TaxTMI 
TaxTMI 
2016 (2) TMI 1140
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....ne Mr. Ketan Raj and Jeevandeep Hospital & Critical Care Centre (hereinafter referred to as Jeevandeep Hospital) for offence under Section 138 of the Negotiable Instruments Act. It is alleged that the applicant and the other two accused were in need of finance and had therefore approached the complainant company with a request to grant medical equipment loan facility. After considering the said request and upon execution of various documents, the complainant company disbursed the loan. 4. The applicant had issued a cheque dated 10.9.2013 for Rs. 97,962/- (subject matter of CC/2995/SS/2013), two cheques dated 1.5.2012 for Rs. 2,13,552 and Rs. 2,03,280/- (subject matter of CC/1348/2012) and a cheque dated 1.5.2012 for Rs. 91218/- (subject matter of CC/1350/2012) in favour of the complainant towards repayment of the loan. The said cheques were dishonoured with remark "account closed". The complainant company issued demand notices and called upon the applicant and the other accused to repay the loan amount. The applicant and the other accused having failed to pay the cheque amount, the complainant company filed the afore stated complaints for offence under Section 138 of the Negotiabl....
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....no.3 Jeevandeep Hospital. The complaint is filed under section 138 N.I.Act with allegations that the cheques issued by the applicant accused towards repayment of medical equipment loan were dishonoured and that the applicant accused had not paid the said amount despite the statutory notices. 9. Relying upon Raman v. Krishna Pharmaceutical Distributors [(1994) CCR 1601 (Madras HC)] and Satish Jayantilal Shah v. Pankaj Mashruwala [1996 CRI.L.UJ. 3099 (Guj.H.C.)], the learned Counsel for the applicant submits that the proprietary concern not being a juristic person cannot be prosecuted. 10. In Raman (supra) and Satish Jayantilal Shah (supra) it has been held that a proprietary concern not being a legal and juristic entity, it cannot initiate any proceedings nor can any proceedings be initiated against it, and it is only the proprietor who can either indict or be indicted. There is no dispute about this settled proposition. It is however to be noted that Ketan Raj and Jeevandeep Hospital have neither challenged the order of issuance of process nor they are parties to these proceedings. The orders of issuance of process are challenged by the applicant herein on the ground that she was....
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....note to pay the loan amount with interest. The complainant has also placed on record the loan account statement, a perusal of which clearly indicates that the said loan account is in the name of the present applicant. 14. It is pertinent to note that in Bimal Singh (supra) the cheques were issued on an account maintained by the company which is a distinct entity. No notice was given to the company and the company was not arrayed as an accused. Under these circumstances, it was held that no process could have been issued against the accused only because he had signed the cheque on behalf of the company as an authorized signatory. 15. In the instant case the applicant had not applied for and availed the loan as an authorized signatory of Jeevandeep Hospital. She had also not signed the demand promissory note as an authorized signatory of Jeevandeep Hospital. On the contrary the records prima facie indicate that the applicant and Ketan had applied for and availed the loan in their individual capacity. Furthermore the applicant had signed the demand promissory note and had thereby agreed to repay the said loan and had accordingly issued the subject cheques towards repayment of the sa....
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....nt and the witnesses- (a) if a public servant acting or purporting to act in the discharge of his official duties or a Court has made the complaint; or (b) if the Magistrate makes over the case for inquiry or trial to another Magistrate under Section 192: Provided further that if the Magistrate makes over the case to another Magistrate under Section 192 after examining the complainant and the witnesses, the latter Magistrate need not re-examine them. 202. Postponement of issue of process: (1) Any Magistrate, on receipt of a complaint of an offence which he is authorised to take cognizance or which has been made over to him under section 192, may, if he thinks fit, 1[and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction]. postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by, a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding: Provided that no such direction for investigation shall be made, - (a) Where it appears to the Magistrate that the ....
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....brought, the Apex Court held that an inquiry or the investigation, as the case may be, is mandatory before summons are issued against the accused living beyond the territorial jurisdiction of the Magistrate. 21. In the case of Chandrakant Tanaji Pawar (supra) this court had set aside the order of issuance of process for offence under Section 494 and 495 r/w. 109 of IPC for not holding an enquiry under Section 202 and had directed the Magistrate to deal with the complaint in accordance with law keeping in mind the provisions of Section 202 of Cr.P.C. 22. It is pertinent to note that in Bansilal S. Kabra v. Global Trade Finance Ltd. [2010 ALL MR (Cri) 3168] this Court (V.M.Kanade, J.) while considering the applicability of the provisions of Section 202 of Cr.P.C. to the complaints filed under Section 138 of the N.I.Act this court has held that the inquiry which has to be made in complaint filed under Section 138 N.I.Act is very limited to certain documents and averments in the complaint. It is held the mandate of Section 202 of Cr.P.C. if made applicable to the complaints filed under Section 138 of N.I.Act would defeat the very purpose behind the enactment of Section 138 of the N.I....
