Final Order 2

Order Details: Copy  of Judgment
Pdf Text: 1 C. C. NO. 3713/SS/2018
CNR No. : MHMM19-009831-2018
Received On : 17/09/2018
Registered On : 17/09/2018
Decided On : 25/04/2026
Duration :Y-07, M-07, D-08
IN THE COURT OF METROPOLITAN MAGISTRATE, ANDHERI (Court
No. 48), MUMBAI.
( Presided over by Y. P. Pujari )
C.C. No. 3713/SS/2018 Exh. 56
M/s. Hotel Imperial Palace (I)
45, Telly Park Road, Andheri East,
Mumbai – 400 069.
Through its Partner Mr. Jaspal Singh
Chandock. -- Complainant
Versus
1. M/s. Shree Shyam Hospitality.
Plot No. 42, Shweta Building,
Main Gulmohar Road,
JVPD Scheme, Vile Parle West,
Mumbai – 400 049.
2. Mr. Jagmohan Agarwal,
Plot No. 42, Shweta Building,
Main Gulmohar Road,
JVPD Scheme, Vile Parle West,
Mumbai – 400 049.
3. Mr. Shubham Agarwal
Plot No. 42, Shweta Building,
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Main Gulmohar Road,
JVPD Scheme, Vile Parle West,
Mumbai – 400 049.
4. Mr. Ankush Agarwal.
Plot No. 42, Shweta Building,
Main Gulmohar Road,
JVPD Scheme, Vile Parle West,
Mumbai – 400 049. -- Accused
OFFENCE PUNISHABLE UNDER SECTION 138 R/W. 141 OF THE
NEGOTIABLE INSTRUMENTS ACT
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Appearance:- Adv. M/s. Nankani & Associates/ Riya Sinkar for the
complainant.
Adv. Mr. Subhash Upadhayay for the accused.
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JUDGMENT
(Delivered on 25th of April 2026)
The accused is facing trial for an offence punishable under
Section 138 r/w. 141 of the Negotiable Instruments Act (Hereinafter
referred as “the Act” for short) for dishonor of a cheque for an amount
of Rs. 5,40,000/-.
The brief facts of complainant's case are as under:
02. It is averred by the complainant that, complainant is a
registered partnership firm. Accused No. 1 is a partnership firm.
Accused No. 2 to 4 are its partners. Accused No. 2 and 4 were in-charge
and responsible for the day-to-day affairs of the accused no. 1. In the
month of January 2018, the accused approached to Mr. Jaspal Singh
Chandock, the partner of complainant partnership firm and requested to
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use the premises on leave and license basis. The leave and license
agreement dated 26/02/2018 came to be executed. The accused liable
to pay monthly license fee of Rs. 5,00,000/- + applicable taxes for the
period of 15/02/2018 to 14/02/2019.
03. Complainant has further submitted that, in discharge of
liability towards monthly license fee for the period 15th July 2018 to 14th
August 2018, accused issued a cheque bearing no. 000004 dated
15/07/2018 for Rs. 5,40,000/- drawn on HDFC Bank Limited, Lord
House, Maharshi Karve Marg, Opposite Charni Road Station, Charni
Road, Mumbai – 400 004. Thereafter, the complainant deposited the
above said cheque for encashment in his Bank namely HDFC Bank
Limited, Andheri Vishal Hall Branch, Andheri (East), Mumbai. The
same was returned unpaid from drawee bank with endorsement ‘Funds
Insufficient’. Accordingly, the HDFC Bank issued memo dated
17/07/2018. 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 06/08/2018 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. 15 which were
read over and explained to the accused in vernacular, to which they
pleaded not guilty and claimed to be tried.
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05. Accused has did not conduct the cross-examination of the
complainant.
06. The statement of accused under Section 313 of the Code of
Criminal Procedure, 1972 (in short 'the Code') was recorded vide Exh.
59. In their statement U/s. 313 of the Code, accused have submitted
that, matter is settled. They have given demand draft for an amount of
amount of Rs. 4,32,000/- and already deposited an amount of Rs.
1,08,000/- in the court.
07. As per order passed below Exh. 01 dated 06/04/2026, both
the parties did not argue the matter and therefore matter was posted for
final judgment.
