Final Order 1

Order Details: Copy  of Judgment
Pdf Text: 1 C. C. NO. 1272/SS/2018
CNR No. : MHMM19-002970-2018
Received On : 07/03/2018
Registered On : 07/03/2018
Decided On : 07/05/2026
Duration :Y-08, M-02, D-00
IN THE COURT OF METROPOLITAN MAGISTRATE, ANDHERI (Court
No. 48), MUMBAI.
( Presided over by Y. P. Pujari )
C.C. No. 1272/SS/2018 Exh. 115
Mr. Parth Dilip Kambli.
Aged 26 years,Occu : Business
Residing at A-301, Raj Madhur,
Devidas Road, Borivali (West)
Mumbai – 400 103 -- Complainant
Versus
Mr. Pradeep Gajanan Rao.
Occu : Business.
Residing at 403, Darwin Puranik City,
Kasarvadawali, Ghodbunder Road,
Thane (West). -- Accused
OFFENCE PUNISHABLE UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT
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Appearance:- Adv. D. S. Patil/Amit Shirsath for the complainant.
Adv. Sushil Shukla/Prakash Patange for the accused.
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JUDGMENT
(Delivered on 07th of May 2026)
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 two cheques for total amount of Rs.
27,05,950/-.
The brief facts of complainant's case are as under:
02. It is averred by the complainant that, he knows the
accused. The accused represented him that he is in business of Shrimp
farming since 2005. He is doing business under the logo Kaustubh
Shrimp Farming at Redi Taluka Vegurla, Dist.: Sindhudurga. The
accused has acquired fish pond from Shri. Vishwanath Sambhaji Redkar
as per Agreement dated 19/10/2005. The accused represented to the
complainant that he is in financial crux and in need of fund for the
purpose of business. After discussion with the accused, the complainant
has started business of Shrimp farming under logo Kaustubh Shrimp
Farming JV. On the basis of joint venture and joint venture agreement
was executed on 10/05/2013. As per the terms of said agreement, he
has paid Rs. 16,00,000/- and repayment of this principle amount, the
accused has agreed to pay Rs. 1,50,000/- for every six months for a
period of six years along with profit of business. He further submitted
that, on 31/03/2014, the accused has executed receipt of
acknowledgment of Rs. 14,71,000/- and the balance amount of Rs.
1,29,000/- was also paid by the accused. The accused promised to issue
receipt for the said amount in due course. He has also paid Rs.
16,00,000/- to the accused as per the agreement. He has issued receipt
dated 31/03/2014. After payment of Rs. 16,00,000/- the accused has
demanded extra amount of Rs. 3,65,000/- by giving reasons that, the
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accused requires said amount for smooth running of business. He has
paid Rs. 3,65,000/- to the accused.
03. Complainant has further submitted that, the accused failed
to fulfill the said promise and for the repayment of amount received by
the accused, accused issued two cheques bearing cheque No. 000032
dated 15/12/2017 for Rs. 19,65,000/- and cheque No. 000033 dated
15/12/2017 for Rs. 7,40,950/-drawn on Bank of India, Aronda Branch,
Sindhudurg, issued in favour of complainant. Thereafter, the
complainant deposited the above said cheque for encashment in his
Bank namely Sarswat Co Op Bank Ltd., Andheri (East) branch, Mumbai.
The same was returned unpaid from drawee bank with endorsement
‘Funds Insufficient’. Accordingly, the Sarswat Co Op Bank Ltd., issued
memo dated 24/01/2018. 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 08/02/2018 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. 10 which were
read over and explained to the accused in vernacular, to which he
pleaded not guilty and claimed to be tried.
05. Accused has conducted the cross-examination of the
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complainant in which he has raised following defences:-
a) The complainant did not prove the transaction.
b) The complainant did not prove that the money was
given by the complainant to accused.
c) The complainant did not show his financial capacity
to pay the amount.
d) The present complaint is not tenable against the
present accused is also one of the partner of
Kaustubh Shrimp Farming JV.
e) The alleged amount is not shown in the income-tax
returns.
f) The contents of cheques are not filled by the accused.
g) The accused is not liable to pay the cheques amount.
06. The statement of accused under Section 313 of the Code of
Criminal Procedure, 1972 (in short 'the Code') was recorded vide Exh.
96. In his statement U/s. 313 of the Code, accused has submitted that,
false complaint has filed.
07. Heard Ld. Advocate D. S. Patil for complainant and Ld.
Advocate Shri. Sushil Shukla for accused and also perused and
considered the written notes of argument filed by complainant at Exh.
113.
08. From perusal of complaint, record and defence of the
accused, following points arise for my determination. I have recorded
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my finding and reasons thereon as under:
Sr. No. Points Findings.
1. Does the complainant prove that cheque No.
000032 (Exh. 35) and cheque no. 000033
(Exh. 36) were drawn by accused for legally
recoverable debt or other liability?
No.
2.
Does the complainant prove that the said
cheque returned unpaid for the reason “funds
Insufficient”?
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.
5.
Whether the accused has committed an
offence punishable under Section 138 of the
Negotiable Instruments Act ?
No.
6. What order? The accused
is acquitted
09. In order to prove his case, the complainant has filed his
evidence affidavit as a (C.W.1) at Exh. 13. Complainant has examined
one bank witness namely namely Seema Bharati as a (C.W.2) at Exh. 88
The complainant has also placed his reliance upon following
documents:
Description of documents Exhibit numbers
Xerox copy of agreement Article-A
Joint Venture Exh. 31
Confirmation given by accused dated
31/03/2014 and letter dated 17/11/2015,
15/12/2017
Exh. 32 to 34
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Original cheques Exh. 35 and 36
Cheque returned memos Exh. 37 and 38
Demand notice Exh. 39
Postal receipt Exh. 40
Sealed returned envelope from the post Exh. 41
Notice from the envelope Exh. 42
Authority letter Exh. 89
Copy of specimen signature form Exh. 9 0
Resolution Exh. 91
Account opening form Exh. 92
Circular in relation to general rules of the
banking
Exh. 93
Statement of Kaustubh Shrimp Farm J.V. Exh. 94
Accused has examined one bank witness namely Rohit Jankalal Urkude
as a (D.W.1) at Exh. 101.
