Final Order 1

Order Details: Copy  of Judgment
Pdf Text: 1 C. C. NO. 185/SS/2018
CNR No. : MHMM19-000357-2018
Received On : 11/01/2018
Registered On : 11/01/2018
Decided On : 09/10/2025
Duration :Y-07, M-08, D-28
IN THE COURT OF METROPOLITAN MAGISTRATE, ANDHERI (Court
No. 48), MUMBAI.
( Presided over by Y. P. Pujari )
C.C. No. 185/SS/2018 Exh. 78
Motilal Oswal Financial Services Limited.
Having registered office at
Motilal Oswal Tower,
Rahimtullah Sayani Road,
Prabhadevi, Mumbai – 400 025
Through authorized Representative
Mr. Tushar Kanakrai Ghelani.
Age : 49 years. -- Complainant
Versus
Neelam Maharshi Joshi.
54/G, 3rd Floor, Room No. 25,
Gow Raksha Estate, Fanas Wadi,
S. P. Marg, Mumbai- 400 002. -- Accused
OFFENCE PUNISHABLE UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT
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Appearance:- Adv. Mr. Vinay Vyas for the complainant.
Adv. Mr. Chetan Pawar for the accused.
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JUDGMENT
(Delivered on 09th of October 2025)
The accused is facing trial for an offence punishable under
Section 138 of the Negotiable Instruments Act (Hereinafter referred as
“the Act” for short) for dishonor of a cheque for an amount of Rs.
9,35,413.52/-.
The brief facts of complainant's case are as under:
02. It is averred by the complainant that, complainant
company is duly incorporated under the provisions of Companies Act
1956 and is member of National Stock Exchange of India Ltd. and
Bombay Stock Exchange Ltd. inter-alia trading in securities market.
The complainant has filed present complaint through authorized
representative. The power of attorney and letter of authority are
executed in favour of authorized representative. The accused had
entered into a member client agreement and completed client
registration form with complainant company for commencing the
dealing through complainant company’s Trading Terminal of National
Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd. by
placing orders with the complainant company from time-to-time. The
complainant has allotted a client code number CIX 644. The
complainant further averred that, accused has duly accepted and
retained the numerous contract note and bills issued by the complainant
company. The accused during the course of transactions by placing
orders for trading with National Stock Exchange of India Ltd and
Bombay Stock Exchange Ltd. incurred liability which is due and payable
by accused to complainant company.
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03. Complainant has further submitted that, in discharge of the
aforesaid liability, accused issued a cheque bearing No. 057052 dated
21/01/2015 for an amount of Rs. 9,35,413.52/- drawn on Union Bank
of India. Thereafter, the complainant deposited the above said cheque
for encashment in his bank namely Citi Bank, Mumbai. The same was
returned unpaid from drawee bank with endorsement ‘Funds
Insufficient’. Accordingly, the Citi Bank issued memo dated 09/04/2015.
Thereafter, he contacted the accused and requested to pay cheque
amount but the accused intentionally not paid said amount. Thereafter,
he issued demand notice dated 21/04/2015 to accused. The notice was
duly served on the accused but accused failed to pay cheque amount
within stipulated period. Hence, the complainant constrained to file
present complaint.
04. After recording statement of the complainant and perusing
all documents produced on record, process came to be issued against
the accused for the above offence. In response to summons, the accused
appeared. Particulars of offence recorded below Exh. 17 which were
read over and explained to the accused in vernacular, to which she
pleaded not guilty and claimed to be tried.
05. Accused has conducted the cross-examination of the
complainant in which she has raised following defences:-
a) The complainant has not proved the authorization in
favour of present complainant.
b) Complainant has not proved the transaction.
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c) The cheque was issued for security purpose.
d) The accused is not liable to pay the cheque amount.
06. The statement of accused under Section 313 of the Code of
Criminal Procedure, 1972 (in short 'the Code') was recorded vide Exh.
58.
07. Heard Ld. Advocate Shri. Vinay Vyas for complainant and
Ld. Advocate Shri. Chetan Pawar for accused and also perused and
considered the written notes of argument filed by both parties at Exh.
68 and 69.
08. From perusal of complaint, record and defence of the
accused, following points arise for my determination. I have recorded
my finding and reasons thereon as under:
Sr. No. Points Findings.
1. Does the complainant prove that cheque No.
057052 (Exh. 29) was drawn by accused for
legally recoverable debt or other liability?
Yes.
2.
Does the complainant prove that the said
cheque returned unpaid for the reason
“Exceeds Arrangement”?
Yes.
3.
Does the complainant prove that he had issued
demand notice to the accused within
limitation demanding cheque amount?
Yes.
4.
Does complainant prove that the accused
failed to pay cheque amount to complainant
within statutory limit?
Yes.
Whether the accused has committed an
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5. offence punishable under Section 138 of the
Negotiable Instruments Act ?
Yes.
6. What order? The accused
is convicted.
09. In order to prove the case, the authorized representative of
complainant namely Tushar Kanakrai Ghelani has filed his evidence
affidavit as a (C.W.1) at Exh. 18. Complainant has also filed evidence
affidavit of witness namely Mr. Ajay Shreedhara Menon as a (C.W.2) at
Exh. 41. The complainant has also placed his reliance upon following
documents:
Description of documents Exhibit numbers
Authority letter Exh. 25
Power of attorney Exh. 26
KYC Booklet Exh. 27
Ledger account along with certificate U/s. 65
(B).
Exh. 28
Confirmation letter dated 16/01/2015 Exh. 36
Original cheque Exh. 29
Cheque returned memo Exh. 30
Demand notice Exh. 31
Postal receipt Exh. 32
Returned envelope Exh. 33
Certified true copy of Arbitration award Exh. 34
Letter dated 05/02/2019 along with
Certificate of Registration from SEBI
Exh. 35
Verified copy of minutes of meeting of board
of director dated 26/04/2014
Exh. 43
Certified copy of the extract of the resolution
dated 28/10/2021
Exh. 44
Verified copy of minutes of meeting of board
of director dated 28/10/2021
Exh. 45
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Contract Notes filed at serial no. 1 with list
at Exh. 52 along with Certificate U/s. 65 (B)
of Indian Evidence Act.
Exh. 54 Collectively
Print out of SMS log along with certificate
U/s. 65 (B) of Indian Evidence Act.
Exh. 55
Email log along with certificate U/s. 65 (B)
of Indian Evidence Act.
Exh. 56
REASONS
As to Point No.1:-
10. In order to prove the allegation leveled against the
accused, the authorized representative of complainant has filed his
evidence affidavit as a (C.W.1) at Exh. 18. As per his evidence,
complainant company is duly incorporated under the provisions of
Companies Act 1956 and is a member of National Stock Exchange of
India Ltd. and Bombay Stock Exchange Ltd. inter-alia trading in
securities market. The complainant has filed present complaint through
authorized representative. The power of attorney and letter of authority
are executed in favour of authorized representative. The accused had
entered into a member client agreement and completed client
registration form with complainant company for commencing the
dealing through complainant company’s Trading Terminal of National
Stock Exchange of India Ltd. and Bombay Stock Exchange Ltd. by
placing orders with the complainant company from time-to-time. The
complainant has allotted a client code number CIX 644. The
complainant further averred that, accused has duly accepted and
retained the numerous contract note and bills issued by the complainant
company. The accused during the course of transactions by placing
orders for trading with National Stock Exchange of India Ltd and
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Bombay Stock Exchange Ltd. incurred liability which is due and payable
by accused to complainant company.
11. It has further come in his evidence that, in discharge of the
aforesaid liability, accused issued a cheque bearing No. 057052 dated
21/01/2015 for an amount of Rs. 9,35,413.52/- drawn on Union Bank
of India. Thereafter, the complainant deposited the above said cheque
for encashment in his bank namely Citi Bank, Mumbai. The same was
returned unpaid from drawee bank with endorsement ‘Exceed
Arrangements’.
12. The accused has conducted the cross-examination of the
complainant. In cross-examination, the accused has raised defences
that,
a) The complainant has not proved the authorization in
favour of present complainant.
b) Complainant has not proved the transaction.
c) The cheque was issued for security purpose.
d) The accused is not liable to pay the cheque amount.
13. Before adverting towards the merit of case, it is necessary
to deal with some legal principles regarding presumptions contemplated
in Section 118 and 139 of the Act and standards of proof for its
establishment or also for rebuttal. The Hon'ble Supreme Court of India
in
T. Vasanta Kumar v/s. Vijay Kumar (2015) 8 SCC 378 has held that,
“the presumption mandated by Section 139 includes a presumption that
there exists a legally enforceable debt or liability. This is of course in
the nature of a rebuttable presumption and it is open to the accused to
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raise a defence wherein the existence of a legally enforceable debt or
liability can be contested. However, there can be no doubt that there is
an initial presumption which favours the respondent complainant”.
14. The Hon’ble Supreme Court of India in the case Rangappa
V. Mohan reported in AIR 2010 SC 1898, has held that, “the
presumption mandated by Section 139 of the Act does indeed include
the existence of legally enforceable debt or liability.
” I have perused the
decision of Hon’ble Supreme Court of India in M/s. Kalamani Tex & Anr
V/s. P. Balasubramanian, Criminal Appeal No. 123 of 2021, decided on
10/02/2021. It has been observed that,
“16. No doubt, and as correctly argued by senior counsel for the
appellants, the presumptions raised under Section 118 and Section
139 are rebuttable in nature. As held in MS Narayana Menon v. State
of Kerela11, which was relied upon in Basalingappa (supra), a
probable defence needs to be raised, which must meet the standard
of “preponderance of probability”, and not mere possibility. These
principles were also affirmed in the case of Kumar Exports (supra),
wherein it was further held that a bare denial of passing of
consideration would not aid the case of accused.”
In the present case, the accused has not sent reply to the demand
notice of the complainant. The accused has conducted the cross-
examination of the complainant. I have minutely perused the cross-
examination of the complainant and it seems that, the accused has not
denied the issuance of cheque nor denied her signature on the cheque.
Accused has admitted the signature on the cheque as it is not denied by
the accused. Therefore, it can be gathered that, accused has not
challenged the signature from cheque (Exh. 29). This shows that, the
signature of accused from cheque (Exh. 29) is not in dispute. Therefore,
the presumptions under Section 118 and 139 of the Act are raised in
favor of complainant.
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15. The Hon’ble Bombay High Court in Sachin Food Processor
V/s. Shri. Sanjay T. Pathak (Kulkarni), Criminal Appeal No. 487 of
2001, dated 04/02/2016 has held that, “the presumption to be rebutted
not only through direct evidence of accused but also from material on
record and also by reference in circumstances upon which accused
rely”. The Hon'ble Supreme Court of India in case of
M.S. Narayan
Menon @ Mani V/s. State of Kerala and another (Appeal (Cri.) 1012 of
1999 decided on 04/07/2006) has laid down the rules regarding the
standards of proof for establishment of case as well as of rebuttal of
defence in the case filed under Section 138 of the Act. The Hon'ble
Supreme Court of India has observed that
“It is not necessary for the defendant to
disprove the existence of consideration by way of direct
evidence. The standard of proof evidently is pre-
ponderance of probabilities. Inference of pre-ponderance of
probabilities can be drawn not only from the materials on
records but also by reference to the circumstances upon
which he relies. Presumption drawn under a statute has
only an evidentiary value. Presumptions are raised in terms
of the Evidence Act. Presumption drawn in respect of one
fact may be an evidence even for the purpose of drawing
presumption under another.”
