2023 (8) TMI 241 - HC - Indian Laws

Warrant of arrest set aside in cheque bounce case, mediation to resolve dispute

The court set aside the warrant of arrest against the petitioner in the interest of justice, considering the payment made towards the dishonored cheque ... Offence under Section 138 of the Negotiable Instruments Act - Legally enforceable debt on date of maturity - Notice period for demand under Section 138 - Postponement of issue of process under Section 202 Cr.P.C. - Examination by affidavit under Section 145 of the Negotiable Instruments Act - Warrant of arrest - setting aside where payment has been made - Referral for mediation to District Legal Services AuthorityNotice period for demand under Section 138 - Legally enforceable debt on date of maturity - Whether the complaint under Section 138 NI Act was prima facie maintainable despite payment of the cheque amount by the accused prior to issuance of summons - HELD THAT: - The court examined the chronology and documents placed on record and found that the accused deposited two demand drafts after the cheque was dishonoured but the payments were not made within the statutory notice period. Relying on the principle that for Section 138 to be attracted the cheque must represent a legally enforceable debt on the date of presentation/maturity, the court observed that where payment is made after dishonour and outside the notice period the defence of prior payment is not available to defeat maintainability. On this material the proceedings under Section 138 were held to be prima facie maintainable. [Paras 17, 19]Proceedings under Section 138 NI Act are prima facie maintainable as the payment was not within the notice period.Postponement of issue of process under Section 202 Cr.P.C. - Examination by affidavit under Section 145 of the Negotiable Instruments Act - Whether the learned Magistrate erred in issuing process without postponing the issue of process under Section 202 Cr.P.C. and without examining witnesses on oath - HELD THAT: - The court considered the governing provisions of Sections 200 and 202 Cr.P.C. and the exception created by Section 145 of the NI Act (permitted evidence by affidavit in Section 138 complaints). Having regard to binding Supreme Court precedents which hold that examination on affidavit is permissible for complaints under Section 138 and that strict compliance with Section 202(2) in respect of oath-bound examination of witnesses is dispensed with in such cases, the High Court found the order issuing process on 18.03.2009 to be in accordance with law. The Magistrate's reliance on the complainant's affidavit and documents for satisfaction of sufficiency of grounds was therefore not contrary to legal requirements. [Paras 24, 25, 26, 27, 28]No infirmity in issuance of process; compliance with Section 202 Cr.P.C. as construed with Section 145 NI Act was satisfied.Warrant of arrest - setting aside where payment has been made - Referral for mediation to District Legal Services Authority - Whether the warrant of arrest issued against the petitioner should be set aside and further directions as to mediation given - HELD THAT: - Although the complaint was held prima facie maintainable, the court noted that the cheque amount had been paid by the petitioner. In the interest of justice and having regard to the Supreme Court's emphasis on expeditious disposal of Section 138 complaints and on conciliatory resolution, the High Court exercised revisional jurisdiction to set aside the warrant and directed the trial court to attempt mediation by referring the case to the Secretary of the appropriate District Legal Services Authority, while permitting the criminal proceeding to continue in accordance with law. [Paras 29, 30, 31, 32, 33]Warrant of arrest set aside; matter to proceed and parties to be referred for mediation to District Legal Services Authority.Final Conclusion: Revision allowed: the order issuing warrant of arrest dated 14.11.2018 is set aside; criminal complaint under Section 138 NI Act is prima facie maintainable (payment was not within the notice period) and the trial court is directed to proceed in accordance with law with an effort to settle the dispute through mediation by referring the matter to the District Legal Services Authority. Issues Involved:1. Quashing of the order dated 14.11.2018 and the entire proceeding of complaint case C/13277/2009 under Section 138 of the Negotiable Instruments Act, 1881.2. Compliance with Section 202 of the Cr.P.C.3. Validity of the warrant issued against the petitioner.4. Payment of the alleged debt before the issuance of summons.Summary:Quashing of the Order and Proceedings:The petitioner sought to quash the order dated 14.11.2018 and the entire proceeding of complaint case C/13277/2009 under Section 138 of the Negotiable Instruments Act, 1881. The complaint was initially filed on 18.03.2009, alleging that the petitioner issued a cheque for Rs. 53,110/-, which was dishonored due to 'Insufficient funds.' Despite receiving a demand notice, the petitioner allegedly did not make the payment within the stipulated period, leading to the filing of the complaint.Compliance with Section 202 of the Cr.P.C.:The petitioner contended that the learned Trial Court did not comply with the mandatory provision of Section 202 of the Cr.P.C. when issuing the process, as the petitioner resided outside the jurisdiction of the court. However, the court noted that the proceedings under Section 138 of the NI Act do not strictly require compliance with Section 202 Cr.P.C. as per the Supreme Court's interpretation in relevant cases, including 'Re expeditious trial of cases u/s 138 N.I. Act' and 'Sunil Todi vs The State of Gujarat.'Validity of the Warrant:The petitioner argued that the warrant issued on 14.11.2018 was unjustified as the petitioner had already paid the total cheque amount through two demand drafts before receiving the summons. The court acknowledged that the payment was made before the issuance of the summons but outside the statutory notice period. Therefore, the proceedings under Section 138 NI Act were prima facie maintainable.Payment of Alleged Debt:The petitioner submitted evidence of payment through two demand drafts amounting to Rs. 53,110/-, which was acknowledged by the complainant. The court observed that the payment was made after the notice period but before the summons, indicating a bona fide effort to settle the debt.Conclusion:The court concluded that the order issuing the warrant of arrest against the petitioner should be set aside in the interest of justice, considering the payment of the cheque amount. The complaint case C/13277/2009 is to proceed in accordance with the law, with an effort to settle the dispute through mediation. The revisional application CRR 1021 of 2019 was allowed, and the impugned order dated 14.11.2018 was set aside. All connected applications were disposed of, and the interim order was vacated. The judgment was directed to be sent to the learned Trial Court for necessary compliance.