TaxTMI 
TaxTMI 
2005 (2) TMI 885
X X X X Extracts X X X X
X X X X Extracts X X X X
....e proceedings under Section 138 of the Negotiable Instruments Act, 1881 (for short, "the Act"). Therefore, we propose to decide these petitions by a common judgment. 2. These petitions raise following two issues, which are required to be determined: (i) Whether the complaint under Section 138 of the Act, according to the legislative mandate, requires to be adjudicated expeditiously and in any event, within six months from the date of the service of summons or warrants on the accused? (ii) Whether, in spite of mandate of Section 145(1) of the Act, the Court is obliged to examine the complainant even in respect of matters which have been stated on affidavit? 3. Now, we would deal with basic facts and issues involved in individual petitions. Criminal Writ Petition No. 1228 of 2004: 4. The petitioner Company approached this Court against the order of the learned Sessions Judge delivered in Criminal Revision Application No. 713 of 2003 on 28th November, 2003 in proceedings emanated from Section 138 of the Act. The learned Metropolitan Magistrate, Mumbai, by his order dated 1st August, 2003, arrived at the conclusion that the amendment, more particularly in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly the same, therefore, we would like to decide these petitions by this common judgment. 8. PIL No. 151 of 2004 relates to cases pertaining to Section 138 of the Act. In this case, a criminal complaint was filed under Section 138 of the Act against the accused, who issued a cheque for Rs. 3,15,300/for discharge of legal liability on 14th July, 2003. The said cheque was dishonoured with the remark: "Refer to drawer". The demand notice was sent, but the accused refused to pay the outstanding amount. In these circumstances, the petitioner was compelled to file a criminal complaint under Section 138 of the Act. 9. The petitioner's complaint was verified on 20th September, 2003 and the process was issued by the Metropolitan Magistrate returnable after six months on 20th March, 2004. The petitioner has filed an application for proponing the date, which was rejected after hearing the parties. The petitioner in this petition has made serious grievance of undue delay which occurs in disposal of complaints under Section 138 of the Act by the Metropolitan Magistrates. According to the petitioner, normally, there are only one or two hearings of these cases in the entire year and cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... contained in this section shall apply unless- (a) the 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; (b) the payee or the holder in due course of the cheque, as the case may be, 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.-For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability." 16. Section 140 deals with defence which may not be allowed in any prosecution under Section 138. Section 138 deals with offences by companies. Sections 142 deals with cognizance of offences. Sections 138 to 142 have been incorporated in the Act as a result of strong public opini....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lace and thereafter give suggestions by which delay in disposal of these complaints can be curtailed. Following are the usual stages of the complaint: (i) Filing of complaint under Section 138 of the Act with Metropolitan Magistrate (MM) / Additional Metropolitan Magistrate (AMM); (ii) The Metropolitan Magistrate (incharge) verifies the complaint and marks the same to the concerned MM or AMM for further proceeding; (iii) Stage of issuance or declining to issue the process; (iv) Recording of the statement of the Complainant and other witnesses and their cross examination; (v) Fixing the date for hearing of arguments of the Counsel for the Complainant and accused; (vi) Orders for summoning of the accused; (vii) Appearance of the accused and other necessary formalities regarding release of the accused on bail be completed; (viii) Hearing of application, if moved, for recalling the summoning order and passing order; (ix) Asking the accused regarding his guilt or otherwise by a notice under Section 251 of the Criminal Procedure Code; (x) On his pleading not guilty, to again examine the complainant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of issuance of cheques in commercial transactions have been eroded to a large extent. 28. Undoubtedly, dishonoured of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee, and the entire credibility of the business transaction within and outside the country suffers a serious set back. The Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment, specifically incorporated the provisions of Sections 138 to 142 of the Act. An unscrupulous drawer normally takes various pleas to defeat the genuine transaction and claim of the payee. 29.Experience has shown that the criminal prosecution under the provisions of Sections 417 and 420, Indian Penal Code, have not proved efficacious to bring home the guilt of the drawer accused . In this background, these new provisions have been enacted. The object and intention of incorporating these provisions were to lend greater acceptability and credibility to the business transactions and to establish that the cheques are a trustworthy substitute for cash payment. The other object and inherent intention of enacting the said provisions is clear, viz., that the Legis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and reasons clause of the bill which introduced the Amending Act would show that the new Chapter was incorporated specifically to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers. It is obviously to achieve the above objective that provisions have been incorporated in the Chapter creating a new offence in case where a cheque bounces when presented for payment and conferring a new criminal remedy on the affected party, namely, the payee or holder in due course of the dishonoured cheque in addition to the existing civil remedy." 34. Their Lordships of the Supreme Court in Electronic Trade and Technology Development Corporation Ltd. v. Indian Technologist and Engineers, 1996CriLJ1692, have observed that the object of bringing Section 138 of the Act on the statute appears to be to inculcate faith in the efficacy of the banking operations and credibility in transacting business on negotiable instruments. The fact tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents (Amendment and Miscellaneous Provisions) Act, 2002, as crystallised, is as under: The said provisions in the Negotiable Instruments Act, 1881, viz., Sections 138 to 142 in Chapter XVII, have been found deficient in dealing with dishonoured of cheques. Not only the punishment provided in the Act has proved to be inadequate, the procedure prescribed for the Courts to deal with such matters has been found to be cumbersome. The Courts are unable to dispose of such cases expeditiously in a time bound manner, in view of the procedure contained in the Act. The proposed amendments in the Act are made for early disposal of cases relating to dishonoured of cheques, enhancing punishment for offenders, introducing electronic image of a truncated cheque and a cheque in the electronic form as well as exempting an official nominee director from prosecution under the Act. 38. Subsection (1) of Section 145 gives complete freedom to the complainant either to give his evidence by way of affidavit or by way of oral evidence. If this is made on affidavit, the same has to be accepted and such affidavit is required to be kept on record by the Court. The second part of subsection (1) prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cer is not able to dispose of the complaint within six months, then, the concerned judicial officer must submit a report to the concerned Sessions Judge, indicating the reasons which led to delay in disposal of the complaint. The report submitted by the concerned judicial officer shall be taken into consideration while evaluating the performance of the concerned judicial officer. (d) Every judicial officer must ensure that at least four cases in a month are disposed of by reasoned judgments. (e) The trial of these complaint cases under Section 138 of the Act be continued from day to day until its conclusion. (f) The complainant must ensure that the legislative intention is carried out in dealing with complaints under Section 138 of the Act. (g) The Registrar General is directed to monitor that directions given by the Court are scrupulously followed. A comprehensive quarterly report be submitted to this Court indicating whether directions of this Court are followed. 41. All these petitions are accordingly disposed of. Rule is partly made absolute in Criminal Writ Petition No. 1228 of 2004. All intervention applications stand disposed of. 42.....