REASONS
As to Point No.1:-
10. In order to prove the allegation leveled against the
accused, the complainant has filed his evidence affidavit as a (C.W.1) at
Exh. 13. As per his evidence, he knows the accused. The accused
represented him that he is in business of Shrimp farming since 2005. He
is doing business under the logo Kaustubh Shrimp Farming at Redi
Taluka Vegurla, Dist.: Sindhudurga. The accused has acquired fish pond
from Shri. Vishwanath Sambhaji Redkar, as per Agreement dated
19/10/2005. The accused represented him that he is in financial crux
and need of fund for the purpose of business. After discussion with the
accused, he has started business of Shrimp farming under logo
Kaustubh Shrimp Farming JV. On the basis of joint venture and joint
venture agreement was executed on 10/05/2013. As per the terms of
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said agreement, he has paid Rs. 16,00,000/- and repayment of this
principle amount, the accused has agreed to pay Rs. 1,50,000/- for
every six months for a period of six years along with profit of business.
He further submitted that, on 31/03/2014, the accused has executed
receipt of acknowledgment of Rs. 14,71,000/- and the balance amount
of Rs. 1,29,000/- was also paid by the accused. The accused promised
to issue receipt for the said amount in due course. He has also paid Rs.
16,00,000/- to the accused as per the agreement. He has issued receipt
dated 31/03/2014. After payment of Rs. 16,00,000/- the accused has
demanded extra amount of Rs. 3,65,000/- by giving reasons that, the
accused requires said amount for of smooth running of business. He
has paid Rs. 3,65,000/- to the accused.
11. It has further come in his evidence that, the accused failed
to fulfill the said promise and for the repayment of amount received by
the accused, accused issued two cheques bearing cheque No. 000032
dated 15/12/2017 for Rs. 19,65,000/- and cheque No. 000033 dated
15/12/2017 for Rs. 7,40,950/-drawn on Bank of India, Aronda Branch,
Sindhudurg, issued in his favour. Thereafter, he deposited the above
said cheque for encashment in his Bank namely Sarswat Co Op Bank
Ltd., Andheri (East) branch, Mumbai. The same was returned unpaid
from drawee bank with endorsement ‘Funds Insufficient’.
12. The accused has conducted the cross-examination of the
complainant. In his cross-examination, the accused has raised defences
that,
a) The complainant did not prove the transaction.
b) The complainant did not prove that the money was
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given by the complainant to accused.
c) The complainant did not show his financial capacity
to pay the amount.
d) The present complaint is not tenable against the
present accused is also one of the partner of
Kaustubh Shrimp Farming JV.
e) The alleged amount is not shown in the income-tax
returns.
f) The contents of cheques are not filled by the accused.
g) The accused is not liable to pay the cheques amount.
13. Before adverting towards the merit of case, it is necessary
to deal with some legal principle 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. Vasanthakumar v/s. Vijayakumari (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
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.
” In the present
case, the accused has not sent reply to the demand notice of the
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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 his 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 cheques (Exh. 35 and 36). This shows that, the signature
of accused from cheques (Exh. 35 and 36) is not in dispute. Therefore,
the presumptions under Section 118 and 139 of the Act are raised in
favor of complainant.
15. 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)
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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
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
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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
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 his signature on the cheques
(Exh. 35 and 36), 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
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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
he raised defences that:-
a) The complainant did not prove the transaction.
b) The complainant did not prove that the money was
given by the complainant to accused.
c) The complainant did not show his financial capacity
to pay the amount.
d) The present complaint is not tenable against the
present accused is also one of the partner of
Kaustubh Shrimp Farming JV.
e) The alleged amount is not shown in the income-tax
returns.
f) The contents of cheques are not filled by the accused.
g) The accused is not liable to pay the cheques amount.
The statement of accused under Section 313 of the Code is recorded
wherein he submitted that false complaint has filed.
19. So far as the first defence of the accused is concerned, the
accused has submitted that, the accused did not receive the amount as
alleged by the complainant. Ld. Advocate for the complainant has
submitted that, the complainant has filed joint venture at Exh. 31 and
also confirmation letter issued by the accused at Exh. 32 to 34. Ld.
Advocate for the accused has submitted that there is discrepancy in the
joint venture agreement at Exh. 31. In the cross-examination also the
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accused has asked question in respect of overwriting made by the
complainant in the joint venture agreement at Exh. 31. I have perused
the said joint venture agreement at Exh. 31, it seems that, it is executed
between complainant and accused. It is a notarized document. In
clause no. 5, there is overwriting in the amount. It seems that, initially
the amount was Rs. 10,00,000/- was mentioned and later on it was
corrected as Rs. 16,00,000/-. Further, in clause no. 8 also there is
overwriting and the tenure of joint venture was earlier mentioned as 8
seasons or 4 years but it was overwritten as 12 seasons and 6 years. In
the clause no. 15 also, there is overwriting about the tenure of the
present agreement and earlier it seems to be written as “ 8 Shrimp
Farming Seasons or 4 years” and later on there is overwriting as “12
Shrimp Farming Season or 6 years”. Admittedly, all these overwriting
can be easily identified by necked eyes.