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....er of issuance of process under Section 138 of N.I.Act was set aside and the learned Magistrate was directed to exercise discretion in accordance with the mandate of the provisions of Section 202 of Cr.P.C. 26. In Vimal Powerloom vs. Ravi Agency & Anr. [2014 ALL MR (Cri) 1696], the Magistrate had not complied with the amended provision of Section 202 of Cr.P.C in a complaint under Section 138 of the N.I.Act. The co-ordinate bench of this Court has held as follows : " the various decisions rendered by this Court show that this court has held that the provisions of Section 202 as amended is mandatory in nature. Thus the courts are following the amended provisions in the State. In the case of Oman Bank cited supra, it is laid down that it is mandatory provision and procedure needs to be followed by JMFC. In view of this position of law, this court holds that the order of issue process passed by the JMFC, without following the aforesaid procedure cannot sustain in law. The Magistrate needs to follow the procedure with only object, to ascertain the truth in the allegations made and only prima facie case is required to be made out. The scope of the enquiry under Section 202 of Cr.P.C. ....
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.... and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138." 29. These amended provisions could not achieve the desired result, which necessitated the parliament to make changes in existing provisions and further introduce Sections 143 to 147 by the Negotiable Instruments (Amendment & Miscellaneous Provisions ) Act, 2002, which came into force with effect from 6-2-2003. By this Act, Sections 138, 141, and 142 were amended and Section 143 to 147 were introduced with an aim to ensure expeditious disposal of cases relating to dishonour of cheques, which are found to have clogged the criminal justice system. Further to address the difficulties faced by the payee or the lender of the money in filing the case under Section 138 of the said Act, by the Negotiable In....
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....for such offence on fulfillment of the conditions stipulated in the proviso. The Apex Court in Kusum Ingots & Alloyts v. Pennar Peterson Securities Ltd. & Ar. [(2000) 2 SCC 745] has summed up the essential ingredients of the offence under Section 138 of the N.I.Act as under : (i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability; (ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier; (iii) that cheque is returned by the bank unpaid. either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank; (iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of ....
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....in a summary trial under this Section, it shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount of fine exceeding five thousand rupees: Provided further that when at the commencement of, or in the course of a summary trial under this section, it appears to the Magistrate that the nature of the case is such that a sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Magistrate shall after hearing the parties, record an order to that effect and thereafter recall any witness who may have been examined and proceed to hear or rehear the case in the manner provided by the said Code. (2) The trial of a case under this section shall, so far as practicable consistently with the interest of justice, be continued from day to day until the conclusion, unless the Court finds the adjournment of the trial beyond the following day to be necessary for reasons to be recorded in writing. (3) Every trial under this section shall be conducted as expeditiously as possible and an endeavour shall be made to conclude the trial within six ....
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....y way compromising on the right of the accused for a fair trial." 35. A plain reading of the above provisions clearly indicate that section 142 of the Negotiable Instrument underlines the procedure for taking cognizance of offences under the Act. Departing from the general rule that the criminal law can be set in motion by any person either by written complaint or oral information, the provision of section 142 of the Act mandates that the complaint under section 138 N.I.Act should be in writing and should be filed and signed by the payee or the holder in due course, as the case may be, before the concerned court. There is thus no scope to refer the case for police investigation or enquiry. The exception engrafted in section 142 serves as a safeguard against false and frivolous complaints and thus eliminates the need to hold a preliminary enquiry contemplated by section 202 Cr.P.C. 36. It is also pertinent to note that as a general rule Section 200 mandates examination on oath of the complainant and the witnesses present, if any, and section 202 mandates an enquiry or investigation by the police or by any other person. However, Section 145 with its non-obstante clause dispenses th....
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....sis of the contents of the complaint, the documents in support thereof and the affidavit submitted by the complainant in support of the complaint. Once the complainant files an affidavit in support of the complaint before issuance of the process under Section 200 Cr.P.C, it is thereafter open to the Magistrate, if he thinks it fit, to call upon the complainant to remain present and to examine him as to the facts contained in the affidavit submitted by the complainant in support of his complaint. But then it is a matter of discretion and the Magistrate is not bound to call upon the complainant to remain present before the Court and to examine him upon oath for taking decision whether or not to issue process on the complaint under Section 138 of NI Act." 39. The dictum laid down by the Apex Court in Indian Bank Association (supra) and the Full Bench of this court in Rajesh Chalke (supra) makes it clear that in the complaints under section 138 NI Act, the Magistrate is not obliged to examine the complainant under section 200 Cr.PC and can rely on affidavit filed along with the complaint. The Magistrate can take cognizance and issue summons if upon scrutinizing the complaint, the affi....