16. The Hon'ble Supreme Court of India in case of Sumeti VIJ
V/s. M/s. Paramount Tech Fab, Criminal Appeal No(s) 292 of 2021,
(Arising out of SLP (Crl.) No (s). 8498 of 2019), in which the decision
of Rohitbhai Jivanlal Patel V/s. State of Gujarat and Another, 4 (2019)
18 SCC 106 is discussed and wherein it has laid down the procedure as
to how the accused can rebut the presumption under Section118 and
139 of the Act,
“The accused in a trial under Section 138 of the Act has
two options. He can either show that consideration and
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debt did not exist or that under the particular circumstances
of the case the non-existence of consideration and debt is so
probable that a prudent man ought to suppose that no
consideration and debt existed. To rebut the statutory
presumptions an accused is not expected to prove his
defence beyond reasonable doubt as is expected of the
complainant in a criminal trial. The accused may adduce
direct evidence to prove that the note in question was not
supported by consideration and that there was no debt or
liability to be discharged by him. However, the court need
not insist in every case that the accused should disprove the
non-existence of consideration and debt by leading direct
evidence because the existence of negative evidence is
neither possible nor contemplated. At the same time, it is
clear that bare denial of the passing of the consideration
and existence of debt, apparently would not serve the
purpose of the accused. Something which is probable has to
be brought on record for getting the burden of proof shifted
to the complainant. To disprove the presumptions, the
accused should bring on record such facts and
circumstances, upon consideration of which, the court may
either believe that the consideration and debt did not exist
or their non-existence was so probable that a prudent man
would under the circumstances of the case, act upon the
plea that they did not exist. Apart from adducing direct
evidence to prove that the note in question was not
supported by consideration or that he had not incurred any
debt or liability, the accused may also rely upon
circumstantial evidence and if the circumstances so relied
upon are compelling, the burden may likewise shift again
on to the complainant. The accused may also rely upon
presumptions of fact, for instance, those mentioned in
Section 114 of the Evidence Act to rebut the presumptions
arising under Sections 118 and 139 of the Act. The accused
has also an option to prove the non-existence of
consideration and debt or liability either by letting in
evidence or in some clear and exceptional cases, from the
case set out by the complainant, that is, the averments in
the complaint, the case set out in the statutory notice and
evidence adduced by the complainant during the trial. Once
such rebuttal evidence is adduced and accepted by the
court, having regard to all the circumstances of the case
and the preponderance of probabilities, the evidential
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burden shifts back to the complainant and, thereafter, the
presumptions under Sections 118 and 139 of the Act will
not again come to the complainant's rescue”.
17. The Hon'ble Bombay High Court in the case of
Vishnu Vs.
State of Maharashtra (Cri. Rev. Application No. 176/2015 decided on
24/01/2019) observed that,
“There cannot be any manner of dispute with
the proposition that once the presumption arising under
Section 118 read with Section 139 of the Act is raised, it can
be rebutted by the accused on preponderance of probability
at the trial. This can be done on the basis of cross-
examination of the complainant and his witnesses, if any,
and/or by leading independent defence evidence.”
18
. As accused has not challenged her signature on the cheque
(Exh. 29), the presumptions under Section 118 and 139 of the Act are
raised in favor of complainant. Therefore, in view of the observations
given in case of Rangappa V/s. Sri Mohan (Cited Supra), the accused
has to raise a probable defence which creates doubts about the
existence of a legally enforceable debt or liability and the prosecution
can fail. It also makes clear that, mere denial is not sufficient to rebut
the presumption which is raised in favor of complainant. As observed in
the case of
Vishnu Vs. State of Maharashtra (cited supra), accused has
many modes to bring on record his defence e.g. by replying upon
notice, complaint, complainant's evidence and also by mode of cross
examination, her own testimony or of other witnesses, if cross examined
and also through statement of accused recorded under section 313 of
the Code. In the present case, the accused has conducted the cross-
examination of complainant wherein she raised defences that:-
a) The complainant has not proved the authorization in
favour of present complainant.
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b) Complainant has not proved the transaction.
c) The cheque was issued for security purpose.
d) The accused is not liable to pay the cheque amount.
19. Ld. Advocate for the accused has submitted that, the
complainant has not filed any document on record to show that, the
complainant has given proper authorization to file the present
complaint. It is the submission of Ld. Advocate for the accused that, the
complaint cannot be filed on the basis of authority letter only. It is the
submission of Ld. Advocate for the accused that, the complainant is a
company and the complaint has to be filed on the basis of board
resolution or the power of attorney. In the case in hand, I have perused
the record and it seems that, the complainant has filed an authority
letter at Exh. 25. It seems from the authority letter filed at Exh. 25 that,
the said authority letter was issued by one Ajay Menon who is
mentioned as a whole time director of Motilal Oswal Securities Ltd. Ld.
Advocate for the complainant submitted that, the said authority letter
was issued by Ajay Menon who is the director of Motilal Oswal Security
Ltd. As per his submission, Mr. Ajay Memon has issued the said
authority letter on the basis of meeting of board of directors held on
26/04/2014. As per the contention of complainant that, in the meeting
of board of directors, the power has been delegated to Mr. Ajay Menon
to file the complaint and he has delegated his power to Mr. Tushar
Ghelani by way of the authority letter filed at Exh. 25.
20. The complainant has examined Ajay Menon (C.W.2) at Exh.
41. In his evidence, it has come on record that, the resolution dated
26/04/2014 passed by the complainant company in its meeting of
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board of directors and complainant company authorized him to initiate,
defend, prosecute, pursue and all necessary steps as more particularly
mentioned in the resolution. The said minutes of book was signed by
him. The resolution is filed on record. This witness has filed the
verified copy of minutes of books of meeting held on 26/04/2014 at
Exh. 43. Perusal of said minutes of meeting of board of directors, it
seems that, the power has been given to this witness.
21. Ld. Advocate for the accused has submitted that, the
complainant has not filed the original copy of minutes of books of the
meeting held in respect of giving of power to the Tushar Ghelani who
has filed the present complaint and deposed in this matter. He has
placed reliance the decision of Hon’ble Bombay High Court in Mrs. Alka
Toraskar V/s. The Vaishya Urban Co.-Op. Credit Society Ltd. and Anr.,
C.R.A No. 32 of 2006, decided on 04/10/2006. it has observed that,
“12. There is no dispute that the accused had issued the subject cheque to the
Complainant which is a registered Co-operative Credit Society, registered
under the Maharashtra Co-operative Societies Act, 1960, as applicable to the
State of Goa. The cause title also shows that the complaint was filed by the
said Society. On behalf of the Complainant, Resolution No. 20 was produced
as exhibit 20. It reads as follows:
It was resolved to authorise Mr. Gaurish P. Shirodkar, Officer-in-charge for
Recovery, to attend any Court/ABN case on behalf of our Society against
defaulters and our loanee members.
When the Complainant's witness the said Shirodkar was cross-examined
on the said Resolution/Authority letter, the Complainant's witness
admitted that the said Resolution authorised him to attend Court cases
and not to depose on oath. It is contended by learned Counsel on behalf of
the accused that this point was raised before both the Courts below. The
learned J.M.F.C., merely observed that the Complainant produced on
record true extract of the Resolution authorising Gaurish Shirodkar to
attend the Court on behalf of the Society. There is no whisper about the
said Resolution/Letter of Authority in the Judgment of the learned
Appellate Court, which otherwise also is very cryptic. The said Resolution
did not authorise the said Gaurish P. Shirodkar, the recovery officer of the
Complainant-Co-operative Society, either to file a complaint on behalf of
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the Complainant, which is a separate legal entity or to depose in support
of the Complainant. A complaint under Section 142 of the Act can be filed
either by the payee or the holder in due course. The Complainant-Co-
operative Society was the payee in his case and the complaint was filed in
its name. The authority produced did not sufficiently authorise Shri G. P.
Shirodkar either to file the complaint or to depose in support thereof. The
Complainant was not sufficiently represented before the Court. Therefore,
it could not be said that the complaint filed or the evidence given in
support thereof was in accordance with Section 142 of the Act, which
requires that the complaint has to be made by the payee or, as the case
may be, by the holder in due course of the cheque. In the absence of any
Power of Attorney or a valid authority by the Complainant in favour of the
said Recovery Officer, the complaint itself could not have been entertained
and conviction based on such a complaint, is liable to be set aside.”
He has also placed reliance the decision of Hon’ble Calcutta High
Court in Amal Kumar Mukherjee and Anr. V/s. Clarian Advertising
Services Ltd., 1982 52 CompCas 315 Cal, decided on 03/08/1979. It
has observed that,
“9. Such a submission, as has impressed me as highly
reasonable and probable and in accordance with the ordinary human
conduct and behaviour, was castigated by Mr. Deb, appearing on behalf
of the respondents as the leading counsel, as a feeling which cannot
form the basis of any order to be made by the court; but I am unable to
accept the said submission of Mr. Deb, as, at the interlocutory stage,
the court must examine the prima facie case and see whether there is a
serious question to be tried after weighing all the relevant facts and
also probability according to ordinary human behaviour and conduct,
and must see the situation, which can be called the appreciation of the
existing facts appearing from the materials before the court and the
realities of the situation. After all, the court is not a computer or
without any mind so as not to have any feeling at this stage, and to
proceed on mere technicalities and rules of pleadings and some
reported decisions on various aspects of the matter. Not only that, the
way the respondents are resisting the interim orders already passed
and also the appointment of a special officer and arguing the matter
through different sets of counsel only confirmed that the questions are
very serious questions which have been raised by the petitioners to be
tried and adjudicated by the court in due course after full disclosure of
facts and materials before the court by affidavits or otherwise. At this
stage, it appears to me that there is not only a prima facie case made
out by the petitioner, but a very serious question, which is analogous to
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fraud, wrongful and illegal acts on the part of respondents Nos. 2 to 11
has been disclosed and very serious questions as to the interpretation
of the articles and provisions of the Companies Act are to be gone into.
