2. Rule made returnable forthwith. Heard, finally with the consent of the parties.
3. This application under Section 482 of the Code of Criminal Procedure, 1973 (Code for short) challenges the order dated 23rd October, 2019 in Criminal Revision Application No.79/2019 passed by the Court of Sessions Judge, Thane.
4. Facts essential for decision of this application, are as follows;
Applicant is a partnership firm engaged in the business of trading and supplying of metal products from its office at Thane. Respondent No.1 is also a partnership firm engaged in the business of manufacturing of sheet metal pressed components, of which Respondent Nos. 2 to 4 are partners. The Applicant and the Respondent No.1 had business dealings since 2013, over the years. Respondent No.1 through Respondent Nos. 2 to 4, received the goods sold by the Applicants’ firm and acknowledged receipt of the same. As on 17th October, 2018, a sum of Rs. 26,68,206/- was due to the Applicants by the Respondent No.1 towards goods sold and delivered to them. Subsequently in discharge of said dues, Respondent No.1 issued a cheque dated 25th September, 2018, in a sum of Rs. 25,47,982/- in favour of the Applicant. The cheque was returned unpaid. After which, notices were exchanged, followed by complaint bearing S.C.C. No.10767/2018, filed in the Court of Magistrate at Thane under Section 138 read with 141 of the Negotiable Instruments Act, 1881 (Act for short). Pursuant to complaint and upon verification, statement of the Applicant being recorded on 22nd November, 2018, learned Magistrate issued process on 16th January, 2019. This order reads as under;
ORDER BELOW EXH. IN S.C.C. NO.10767/2018
1) I have personally verified the complainant through Aadhar Card. On perusal of the complaint, documents filed along with it and after taking into consideration the statement of the complainant on oath and hearing learned advocate of the complainant at length. I am satisfied that there is sufficient ground for proceeding against the accused. Hence, the order.
Issue process against the accused for the offence punishable under Section 138 r/w 141 of N.I. Act returnable on 30/01/2019.
5. The Respondent Nos. 1 to 4 challenged the order, issue process in Criminal Revision Application No. 79/2019 before the learned Sessions Court at Thane.
6. The learned Sessions Court vide order 23rd September, 2019 allowed the revision and set aside the order issue process on the following grounds;
(i) At the material time, when the complaint was filed, Complainant-firm was unregistered partnership firm and therefore complaint was not maintainable under Section 69(2) of the Indian Partnership Act, 1932.
(ii) At the material time, when the process was issued, accused were residing at a place beyond the area in which he exercises his jurisdiction and therefore ought to have postponed the issue of process and further, either inquired into the case himself or direct the investigation to be made by a police officer or by such other person as he thinks fit for the purpose of deciding whether or not, there was sufficient ground for proceeding.
(iii) The issue process order was passed without examining the complaint upon oath, by simply relying on the verification below the complaint.
(iv) When the statutory notice issued by the complainant-firm, was replied it was informed to the Complainant that accused no. 4 – Ms. Sunita Mukund Burkule was no way concerned with the partnership firm, nor was responsible for day to day transaction of the partnership firm. In spite of this fact, Ms. Sunita Burkule was arraigned as an accused and order issue process was passed mechanically by the learned Magistrate.
7. Heard. Mr. Karl Rustomkhan for the Applicant; Mr. Gite for Respondent No.2; Ms. Gadkari for Respondent No.3 and Mr. Hulke, learned APP for State.
8. Unregistered Partnership – maintainability of complaint under Section 138 of the N.I. Act:
Whether prosecution under Section 138 of the Act is hit by the bar created by Subsection 2 of Section 69 of the Indian Partnership Act, 1932, was the question referred to Division Bench of this Court in the case of Narendra Amarnathji Kalda Vs. Balbirsingh Motisingh Chawhan. It appears in the case of Sai Accumaltor Industries, Sangamner Vs. Sethi Brothers, Aurangabad, the learned Judge of this Court was of the view that complaint filed by unregistered firm under Section 138 of the Act, was not tenable in law in view of the bar under Section 69(2) of the Indian Partnership Act, 1932; whereas a diagonally opposite view was taken in the case of Narendra Amarnathji Kalda (supra). On reference the Division Bench after taking into consideration the judgment in the case of A.V. Ramanaiah M. Shekhara ALD (Cri) 2009 2 80, concluded that prosecution of an accused under Section 138 of the Act is not hit by the bar created by Subsection 2 of Section 69 of the Indian Partnership Act. This judgment in Narendra Amarnathji Kalda (supra) of the Division Bench, as it appears, was not brought to the notice of the learned Additional Judge, Thane. May be for this reason, he held otherwise, that the prosecution under Section 138 of the Act was not maintainable at the instance of unregistered partnership firm.