20. Ld. Advocate for the accused has submitted that, the joint
venture agreement at Exh. 31 is doubtful because it has multiple
overwriting. Admittedly, in the joint venture agreement, there is
multiple overwriting. Ld. Advocate for complainant has invited my
attention towards the balance confirmation letter issued by accused at
Exh. 32, 34-A, 33, and 34. I have perused these documents and it
seems that, these documents were issued by the accused in favour of
complainant and confirmed the outstanding amount. Ld. Advocate for
the accused has conducted the cross-examination of the complainant
wherein also the accused has conducted detailed cross-examination on
these documents but nothing has been brought on record to discard his
evidence.
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21. I have perused the decision of Hon’ble Supreme Court of
India in Rangappa’s Case (Cited supra) and perusal of it makes clear
that, once the accused has admitted her signatures on the cheque and
issuance of cheques then 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 the case of Sanjabij Tari V/s. Kishore
S. Borcar & Anr., Criminal Appeal No. 1755 of 2010, decided on
25/09/2025. It has held that,
“This Court also takes judicial notice of the fact that some District
Courts and some High Courts are not giving effect to the
presumptions incorporated in Sections 118 and 139 of NI Act and
are treating the proceedings under the NI Act as another civil
recovery proceedings and are directing the complainant to prove the
antecedent debt or liability. This Court is of the view that such an
approach is not only prolonging the trial but is also contrary to the
mandate of Parliament, namely, that the drawer and the bank must
honour the cheque, otherwise, trust in cheques would be irreparably
damaged.”
22. Perusal of the above cited decision, it makes clear that,
once the accused has admitted his signature and issuance of cheques,
then burden lies on the accused to rebut the presumption arises U/s.
118 and 139 of Negotiable Instruments Act. In the case in hand, the
burden lies on the accused to rebut the presumption because the
accused did not deny his signature nor denied issuance of cheques. The
burden is on the accused to rebut the presumption and therefore it is
necessary to produce the evidence of the parties brought on record to
rebut the presumption.
23. Ld. Advocate for the accused has submitted that the
complainant did not file any document to show that he was having
sufficient financial capacity to pay the money to the accused. I have
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perused the decision of Hon’ble Supreme Court of India in Sanjabij
Tari’s case (Cited supra). It has held that,
“It is pertinent to mention that in the present case, the
Respondent No.1- Accused has filed no documents and/or
examined any independent witness or led any evidence with
regard to the financial incapacity of the Appellant-
Complainant to advance the loans in question. For instance,
this Court in Rajaram S/o Sriramulu Naidu (Since Deceased)
Through LRs. vs. Maruthachalam (Since Deceased) Through
LRs., (2023) 16 SCC 125 has held that presumptions under
Sections 118 and 139 of the NI Act can be rebutted by the
accused examining the Income Tax Officer and bank officials of
the complainant/drawee.”
In the case in hand, the accused did not examine any income-tax
officer or bank officers. Therefore, it has brought on record that, the
complainant has sufficient income. Further, the accused did not send
reply to the demand notice. The accused ought to have sent reply to
the demand notice and he must have raised a defence. Further, I have
perused the JV agreement filed at Exh. 75. In the JV agreement, it is
mentioned that, the complainant shall infuse a sum of Rs. 10,00,000/-
on the date of execution. Further, the receipt filed at Exh. 32, 34-A, 33
and 34 itself shows that, the amount was given by the complainant to
the accused.
24. Ld. Advocate for the accused has raised a defence that, the
present complaint is not maintainable against the present accused. It is
his submission that, the Kaustubh Shrimp Farming JV is a partnership
firm and the complainant and accused both are its partners and
therefore, the cheque issued from the account of partnership firm and
signed by one partner and issued in favour of another partner then the
other partner is also required to be made an accused and therefore, the
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present complaint is not maintainable. Here, it is required to ascertain
the status of Kaustubh Shrimp Farming JV. In the case in hand, the
complainant came with a case that, Kaustubh Shrimp Farming JV is a
joint venture. It is the submission of accused that, it is a partnership
firm. I have perused the joint venture agreement filed at Exh. 31 and
75. Perusal of these agreements it seems that, it is mentioned in clause
no. 2 that, “It is expressly understood between the parties that there is
no intention to create any partnership between them. ” therefore, this
clause itself make it clear that, there was no intention between the
parties to create any partnership between them. Therefore, it cannot be
said that, the Kaustubh Shrimp Farming JV is a partnership firm.
Therefore, it made clear that, Kaustubh Shrimp Farming JV is a joint
venture.
25. Ld. Advocate for the accused has submitted that though the
accused no. 1 is a joint venture, then also the rules of Partnership firm
are applicable it. I have perused the record and the position of joint
venture, it seems that the joint venture is not so different from the
partnership firm and as per the recent position of law , the rules of
partnership firm are applicable to the joint venture.