Further, the directors' minutes book which has been produced before
me by the special officer who has taken possession appears to me not a
minutes book within the meaning of Section 193 of the Companies Act,
1956, as it is in a loose leaf binder and typewritten. In my view, such a
book is not admissible in evidence as the minutes book of a company
as it is in violation of the provisions of Section 193 (1B) which
provides that nothing can be pasted or attached to a minutes book
indicating that a minutes book must be a bound book and must be
hand written and cannot be a loose leaf binder and typewritten. This is
for obvious reasons for preventing interpolation, manipulation,
fabrication and substitution and I am further satisfied at this stage that
there is no active board of the respondent-company at the present
moment and, therefore, the administration of the company cannot be
left in the hands of the executives against whom serious allegations
have been made in the petition which appears to be, prima facie,
maintainable and the balance of convenience appears to me to be in
favour of a proper order to be made for the protection of the
company's books, assets and funds until further orders. The principle is
now well settled by the House of Lords decision in American Cyanamid
Co? v. Ethican Ltd. [1975] 1 All ER 504; [1975] 2 WLR 316 and the
Court of Appeal decision in Fellowes & Sows v. Fisher [1975] 2 All ER
829; [1975] 3 WLR 184. It is admitted and is apparent from the
contentions of both the petitioners and the respondents through their
respective counsel that the matter involves a serious question to be
tried. The charges are the clandestine, illegal and wrongful allotment
of 1,200 shares about which I have already mentioned and also the
renovation of the respondent-company's flat at heavy expense for
respondent No. 2, the ailing managing director of the company, to
occupy after retirement. There are sufficient allegations in the petition
and the annexures that the said respondent No. 6 is the prime mover
in respect of such wrongful acts by draining out the company's funds
for the personal use of respondents Nos. 2 to 11. The allegations are in
paras. 44, 45 and annex. 1 at page 86 of the petition. I am also prima
facie satisfied that there are diversions of the funds of the company by
respondents Nos. 3, 4, 6 and 7 by way of taking loans and advances for
their personal benefit without having any intention to repay the same.
The books of account of the company which has been taken into
possession by the special officer was produced before me and it
appears that advances taken by the respondents have not been paid in
spite of their promise to pay by monthly instalments. That will also
appear from para. 43 and page 84 of the petition. Further, the other
allegation that the company is diverting its business through another
company of which respondent No. 6, Raban Sengupta, is also a
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director, makes out a prima facie case at this stage for an interim order.
The allegations are in para. 66 of the petition. There also appears to be
a prima facie case of violation of the provisions of Section 295 of the
Companies Act, 1956, by respondent No. 2, Prasanta Sanyal, for
obtaining a loan from the company in the name of others as alleged in
para. 39 of the petition and from the documents annexed with the
petition, being at pages 41, 42, 81 and 82. At this stage, I am inclined
to accept the prima facie case made out by the petitioner and also the
statements in para. 40 that the petitioners discovered the said facts
only in or about April, 1979, and, thereafter, the present application
has been made.
I have perused the decision of Hon’ble Supreme Court of India in
Bhupesh Rathod vs Dayashankar Prasad Chaurasia, Criminal Appeal No.
1105 of 2021, decided on 10 November, 2021, It has been held that,
“23. It is also relevant to note that a copy of the Board Resolution
was filed along with the complaint. An affidavit had been brought
on record in the trial court by the Company, affirming to the factum
of authorisation in favour of the Managing Director. A Manager or a
Managing Director ordinarily by the very nomenclature can be
taken to be the person in-charge of the affairs Company for its day-
to-day management and within the activity would certainly be
calling the act of approaching the court either under civil law or
criminal law for setting the trial in motion.4 It would be too
technical a view to take to defeat the complaint merely because the
body of the complaint does not elaborate upon the authorisation.
The artificial person being the Company had to act through a
person/official, which logically would include the Chairman or
Managing Director. Only the existence of authorisation could be
verified.
24. While we turn to the authorisation in the present case, it was a
copy and, thus, does not have to be signed by the Board Members, as
that would form a part of the minutes of the Board meeting and not
a true copy of the authorisation. We also feel that it has been
wrongly concluded that the Managing Director was not authorised. If
we peruse the authorisation in the form of a certified copy of the
Resolution, it states that legal action has to be taken against the
respondent for dishonour of cheques issued by him to discharge his
liabilities to the Company. To this effect, Mr. Bhupesh
Rathod/Sashikant Ganekar were authorised to appoint advocates,
issues notices through advocate, file complaint, verifications on oath,
appoint Constituent attorney to file complaint in the court and
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attend all such affairs which may be needed in the process of legal
actions. What more could be said?”
I have also perused the decision of Hon’ble Bombay High Court
in M/s. Prince Marine Transport Services Private Limited V/s. State of
Maharashtra and Anr., Criminal Appeal No. 412/2023, decided on
08/02/2024. It has been held that,
“ 17. When there was an issue about not signing “Copy of Board
resolution” When it was tendererd before the Court, how the
Hon’ble Supreme Court has dealt with the so called lacuna. There
is reliance on the observations in the case of Bhupesh Rathod V/s.
Dayanshankar Prasad Chaurasia. He read over the observations in
para No. 22 and 23. Whereas , Ld. Advocate Shri. Satyanarayanan
invited my attention to the specific lacuna as recorded in paragraph
No. 7 (b) of that judgment. It deals with:-
‘not signing copy of board resolution and whether it can be treated
as true copy of the resolution’.
Finally, the Hon’ble the Supreme Court observed as :-
“If in the affidavit the witness has affirmed that there is an
authorization in favour of the Managing Director that is sufficient
compliance about the necessary authorization.”
This issue arises only when the complaint is filed by an artificial entity
just like the case before us. The only difference is not about not
signing the true copy of the resolution but about mode of proof of two
documents’. Submission for Respondent.
27. I do not think not making an endorsement about perusing
original of minutes book is of vital importance. It is important to say
something about nature of these two documents. One is minutes book
and another is board resolution. Minutes book is the primary
documents and it contains recording of discussion in the meeting and
then decision taken. Whereas copy of the board resolution is nothing
but the reproduction of decision taken in the meeting.”
22. In the case in hand, the complainant has filed the copy of
Minutes of Meeting of board of directors at Exh. 43. Perusal of the
minutes of meeting of board of directors filed at Exh. 43, it seems that,
said document is verified by the Judicial Clerk of this court from the
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original. Therefore, it seems that, at the time of verifying said
document, the original was brought and on the basis of original the
present document at Exh. 43 came to be verified. As per the decision of
Hon’ble Supreme Court of India in Rupesh Rathod’s case (Cited Supra)
and as per the decision of Hon’ble Bombay High Court in M/s. Prince
Marin’s Case (Cited Supra), it makes clear that the original document
was brought in the court for verification and therefore there is no need
to file the original on record after its verification. In the case in hand
also, the said document is verified from the original.
23. Ld. Advocate for the complainant has submitted that, the
complainant has also filed the certified true copy of resolution passed by
the board of directors as per the meeting held on 28/10/2021 and said
is filed at Exh. 44. It is the submission of Ld. Advocate for the
complainant that the authorization can be rectified at any stage of the
trial. He has placed his reliance on the decision of Hon’ble Supreme
Court of India in M.M.T.C. Ltd. and Another V/s. MEDCHL Chemicals
and Pharma (P) Ltd., (2002) 1 Supreme Court Cases 234. It has held
that,
“This Court has, as far back as, in the case of Vishwa Mitter v. O. P.
Poddar reported in (1983) 4 SCC 701, held that it is clear that anyone
can set the criminal law in motion by filing a complaint of facts
constituting an offence before a Magistrate entitled to take cognizance.
It has been held that no court can decline to take cognizance on the
sole ground that the complainant was not competent to file the
complaint. It has been held that if any special statute prescribes
offences and makes any special provision for taking cognizance of such
offences under the statute, then the complainant requesting the
Magistrate to take cognizance of the offence must satisfy the eligibility
criterion prescribed by the statute. In the present case, the only
eligibility criteria prescribed by Section 142 is that the complaint must
be by the payee or the holder in due course. This criteria is satisfied as
the complaint is in the name and on behalf of the appellant Company.
In the case of Associated Cement Co. Ltd. v. Keshvanand reported in
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(1998) 1 SCC 687, it has been held by this Court that the complainant
has to be a corporeal person who is capable of making a physical
appearance in the court. It has been held that if a complaint is made in
the name of a incorporeal person (like a company or corporation) it is
necessary that a natural person represents such juristic person in the
court. It is held that the court looks upon the natural person to be the
complainant for all practical purposes. It is held that when the
complainant is a body corporate it is the de jure complainant, and it
must necessarily associate a human being as de facto complaint to
represent the former in court proceedings. It has further been held that
no Magistrate shall insist that the particular person, whose statement
was taken on oath at the first instance, alone can continue to represent
the company till the end of the proceedings. It has been held that there
may be occasions when different persons can represent the company. It
has been held that it is open to the de jure complainant company to
seek permission of the court for sending any other person to represent
the company in the court. Thus, even presuming, that initially there
was no authority, still the Company can, at any stage, rectify that
defect. At a subsequent stage the Company can send a person who is
competent to represent the company. The complaints could thus not
have been quashed on this ground.”
Perusal of the above discussion, it seems that, the issue of
authorization can be rectified during the course of trial. In the case in
hand, the complainant has filed the certified true copy of resolution
passed by the board of directors on 28/10/2021. It is the submission of
Ld. Advocate for the complainant that, by way of said meeting of board
of directors, the resolution came to be passed in favour of present
complainant.
24. Ld. Advocate for the accused has submitted that, the
person who has no knowledge about the transaction is not competent to
depose on behalf of complainant. He has placed reliance on the
decision of Hon’ble Bombay High Court in Jaimin Jewelery Exports Pvt.
Ltd. V/s. State of Maharashtra, Criminal Revision Application No.
432/2015, decided on 14/03/2017. It has held that,
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“60. It is to be noted that Section 20 of the NI Act permits the
payee to filling the amount as well as the date in blank signed
cheques and thus complete the inchoate instrument delivered to
him. Such filling up of the date and the amount does not
constitute alternation within the meaning of Section 87 of the NI
Act. There is absolutely no dispute about this proposition. It is
also not in dispute that a mere statement that the cheque was
issued towards security does not absolve liability under Section
138 N.I.Act. The question in the present case is not about the
applicability of Section 20 of NI Act or the liability of the
partnership firm after the incorporation of the Company or the
liability of the Accused No.1 -Company NI Actrevn432_2015.doc
in respect of the cheque issued by the partnership firm as security.
The question is about the genuineness of the case put forth by the
Complainant- company. As stated earlier, in the instant case, the
Complainant-company had come with a specific case that the
accused No.2 had issued the subject cheques on behalf of the
Complainant-company towards payment of outstanding dues.
Whereas the accused had questioned the genuineness of the
claim and raised a probable defence that the Complainant-
company had filled in the amount and the date in the blank
signed cheques which were given as security. Though the
Complainant-company had specifically denied the defence raised
by the accused, a perusal of the subject cheques reveals that the
same were issued by the accused no.2 not as a director of the
Company but as a partner of the Partnership firm. This fact not
only negates the case of the Complainant company but leads to
an inference that the said cheques were issued when the
partnership firm was in existence and thus probabalises the
defence that the same were given as security. The accused having
proved their defence by preponderance of probability, the onus
was on the Complainant-company to prove that the amount
quantified in the cheque was the existing and subsisting liability.”
In the case in hand, perusal of the evidence of the complainant, it
seems that, the complainant has given rational answers to the questions
asked in the cross-examination. Therefore, it cannot be said that, the
complainant has no knowledge.