9. The second ground on which the learned Sessions Judge set aside the order issue process was that the learned Magistrate did not examine the Complainant upon oath, but simply relied on the verification appended to complaint. This reason is factually incorrect in view of the verification dated 22nd November, 2018, which reveals that the Complainant was examined oath, as is evident from the order issue process as reproduced herein above. Be that as it may may, in the case of Rajesh Chalke Vs. State of Maharashtra 2011(1) Mh.LJ (F.B.) 244, the issue before Full Bench was whether in view of provisions of Section 145 of N.I. Act, the Magistrate, taking up a complaint under Section 138 of N.I. Act, alongwith documents in support thereof and verification made in the affidavit in support of the complaint, is still obliged to examine on oath the Complainant and his witnesses before issuing process on the Complainant. Full Bench of this Court after considering the object of Section 138 of the N.I. Act vis-a-vis the provisions of Section 145 of N.I. Act and 200 of Cr.P.C. has held that:
“After addition of Section 145 of N.I. Act in the statute book, it is open to the Magistrate to issue process on the basis of the contents of the complaint, the documents in support thereof and the affidavit submitted by the complainant in support of the complaint. Once the complainant files an affidavit in support of the complaint before issuance of the process under Section 200, Cr.P.C., it is thereafter open to the Magistrate, if he thinks it fit, to call upon the complainant to remain present and to examine him as to the facts contained in the affidavit submitted by the complainant in support of his complaint. But then it is a matter of discretion and the Magistrate is not bound to call upon the complainant to remain present before the Court and to examine him upon oath for taking decision whether or not to issue process on the complaint under Section 138 of N.I. Act.”
Herein, Complainant was examined on oath; learned Magistrate perused the documents; heard Advocate for the Complainant and issued process. Thus, the finding of the Revisional Court that order ‘issue process’ was passed simply relying on verification was factually incorrect, and thus set aside.
10. The next question is; in a case in which, the accused is residing at a place beyond the area in which learned Magistrate exercises his jurisdiction ‘whether it would be mandatory to postpone issue of process and hold inquiry or the investigation for the purpose of deciding, whether or not there is sufficient ground for proceeding.’
In relation to this question, it would be advantageous to refer to Section 202 of the Code, which provides for postponing of issue of process. The same reads as follows ;
“202. Postponement of issue of process :
(1) Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance or which has been made over to him under Section 192, may, if he thinks fit[and shall, in case where the accused is residing at a place beyond the area in which he exercises his jurisdiction,] postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding:
Provided that no such direction for investigation shall be made—
(a) where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session; or
(b) where the complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath under Section 200.
(2) In an inquiry under sub-section (1), the Magistrate may, if he thinks fit, take evidence of witnesses on oath:
Provided that if it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session, he shall call upon the complainant to produce all his witnesses and examine them on oath.
(3) If an investigation under sub-section (1) is made by a person not being a police officer, he shall have for that investigation all the powers conferred by this Code on an officer-in-charge of a police station except the power to arrest without warrant.”