26. Ld. Advocate for the accused has submitted that, the
cheque issued by one of the partner of the partnership firm in favour of
another partner is not maintainable because the other person is also
required to made an accused and therefore, in absence of another
partner as an accused the complaint is not maintainable. He has placed
reliance on the decision of Hon’ble Supreme Court of India in Aneeta
Hada V/s. M/s. Godfather Travels & Tours, (2012) 2 Bankmann (SC)
120. It has held that,
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“33. The word ‘deemed’ used in Section 141 of the Act applies to the
company and the persons responsible for the acts of the company. It
crystallizes the corporate criminal liability and vicarious liability of a
person who is in charge of the company. What averments should be
required to make a person vicariously liable has been dealt with in
SMS Pharmaceuticals Ltd. (supra). In the said case, it has been opined
that the criminal liability on account of dishonour of cheque primarily
falls on the drawee company and is extended to the officers of the
company and as there is a specific provision extending the liability to
the officers, the conditions incorporated in Section 141 are to be
satisfied. It has been ruled as follow:-
“It primarily falls on the drawer company and is extended to
officers of the company. The normal rule in the cases involving
criminal liability is against vicarious liability, that is, no one is to be
held criminally liable for an act of another. This normal rule is,
however, subject to exception on account of specific provision
being made in the statutes extending liability to others. Section
141 of the Act is an instance of specific provision which in case an
offence under Section 138 is committed by a company, extends
criminal liability for dishonor of a cheque to officers of the
company. Section 141 contains conditions which have to be
satisfied before the liability can be extended to officers of a
company. Since the provision creates criminal liability, the
conditions have to be strictly complied with. The conditions are
intended to ensure that a person who is sought to be made
vicariously liable for an offence of which the principal accused is
the company, had a role to play in relation to the incriminating act
and further that such a person should know what is attributed to
him to make him liable.” After so stating, it has been further held
that while analyzing Section 141 of the Act, it will be seen that it
operates in cases where an offence under Section 138 is committed
by a company. In paragraph 19 of the judgment, it has been clearly
held as follows: -
“There is almost unanimous judicial opinion that necessary
averments ought to be contained in a complaint before a person
can be subjected to criminal process. A liability under Section 141
of the Act is sought to be fastened vicariously on a person
connected with a Company, the principal accused being the
company itself. It is a departure from the rule in criminal law
against vicarious liability.” ”
He has also placed reliance on the decision Hon’ble Supreme
Court of India in Pawan Kumar Goel V/s. State of U. P. and Another,
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Criminal Application Nos. 1999, 2000, 2001,2002,2003 of 2022, Special
Leave Petition (Cri) Nos. 1697, 3563, 3566, 3567, 4471 of 2020,
decided on 17/11/2022. It has held that,
“ 21. This issue stands concluded by a decision of three-Judge
Bench of this Court in the case of Aneeta Hada Vs. Godfather Travels &
Tours (P) Ltd. (Supra), wherein it has been held that for maintaining
the prosecution under Section 141 of NI Act, arraigning of the company
as an accused is imperative and non-impleadment of the company
would be fatal for the complaint. It may be relevant to extract the
following from the said judgment :-
“58. Applying the doctrine of strict construction, we are of the
considered opinion that commission of offence by the company is
an express condition precedent to attract the vicarious liability of
others. Thus, the words “as well as the company” appearing in the
Section make it absolutely unmistakably clear that when the
company can be prosecuted, then only the persons mentioned in
the other categories could be vicariously liable for the offence
subject to the averments in the petition and proof thereof. One
cannot be oblivious of the fact that the company is a juristic person
and it has its own respectability. If a finding is recorded against it,
it would create a concavity in its reputation. There can be
situations when the corporate reputation is affected when a
director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible
conclusion that for maintaining the prosecution under Section 141
of the Act, arraigning of a company as an accused is imperative.
The other categories of offenders can only be brought in the
dragnet on the touchstone of vicarious liability as the same has
been stipulated in the provision itself.” ”
He has also placed reliance on the decision of Hon’ble Kerala
High Court in P. I. Moideen Kutty V/s. Abdul Rasheed V., CRL. Rev.
Petition No. 39 of 2016, decided on 10/07/2023. It has held that,
“15. While answering the above questions, the Apex Court held
that the company cannot be impleaded as an additional accused
subsequent to the filing of the complaint, once limitation
prescribed for taking cognizance of the offence under Section 142
has expired. Similarly, it has been held that if the complainant fails
to make specific averments against the company in the complaint
alleging commission of offence punishable under Section 138 of
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the N.I. Act, the same cannot be rectified by taking recourse to
general principles of criminal jurisprudence. It has been held
further that unless the company or firm has committed an offence
punishable under Section 138 of the N.I. Act as a principal accused,
persons mentioned in sub-section (1) and (2) of Section 141 of the
N.I. Act would not be liable to be convicted on the basis of the
principles of vicarious liability. Further, it has been held that in a
prosecution alleging commission of offence punishable under
Section 138 of the N.I. Act, the director of a company would not be
liable to be proceeded without there being any averments in the
complaint that the director arrayed as an accused was in charge of
and responsible for the conduct and business of the company.
16. On evaluation of the legal position, the present complaint filed
by the complainant against the accused/revision petitioner without
arraying the firm as an accused would not sustain. Since the
cheque was one belonged to the firm, the complainant should have
arrayed the firm as an accused and the directors, if any, by
disclosing their complicity in detail so as to warrant conviction and
sentence provided under Section 138 of the N.I. Act.”
I have perused the above referred decisions and perusal of these
decisions, it makes clear that in the case of company, the company must
be made an accused. In the case in hand, the accused came with a
defence that, accused no. 1 is a partnership firm and being a
partnership firm, the cheque issued from the account of partnership
firm in favour of one partner signed by the other is not maintainable.