25. Ld. Advocate for the accused has submitted that, the
minutes of meeting dated 26/04/2014 is not maintain as per Section
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193 of the Companies Act. He has placed his reliance on the decision of
Hon’ble Bombay High Court, Goa Bench in Shraddha Shipping Co.Pvt.
Ltd. V/s. Adhithri Trading Company and Another, Criminal Revision
Application No. 21 of 2014, decided on 25/11/2014. It has observed
that,
“14. In the case of “Shri Ashok Bampto Pagui” (supra), this Court has
observed at para 21, thus:-
“A Director, as an individual Director, has no power to act on behalf of
the company. He is only one of a body of Directors called the Board of
Directors and alone he has no power except such as may be delegated
to him by the Board of Directors or given to him by the articles of
association of a company. In the case at hand, the complaint was filed
by one of the Directors and as already stated by a Director who had
initially complained to the Police that the subject cheque was forged
by the accused, and, without any resolution of the company or any
authorization from the Board of Directors. The view held by me is
consistent with the views expressed in the decisions referred to herein
above, namely, those of the Madras High Court in Ruby Leather
Exports v. K. Venu (supra), Andhra Pradesh High Court and Delhi
High Court which is now confirmed by the view held by the Apex
Court in Dale and Carrington Invt. (P) Ltd. v. P.K Prathapan (supra)
and therefore I hold that the complaint in this case was not filed by
the company as required under Clause (a) of Section 142 of the Act
and on such a complaint no process could have been issued much less
a conviction imposed. The said Shri Prashant Shirodkar could not
have filed the same merely in his capacity of a Director. He had to file
the same only with authorization from the Board of Directors. As
already stated, prima facie, it appears that such authorization was
issued by the complainant company in favour of Shri Pednekar as can
be seen from the copy of power of attorney produced.”
I have perused the minutes of meeting dated 28/10/2021 and it seems
that, for that meeting many directors were present. Therefore, the facts
of the cited decision are different from the facts of the case in hand.
26. It is the submission of Ld. Advocate for the accused that
the complainant has filed the authority letter on record and the said
authority letter bears signature of only one director. There is no
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authenticate mark of the complainant company. He has invited my
attention towards the cross-examination of the complainant wherein the
complainant has admitted that, “It is correct to say that, in authority
letter at Exh. 25, authority is not given to me by mentioning in specific
word “ to file affidavit of evidence, to file complaint and to depose on
oath on behalf of complainant company”. Further the complainant
admitted that, “ It is correct to say that, the said authority letter does
not bear seal of the complainant company or rubber stamp of director to
sign on this letter”. I have perused the authority letter filed at Exh. 25.
Perusal of it seems that, it bears the signature of Mr. Ajay Menon who
has mentioned as whole time director. Further, the complainant has
filed the verified copy of resolution dated 26/04/2014 and 28/10/2021
to show that, the complainant company has passed resolution in favour
of complainant.
27. Ld. Advocate for the accused has submitted that, the power
of attorney filed at Exh. 26 does not bear the serial number of notary
nor the notary person has been examined by the complainant. He
invited my attention towards the cross-examination of complainant
wherein complainant has admitted that, “ it is correct to say that, power
of attorney does not bears serial number from notary register as well as
register number in which said document is registered.” He further
admitted that, “It is true to say that, minutes books are in binding
nature.”
28. He placed reliance on the decision of Hon’ble Bombay
High Court in H. K. Taneja and others V/s. Bipin Ganatra,
MANU/MH/1476/2008. It has been observed in para no. 7 that,
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“It may be mentioned that, that was a case of only a
certification of copy of a document as a true copy. Our case goes
much further. It is the case of the execution of the original document
itself. The executant is required to be present before the notary. He is
required to be identified before the notary. He is required to sign
before the notary. The notary is required to witness such an act and
register the transaction. Keeping in mind that, the document relied
upon by the applicant herein is not registered and hence is
inadmissible in evidence, even the factum of the execution of the
document is not even prima-facie shown by the applicant upon
proving the notarial act. It is for the applicant to make out his case.
The prima-facie of proof of the execution of the document on a given
date by the executant before the notary can be evidenced by the
production of the true or certified copy of the relevant portion of the
notarial register showing that, the entry was made on the relevant
date in the normal course of the conduct of the notary. The applicant
has undertaken no exercise to substantiate his case of the execution of
the document otherwise completely inadmissible in evidence. Since
even the notarial act is not shown even a prima-facie case cannot be
made out.”
In the above cited decision, the decision of Prataprai Trumbaklal
Mehta V/s. Jayant Nemchand Shah And Anr., MANU/MH/0030/1992 :
has been referred wherein it is held that,
“this court considered, inter alia, the essence of notarization of
documents by persons identified before notary and the proscribed
rules, more especially Rule 11 required to be followed for every
notarial act, That was a case of reliance upon a copy of a document
certified as true copy by the notary. That notarial act remained
unregistered. The mere fact that the document was notarized was held
not to lend any authenticity to the document in the absence of seeing
the notarial register kept b the notary in the course of his conduct as a
notary as per Rule 11 of the Notaries Rules. Evidence was led in that
case. The notary was summoned. The relevant notarial register was
produced. No entry was found in the notarial register relating to the
transaction claimed to have taken place under the copy document
notarized as true copy. The notary deposed that, the executant was not
before him. He had not made any entry in the notarial register as,
according to him, that was not required. He was only required to
verify the document, compare the document and endorse it as true
copy if it was the identical copy of the original. It was observed thus:
“law takes judicial notice of seal of notary. In ordinary
course, an initial presumption may be made about genuineness
of the notarised copy of the document. The underlying idea
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behind such presumption is that the notary is normally a
responsible member of the legal profession and he is expected
to take due care to satisfy himself about the identity of the
party appearing before him. If the party appearing before the
notary is not known to the notary, the notary must get the
party identified by an Advocate known to him and take
signature of both of them in token thereof.”
In the cited decision, the matter was relating to the possession
and on the basis of power of attorney the leave and license agreement
was executed. In the present case , the power of attorney is executed to
file complaint and to depose in the present case. Therefore, it is
necessary to peruse the provisions of The Powers- of -Attorney Act 1882.
I have perused Section 2 of the said Act which reads as follows:-
Section 2 -Execution under Power of Attorney-
The donee of a power of attorney may thinks fit, execute or do
any instrument or think in and with his own name and signature, he
and his own seal, where sealing is required, by the authority of the
doner of the power, and every instrument and thing so executed and
done, shall be effectual in law as if it had been executed or done by the
donee of the power in the name, with the signature and seal of the
doner thereof.
This Section applies to power of attorney created by instrument
executed either before or after this Act comes into force.
I have also perused Section 4 of the said Act.
4. Deposit of original instruments creating powers-of-
attorney.- (a) An instrument creating a power-of-attorney, its execution
being verified by affidavit, statutory declaration other sufficient
evidence, may, with the affidavit or declaration, if any, be deposited in
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the High Court [or District Court] within the local limits of whose
jurisdiction the instrument may be.
(b) A separate file of instruments so deposited shall be kept; and
any person May search that file, and inspect every instrument so
deposited; and a certified copy thereof shall be delivered out to him on
request.
29. Perusal of above referred provisions, it seems that, the
instrument creating a power of attorney its execution has to be verified
by affidavit, statutory declaration or other sufficient evidence with the
affidavit or declaration.
30. In the case in hand, perusal of notarized document it seems
that the serial number is mentioned on the notary nor in the notary
register. Therefore, it seems that, the notary is not registered as per
Rule 11 of the Notary Act. Further, as held in the H. K. Taneja’s case
(cited Supra) that, the instrument which is notarized does not bears
serial number of the notary, then it becomes in admissible.
31. Ld. advocate for the complainant submitted that, there is
presumption to the notarized document. I have perused Section 85 of
the Indian Evidence Act, which is reproduced as follows:-
“The Court shall presume that every document purporting to
be a power-of-attorney, and to have been executed before, and
authenticated by, a Notary Public, or any court, Judge,
Magistrate, Indian Consul or Vice-Consul, or representative of
the Central Government, was so executed and authenticated.”
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Perusal of the above provision, it seems that, the presumption
available under Section 85 of the Indian Evidence Act would be
applicable only when it is proved that, the document is notarized and
executed before the notary. In the case in hand, it can not be said that
the document is proved to be executed because it does not bear serial
number of notary nor it is registered in the notary register. Therefore,
the presumption prescribed U/s. 85 of the Indian Evidence Act, is not
applicable to the present power of attorney at Exh. 21.
32. Ld. Advocate for the complainant submitted that, the
power of attorney is not required to be registered and therefore the
serial number is not mentioned on the power of attorney nor the entry
of said document is made in the notary register, then also it does not
affect on its admissibility. As per my view, the complainant has relied
on the notarized power of attorney and therefore the complainant has
to prove that the power of attorney is duly notarized. In the case in
hand, as I discussed above, the power of attorney does not bear serial
number of the notary nor it is registered in the notary register.
Therefore, the document cannot be said to be duly notarized and
therefore the power of attorney becomes inadmissible.
33. Ld. Advocate for the complainant submitted that, the
complaint is filed by authorized person is valid. He has placed his
reliance on the decision of Hon’ble Supreme Court of India in TRL
Krosaki Refractories Ltd. V/s. SMS Asia Private Limited and Ors,
Criminal Appeal No. 270 of 2022 (Arising Out of SLP (Crl) No. 3113 of
2018), decided on 22/02/2022. It has held that,
“When a company is the payee of the cheque based on which a
complaint is filed U/s. 138 of N. I. Act, the complainant
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necessarily should be the company which would be represented
by an employee who is authorized. Prima-facie, in such a
situation the indication in the complaint and the sworn statement
(either orally or by affidavit) to the effect that the complainant
(Company) is represented by an authorized person who has
knowledge, would be sufficient. When, the complainant/payee is
a company, an authorized employee can represent the company.
Such averment and prima facie material is sufficient for the
learned Magistrate to take cognizance and issue process. If at all,
there is any serious dispute with regard to the person prosecuting
the complaint not being authorized or if it is to be demonstrated
that the person who filed the complaint has no knowledge of the
transaction and, as such that person could not have instituted and
prosecuted the complaint, it would be open for the accused to
dispute the position and establish the same during the course of
the trial. Dismissal of a complaint at the threshold by the
Magistrate on the question of authorisation, would not be
justified. Similarly, in such circumstances entertaining a petition
under Section 482 to quash the order taking cognizance by the
Magistrate would be unjustified when the issue of proper
authorization and knowledge can only be an issue for trail.”
In the case in hand, the complainant has filed the authority letter which
was issued on the basis of minutes of meeting held on 26/04/2014. The
complainant has also filed the minutes of meeting of board of directors
dated 28/10/2021. Therefore, it seems that, the present complainant is
duly authorized to file the present complaint and to depose in the case.
34. Ld. Advocate for the accused has submitted that, the
complainant has not proved the transaction. It is the submission of Ld.