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.
000004 (Exh. 38) 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 “funds
Insufficient”?
Yes.
3.
Does the complainant prove that he had issued
demand notice to the accused within
limitation demanding cheque amount?
Yes.
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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 r/w. 141
of the Negotiable Instruments Act ?
Yes.
6. What order? The accused
are convicted.
09. In order to prove his case, the partner of complainant
namely Jaspal Singh Chandock has filed his evidence affidavit as a
(C.W.1) at Exh. 19. The complainant also placed his reliance upon
following documents:
Description of documents Exhibit numbers
Xerox copy of leave and license agreement Article – A
Original cheque Exh. 38
Cheque returned memo Exh. 39
Office copy of notice Exh. 40
Postal receipts Exh. 41 to 44
Copy of GST certificate and postal track
report along with certificate U/s. 65 (B) of
Evidence Act.
Exh. 45 and 46
respectively.
REASONS
As to Point No.1:-
10. In order to prove the allegation leveled against the
accused, the partner of complainant namely Jaspal Singh Chandock has
filed his evidence affidavit as a (C.W.1) at Exh. 19. As per his evidence,
complainant is a registered partnership firm. Accused No. 1 is a
partnership firm. Accused No. 2 to 4 are its partners. Accused No. 2
and 4 were in-charge and responsible for the day-to-day affairs of the
accused no. 1. In the month of January 2018, the accused approached
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to Mr. Jaspal Singh Chandock, the partner of complainant partnership
firm and requested for use the premises on leave and license basis. The
leave and license agreement dated 26/02/2018 came to be executed.
The accused liable to pay monthly license fee of Rs. 5,00,000/- +
applicable taxes for the period of 15/02/2018 to 14/02/2019.
11. It has further come in his evidence that, in discharge of
liability towards monthly license fee for the period 15th July 2018 to 14th
August 2018, accused issued a cheque bearing no. 000004 dated
15/07/2018 for Rs. 5,40,000/- drawn on HDFC Bank Limited, Lord
House,Maharshi Karve Marg, Opposite Charni Road Station, Charni
Road, Mumbai – 400 004. Thereafter, the complainant deposited the
above said cheque for encashment in his Bank namely HDFC Bank
Limited, Andheri Vishal Hall Branch, Andheri (East), Mumbai. The
same was returned unpaid from drawee bank with endorsement ‘Funds
Insufficient’.
12. The accused did not conduct the cross-examination of the
complainant.
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
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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 did not sent reply to the demand notice of the
complainant nor conducted cross-examination of the complainant.
Therefore, 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 cheque (Exh. 38). This shows that, the signature of
accused from cheque (Exh. 38) 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
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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
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
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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
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 have not challenged their signature on the
cheque (Exh. 38), 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
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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 did not conduct the cross-examination of complainant. The
statement of accused under Section 313 of the Code is recorded
wherein they submitted that matter is settled. They have given
demand draft for an amount of amount of Rs. 4,32,000/- and already
deposited an amount of Rs. 1,08,000/- in the court.
19. In the case in hand, as I observed above the accused did
not avail the opportunity available to him to rebut the presumption.
Because the accused did not conduct cross-examination of the
complainant. Per-contra, the complainant has produced the photo copy
of leave and license agreement at Article-A, original cheque at Exh. 38,
the cheque returned memo Exh. 39, the demand notice at Exh. 40,
postal receipts at Exh. 41 to 44 and copy of GST certificate and postal
track report along with certificate U/s. 65 (B) of Evidence Act at Exh.
45 and 46. These documents are filed by the complainant in support of
his contentions and to show that, the cheques were issued for
repayment of amount. I have perused the decision of Hon’ble Supreme
Court of India in the case of 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
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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.”
20. 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 their signature nor denied issuance of cheque.
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. In the case in hand, the accused did not
conduct the cross-examination of the complainant nor sent reply to the
demand notice. As per the statement of accused recorded U/s. 313 of
the Code of Criminal Procedure, they have paid the amount but nothing
has been brought on record nor the complainant has withdrawn the
complaint. None were present to proceed the complaint though detail
orders came to be passed below Exh. 01. Therefore, it becomes clear
that the accused have utterly failed to rebut the presumption raised
under Section 118 & 139 of the Act. Therefore, I hold that the
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complainant has duly proved that accused have issued the subject
cheque from the account account of accused no.1 in favour of the
complainant towards the legally enforceable debt. Hence, point No. 1 is
answered in the “affirmative”.
