TaxTMI 
TaxTMI 
TaxTMI 
2021 (5) TMI 846
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....urt. It is alleged in the complaint that petitioner and the respondent were having friendly relations and the respondent, from time to time, had lent more than two crores and seventy five thousand to the petitioner through different modes, viz. cheques, transfer and cash etc. The petitioner paid part of the said amount and was reluctant to pay the balance amount due to the respondent. The matter was finally settled in the month of October/November 2019 and, after rendition of accounts, a sum of Rs. 82 lacs was found payable by the petitioner to the respondent as outstanding amount. The petitioner discharged part of his liability by making the payment of Rs. 40 Lacs in cash and issued four cheques for an amount of Rs. 32 lacs. The balance amount of Rs. 10 lacs was promised to be paid by the petitioner within some short time. Before the respondent could present the cheques for encashment to the bank, he was requested by the petitioner not to present cheque bearing No. 119942 dated 10.05.2020 for an amount of Rs. 10 lacs for encashment with a promise that petitioner would make the payment of the entire amount once the lockdown imposed by the Government due to COVID-19 was lifted. The ....
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....the respondent and reply thereto sent by the petitioner on 15.10.2020 as also to the contents of the complaint, it is quite evident that the matter involved in the complaint is of civil nature and, therefore, complaint under Section 138 of the NI Act is not maintainable. The taking of cognizance and issuance of process by the trial Court in terms of impugned order dated 30.03.2021 is, thus, vitiated in law. (ii) That the trial Court while passing the impugned order and taking cognizance of the complaint has only passingly referred to the preliminary statements of the complainant and his witness but has not discussed the same to find out as to whether the preliminary statements supports the averments in the complaint or not. (iii) That the demand notice, whereby the respondent, apart from the sum represented by three cheques, has also raised a demand of additional amount of Rs. 20 lacs, totalling Rs. 42 lacs, therefore, the demand notice is not a valid notice in terms of Section 138 NI Act and the very basis of the complaint is thus an invalid notice which renders the complaint filed by the respondent unsustainable in law. (iv) That the petitioner has paid more than what was r....
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.... however, disputes the validity of the demand notice issued by the respondent. It is also not the case of the petitioner that the respondent has not filed the complaint within the stipulated period. In that view of the matter, it can safely be concluded that the complaint filed by the respondent, supported by the relevant documents i.e. three original dishonoured cheques, demand notice and reply to the demand notice given by the petitioner, do make out the ingredients of Section 138 of the N.I.Act. 9. It is also seen that when the complaint was initially presented before the trial Court, on 17.11.2020 the Magistrate took cognizance of the complaint, recorded the preliminary statements of the complainant ( respondent herein) and one witness present along with the complainant and vide its order dated 17.11.2020 issued process for securing presence of the petitioner (accused). It is also true that order dated 17.11.2020 was set aside by the Court of Sessions Judge, Budgam in a revision petition filed by the petitioner. The Revisional Court found that the impugned order was bereft of satisfaction recorded by the Magistrate before issuing the process and that there was defect in taking....
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.... or upon his own knowledge, that such offence has been committed. 15. From the above, it is crystal clear that the stage of taking cognizance of an offence upon receiving a complaint precedes the examination of complainant and his witness under Section 200 Cr.P.C. It is thus incorrect to say that the cognizance of offence upon receiving a complaint of facts constituting such offence is taken only after examination of the complainant and his witness present, if any on oath. The preliminary statement of the complainant and his witness in attendance is recorded only with a view to decide taking further steps in the complaint, like issuance of process for securing the presence of the accused. 16. It has been noticed time and again that generally the Magistrates, before whom the complaint of facts constituting offences are presented, mix up the 'cognizance' and the 'issuance of process'. Generally, the learned Magistrates are of the view that the cognizance of offences is taken not on presentation of the complaint but after recording the preliminary statement of the complainant and his witness, in attendance. This is not the correct position of law. The cognizance in such matters is ....
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....e machinery of the criminal court into motion to seek attendance of the accused before him. As is provided under Section 202, if in the judgment of the Magistrate there is no sufficient ground for proceeding ahead, he shall dismiss the complaint. It is not the case of the petitioner that in the instant case, the preliminary statement of the complainant and his witness in attendance, has not been recorded by the trial court but his plea is that the same has not been discussed nor has any finding been returned by the trial court that the statement of the complainant and his witness substantiates the case set up by the complainant in his complaint. Omission to refer to the preliminary statement of the complainant and his witness would have been fatal in a case where a complaint of facts constituting alleged offences though made in writing is not supported by any documentary evidence. In the instant case, the averments made in the complaint are duly substantiated and fully corroborated by the documentary evidence appended with the complaint viz. three dishonoured original cheques, memo by the bank showing the reasons for dishonour of cheques, demand notice and proof of service of that ....
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....ere is also a claim by way of interest, cost, etc, whether the notice is bad or not would depend on the language of the notice. If in a notice, while giving the break up of the claim, the cheque amount, interest, damages are separably specified, the other such claims for interest, costs, etc would be superfluous and these additional claims would be severable and will not invalidate the notice. If however, in the notice an ommbus demand is made without specifying what was due under the dishonored cheque, notice might fail to meet the legal requirement and may be regarded as bad. Para 7 and 8 of the judgement are relevant which are reproduced as under:- "7. There is no ambiguity or doubt in the language of Section 138. Reading the entire Section as a whole and applying commonsense, from the words, as stated above, it is clear that the legislature intended that in notice under clause (b) to the proviso, the demand has to be made for the cheque amount. According to Dr. Dhawan, the notice of demand should not contain anything more or less than what is due under the cheque. 8. It is well settled principle of law that the notice has to he read as a whole. In the notice, demand has to ....
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.... dishonest or deceptive inducements. There is subtle distinction between mere breach of contract and cheating. The cheating would involve fraudulent inducement and mens rea. In so far as Section 138 NI Act is concerned, the same was introduced in the Negotiable Instruments Act, 1881 with a view to promoting the efficiency of bank operations and to ensure the credibility in transacting business through cheques. Undoubtedly, the law related to NI Act is the law of commercial nature legislated to simplify the acts in transaction and loan making provision of giving sanctity to the instruments of credits which could be deemed to be creditable in money and easily passable from one person to another. Section 138 creates a statutory offence in the matter of dishonour of cheques on the grounds of insufficiency of funds in the account maintained by a person with the banker and that it exceeds the amount arranged to be paid. Generally, in the criminal law, mens rea is an essential component of crime but dishonour of cheque is a criminal offence where there is no need to prove a mens rea. The offence under Section 138 would be made out only if the dishonoured cheque is drawn by the drawer in f....