Advocate for the accused that, the complainant has not produced ledger
accounts, confirmation letter to prove the outstanding amount. I have
perused the cross-examination of the complainant wherein the
complainant has admitted that, “It is true to say that, complainant
company being member of NSE and BSE, it has to follow rules and
regulations issued by SEBI. He further admitted that, “It is correct to
say that, whatever purchase order received through phone are voice
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recorded. In this case, it cannot produce voice recorded evidence to
show that, accused had placed purchase order through phone. He
further admitted that, it is true to say that after accepting the orders
from the customer, complainant company issues contract notes and
those contract notes are to be delivered to the customer within 24
hours. He further admitted that, in the present case he has not filed
contract notes on record. He further admitted that, being a limited
company, complainant company maintains books of accounts on the
basis of ledger. He admitted that, every year audit of books of account
of complainant company is conducted through C.A. He further admitted
that, no documents that includes ledger account, balance-sheet or
anything else is filed on record to show that, on 21/01/2015 accused
was liable to pay an amount of Rs 9,35,413 i.e. cheque amount to the
complainant company.
35. Ld. Advocate for the complainant has submitted that, it is
not necessary for the complainant to file the account book, cash book in
the matter pertaining to file under Section 138 of N. I. Act. He has
placed his reliance on the decision of Hon’ble Supreme Court of India in
D. K. Chandel V/s. Wockhardt Ltd. and Ors, Criminal Appeal Nos. 132
of 2020 (Arising Out of SLP (Crl). No. 1621 of 2018) decided on
20/01/2020. It has observed that,
“ As held by the Trial Court as well as by the High Court that the
cheque was issued towards the amount due and payable by the appellant for
purchase of pesticides. As rightly observed by the High Court production of
the account books/cash book may be relevant in the civil court; but may not
be so in the criminal case filed under Section 138 of the N.I.Act. This is
because of the presumption raised in favour of the holder of the cheque. In
view of the concurrent findings recorded by the Trial Court as well as by the
High Court we do not see any ground warranting interference with the
conviction of the appellant under Section 138 of the N.I.Act.”
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On the contrary Ld. Advocate for the accused has submitted that, the
complainant has not filed any document which has available with him.
He has placed his reliance the decision of Hon’ble Andhra High Court in
Nagisetty Nagaiah V/s. State of A. P. And Anr., 2004 (2) ALD Cri 455,
decided on 16/07/2004. It has observed that,
“10. Firstly, the fact that the amount due by the accused in the
business transaction between the complainant and the accused
was not proved. The complainant did not file any account books,
not even a scrap of paper, to show that there were business
transactions between himself and the accused and the accused
due to him an amount of Rs. 88,888/-. No income-tax return or
audit report has been placed before the Court to construe that
there was any legally enforceable debt to inspire that the factual
basis for raising presumption under Section 139 of the Act had
been established. Secondly, a close examination of Ex.P1 cheque
reveals that the signature on the cheque was in blue ink, but it
was filled up altogether with a different ink (black), admittedly,
by a third person, which was not properly explained by the
complainant. Even otherwise, the accused had sent a letter dated
6-7-1996 i.e. much prior to the date of Ex.P1 cheque dated 20-7-
1996. It is admitted by the complainant that the amount was
paid to the accused on 20-7-1996 and on that day itself, the
cheque was issued. Therefore, the complainant failed to make
out any case against the accused and thus the question of raising
legal presumption under Section 139 of the Act does not arise. It
is obligatory on the part of the Court to raise this presumption in
every case where the factual basis for the raising of presumption
had been established. In this context, the Court below has rightly
held that the initial burden on the part of the complainant was
not discharged , since, in this case, the factual basis for raising
such presumption had not been established. Under these
circumstances, it cannot be said that the factual basis for raising
of the presumption under Section 139 of the Act has been
established. 'Initial' means that which begins or stands at the
beginning, i.e. the factual basis for raising such a presumption as
per law. In this case, such facts are missing.”
36. Ld. Advocate for the accused has submitted that, there is
no presumption about the legally enforceable debt and complainant has
to prove the legally enforceable debt. He has placed reliance on the
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decision of Hon’ble Supreme Court of India in Krishna Janardhan Bhat
V/s. Dattatraya G. Hegde, 2008 (4) Mh.L.J. It has held that
“34. We are not oblivious of the fact that the said provision has
been inserted to regulate the growing business, trade, commerce
and industrial activities of the country and the strict liability to
promote greater vigilance in financial matters and to safeguard the
faith of the creditor in the drawer of the cheque which is essential
to the economic life of a developing country like India. This,
however, shall not mean that the courts shall put a blind eye to the
ground realities. Statute mandates raising of presumption but it
stops at that. It does not say how presumption drawn should be
held to have rebutted. Other important principles of legal
jurisprudence, namely presumption of innocence as human rights
and the doctrine of reverse burden introduced by Section 139
should be delicately balanced. Such balancing acts, indisputably
would largely depend upon the factual matrix of each case, the
materials brought on record and having regard to legal principles
governing the same.”
He has also placed his reliance the decision of Hon’ble Bombay High
Court (Nagpur Bench) in Ghanshyamdas Lalchand Chandak V/s. Sheikh
Hamid Sheikh Gulab, Criminal Appeal No. 536 of 2006, decided on
09/01/2018.
“14. The settled position of law is that if the signature on the
cheque is admitted, the statutory presumption under Section 139
of the Act stands activated and the accused is obligated to rebut
the presumption before the burden of proving the existence of
debt or liability shifts to the complainant. However, the accused
need not adduce direct evidence and is entitled to rely on the
material brought on record, during the evidence of the
complainant, or otherwise, to rebut the statutory presumption. The
burden on the accused of proving the non-existence of debt or
liability is duly discharged if the accused brings on record, on
preponderance or probabilities, that the existence of a legally
enforceable debt or liability is doubtful.
15. If the evidence is tested on the anvil of the enunciation of law
by the Hon'ble Apex Court, I do not find any perversity or serious
error in the judgment and order of acquittal. The finding that the
statutory presumption is duly rebutted since concededly the
complainant did not produce any record whatsoever pertaining to
the purchase of chilly by the accused including the record
pertaining to chilly is unexceptionable. The defence, which is
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disclosed at the first available opportunity, is more than amply
probablised on the touchstone of preponderance of probabilities.
Since the accused succeeded in rebutting the statutory
presumption, the burden shifted on the complainant to prove the
existence of the debt or liability, which burden is not discharged
by the complainant. It must be borne in mind, that this Court
would be slow to interfere in a judgment of acquittal unless the
judgment is demonstrably perverse or is vitiated by a serious error
of law or fact or occasions grave miscarriage of justice. I am not
persuaded to hold, in the fact of the case, that the judgment
impugned suffers from any such infirmity as would warrant
interference.”
37. I have perused the decision of Hon’ble Supreme Court of
India in Rangappa’s case (Cited supra) and perusal of it, it makes clear
that, once the signature on the cheque and issuance of cheque is
admitted by the accused then the presumption U/s. 118 and 139 of N. I.
Act arises in favour of complainant. I have also perused the decision of
Hon’ble Supreme Court of India in Sanajabij Tari V/s. Kishor S. Borcar &
Anr., Criminal Appeal No. 1755 of 2010, decided on 25/09/2025
wherein it has been held that,
“15. In the present case, the cheque in question has admittedly been
signed by the Respondent No.1-Accused . This Court is of the view that
once the execution of the cheque is admitted, the presumption under
Section 118 of the NI Act that the cheque in question was drawn for
consideration and the presumption under Section 139 of the NI Act
that the holder of the cheque received the said cheque in discharge of a
legally enforceable debt or liability arises against the accused. It is
pertinent to mention that observations to the contrary by a two Judges
Bench Criminal Appeal No.1755/2010 Page 5 of 19 in Krishna
Janardhan Bhat vs. Dattatraya G. Hegde, (2008) 4 SCC 54 have been
set aside by a three Judges Bench in Rangappa (supra).”
Further, it has held that,
29. Furthermore, the fact that the accused has failed to reply to the
statutory notice under Section 138 of the NI Act leads to an inference
that there is merit in Criminal Appeal No.1755/2010 Page 9 of 19 the
Appellant-Complainant’s version. This Court in Tedhi Singh vs.
Narayan Dass Mahant, (2022) 6 SCC 735 has held that the accused has
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the initial burden to set up the defence in his reply to the demand
notice that the complainant did not have the financial capacity to
advance the loan. The relevant portion of the said judgment is
reproduced hereinbelow:- “10. … The proceedings under Section 138
of the NI Act is not a civil suit. At the time, when the complainant gives
his evidence, unless a case is set up in the reply notice to the statutory
notice sent, that the complainant did not have the wherewithal, it
cannot be expected of the complainant to initially lead evidence to
show that he had the financial capacity. To that extent, the courts in
our view were right in holding on those lines. However, the accused
has the right to demonstrate that the complainant in a particular case
did not have the capacity and therefore, the case of the accused is
acceptable which he can do by producing independent materials,
namely, by examining his witnesses and producing documents. It is
also open to him to establish the very same aspect by pointing to the
materials produced by the complainant himself. He can further, more
importantly, achieve this result through the cross-examination of the
witnesses of the complainant. Ultimately, it becomes the duty of the
courts to consider carefully and appreciate the totality of the evidence
and then come to a conclusion whether in the given case, the accused
has shown that the case of the complainant is in peril for the reason
that the accused has established a probable defence.” (emphasis
supplied)
30. This Court in MMTC Ltd. and Another vs. Medchl Chemicals &
Pharma (P) Ltd. and Another, (2002) 1 SCC 234 has specifically held
that when a statutory notice is not replied, it has to be presumed that
the cheque was issued towards the discharge of liability.”
38. Ld. Advocate for the complainant has placed reliance on
the decision of Hon’ble Bombay High Court in Hemant Pavel Gracias
V/s. Socorro Santan Fernandes, ALL MR (Cri) – 2007-0-3425 (BOM). It
has held that,
“13. In the case of Gorantla Venkateswara Rao v. Kolla Veera
Raghava Rao, 2006 Cri.L.J 1 the Andhra Pradesh High Court has
held that the failure of the accused in giving reply to the legal no-
tice issued by the Complainant is one of the strong circumstances
to draw an inference that the accused borrowed the amount from
the Complainant and the cheque was issued towards part pay-
ment of the legally enforceable debt. If the Complainant had fabri-
cated and misused the blank cheque issued by the accused, the ac-
cused would have immediately protested and threatened the
Complainant with legal action and would not wait till the end of
the trial without taking any action against the Complainant. Ad-
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verse inference is required to be drawn against the accused for not
replying to the notice. The contention of the learned Counsel of
the accused that many times notices are not at all answered can-
not be accepted. Those who don't answer may do so at their own
risk, including drawing an adverse inference like the case at
hand.”
Ld. Advocate for the complainant submitted that, the complainant has
filed ledger account, the certified copy of award passed by Bombay
Stock Exchange Ltd. in the arbitration proceeding. It is his submission
that those documents show and prove that, the cheque amount is due
from the accused.