Ld. Advocate for the accused has submitted that, the partnership firm is
not a legal entity and therefore, the cheque issued by one partner in
favour of another partner is not maintainable. He has placed reliance
on the decision of Hon’ble Supreme Court of India in Malabar Fisheries
Company, Calicut V/s. Commissioner of Income Tax, Kerala, Civil 196
and 199 of 1973, decided on 19/09/1979. It has held that,
“ Having regard to the above discussion, it seems to us clear that a
partnership firm under the Indian Partnership Act, 1932 is not a
distinct legal entity apart from the partners constituting it and
equally in law the firm as such has no separate rights of its own in
the partnership assets and when one talks of the firm's property. Or
firm's assets all that is meant is property or assets in which all
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partners have a joint or common interest. If that be the position, it
is difficult to accept the contention that upon dissolution the firm's
rights in the partnership assets are extinguished. The firm as such
has no separate rights of its own in the partnership assets but it is
the partners who own jointly in common the assets of the
partnership and, therefore, the consequences of the distribution,
division or allotment of assets to the partners which flows upon
dissolution after discharge of liabilities is nothing but a mutual
adjustment of rights between the partners and there is no question
of any extinguishment of the firm's rights in the partnership assets
amounting to a transfer of assets within the meaning of s. (47) of
the Act. In our view, therefore, there is no transfer of assets
involved even in the sense of any extinguishment the firm's rights
in the partnership assets when distribution takes place upon
dissolution. ”
I have also perused the decision of Hon’ble Supreme Court of
India in the case of Dhansingh Prabhu V/s. Chandrashekhar and
Another, CRIMINAL APPEAL NO.________OF 2025, (Arising out of
Special Leave Petition (Criminal) No. 5706 of 2024), decided on
14/07/2025. It has held that,
“9.8 However, jurisprudentially speaking, the partners of a
partnership firm constitute the firm and a firm is a compendious
term for the partners of a firm. This is opposed to the position of
a director in a company which is a body corporate stricto sensu
and such a company is a separate juristic entity vis-à-vis the
directors. On the other hand, a partnership firm has no legal
recognition in the absence of its partners. If a partnership firm is
liable for the offence under Section 138 of the Act, it would imply
that the liability would automatically extend to the partners of
the partnership firm jointly and severally. This underlying
distinction between a partnership firm and a company which is a
body corporate has to be borne in mind while dealing with an
offence committed by a company or a partnership firm, as the
case may be, within the meaning of Section 138 read with
Section 141 of the Act. To reiterate, in the case of a partnership
firm, there is no concept of vicarious liability of the partners as
such. The liability is joint and several because a partnership firm
is the business of partners and one cannot proceed against only
the firm without the partners being made liable. 9.9 Therefore,
even in the absence of partnership firm being named as an
accused, if the partners of the partnership firm are proceeded
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against, they being jointly and severally liable along with the
partnership firm as well as inter-se the partners of the firm, the
complaint is still maintainable. The accused in such a case would
in substance be the partners of the partnership firm along with
the firm itself. Since the liability is joint and several, even in the
absence of a partnership firm being proceeded against by the
complainant by issuance of legal notice as mandated under
Section 138 of the Act or being made an accused specifically in a
complaint filed under Section 200 of CrPC, (equivalent to Section
223 of the BNSS), such a complaint is maintainable. 9.10 Thus,
when it is a case of an offence committed by a company which is
a body corporate stricto sensu, the vicarious liability on the
categories of persons mentioned in sub-section (1) and sub-
section (2) of Section 141 of the Act accordingly would be
proceeded against and liable for the offence under Section 138 of
the Act. In the case of a partnership firm on the other hand, when
the offence has been proved against a partnership firm, the firm
per se would not be liable, but liability would inevitably extend to
the partners of the firm inasmuch as they would be personally,
jointly and severally liable with the firm even when the offence is
committed in the name of the partnership firm. 9.11 To reiterate,
when the partnership firm is only a compendious name for the
partners of the firm, any offence committed under Section 138
read with Section 141 of the Act would make the partners of the
firm jointly and severally liable with the firm. If, on the other
hand, the Parliament intended that the partners of the firm be
construed as separate entities for the purpose of penalty, then it
would have provided so by expressly stating that the firm, as well
as the partners, would be liable separately for the offence under
Section 138 of the Act. Such an intention does not emanate from
Section 141 of the Act as the offence proved against the firm
would amount to the partners of the firm also being liable jointly
and severally with the firm. Therefore, there is no separate
liability on each of the partners unless sub- section (2) of Section
141 applies, when negligence or lack of bona fides on the part of
any individual partner of the firm has been proved. ”
Perusal of the above referred decisions, it makes clear that, the
partnership firm is not a separate legal entity. Therefore, though
partnership firm is not added as party then it does not affect on the
complaint. In the case in hand, the partnership firm is added as an
accused but as it made clear by the Hon’ble Supreme Court of India in
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the case of Dhansingh Prabhu’ s case (Cited supra) that the partnership
firm has no separate legal entity.
27. Ld. advocate for the accused has submitted that, the
cheque issued from an account maintained in the name of partnership
firm by one drawer in favour of another partner is not maintainable.
He has placed reliance on the decision of Hon’ble Bombay High Court in
Mukesh Raoji Navadhare V/s. Ajit Bhaskar Kasbekar & Another,
Criminal Writ Petition No. 1526 of 2001, decided on 03/12/2009. It
has held that,
“7. Applying the law as laid down by the Supreme Court to the
facts of the present case, the petitioner cannot be held liable under
section 138 of the Act for the dishonour of the cheque. The cheque
was drawn from an account in a bank maintained in the name of
the firm. It bears the rubber stamp of the firm and the petitioner
has signed it as a partner of the firm. In law, when a cheque is
issued by the firm and from an account maintained by the firm,
the cheque is issued by all the partners, and one of the partners
merely signs it as an agent of the firm i.e agent of all partners (see
section 18 of the Partnership Act). The complainant who is a
partner of the firm would therefore be regarded as one of the
drawers being a part of the firm. Thus, the complainant is co-
drawer as well as payee of the cheque. He therefore cannot
prosecute himself or other partner under section 138 of the Act.
The position may be different when a firm issues a cheque not to
its own partner but to a third person. There, the firm would be
liable as also the partners subject, of course, to the provisions of
section 141 of the Act and in particular explanation (b) thereto. It
is however not necessary to consider this aspect in the facts of the
present case.”