As to Point No. 2:-
21. As per contentions and evidence of complainant, the
cheque No. 000004 (Exh. 38) was presented for encashment. However,
the cheque was returned with remark as ‘Funds Insufficient’. In support
of said contentions, the complainant produced the cheque return memo
of (Exh. 39). It is seen from the bank memo (Exh. 39) that, the cheque
was returned with endorsement ‘Funds Insufficient’. The memo (Exh.
39) does not bears seal but it bears signature of concerned bank. I
have perused the statement of accused recorded U/s. 313 of the Code of
Criminal Procedure wherein the accused have admitted that disputed
cheque came to be dishonoured due to insufficient funds. Perusal of said
document, it seems that, cheque was dishonoured with reason “Funds
Insufficient”. Hence, no hurdle to held that the complainant has proved
that, the cheque was dishonored with reason 'Insufficient Funds’’.
Consequently, point No. 2 is answered in the “affirmative”.
As to Point Nos. 3 and 4 :-
22. As per evidence of Jaspal Singh (C.W.1), after dishonor of
cheque (Exh. 38), he issued demand notice dated 06/08/2018 (Exh.
40). The complainant has filed postal receipts at Exh. 41 to 44 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 06/08/2018 (Exh. 40) and postal receipts (Exh. 41 to 44). Upon
perusal of demand notice (Exh. 40), postal receipts (Exh. 41 to 44), it is
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seen that, the complainant issued demand notice on 06/08/2018 to the
accused and same was received by the accused. The demand notice was
sent on the following address :-
To,
1. M/s. Shree Shyam Hospitality.
2. Mr. Jagmohan Agarwal.
3. Shubham Agarwal.
4. Mr. Ankush Agarwal.
All having address at:
Plot No. 42, Shweta Building,
Main Gulmohar Road,
JVPD Scheme, Vile Parle (West)
Mumbai – 400 049.
23. Accused nowhere challenged their aforesaid residential
address. It seems from the postal receipts at Exh. 41 to 44 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
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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
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
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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.
24. As already discussed in earlier points, it becomes clear that
the subject cheque (Exh. 38) was dishonored on 17/07/2018 for the
reason of ‘Funds Insufficient’. It is seen from the record that, the notice
(Exh. 38) was posted on 06/08/2018 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 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 :
25. 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. 39) that the cheque (Exh. 38) was dishonored on
17/07/2018. The notice (Exh. 40) was sent on 06/08/2018 and so, it is
seen to be issued within 30 days of dishonor of cheque (Exh. 38).
Therefore, the accused has to pay cheque amount within fifteen days
from 06/08/2018 but accused failed to pay it. Therefore, the cause of
action for this complaint was arose on 22/08/2018. The complainant
has to file complaint with 30 days from the day of cause of action. The
complaint was filed on 17/09/2018.
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26. I have perused Section 141 of N. I. Act, which reads as
follows:-
141. Offences by Companies.
“If the person committing an offence under section 138 is a company,
every person who, at the time the offence was committed, was in charge
of, and was responsible to, the company for the conduct of the business
of the company, as well as the company, shall be deemed to be guilty of
the offence and shall be liable to be proceeded against and punished
accordingly:
Provided that nothing contained in this sub-section shall render any
person liable to punishment if he proves that the offence was committed
without his knowledge, or that he had exercised all due diligence to
prevent the commission of such offence.
Notwithstanding anything contained in sub-section (1), where any
offence under this Act has been committed by a company and it is
proved that the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be proceeded against and
punished accordingly.”