39. Ld. Advocate for the accused has submitted that, the award
passed by Bombay Stock Exchange Limited in the arbitration proceeding
is not binding on this court. He has placed reliance on the decision of
Hon’ble Bombay High Court in Karad Urban Co-Operative Bank Limited
V/s. Sunil Laxman Dalvi and Anr., Criminal Appeal No. 920 of 2013
with Criminal Application No. 472 of 2013, decided on 15/12/2015. It
has held that,
“The award would show the opinion of the Co-operative court. The
decision rendered by the Co-operative court would not be
admissible or even relevant in the proceedings that were before the
Magistrate. The law regarding the relevancy of judgments delivered
by the courts is found in Section 40 to 44 of the Evidence Act. The
judgment delivered by the Co-operative court or the award passed
by it is not even relevant in the context of the proceedings that were
before the Magistrate.”
In the case in hand, the complainant has filed ledger account along with
award. Further, the presumption U/s. 118 and 139 of N. I. Act is in
favour of complainant. The accused has not denied her signature on
the cheque nor denied issuance of cheque. Further, the accused has not
rebutted the presumption lies in favour of complainant. The accused
has not given any explanation as to how the custody of cheque comes
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with the complainant. Further, the presumption U/s. 118 and 139 of N.
I. Act are not rebutted by the accused.
40. Ld. Advocate for the accused has submitted that, the
cheque was issued for security purpose and same is misused by the
complainant. On the contrary, Ld. Advocate for the complainant
submitted that, though cheque was given for security, then also it can be
used to recover the due amount. He has placed reliance on the decision
of Hon’ble Supreme Court of India in Birsingh V/s. Mukesh Kumar,
2019 (4) SCC 197 has held that, “the cheque duly signed and
voluntarily made over the payee, was in discharge of debt or liability
arise irrespective of whether cheque was post dated or blank cheque for
filing by payer or any other person, in absence of evidence of undue
influence or coercion.” He has also placed reliance on the decision of
Hon’ble Bombay High Court, Nagpur Bench in M/s. Sai Auto Agencies
V/s. Sheikh Yusuf Shaikh Umar, Criminal Appeal No. 835 of 2008,
decided on 08/02/2010. it has held that, “Even if blank cheque has
been given towards liability or even as a security, when the liability is
assess and quantified, if the cheque is filled up and presented to the
bank, the person who had drawn the cheque cannot avoid the criminal
liability arising out of Section 138 of N. I. Act”.
41. He has also placed reliance the decision of Hon’ble
Supreme Court of India in Oriental Bank of Commerce V/s Prabhodh
Kumar Tewari, Criminal Appeal No. 1260 of 2022, decided 14th August
2022. It has observed that,
“17. For such a determination, the fact that the details in the
cheque have been filled up not by the drawer, but by some other
person would be immaterial. The presumption which arises on the
signing of the cheque cannot be rebutted merely by the report of a
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hand-writing expert. Even if the details in the cheque have not
been filled up by drawer but by another person, this is not relevant
to the defense whether cheque was issued towards payment of a
debt or in discharge of a liability.”
I have perused the decision of Hon’ble Supreme Court of India in
Sripati Singh V/s. State of Jharkhand (Criminal Appeal No. 1269 -1270
of 2021, it has held that, “a cheque issued as a security pursuant to a
financial transaction cannot be considered as a worthless piece of paper
under every circumstances. ‘Security’ in its true sense is the state of
being safe and the security given for a loan is something given as a
pledge of payment. It is given, deposited or pledged to make certain the
fulfillment of an obligation to which the parties to the transaction are
bound. If in a transaction, a loan is advanced and the borrower agrees
to repay the amount in a specified time frame and issues a cheque as
security to secure such repayment; if the loan amount is not repaid in
any other form before the due date or if there is no other
understanding or agreement between the parties to defer the payment
of amount, the cheque which is issued as security would mature for
presentation and the drawee of the cheque would be entitled to present
the same. On such Presentation, if the same is dishonoured, the
consequences contemplated under Section 138 and the other provisions
of N. I. Act would flow.”
Perusal of above decision, it seems that, the cheque issued for
security purpose can be used to recover the amount when the legally
enforceable debt is due from the accused.
42. Ld. Advocate for the accused has submitted that, the ink of
contents from payee column and other contents are different from the
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ink used for signature. He invited my attention towards the cross-
examination of the complainant wherein complainant has admitted
that, the ink of contents from payee column and other contents are
different from the ink used for the signature. He has placed reliance on
the decision of Hon’ble Bombay High Court in Jayantilal Deepchand
Parmar V/s. Sou. Vaishali S. Farne & Anr., Criminal Application No.
2427 of 2006, decided on 06/06/2007. He has also placed his reliance
on the decision of Hon’ble Bombay High Court in State of Maharashtra
V/s. Kalpak Bhaskar Gadhave, Criminal Application No. 3371 of 2006,
decided on 18/06/2008. It has held that,
“ At this stage, I would like to refer to the defence taken by the
accused. The defence of the accused is that an agreement has been
entered into between himself and the complainant for supply of
milk. Pursuant to the said agreement, by way of security the
accused had handed over two blank signed cheques. According to
him, the complainant has misused the said blank cheques by filing
an amount of Rs. 2,89,096/- on one of the blank cheques and
putting it in the bank. The complainant has admitted in his cross-
examination that, it is true that the ink in respect of the date and
signature on the cheque is similar , and the ink in which the
amount and name of payee was written, is different. The
complainant has further stated that, he cannot tell which part of
the cheque is written by the accused. From the evidence on record
it appears that the defence taken by the accused is probable. ”
Ld. Advocate for the accused has also submitted that, the complainant
has made alteration in the cheque by filling the cheque without the
permission of accused and said alternation is material which makes the
cheque invalid. He has placed reliance on the decision of Hon’ble
Bombay High Court in M/s. Pinak Bharat and Company V/s. State of
Maharashtra through Public Prosecutor, Bombay High Court, Bombay in
Criminal Appeal No. 1630 of 2011 along with Criminal Appeal No. 1631
of 2011, dated 02/12/2022. It has held that,
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“ On that aspect, only I agree with the findings given by the trial
Court. No doubt cheque is negotiable instrument which is transferable
and negotiable, presumption under Section 138 of the Negotiable
Instrument Act can be drawn only when the pre-conditions are
satisfied. The complainant unilaterally has put in dates on the cheques
without the authority of the accused and even by not informing him.
So, it amounts to material alterations. If it is so such negotiable
instrument becomes void. Hence prosecution under Section 138 of the
Negotiable Instrument Act cannot be initiated. On that aspect the
complainant has failed to satisfy the requirement of valid cheque.”
I have also perused the decision of Hon’ble Supreme Court of India in
Birsingh’s case (Cited Supra) wherein it has held that, “the cheque duly
signed and voluntarily made over the payee, was in discharge of debt or
liability arise irrespective of whether cheque was post dated or blank
cheque for filing by payer or any other person, in absence of evidence of
undue influence or coercion.” Therefore, the ink used for the writing of
contents of the cheque is different, then also it does not affect on the
case of complaint when the signature is admitted by the accused.
43. Ld. Advocate for the accused has submitted that the
presumption U/s. 118 and 139 is rebuttable. If it has came on record
that, no legally enforceable debt is due from the accused, then the
presumption is said to be rebutted. He has placed his reliance on the
decision of Hon’ble Supreme Court of India in Kundan Lal Rallaram V/s.
Custodian, Evacuee Property, Mumbai, Civil Appeal No. 433 of 1959,
decided on 16/03/1961. It has held that, “the presumption raised
U/s .118 of N.I. Act is rebuttable”. He has also placed reliance on the
decision of Hon’ble Bombay High Court in Santan Financers & Real
Estate Pvt. Ltd. V/s. Devapa A. Sarvi & Anr., Criminal Appeal No. 15 of
2004, decided on 10/12/2004. It has held that, “Section 139 of the Act
deals with presumption in favour of holder, and, it provides that it shall
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be presumed, unless the contrary is proved, that the holder of a cheque
received the cheque, of the nature referred to in Section 138, for the
discharge, in whole or in part, of any debt or other liability. ”
44. Ld. Advocate for the accused has submitted that, as per the
rules of Securities and Exchange Board of India (Stock Brokers and Sub
Brokers) Rules and Regulations, the complainant did not acted as per
the said rule. The complainant has to prove the legally enforceable debt
by following the rules established under the Securities and Exchange
Board of India (Stock Brokers and Sub Brokers) Rules and Regulations.
He has placed his reliance on the decision of Hon’ble Bombay High
Court in Jyoti W/o. Rajkumar Sahajwani V/s. Shri. Sadhu and Anr.,
Criminal Appeal No. 126 of 2003, decided on 13/09/2012. It has held
that,
“22. By pointing out these Regulations, which are admittedly not
complied at any time by the complainant, it is submitted by the
respondent/accused that the complainant has failed to establish the
legally enforceable liability of the respondent/accused with respect
to the said cheque.
23. Regarding presumption u/s 118 and 139 of the Negotiable
Instruments Act, much is argued by the Learned Counsel for the
appellant/complainant that the necessary facts required to prove and
required to raise the presumption under said Sections in favour of
the complainant have already been proved by examination of P.W. 1
and P.W. 2 as to giving of the cheque by the accused and signing the
same in presence of P.W. 2. In that event, the burden was on the
accused to rebut the said presumption by leading the cogent
evidence, further argued. It is further submitted that accused had
failed to rebut the said presumption as he did not enter into the
witness box so also he did not examine any defence witnesses.”
The facts of cited decisions are different from the facts in the case in
hand.
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45. As I discussed above the accused has not brought on
record any material by way of cross-examination or in the statement of
313 of the Code. Therefore, it becomes clear that the accused has
utterly failed to rebut the presumption raised under Section 118 & 139
of the Act. Therefore, I hold that the complainant has duly proved that
accused has issued the subject cheque from her account in favour of the
complainant towards the legally enforceable debt. Hence, point No. 1 is
answered in the “affirmative”.
As to Point No. 2:-
46. As per contentions and evidence of complainant, the
cheque No. 057052 (Exh. 29) was presented for encashment. However,
the cheque was returned with remark as ‘Exceeds arrangements’. In
support of said contentions, the complainant produced the cheque
return memo of (Exh. 30). It is seen from the bank memo (Exh. 30)
that, the cheque was returned with endorsement ‘Exceeds
arrangements’. The memo (Exh. 30) bears signature of concerned
bank. Therefore, here it is necessary to mention Section 146 of the
Negotiable Instruments Act;
“
The Court shall, in respect of every proceeding
under this Chapter, on production of bank's slip or memo
having thereon the official mark denoting that the cheque
has been dishonored, presume the fact of dishonor of
such cheque, unless and until such fact is disproved”.
47. So, as per the aforesaid provision, the bank memo is having
presumptive value as per Section 146 of the N.I Act. Ld. Advocate for
the accused has submitted that, the presumption U/s. 146 is available
only if the memo bears official mark. It is his submission that, in the
cheque returned memo at Exh. 30, it doesn’t bear official mark and
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therefore the presumption is not available. He has placed reliance on
the decision of Hon’ble Bombay High Court in Shri. Madhusudan
Shrikrishan V/s. M/s. Emkay Exports and others, Criminal Application
No. 441 of 2007, decided on 08/08/2007. It has observed that,
“On a specific query before this court, the complainant through the
learned advocate has stated that summary suit no. 2171 of 2004 has
been filed on the Original side of this court for recovery of Rs.