On the contrary Ld. Advocate for the complainant has submitted that,
the cheque issued by one drawer in favour of complainant is
maintainable. He has placed reliance on the decision of Hon’ble
Bombay High Court in P. J. Aprain and others V/s. Vasant Chedda and
others, Criminal W.P. No. 3524, 3525, 3526, 3571, 3572, 3573 of 2011,
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decided on 10/02/2012. In this decision the decision of Hon’ble
Supreme Court of India in M/s. Malabar Fisheries Company V/s. The
Commissioner of Income Tax, Kerala, AIR 1980 Supreme Court 176 is
referred. Further, in the cited decision of Hon’ble Bombay High Court
in Mukesh Raoji Navadhare V/s. Ajit Bhaskar Kasbekar & Another,
Criminal Writ Petition No. 1526 of 2001, decided on 03/12/2009 is
referred. It has been held that,
“9 The case before the Supreme Court arose from certain provisions of
Indian Income Tax Act. The question before the Supreme Court was
whether the distribution of assets of the firm consequent on its
dissolution, amounts to transfer of its assets within the meaning of
expression "otherwise transferred" occurring in Section 34 of the
Indian Income Tax Act, having regard to the definition of "transfer" in
Section 2 of the Act. The facts giving rise to this question were as
under :
M/s.Malabar Fisheries was a partnership firm and was dissolved.
Before dissolution, it had four partners carrying on different
businesses in six different names and styles. The firm was
dissolved in 1963 and under the Deed of Dissolution executed by
the partners, six businesses were taken over by the partners and
one partner received certain amount of cash, in lieu of his share
in the assets of the firm. Prior to dissolution, the firm had
installed certain machinery and claimed and received, certain
development rebate in Income Tax. After dissolution of the firm,
the Income Tax took up a stand that since the assets of the firm
were transferred to the partners, the rebate should be cancelled
and the tax should be recovered. The Supreme Court then held
that in the facts and circumstances of the case, there was no
transfer of assets within the meaning of the words "otherwise
transferred"occurring in Section 34 of the Income Tax Act, after
the dissolution of the firm. In this regard, the Supreme Court
elaborating the law on the subject, observed in paragraph 18 as
under :
"18. Having regard to the above discussion, it seems to us clear
that a partnership firm under the Indian Partnership Act, 1932, is
not a distinct legal entity apart from the partners constituting it
and equally in law the firm as such has no separate rights of its
own in the partnership assets and when one talks of the firm's
property or firm's assets all that is meant is property or assets in
which all partners have a joint or common interest. If that be the
position, it is difficult to accept the contention that upon
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dissolution the firm's rights in the partnership assets are
extinguished. The firm as such has no separate rights of its own
in the partnership assets but it is the partners who own jointly in
common the assets of the partnership and, therefore, the
consequence of the distribution, division or allotment of assets to
the partners which flows upon dissolution after discharge of
liabilities is nothing but a mutual adjustment of rights between
the partners and there is no question of extinguishment of the
firm's rights in the partnership assets amounting to a transfer of
assets within the meaning of Section 2(47) of the Act. In our
view, therefore, there is no transfer of assets involved even in the
sense of any extinguishment of the firm's rights in the
partnership assets when distribution takes place upon
dissolution.”
In the cited decisions, the cheque was issued from the account of
partnership firm. Further, the cheque was signed by one partner and
issued in favour of another partner. One partner was only lookafter the
business of the partnership firm and another partner was in USA. In
the case in hand, the complainant came with a case that it is a joint
venture and the both the partners have authority to sign the cheque . I
have perused the cross-examination of complainant wherein the
complainant has admitted that to operate the bank account, signature
of both the parties were essential. However, later on mandate was
given to the bank in relation to operate said account either singly or
jointly. The complainant has examined Seema Bharti (C.W.2) at Exh.
88. This witness is a branch admin with the Bank of India, Aronda
branch. As per her evidence, he has filed the specimen signatures form
at Exh. 90. AS per her evidence, resolution was submitted with the
banker on 10/12/2013 and as per the resolution, the bank account was
to be operated by jointly. In the cross-examination also, it has come on
record that, initially the said account was jointly operated. However,
later on by giving mandate, the mode of operation was any of the
partner. The accused has also examined Rohit Ukarde (D.W. 1) at Exh.
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101. As per his evidence, he is working with Bank of India, Aronda
branch. He has produced original letter dated 12/12/2019 issued by
the bank stating that M/s. Kaustubh Shrimp Farm JV is maintained
current account and further by mentioning account number in it stated
that the account is operated by two partners. The said letter is at Exh.
103.
28. Perusal of evidence of these witnesses, it has come on
record that initially account was operated jointly by both the partners
and thereafter it was operated either partner. Therefore, the mode of
operation of joint venture was by either partner.
29. In this matter, it is the submission of Ld. Advocate for the
accused that the cheque is of joint venture and both the partners have
equally liable for the issuance of cheque. I have perused the cheques
filed on record at Exh. 35 and 36 and it seems that these cheques were
issued by the Kaustubh Shrimp Farm JV and it bears the signature of the
accused. As per the decision of Hon’ble Supreme Court of India in
Dhansingh Prabhu’s case (Cited supra), the partnership firm has no
separate legal entity and therefore, as per Section 19 of Partnership Act,
the partners are the agent of the partnership firm and partners are
liable for their act. As the Hon’ble Bombay High Court in Mukesh Raoji
Navadhare’s case (Cited supra), each partner is liable for the cheque
which is issued from the account of partnership firm. In the case in
hand also, it seems that each partner is liable to cheques issued.
Therefore, the ratio laid down by Hon’ble Bombay High Court in
Mukesh Raoji Navadhare’s case (Cited Supra) is squarely application.
Therefore, the present complaint is not maintainable as per the decision
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of Hon’ble Bombay High Court in Mukesh Raoji Navadhare’s case (cited
supra)
30. As per the defence of accused, the complainant did not pay
income-tax nor shown the transaction amount in the income-tax return.