27. I have perused the decision of Hon’ble Supreme Court of
India in S.P. Mani And Mohan Dairy vs Dr. Snehalatha Elangovan,
CRIMINAL APPEAL NO.1586 OF 2022 (ARISING OUT OF SPECIAL
LEAVE APPEAL (CRIMINAL) NO. 9811 OF 2021), decided on 16
September, 2022. It has held that,
“47. Our final conclusions may be summarised as under: a.) The
primary responsibility of the complainant is to make specific
averments in the complaint so as to make the accused vicariously
liable. For fastening the criminal liability, there is no legal
requirement for the complainant to show that the accused partner
of the firm was aware about each and every transaction. On the
other hand, the first proviso to sub-section (1) of Section 141 of
the Act clearly lays down that if the accused is able to prove to the
satisfaction of the Court that the offence was committed without
his/her knowledge or he/she had exercised due diligence to
prevent the commission of such offence, he/she will not be liable of
punishment.
b.) The complainant is supposed to know only generally as to who
were in charge of the affairs of the company or firm, as the case
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may be. The other administrative matters would be within the
special knowledge of the company or the firm and those who are
in charge of it. In such circumstances, the complainant is expected
to allege that the persons named in the complaint are in charge of
the affairs of the company/firm. It is only the Directors of the
company or the partners of the firm, as the case may be, who have
the special knowledge about the role they had played in the
company or the partners in a firm to show before the court that at
the relevant point of time they were not in charge of the affairs of
the company. Advertence to Section 138 and Section 141
respectively of the NI ACT shows that on the other elements of an
offence under Section 138 being satisfied, the burden is on the
Board of Directors or the officers in charge of the affairs of the
company/partners of a firm to show that they were not liable to be
convicted. The existence of any special circumstance that makes
them not liable is something that is peculiarly within their
knowledge and it is for them to establish at the trial to show that
at the relevant time they were not in charge of the affairs of the
company or the firm.
c.) Needless to say, the final judgement and order would depend
on the evidence adduced. Criminal liability is attracted only on
those, who at the time of commission of the offence, were in
charge of and were responsible for the conduct of the business of
the firm. But vicarious criminal liability can be inferred against the
partners of a firm when it is specifically averred in the complaint
about the status of the partners ‘qua’ the firm. This would make
them liable to face the prosecution but it does not lead to
automatic conviction. Hence, they are not adversely prejudiced if
they are eventually found to be not guilty, as a necessary
consequence thereof would be acquittal.
d.) If any Director wants the process to be quashed by filing a
petition under Section 482 of the Code on the ground that only a
bald averment is made in the complaint and that he/she is really
not concerned with the issuance of the cheque, he/she must in
order to persuade the High Court to quash the process either
furnish some sterling incontrovertible material or acceptable
circumstances to substantiate his/her contention. He/she must
make out a case that making him/her stand the trial would be an
abuse of process of Court.”
I have also perused the decision of Hon’ble Supreme Court of India in
HDFC Bank Ltd. V/s. State of Maharashtra, Criminal Appeal No. ____
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of 2025, (@ SPL Leave Petition (CRL) No. 6964 of 2024). It has held
that,
“ 27. Hence, it is very clear that the conclusion in para 19(a) in S.M.S.
Pharmaceuticals-I (supra) has to be read with the other holdings in
judgment especially the ratio extracted herein above culminating in
para 18. Merely reading para 19(a) to contend that what is required is
parroting of the words of the section for a complaint to be sustained is
completely unjustified. Para 19(a) does not mention that the words of
the Section 141 has to be mechanically parroted. In fact, the cases that
we discuss hereinbelow have expressly rejected the said contention.
28. After the reference in S.M.S. Pharmaceuticals-I (supra) was
answered by the three-Judge Bench and before the case of the said
parties could be taken up for disposal by the two judge Bench, came the
judgment in Sabitha Ramamurthy and Another vs.
R.B.S.Channabasavaradhya, (2006) 10 SCC 581. This Court, after
noticing S.M.S. Pharmaceuticals-I (supra), held that it was not
necessary for the complainant to specifically reproduce the wordings of
the section but what was required was a clear statement of fact so as to
enable the Court to arrive at a prima facie opinion that the accused are
vicariously liable. Such vicarious liability can be inferred only if the
requisite statements, which are required to be averred in the complaint
petition are made so as to make the accused therein vicariously liable
for the offence committed by the company. It was also held that before a
person can be made vicariously liable, strict compliance with the
statutory requirements should be insisted. On facts, the Court found
that the averments did not meet the requirements in the said case.