25,22,626/- in respect of the two bills or goods sold and delivered
to the present respondent No. 1 viz M/s. Emkay Exports and
reference in the said suit is to the disputed dishonoured cheque
dated 15/07/2004. It is, thus, clear that the applicant has already
resorted to a civil remedy for the recovery of the amount concerning
the dishonoured cheque. ”
He has also placed reliance on the the decision of Hon’ble Bombay
High Court in Smt. Vandana W/o. Akhilesh Pandey V/s. Smt. Abhilasha
W/o. Anil Pande, Criminal Appeal No. 360 of 2017, decided on
08/08/2018. It has observed that,
“17. Analysis of the provisions of the said Act, particularly
Sections 138, 142 and 142 and 146 thereof, shows that
cognizance of the offence under Section 142 of the said Act
could not have been taken by the Court in the present case
because the basic fact of dishonour of cheque could not be
proved by the appellant. The appellant failed to prove
dishonour of cheque by any mode other than the one provided
under Section 146 of the said Act. The memo of return of
cheque in the present case admittedly did not bear official mark
of the Bank, due to which presumption in favour of the
appellant did not arise. Therefore, the complaint in the present
case was correctly rejected by the trial Court, thereby acquitting
the respondent.”
It is also submitted by the Ld. Advocate for the accused that, though the
cheque returned memo is exhibited, then also it is not proved and
cannot be read in evidence. He has placed reliance on the decision of
Hon’ble Bombay High Court in Geeta Marine Services Pvt. Ltd. V/s. The
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State & Another, Criminal Application No. 2633 of 2008, decided on
22/09/2008. In this decision, the decision of Hon’ble Supreme Court of
India in R.V.E.Venkatachala Gounder Vs. Arulmigu Viswesaraswami and
V. P. Temple and another (AIR 2003 Supreme Court 4548) has been
discussed. It has been observed in para no. 20 that,
“20. The learned counsel for the defendant-respondent has relied on
the Roman Catholic Mission v. State of Madras and another, AIR 1966
SC 1457 in support of his submission that a document not admissible
in evidence, though brought on record, has to be excluded from
consideration. We do not have any dispute with the proposition of law
so laid down in the abovesaid case. However, the present one is a case
which calls for the correct position of law being made precise.
Ordinarily an objection to the admissibility of evidence should be
taken when it is tendered and not subsequently. The objections as to
admissibility of documents in evidence may be classified into two
classes :- (i) an objection that the document which is sought to be
proved is itself inadmissible in evidence; and (ii) where the objection
does not dispute the admissibility of the document in evidence but is
directed towards the mode of proof alleging the same to be irregular
or insufficient. In the first case, merely because a document has been
marked as 'an exhibit', an objection as to its admissibility is not
excluded and is available to be raised even at later stage or even in
appeal or revision. In the latter case, the objection should be taken
before the evidence is tendered and once the document has been
admitted in evidence and marked as an exhibit, the objection that it
should not have been admitted in evidence or that the mode adopted
for proving the document is irregular cannot be allowed to be raised at
any stage subsequent to the marking of the document as an exhibit.
The later proposition is a rule of fair play. The crucial test is whether
an objection, if taken at the appropriate point of time would have
enabled the party tendering the evidence to cure the defect and resort
to such mode of proof as would be regular. The omission to object
becomes fatal because by his failure the party entitled to object allows
the party tendering the evidence to act on an assumption that the
opposite party is not serious about the mode of proof. On the other
hand, a prompt objection does not prejudice the party tendering the
evidence, for two reasons: firstly, it enables the court to apply its mind
and pronounce its decision on the question of admissibility then and
there: and secondly, in the event of finding of the Court on the mode
of proof sought to be adopted going against the party tendering the
evidence, the opportunity of seeking indulgence of the Court for
permitting a regular mode or method of proof and thereby removing
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the objection raised by the opposite party, is available to the party
leading the evidence. Such practice and procedure is fair to both the
parties. Out of the two types of objections, referred to hereinabove, in
the later case failure to raise a prompt and timely objection amounts
to waiver of the necessity for insisting on formal proof of a document,
the document itself which is sought to be proved being admissible in
evidence. In the first case, acquiescence would be no bar to raising the
objection in superior Court." (Emphasis supplied)”
In the case in hand also, the cheque returned memo is already
exhibited. I have perused the statement of accused recorded U/s. 313
of the Code of Criminal Procedure and perusal of it seems that, the
following question was asked to the accused:
Q. It has further come in his evidence that, complainant
company deposited the said cheque in their bank i.e. however vide
memo dated 08/0/2015, cheque was returned unpaid with
endorsement “Exceeds arrangement” what you have to say about it?
Ans.: It is true.
It seems from the above question and answer the accused has admitted
that the cheque was dishonoured with reason “Exceeds arrangements”.
Ld. Advocate for the accused has submitted that, the statement of the
accused recorded U/s. 313 of Cr.P.C. cannot be relied upon. He placed
reliance on the decision of Hon’ble Supreme Court of India in Dehal
Singh V/s. State of Himachal Pradesh, Criminal Appeal No. 1216 of
2005, decided on 31/08/2010. It has observed that,
“21. We do not find any substance in this submission of Mr. Mishra.
Statement under Section 313 of the Code of Criminal Procedure is taken
into consideration to appreciate the truthfullness or otherwise of the
case of prosecution and it is not an evidence. Statement of an accused
under Section 313 of the Code of Criminal Procedure is recorded
without administering oath and, therefore, said statement cannot be
treated as evidence within the meaning of Section 3 of the Evidence Act.
Appellants have not chosen to examine any other witness to support this
plea and in case none was available they were free to examine
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themselves in terms of Section 315 of the Code of Criminal Procedure
which, inter alia, provides that a person accused of an offence is a
competent witness of the defence and may give evidence on oath in
disproof of the charges. There is reason not to treat the statement under
Section 313 of the Code of Criminal Procedure as evidence as the
accused cannot be cross-examined, with reference to those statements.
However, when an accused appears as witness in defence to disproof the
charge, his version can be tested by his cross-examination. Therefore, in
our opinion the plea of the appellant Dinesh Kumar that he had taken
lift in the car is not fit to be accepted only on the basis of the statements
of the appellants under Section 313 of the Code of Criminal Procedure.”
48. He has also placed reliance on the decision of Hon’ble
Supreme Court of India in State of Maharashtra V/s. Dr. R. B.
Chowdhary & 2 Ors., 1968 AIR 110, 1967 SCR (3) 708, decided on
19/04/1967. It has held that, “the first argument is correct. No doubt
under the Code of Criminal Procedure the statement of accused may be
taken into consideration in an inquiry or trial but it is not strictly
evidence in the case. An accused when he makes his statement U/s.
342 does not depose as a witness because no oath is administered to
him, when he is examined under that section. The recent amendment
of the code, however enables the accused to give evidence on his own
behalf U/s. 342-A and this is only when an accused offers in writing to
give evidence on his own behalf that his statement can be read as
evidence proper. However, the matter is not to be decided on whether
the statement of the Madane could be read as evidence or not but who
was the editor of the newspaper. ” In the case in hand, the cheque
returned memo is marked as exhibit number and at that time, the
accused had not taken any objection. Further, in the statement
recorded U/s. 313 of the Code of Criminal Procedure, the accused has
admitted that, the cheque was dishonoured. It is settled position of law
that, the prosecution must stand on its own legs and cannot taken
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advantage of the weakness in the defence case. The Hon’ble Supreme
Court of India in the case of Balaji Gunthu Dhule V/s. State of
Maharashtra, 2012 (11) SCC 685 has observed that, “ the statement of
accused can be used to test the accuracy of the excultatory nature of the
admission. If any, made by the accused, it can be taken into
consideration in an inquiry or trial but still it is not strictly evidence in
the case.”
49. Admittedly, the said presumption available under Section
146 of N.I.Act is rebuttable. However, nothing is brought on record by
the accused to rebut the presumption in respect of bank memo (Exh.
30). After perusal of said memo, it is seen that the cheque No. 057052
(Exh. 29) was dishonored for reason ‘Exceeds Arrangement’. However,
nothing is brought by the accused on record to show his bonafide as
well as also to show that at the relevant time, the amount mentioned in
the cheque was pending in his account. Hence, no hurdle to held that
the cheque was dishonored with reason ‘Exceeds arrangements’.
Consequently, point No. 2 is answered in the “affirmative”.
As to Point Nos. 3 and 4 :-
50. As per evidence of Tushar Kanakrai Ghelani (C.W.1), after
dishonor of cheque of Rs. 9,35,413.52 (Exh. 29), he issued demand
notice dated 21/04/2015 (Exh. 31). The complainant has filed postal
receipt at Exh. 32 to show that, the notice was issued on the correct
address of the accused. In support of said contention, the complainant
produced demand notice dated 21/04/2015 (Exh. 31) and postal
receipt (Exh. 32). Upon perusal of demand notice (Exh. 31), postal
receipt (Exh. 32), it is seen that, the complainant issued demand notice
on 21/04/2015 to the accused. The demand notice was sent on the
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following address :-
To,
Neelam Maharshi Joshi.
Client Code- CIX644
54/G, 3rd Floor, Room No. 25,
Gow Raksha Estate, Fanas Wadi,
S. P. Marg, Mumbai – 400 002.
51. Ld. advocate for the accused has submitted that, the
complainant has not filed any document on record to show that, the
demand notice was served to the accused. It is his submission that, it is
obligatory on the part of complainant to prove the fact of service of
notice. He has also placed reliance on the the decision of Hon’ble
Madhya Pradesh High Court in Satyendra Tiwari @ Sonu V/s. State of
M.P. and Another, Misc. Criminal Case No. 6235 of 2010, decided on
05/06/2014. It has observed that,
“The first condition is stipulated in the proviso (b)
of the Section 138 of the NI Actis service of notice of demand, which is a
condition precedent for filing a complaint under section 138 of NI Act. Under
this clause (b) of the proviso, the holder of the cheque in due course is
required to give a written notice to the drawer of the cheque within a period
of thirty days from the date of receipt of information from the bank regarding
the return of the cheque as unpaid ”
I have perused the cross-examination of the complainant and it seems
that, accused nowhere challenged his aforesaid residential address. It
seems from the postal receipt at Exh. 32 that, the said notice was
delivered on the correct address of accused. Therefore, there is no
hurdle to held that complainant sent demand notice on the correct
address of accused.