11. Mr. Karl Rustomkhan, learned Counsel for the Applicant submitted simply because accused reside beyond the jurisdiction of the Court, order issue process would not vitiate if in a given case requisite satisfaction is obtained/ derived from the material on record. He drew my attention to order ‘issue process’ (reproduced hereinabove) to contend that, learned Magistrate has issued process after verifying the complaint; documents, produced with it, and after hearing the advocate for the Complainant. He therefore, submitted, after application of mind, process was issued and it was not issued mechanically. In support of the contention, he relied on the judgments of this Court in the case of (i) Bansilal S. Kabra Vs. Global Trade Finance Ltd. (2010 ALL MR (Cri) 3168); (ii) Dr. Rajul Ketan Raj Vs. Reliance Capital Ltd. 2016(5) Mh.L.J.58; (iii) Girish Dharmchand Chordiya vs. Neeta Sachin Chandak (Criminal Writ Petition No. 997/2017). He submitted that the object of the Act will stand defeated if an inquiry under Subsection 1 of Section 202 of the Code is held to be mandatory in the complaint under Section 138 of the Act. Mr. Rustomkhan would largely rely on the judgment in the case of Dr.Rajul Ketan Raj (supra), which in turn relied on in the case of Bansilal S. Kabra (supra), wherein similar view was taken with regard to provision Subsection 202 of the Code. Besides, Mr. Rustomkhan has taken me through the judgment of the Hon’ble Apex Court in the case of Vijay Dhanuka Vs. Najima Mamtaj, 2014 ALL MR (Cri.) 1924 (SC) to contend, that although the Hon’ble Supreme Court in the said decision has considered the issue relating to compliance of Section 202 of the Code, qua the prosecution under the Indian Penal Code is mandatory; however this Court in the case of Dr. Rajul Raj (supra) has drawn distinction between the proceedings under Section 138 of the N.I. Act and the Prosecution under the IPC. In the case of Dr. Rajul Raj (supra), the learned Judge after considering the scope of Section 138 and other amended provision of the Act, has held that the amended provisions could not achieve the desired result, which necessitated the Parliament to make changes in existing provisions and further introduced Sections 143 to 147 by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. Thus, held that the very object of the Act will stand defeated if the inquiry under Subsection 1 of Section 202 of the Code is held to be mandatory in the complaint under Section 138 of the Negotiable Instruments Act. The judgment in the case of Dr. Rajul Ketan Raj (supra) was followed in the case of Girish Dharmchand Chordiya (supra).
12. The next authority relied on by learned Counsel for the Applicant is the order of the Hon’ble Apex Court in Suo Motu Writ Petition (Cri) No. 2 / 2020 decided on 16th April, 2021. Concerned with the large number of cases filed under Section 138 of the Negotiable Instruments Act, 1881 pending at various levels, a Division Bench of the Hon’ble Apex Court decided to examine the reasons for the delay in disposal of these cases and the Registry was directed to register a Suo Motu Writ Petition (Criminal) captioned as “Expeditious Trial of Cases under Section 138 of the Negotiable Instruments Act.” This order refers to scope of Section 202, which was amended with effect from 23rd June, 2006 vide Act 25 of 2005. A reference was made to the judgments in the case of Vijay Dhanuka (supra) and Birla Corporation Limited vs. Adventz Investments and Holdings Limited (2019) 16 SCC 610. In paragraph No.10 of the order, the Hon’ble Apex Court has noted, a divergence of opinion amongst the High Courts relating to the applicability of Section 202 in respect of complaints filed under Section 138 of the Act. The observations in the Paragraph No.10 of the order reads as under;
“Certain cases under Section 138 have been decided by the High Courts upholding the view that it is mandatory for the Magistrate to conduct an inquiry, as provided in Section 202 of the Code, before issuance of process in complaints filed under Section 138. Contrary views have been expressed in some other cases. It has been held that merely because the accused is residing outside the jurisdiction of the Court, it is not necessary for the Magistrate to postpone the issuance of process in each and every case. Further, it has also been held that not conducting inquiry under Section 202 of the Code would not vitiate the issuance of process, if requisite satisfaction can be obtained from materials available on record.”
13. In Paragraph No. 11 of the order, the Hon’ble Apex Court has held thus;
“in view of the judgments of this Court in Vijay Dhanuka (supra), Abhijit Pawar Vs. Hemant Madhukar Nimbalkar (2017) 3 SCC 528 and Birla Corporation Limited (supra), the inquiry to be held by the Magistrate before issuance of summons to the accused residing outside the jurisdiction of the Court cannot be dispensed with.”
