the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 arose in favour of consideration and liability. The petitioner failed to rebut those presumptions by credible evidence. The court also found due service of statutory notice and compliance with the timeline requirements under Section 138.

Conclusion: The cheque was issued towards a legally enforceable liability, and all ingredients of Section 138 were satisfied; this issue was decided against the petitioner.

Final Conclusion: The conviction and sentence for the offence under Section 138 of the Negotiable Instruments Act, 1881 were affirmed, and the revision was rejected.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, a company may act through its manager on implied authority, and once execution of the cheque is admitted, the statutory presumptions of consideration and liability operate until rebutted by the drawer; a contractual arbitration clause cannot oust criminal jurisdiction.

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