I have perused the decision of Hon’ble Bombay High Court, Nagpur
Bench in Prakash Madhukarrao Desai Versus Dattatraya Sheshrao Desai
in Criminal Appeal No. 795/2018 decided on 19.08.2023. In the cited
decision the following question was under consideration,
“Whether in case the transaction, is not reflected in the Books of
account and/or the Income Tax Returns of the holder of the cheque in due
course and thus is in violation to the provisions of Section 269-SS of the
Income Tax Act, 1961 whether such a transaction, can be held to be “a legally
enforceable debt” and can be permitted to be enforced, by institution of
proceedings under Section 138 of the Negotiable Instruments Act ?”
The Hon’ble Bombay High Court, Bench at Nagpur has held that,
“ It can thus be said that the validity of Section 269-SS of the Act of 1961
having been upheld in Assistant Director, Inspection Investigation (supra),
breach thereof being subjected to penalty under Section 271-D with a further
provision for waiving the penalty under Section 273-B of the Act of 1961, it
will have to be held that such transaction in violation of Section 269-SS of
the Act of 1961 at the behest of the drawer of a cheque cannot be treated as
null and void. Similar is the case when there is an omission of any entry
relevant for computation of total income of such person to evade tax liability
under Section 271-AAD of the Act of 1961. Such person, assuming him to be
the payee/holder in due course, is liable to be visited by penalty as
prescribed. Such act is not treated to be statutorily void. We may in this
context refer to paragraph 4 of the decision in M/s Gujarat Travancore
Agency, Cochin (supra) wherein reference has been made to the following
statement in Corpus Juris Secundum, Volume 85 page 580, paragraph 1023 ”
“A penalty imposed for a tax delinquency is a civil obligation, remedial and
coercive in its nature, and is far different from the penalty for a crime or a
fine or forfeiture provided as punishment for the violation of a criminal penal
laws.” Further, in Atul Mohan Bindal (supra), the penalty referred to in
Section 271(1)(c) of the Act of 1961 has been referred to as a civil liability
and not one which is criminal or quasi-criminal in nature. Thus, in the light
of statutory presumption under Sections 118 and 139 of the Act of 1881, it
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would be for the accused to rebut such presumption in the light of what has
been held in Rangappa (supra).
In view of the aforesaid discussion, it is held that a transaction not
reflected in the books of accounts and/or Income Tax returns of the holder of
the cheque in due course can be permitted to be enforced by instituting
proceedings under Section 138 of the Act of 1881 in view of the presumption
under Section 139 of the Act of 1881 that such cheque was issued by the
drawer for the discharge of any debt or other liability, execution of the cheque
being admitted. Violation of Sections 269-SS and/or Section 271-AAD of the
Act of 1961 would not render the transaction unenforceable under Section
138 of the Act of 1881. The decisions in Krishna P. Morajkar, Bipin Mathurdas
Thakkar and Pushpa Sanchalal Kothari (supra) lay down the correct position
and are thus affirmed. The decision in Sanjay Mishra (supra) with utmost
respect stands overruled.”
Perusal of cited decision, it seems that, the amount is not shown
in the income-tax return, then also the said amount can be recovered.
31. Ld. Advocate for the accused has submitted that the
contents of cheque are not filled by the accused and therefore the
cheque is not valid. I have also perused 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.”
Perusal of the cited above decision, it makes clear that once the
signature of the cheque is admitted by the accused, then it gives
authority to the payee to fill the contents of the cheque. Therefore, it
does not makes effect though the cheque was filled by the complainant.
32. Ld. Advocate for the accused has submitted that the
accused is not liable to pay the cheque amount. He has placed his
reliance on the the decision of Hon’ble Supreme Court of India in
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Dashrathbhai Trikambhai Patel V/s. Hitesh Mahendrabhai Patel, 2022
Law Suit (SC) 1202. It has held that,
“30. In view of the discussion above, we summarise our findings below:
(i) For the commission of an offence under Section 138, the cheque that is
dishonoured must represent a legally enforceable debt on the date of
maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole of the sum between
the period when the cheque is drawn and when it is encashed upon
maturity, then the legally enforceable debt on the date of maturity would
not be the sum represented on the cheque;
(iii) When a part or whole of the sum represented on the cheque is paid by
the drawer of the cheque, it must be endorsed on the cheque as prescribed
in section 56 of the Act. The cheque endorsed with the payment made
may be used to negotiate the balance, if any. If the cheque that is endorsed
is dishonoured when it is sought to be encashed upon maturity, then the
offence under Section 138 will stand attracted;(iv) The first respondent
has made part-payments after the debt was incurred and before the
cheque was encashed upon maturity. The sum of rupees twenty lakhs
represented on the cheque was not the ‘legally enforceable debt’ on the
date of maturity. Thus, the first respondent cannot be deemed to have
committed an offence under Section 138 of the Act when the cheque was
dishonoured for insufficient funds; and
(v) The notice demanding the payment of the ‘said amount of money’ has
been interpreted by judgments of this Court to mean the cheque amount.
The conditions stipulated in the provisos to Section 138 need to be fulfilled
in addition to the ingredients in the substantive part of Section 138. Since
in this case, the first respondent has not committed an offence under
Section 138, the validity of the form of the notice need not be decided.”
He placed reliance on the decision of Hon’ble Supreme Court of India in
G. J. Raja V/s. Tejraj Surana, Criminal Appeal No. 1160 of 2019
(Arising out of Special Leave Petition (Criminal) No. 3342 of 2019),
decided on 30/07/2019. It has held that,
“24. In the ultimate analysis, we hold Section 143A to be prospective in
operation and that the provisions of said Section 143A can be applied or
invoked only in cases where the offence under Section 138 of the Act was
committed after the introduction of said Section 143A in the statute book.
Consequently, the orders passed by the Trial Court as well as the High Court
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are required to be set aside. The money deposited by the Appellant, pursuant
to the interim direction passed by this Court, shall be returned to the
Appellant along with interest accrued thereon within two weeks from the date
of this order. ”
In the case in hand, while discussing I have held that the present
complaint is not maintainable against partner filed by another partner.