52. Ld. Advocate for the accused has submitted that, the
complainant has not shown his document to show that, at the time of
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giving instructions to prepare the notice, he was authorized to give
instruction to prepare the notice. The notice can be given by any of the
person from the company or it can be given by the directors. Therefore,
I do not found any substance in the submission of the accused. Here, it
is necessary to mention the observations given by Hon'ble Supreme
Court of India in case of C. C. Alavi Haji V/s. Palapetty Muhammeed
and anr reported in All MR (Cri.) 2007. Wherein it is observed by
Hon'ble Supreme Court of India that,
“15. Insofar as the question of disclosure of necessary particulars
with regard to the issue of notice in terms of proviso (b) of Section
138 of the Act, in order to enable the Court to draw presumption
or inference either under Section 27 of the G.C. Act or Section 114
of the Evidence Act, is concerned, there is no material difference
between the two provisions. In our opinion, therefore, when the
notice is sent by registered post by correctly addressing the drawer
of the cheque, the mandatory requirement of issue of notice in
terms of Clause (b) of proviso to Section 138 of the Act stands
complied with. It is needless to emphasise that the complaint must
contain basic facts regarding the mode and manner of the issuance
of notice to the drawer of the cheque. It is well settled that at the
time of taking cognizance of the complaint under Section 138 of
the Act, the Court is required to be prima facie satisfied that a case
under the said Section is made out and the aforenoted mandatory
statutory procedural requirements have been complied with. It is
then for the drawer to rebut the presumption about the service of
notice and show that he had no knowledge that the notice was
brought to his address or that the address mentioned on the cover
was incorrect or that the letter was never tendered or that the
report of the postman was incorrect. In our opinion, this
interpretation of the provision would effectuate the object and
purpose for which proviso to Section 138 was enacted, namely, to
avoid unnecessary hardship to an honest drawer of a cheque and
to provide him an opportunity to make amends.
17. It is also to be borne in mind that the requirement of giving of
notice is a clear departure from the rule of Criminal Law, where
there is no stipulation of giving of a notice before filing a
complaint. Any drawer who claims that he did not receive the
notice sent by post, can, within 15 days of receipt of summons
from the court in respect of the complaint under Section 138 of the
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Act, make payment of the cheque amount and submit to the Court
that he had made payment within 15 days of receipt of summons
(by receiving a copy of complaint with the summons) and,
therefore, the complaint is liable to be rejected. A person who does
not pay within 15 days of receipt of the summons from the Court
along with the copy of the complaint under Section 138 of the Act,
cannot obviously contend that there was no proper service of
notice as required under Section 138, by ignoring statutory
presumption to the contrary under Section 27 of the G.C. Act and
Section 114 of the Evidence Act. In our view, any other
interpretation of the proviso would defeat the very object of the
legislation. As observed in Bhaskarans case (supra), if the giving of
notice in the context of Clause (b) of the proviso was the same as
the receipt of notice a trickster cheque drawer would get the
premium to avoid receiving the notice by adopting different
strategies and escape from legal consequences of Section 138 of
the Act.”
In the matter in hand also, as discussed earlier, it is duly
established that the complainant sent demand notice on the correct
address of accused. As observed by Hon’ble Supreme Court of India in
the case of
C. C. Alavi Haji V/s. Palapetty Muhammeed and anr. (cited
supra), when the notice is sent by registered post by correctly
addressing the drawer of the cheque, the mandatory requirement of
issue of notice in terms of Clause (b) of proviso to Section 138 of the
Act stands complied with. Therefore, in matter in hand, the compliance
of Section 138(b) of the Act stands complied with by the complainant.
53. As already discussed in earlier points, it becomes clear that
the subject cheque (Exh. 29) was dishonored on 09/04/2015 for the
reason of ‘Exceed Arrangement’. It is seen from the record that, the
notice (Exh. 31) was posted on 28/04/2015 to the accused and so, it is
seen to be sent within 30 days of dishonor of cheque. As discussed
earlier, notice was duly served upon the accused. It is not defence of
the accused that he repaid the cheque amount within 15 days of notice
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and summons of this proceeding. So, point Nos. 3 and 4 are answered
in the “affirmative”.
As to Point No.5 :
54. In view of the above discussion, it reveals that the essential
ingredients of the offence punishable u/s 138 of the Act are proved by
the complainant. As already discussed in earlier points, it becomes clear
from memo (Exh. 30) that the cheque (Exh. 29) was dishonored on
09/04/2015. The notice (Exh. 31) was sent on 21/04/2015 and so, it is
seen to be issued within 30 days of dishonor of cheque (Exh. 29).
Therefore, the accused has to pay cheque amount within fifteen days
from 28/04/2015 but accused failed to pay it. Therefore, the cause of
action for this complaint was arose on 14/05/2015. The complainant
has to file complaint with 30 days from the day of cause of action. The
delay of two days has occurred to file the present complaint as the
complaint came to be filed on 16/06/2015 which ought to had file on
14/06/2015. The delay of two days was condoned by this court as per
order dated 11/01/2018. Therefore, the complaint is seen to be filed
within limitation. Hence, in view of entire evidence of the complainant
and failure of the accused to rebut presumptions given under Section
118 and 139 of the Act, it becomes clear that the accused has
committed an offence punishable u/s 138 of the Act. Consequently,
point No. 5 is answered in the “affirmative”.
AS TO POINT NO.6
55. Taking into consideration answer of points Nos. 1 to 5, it
becomes clear that, the complainant has duly proved his claim with
cogent evidence against the accused. The offence P/u/s. 138 of the
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Negotiable Instruments Act is established against the accused. After
considering the conduct of the accused and nature of offence, I do not
find any special reasons or justifications to extend the benefit of
probation to her vide Section 3 to 5 of the Probation of Offenders Act,
1958. Therefore, the accused is called upon to state on the point of
sentence.
Mumbai (Y. P. Pujari )
Date:- 09/10/2025 Metropolitan Magistrate
48th Court, Andheri, Mumbai.
Hearing on the point of sentence:
56. Accused and her advocate are present. Accused submitted
that, minimum sentence may be awarded. The complainant is absent
and his advocate is present. Ld. advocate for the complainant
submitted that, maximum punishment may be awarded.
57. The object of the Act is to enhance the credibility of the
negotiable instruments. The cheque involved in the case in hand is of
Rs. 9,35,413.52. In the present matter, on 08/04/2015 the disputed
cheque was presented to the drawee bank. If it would have had
encashed regularly, complainant could have received the amount in the
month of April 2015. That amount is admittedly lying with the accused.
Ld. Advocate for the complainant has submitted that, the object of the
Negotiable Instruments Act is required to be considered. He has placed
his reliance on the decision of Hon’ble Supreme Court of India in
Dalmia Cement (Bharat) Ltd. V/s. Galaxy Traders and Ors., AIR 2001
Supreme Court 676. It has held that,
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The Act was enacted and Section 138 thereof incorporated with a
specified object of making a special provision by incorporating a strict
liability so far as the cheque, a negotiable instrument, is concerned.
The law relating to negotiable instrument is the law of commercial
world legislated to facilitate the activities in trade and commerce
making provision of giving sanctity to the instruments of credit which
could be deemed to be convertible into money and easily passable
from one person to another. In the absence of such instruments,
including a cheque, the trade and commerce activities, in the present
day would, are likely to be adversely affected as it is impracticable for
the trading community to carry on with it the bulk of the currency in
force. The negotiable instruments are in fact the instruments of credit
being convertible on account of legality of being negotiated and are
easily passable from one hand to another. To achieve the objectives of
the Act, the legislature has, in its wisdom, thought it proper to make
such provisions in the Act for conferring such privileges to the
mercantile instruments contemplated under it and provide special
penalties and procedure in case the obligations under the instruments
are not discharged. The laws relating to the Act are, therefore, required
to be interpreted in the light of the objects intended to be achieved by
it despite there being deviations from the general law and the
procedure provided for the redressal of the grievances to the litigants.
Efforts to defeat the objectives of law by resorting to innovative
measures and methods are to be discouraged”.
I have perused the decision of Hon’ble Supreme Court of India in the
case of
R.Vijayan V. Baby and anthers AIR 2012 SC 528, in which it has
discussed and expressed several aspects to determine the amount of
compensation and interest on the cheque amount. Para Nos. 14 to 18 of
the above judgment needs to be reproduced here and those are as
under:
“As the provisions of Chapter XVII of the Act strongly
lean towards grant of reimbursement of the loss by way of
compensation, the courts should, unless there are special
circumstances, in all cases of conviction, uniformly exercise
the power to levy fine upto twice the cheque amount
(keeping in view the cheque amount and the simple interest
thereon at 9% per annum as the reasonable quantum of loss)
and direct payment of such amount as compensation.
Direction to pay compensation by way of restitution in
regard to the loss on account of dishonour of the cheque
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should be practical and realistic, which would mean not only
the payment of the cheque amount but interest thereon at a
reasonable rate. Uniformity and consistency in deciding
similar cases by different courts, not only increase the
credibility of cheque as a negotiable instrument, but also the
credibility of courts of justice.”
58. After going through above guidelines issued by Hon'ble
Supreme Court of India, it needs to maintain uniformity by awarding 9
% per annum interest on the cheques amount by way of compensation
to the complainant. If interest on cheque total amount (Rs.
9,35,413.52/-) at the rate of 9 % p.a. is calculated for the period of 92
months i.e. from the filing of present complaint (11/01/2018 to
09/10/2025), it comes to Rs. 6,45,435/-. Thus, the amount of Rs.
15,80,849/- is necessary to give to the complainant as an compensation.
59. The object of the Act is to enhance the credibility of the
negotiable instruments. There is no criminal antecedent of accused
came on record. Thus, after considering said circumstances, amount of
cheques, nature and manner of the offence, in my opinion, sentence to
suffer simple imprisonment for three months will be proper and
justified.
60. Hon'ble Supreme Court of India in the case of
Sugandhi
Sureshkumar Vs. Jagdishan, reported in AIR 2002 SC 681, held that in
case of offences under section 138 of the Act a Magistrate can alleviate
the grievance of the complainant by making resort to Section 357 (3) of
Criminal Procedure Code. In this case Hon’ble Supreme Court of India
also held that the Court may enforce order of compensation by
imposing sentence in default. Resultantly, following order is passed:
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ORDER
1. Accused Neelam Maharshi Joshi, Age : Adult, is
convicted under Section 255 (2) of the Code of
Criminal Procedure, 1973 for an offence punishable
under Section 138 of the Negotiable Instruments Act,
1881 and sentenced to suffer simple Imprisonment
for three months.
2. Accused is directed to pay compensation Rs.
15,80,849/- (Rs. Fifteen Lacs Eighty Thousand Eight
Hundred Forty Nine Only) to the complainant within
three months from today, in default to suffer Simple
Imprisonment for three months.
3. Accused to surrender to her bail bond.
4. Muddemal being an original cheque and bank memo,
be returned to the complainant after appeal period is
over.
5. No question of Set-off under Section 428 of the Code
of Criminal Procedure, 1973 as the accused has not
spent any period in the custody during the trial.
6. The copy of this Judgment shall be given to the convicted
accused, free of cost, in view of section 363(1) of the Code
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of Criminal Procedure, 1973.
7. Dictated and pronounced in open court.
Mumbai (Y. P. Pujari )
Date:- 09/10/2025 Metropolitan Magistrate
48th Court, Andheri, Mumbai.
Dictated On : 09/10/2025
Typed On : 09/10/2025
Signed On : 09/10/2025
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