29. Thereafter, came the judgment in S.M.S. Pharmaceuticals Ltd. vs.
Neeta Bhalla and Another, (2007) 4 SCC 70 (hereinafter referred to as
S.M.S. Pharmaceuticals-II (supra). Referring to para 18 and 19 of the
order in the three-Judge Bench reference in S.M.S. Pharmaceuticals-I
(supra) and following the judgment in Sabitha Ramamurthy (Supra),
the averments in the complaint were tested and it was found that the
complaint petition when read in its entirety, the averments therein fell
short of the requirements to implicate the respondent-accused in that
case.”
It has further held that,
“38. As was rightly held therein, the administrative role of each director
would be within the special knowledge of the company or the director
of the firm and it is for them to establish that they were not in charge of
the affairs of the company. In view of this, the contention of the learned
counsel for the respondent No.2 that the specific role attributed to the
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directors should be set out in the complaint does not merit acceptance.
Reliance has been placed on National Small Industries Corporation
Limited vs. Harmeet Singh Paintal and Another, (2010) 3 SCC 330
by the learned counsel for the respondent No.2 in support of the
proposition canvassed. We are unable to countenance the said
submission. If the learned counsel by the said submission seeks to
contend that the complainant in a Section 138 complaint is obliged to
plead administrative matters which are especially within the knowledge
of the company and the directors, then he is completely wrong in the
understanding of the ingredients of Section 141 . As held in K. K. Ahuja
(supra) and reiterated in S. P. Mani (supra), the complainant is
supposed to know only generally as to who are in charge of the affairs
of the company. Harmeet Singh Paintal (supra) when it holds in para 22
that “further, in order to fasten the vicarious liability in accordance with
Section 141 , the averment as to the role of the Directors concerned
should be specific. The description should be clear and there should be
some unambiguous allegations as how the Directors concerned were
alleged to be in charge of and were responsible for the conduct of the
affairs of the company” should be understood to only mean vis-à-vis the
transaction concerning the issue of the cheque, in question, which are
within the knowledge of the complainant. K. K. Ahuja (supra) where it
holds that “in the case of a Director, secretary or manager [as defined in
Section 2 (24) of the Companies Act] or a person referred to in clauses
(e) and (f) of Section 5 of the Companies Act, an averment in the
complaint that he was in charge of, and was responsible to the company,
for the conduct of the business of the company is necessary to bring the
case under Section 141 (1) of the Act. No further averment would be
necessary in the complaint, though some particulars will be desirable.
They can also be made liable under Section 141 (2) by making
necessary averments relating to consent and connivance or negligence,
in the complaint, to bring the matter under that sub-section” sets out
the correct legal position. A harmonious reading of the judgments in K.
K. Ahuja (supra), Harmeet Singh Paintal (supra) and S. P. Mani (supra)
brings out the position that there is no obligation on the complainant to
plead in the complaint as to matters within the special knowledge of the
company or the directors or firm about the specific role attributed to
them in the company.”
28. In the case in hand, the complainant has deposed that, the
accused no. 2 to 4 are the partners of accused No. 1 and they were in-
charge and responsible for the day-to-day affairs of the accused no. 1.
Accused No. 2 to 4 being the partners of accused no. 1 are looking after
the operations of accused no. 1 and are fully responsible for the acts
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done by and/or on behalf of the accused no.1. This fact is not denied by
the accused.
29. Perusal of the above cited decision and Section 141 of the
N. I. Act, it makes clear that, to attract Section 141 of N. I. Act, the
complainant has to brought on record that the accused are incharge
and responsible for the day-to-day affairs of the firm and exact words
are not necessary. In the case in hand, the perusal of the averment
made in the complaint as well as in the evidence affidavit, it seems that,
the complainant has made an averment that accused no. 2 to 4 were in-
charge and responsible for the day-to-day affairs of the accused no. 1.
Therefore, it can be safely held that, there is sufficient averment made
by the complainant to attract Section 141 of N. I. Act.
30. 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 r/w. 141 of the Act. Consequently, point No. 5 is
answered in the “affirmative”.
AS TO POINT NO.6
31. 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 r/w. 141
of the Negotiable Instruments Act is established against the accused.