33. In the case in hand, as I discussed above the accused has
brought on record that the present complaint is not maintainable
against one partner of the same firm as per the decision of Hon’ble
Bombay High Court in Mukesh Raoji Navadhare’s case (cited supra).
Therefore, the present complaint is not maintainable against the present
accused. Hence, point No. 1 is answered in the “Negative”.
As to Point No. 2:-
34. As per contentions and evidence of complainant, the
cheque No. 000032 (Exh. 35) and cheque no. 000033 (Exh. 36) were
presented for encashment. However, the cheques were returned with
remark as ‘Funds Insufficient’. In support of said contentions, the
complainant produced the cheque return memos of (Exh. 37 and 38).
It is seen from the bank memo (Exh. 37 and 38) that, the cheque was
returned with endorsement ‘Funds Insufficient’. The memos (Exh. 37
and 38) bears seal and 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”.
35. So, as per the aforesaid provision, the bank memos (Exh.
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37 and 38), is having presumptive value as per Section 146 of the N.I
Act. Admittedly, the said presumption is rebuttable. However, nothing is
brought on record by the accused to rebut the presumption in respect of
bank memos (Exh. 37 and 38). After perusal of said memo, it is seen
that the cheque No. 000032 (Exh. 35) and cheque no. 000033 (Exh. 36)
was dishonored for reason ‘Funds Insufficient’. 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 “Fund Insufficient”. Consequently, point
No. 2 is answered in the “affirmative”.
As to Point Nos. 3 and 4 :-
36. As per evidence of Parth Kambli (C.W.1), after dishonor of
cheque No. 000032 (Exh. 35) and cheque no. 000033 (Exh. 36), he
issued demand notice dated 08/02/2018 (Exh.39). The complainant
has filed postal receipt at Exh. 40 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 08/02/2018 (Exh. 39) and
postal receipt (Exh. 40). Upon perusal of demand notice (Exh. 39),
postal receipt (Exh. 40), it is seen that, the complainant issued demand
notice on 08/02/2018 to the accused and same was received by the
accused. The demand notice was sent on the following address :-
To,
Mr. Pradeep Gajanan Rao.
Residing at 403, Darwin Puranik City,
Kasarvadawali, G. B. Road,
Thane (West).
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37. It seems from the postal receipt at Exh. 40 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. 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.
38. As already discussed in earlier points, it becomes clear that
the subject cheque No. 000032 (Exh. 35) and cheque no. 000033 (Exh.
36) was dishonored on 24/01/2018 for the reason of ‘Funds
Insufficient’. It is seen from the record that, the notice (Exh. 39) was
posted on 08/02/2018 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
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repaid the cheque amount within 15 days of notice and summons of this
proceeding. So, point Nos. 3 and 4 are answered in the “affirmative”.
As to Point No.5 :
39. In view of the above discussion, it reveals that the essential
ingredients of the offence punishable u/s 138 of the Act are not proved
by the complainant. In the case in hand, as I discussed above the
accused has brought on record that the present complaint is not
maintainable against one partner of the same firm as per the decision of
Hon’ble Bombay High Court in Mukesh Raoji Navadhare’s case (cited
supra). Therefore, the present complaint is not maintainable against the
present accused. As already discussed in earlier points, it becomes clear
from memos (Exh. 37 and 38) that the cheques (Exh. 35 and 36) were
dishonored on 24/01/2018. The notice (Exh. 39) was sent on
08/02/2018 and so, it is seen to be issued within 30 days of dishonor of
cheque (Exh. 35 and 36). Therefore, the accused has to pay cheque
amount within fifteen days from 08/02/2018 but accused failed to pay
it. Therefore, the cause of action for this complaint was arose on
24/02/2018. The complainant has to file complaint with 30 days from
the day of cause of action. The complaint was filed on 07/03/2018.
Therefore, the complaint is seen to be filed within limitation.
40. In the case in hand, while discussing point no. 1 I held that,
the accused has brought on record that the present complaint is not
maintainable against one partner of the same firm as per the decision of
Hon’ble Bombay High Court in Mukesh Raoji Navadhare’s case (cited
supra). Therefore, the present complaint is not maintainable against the
present accused. Therefore, the complainant has failed to prove that,
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the accused has committed an offence punishable u/s 138 of the Act.
Consequently, point No. 5 is answered in the “negative”.
As to Point No.6:
41. In view of entire evidence of the complainant, he has failed
to prove his case and accused succeed to rebut presumptions available
under Section 118 and 139 of the Act, it becomes clear that the
complainant has failed to prove that, accused has committed an offence
punishable u/s 138 of the Act. Ld. advocate for the accused submitted
that, once the accused succeeded in rebutting the presumption available
with complainant U/s. 118 and 139 of N. I. Act, then accused is entitled
for acquittal. Consequently, point No. 1 and 5 are answered in the
“Negative”. Resultantly, following order is passed:
ORDER
1. The accused Mr. Pradeep Gajanan Rao is hereby
acquitted under Section 255 (1) of the Criminal
Procedure Code, 1973 for an offence punishable
under Section 138 of the Negotiable Instruments
Act,1881.
2. The bail bonds of accused stands canceled.
3. Muddemal being an original cheque and bank memo,
be returned to the complainant after appeal period is
over.
4. Accused is hereby directed to furnish personal bond
of Rs. 15,000/- and surety of like amount to appear
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before Hon'ble Appellate Court, in case of appeal filed
by the prosecution, according to Section 437-A of the
Code of Criminal Procedure, 1973.
(Dictated & Pronounced in the open court)
Mumbai (Y. P. Pujari )
Date:- 07/05/2026 Metropolitan Magistrate
48th Court, Andheri, Mumbai.
Dictated On : 07/05/2026
Typed On : 07/05/2026
Signed On : 07/05/2026
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