TaxTMI 
TaxTMI 
2026 (7) TMI 1928
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....d on 13th March 2026. On 16th March 2026, when the matter was called out Advocate Ms. Neha G. Deshpande appeared and undertook to file Vakalatnama on behalf of the Respondent No. 1 on or before 27th March 2026. As the Vakalatnama was not received and filed within stipulated time, this Court by order dated 7th April 2026, in order to grant an opportunity to the Respondent No. 1 to appear, adjourned the matter to 30th April 2026. 3. On 30th April 2026, none appeared for the Respondent No. 1. The matter was heard and adjourned to 7th May 2026 for further consideration. On 7th May 2026 once again the Respondent No. 1 chose not to appear. 4. By an Order dated 5th January 2017, this Court was pleased to stay the proceeding before the learned Judicial Magistrate, First Class, Devrukh, Ratnagiri. Considering the fact that (i) the Petition is of the year 2016, (ii) the Respondent No. 1 though served has chosen not to appear in the matter and/or (iii) the lawyer for the Respondent No. 1, who despite of the undertaking to file Vakalatnama could not do so due to not receiving instructions, the hearing of the matter was proceeded with. 5. The question which arises in the aforesaid Peti....
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....ion 138 can be issued only at the instance of a "payee" or a "holder in due course" as is contemplated under the provisions of N.I. Act. That, Respondent No. 1 cannot be termed as a "payee" and or a "holder in due course" and for that reason, the proceedings under Section 138 of N.I. Act were not maintainable. 7.3. The Respondent No. 1 could not have initiated the proceedings under Section 138, as the original cheques were issued in the name of her husband and admittedly, it is not pleaded in the complaints or in the notices that the cheques were endorsed for valuable consideration. In view of the aforesaid facts, the complaints as filed ought not to have been entertained. 7.4. It was open for Respondent No. 1 to initiate civil proceedings under the law, as advised for recovery of the said amount, as the legal heir of the late Mr. Ashok Rao. That, even for claiming the recovery of the said amount, it would have been necessary for the Respondent No. 1 to have the heirship certificate or a succession certificate or a probate, as the case may be, to establish her relationship and right with Mr. Ashok Rao for being a original payee. 7.5. There is no order from the competent Ci....
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....e to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction. Section 9: "Holder in due course". - "Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. Section 138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid f....
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....if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. 13. Section 138 provides for dishonor of cheque for insufficiency, etc., of funds in the account. It is provided that, where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both. Clause (a) of the proviso to Section 138 provides that, nothing in the section would apply unless the cheque has been....
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....t was dishonoured for want of funds in the account of the accused. The complainant has thereafter issued notice to the accused within stipulated period and demanded the cheque amount and the notice is served on accused on the date 19.5.2016 and thereafter, accused has failed to pay cheque amount to complainant within stipulated time. So, complainant has made out prima facie case against accused for the offence p/u/s. 138 of Negotiable Instruments Act, 1881. Hence I pass the following order:- -:ORDER:- Issue process against accused Sagar Raghunath Fatkare, R/o.Guravwadi road, Middle Lane, Devrukh, Tal. Sangmeshwar, Dist.Ratnagiri for the offence p/u/s. 138 of Negotiable Instruments Act on P.F. r/o. Sd/- Devrukh (S.N. Sarde) J.M.F.C., Devrukh" Date : 21/07/2016 That, in S.C.C. Nos. 164 of 2016 and 165 of 2015, same order is passed except the number of cheque i.e. Cheque Nos. 122826 & 002748. 16. A prima facie perusal of the order(s) would indicate that, the order(s) proceed on a completely incorrect premise that, the cheques were issued in favour of the complainant and it is only for want ....
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....lied and satisfied with in letter and spirit. 20. In this regard it would also be necessary to refer to the Judgment of this Court (Aurangabad bench) passed in Vishnupant s/o Chaburao Khaire Vs. Kailas S/o Balbhir Madan in Criminal Writ Petition No. 842 of 2009 dated 25th January 2010 has observed that :- "27. The present Respondent complainant is not the person named in the instrument nor he is a person to whom or to whose order money by the instrument is directed to be paid. Admittedly, there is no endorsement on the cheque by the deceased payee in favour of the Respondent complainant. So, it is not that the amount under the instrument was directed to be paid to him. The holder in due course is defined as the person who for consideration is entitled to the possession of the bearer cheque or payee or endorsee thereof. It is submitted that as a legal representative of the deceased payee father, the respondent complainant, is entitled to possession of the valuable security/movable property left by his deceased father and also to receive or recover the amount thereunder. It is not disputed that the complainant could have filed a civil suit on the basis of the dishonoured ....
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....e person to whom such probate or letters of administration have been granted. Similarly, under Section 381, succession certificate with respect to debts and securities specified therein, is conclusive as against person owing such debts or liable on such securities and affords full indemnity to all persons as regards all payments made or dealings had, with the person to whom the certificate is granted. In other words, only in case the legatee or heir is armed with succession certificate or probate or letters of administration, he would be entitled to give full discharge and indemnity to the drawer of the cheque. Unless he can give such indemnity it cannot be said that he has authority to issue notice and non payment of amount mentioned in the notice within 15 days is an offence. 30. By demise of payee itself, it cannot be said that any of the heirs or legatees get right to issue notice under proviso (b) to Section 138 of the N.I. Act and then lodge a complaint under Section 142 (a) of the said Act as if he automatically enters into the shoes of the deceased payee. 31. When we consider the rights of the heirs or legatees to recover the amount of debt and securities ....
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....lder in due course of the cheque. 14. The law on the subject-matter at hand is no longer res integra and has been well-settled by a series of judgments passed by this court. 15. This court in the case of National Small Industries Corporation Ltd.v. State (NCT of Delhi) [2008 SCC OnLine SC 1710] had an occasion to consider the validity of a complaint under section 138 of the Negotiable Instruments Act and the satisfaction of the requirement under section 142 thereof, as well as to determine as to who could be considered to be the complainant/representative in a case where the complaint is to be filed by an incorporated body. This court held as follows : "The term 'complainant' is not defined under the Code. Section 142 of the Negotiable Instruments Act requires a complaint under section 138 of that Act to be made by the payee (or by the holder in due course). It is thus evident that in a complaint relating to dishonour of a cheque (which has not been endorsed by the payee in favour of anyone), it is the payee alone who can be the complainant. The Negotiable Instruments Act only provides that dishonour of a cheque would be an offence and the manner....
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....er proceeded to file the complaint(s) under Section 138 of N.I. Act, neither is the Respondent No. 1 the "payee" or nor is there any endorsement indicating that the Respondent No. 1 is "holder in due course". 23. In view of the aforesaid facts and circumstances, the Respondent No. 1 could not have initiated the proceedings under Section 138 of the N.I. Act. The Respondent No. 1 ought to have approached the civil court seeking appropriate declaration making her entitle to comply with the provisions of N.I. Act, so as to enable her to file and prosecute the proceedings under Section 138 of N.I. Act. 24. The inherent powers under Section 482 of the Code of Criminal Procedure are to be exercised with care and caution and the judicial discretion has to be exercised in a fair judicious manner and in cases which warrant exercise the invocation of the inherent powers to either prevent the abuse of process of law or in the interest of justice. 25. The Hon'ble Supreme Court in the case of State of Haryana & Ors. Vs.Bhajan Lal & Ors. 1992 Supp (1) SCC 335, while enumerating the powers under Section 482 of the Indian Penal Code and Article 226 of the Constitution of India, in Paragrap....