After considering the conduct of the accused and nature of offence, I do
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not find any special reasons or justifications to extend the benefit of
probation to him 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:- 25/04/2026 Metropolitan Magistrate
48th Court, Andheri, Mumbai.
Hearing on the point of sentence:
32. Accused and his advocate are absent. Further, the
complainant and his advocate are absent.
33. Further it would not be illegal to pass the Judgment of
conviction in absence of accused as Section 353 (6) and Section 418 (2)
of Code of Criminal Procedure empowers the court to pronounce
Judgment even of conviction in absence of accused and to issue
conviction warrant if court find it to be just and proper. Hence, coupling
the provisions laid down under Section 353(6) and Section 418(2) of
Code of Criminal Procedure with the guidelines to dispose of the old
cases expeditiously. I have also perused the decision of Hon’ble Bombay
High Court in the case of Navneet Singh Gogia and Anr. V/s. The State
of Maharashtra and Anr., in Criminal Revision Application No. 70 of
2023, decided on21/01/2025. It has held that,
“In nutshell if the proceeding under Section 138 of the
Negotiable Instruments Act are quasi-criminal in nature, there is
reason to believe that one of attribute of criminal trial about
mandatory recording of statement under Section 313 of the
Criminal Procedure Code is not application. So in given set of
facts narrated hereinabove, the accused cannot make complaint
about causing prejudice if evidence is adduced in his absence
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and he cannot make complaint of non recording of the
statement under Section 313 of the Criminal Procedure Code if
they have remained absent without justification. In a given case
and after ascertaining certain factors, the Magistrate is justified
in proceeding further in absence of accused and even dispense
his statement.”
In the case in hand, the statement of accused U/s. 313 of the
Code of Criminal Procedure is already recorded. Hence, I found it to be
just and proper to pass the Judgment of conviction in absence of
accused where the accused are bent upon to cause delay rather
exercising their rights for defence. Thus, I do not find any reason to
keep the case pending when accused themselves are not willing to
defend themselves or even to appear before court. Considering the age
of case and the chances given to the accused I find it to be justifiable
and proper not to wait further and pronounce the Judgment in absence
of accused.
34. 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. 5,40,000/-. In the present matter, on 17/07/2018 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 July 2018. That amount is admittedly lying with the accused.
The Hon’ble Supreme Court of India in the case of
R.Vijayan V. Baby
and anthers AIR 2012 SC 528, 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
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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
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.”
35. 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 amount (Rs. 5,40,000/-) at the
rate of 9 % p.a. is calculated for the period of 91 months i.e. from the
filing of present complaint (17/09/2018 to 25/04/2026), it comes to
Rs. 3,68,550/-. Thus, the amount of Rs. 9,08,550/- is necessary to give
to the complainant as an compensation.
36. 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 two months will be proper and justified.
37. 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
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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:
ORDER
1. Accused No. 2. Mr. Jagmohan Agarwal, accused No.
3. Mr. Shubham Agarwal and accused No. 4. Mr.
Ankush Agarwal- Partner of accused No. 1. M/s.
Shree Shyam Hospitality, Age : Adult, are convicted
under Section 255 (2) of the Code of Criminal
Procedure, 1973 for an offence punishable under
Section 138 r/w. 141 of the Negotiable Instruments
Act, 1881 and sentenced to suffer simple
Imprisonment for two months each.
2. Accused are directed to pay compensation jointly or
severally Rs. 9,08,550/- (Rs. Nine Lacs Eight
Thousand Five Hundred Fifty Only) to the
complainant within three months from today, in
default to suffer Simple Imprisonment for two
months each.
3. Accused to surrender to their bail bond.
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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. Today i.e. on the date of judgment accused remained
absent, hence issue standing Non-bailable warrant against
the accused for their arrest through concerned police
station for execution of sentence in view of Section 418 (2)
of Cr.P.C.
7. The copy of this Judgment shall be send to the convicted
accused, free of cost, in view of section 363(1) of the Code
of Criminal Procedure, 1973.
8. Dictated and pronounced in open court.
Mumbai (Y. P. Pujari )
Date:- 25/04/2026 Metropolitan Magistrate
48th Court, Andheri, Mumbai.
Dictated On : 25/04/2026
Typed On : 25/04/2026
Signed On : 25/04/2026
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