However their Lordships were in agreement with the recommendation of learned Amicus Curiae that the Magistrate should come to a conclusion after holding an inquiry that there are sufficient grounds to proceed against the accused.
14. In Paragraph No.12, Hon’ble Apex Court has observed that:
“Another point that has been brought to ournotice relates to the interpretation of Section 202(2) which stipulates that the Magistrate shall take evidence of the witness on oath in an inquiry conducted under Section 202(1) for the purpose of issuance of process. Section 145 of the Act provides that the evidence of the complainant may be given by him on affidavit, which shall be read in evidence in any inquiry, trial or other proceeding, notwithstanding anything contained in the Code. Section 145(2) of the Act enables the court to summon and examine any person giving evidence on affidavit as to the facts contained therein, on an application of the prosecution or the accused. It is contended by the learned Amici Curiae that though there is no specific provision permitting the examination of witnesses on affidavit, Section 145 permits the complainant to be examined by way of an affidavit for the purpose of inquiry under Section 202. He suggested that Section 202 (2) should be read along with Section 145 and in respect of complaints under Section 138, the examination of witnesses also should be permitted on affidavit. Only in exceptional cases, the Magistrate may examine the witnesses personally. Section 145 of the Act is an exception to Section 202 in respect of examination of the complainant by way of an affidavit. There is no specific provision in relation to examination of the witnesses also on affidavit in Section 145. It becomes clear that Section 145 had been inserted in the Act, with effect from the year 2003, with the laudable object of speeding up trials in complaints filed under Section 138. If the evidence of the complainant may be given by him on affidavit, there is no reason for insisting on the evidence of the witnesses to be taken on oath. On a holistic reading of Section 145 alongwith Section 202, we hold that Section 202(2) of the Code is inapplicable to complaints under Section 138 in respect of examination of witnesses on oath. The evidence of witnesses on behalf of the complainant shall be permitted on affidavit. If the Magistrate holds an inquiry himself, it is compulsory that he should examine witnesses. In suitable cases, the Magistrate can examine documents for proceedings under Section 202.”
The dictum is when Magistrate holds inquiry himself, it is not compulsory that he should examine the witnesses and in suitable cases the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceedings under Section 202.
15. In the case in hand, the learned Magistrate while issuing the process, has personally verified the complaint; perused the documents filed alongwith it and after taking into consideration the statement of Complainant on oath and upon hearing, learned Advocate for the Complainant at length held that there were sufficient grounds for proceeding against the accused. I have reproduced the order issue of process herein above. It shows that the learned Magistrate has not only verified the complaint and heard the Complainants’ Advocates, but also perused the documents filed alongwith the complaint for obtaining satisfaction as to sufficiency of ground for proceeding under Section 202.
16. Thus, in consideration of the law laid down by this Court making a distinction between the complaint under Section 138 of the Act and complaints for offences under IPC, in the case of Rajul Ketan Raj (supra) and Girish Dharmchand Chordiya (supra) and the order passed in Suo Motu Writ Petition (Cri) No. 02/2020 and in particular the observations made in Paragraph Nos. 10, 11 an
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d 12 thereof, in my view herein order issue process passed by the learned Magistrate cannot be faulted with for want of inquiry contemplated under Section 202(1) of the Code. The complaint in question, was filed alongwith requisite documents namely invoices; delivery challans; transporters’ receipts; copy of cheque dated 25th September, 2018; copy of statutory notice dated 17th October, 2018; copy of reply dated 31st October, 2018; copy of rejoinder reply dated 16th November, 2018. Therefore, though the accused Nos. 1, 2 and 3 were residing at a place beyond the territorial jurisdiction of the learned Magistrate, and although he did not postpone the issuance of process, order issue process shows that learned Magistrate has obtained requisite satisfaction, from the documents available on record as to sufficiency of the grounds for proceeding under Section 202 against the accused. In view of this matter and for the aforestated reasons, impugned order in Criminal Revision Application No. 79/2019 is quashed and set aside. 17. In the course of arguments, Mr. Karl Rustomkhan, learned Counsel for the Applicant submitted on instructions, that the Complainant does not want to proceed against Ms. Sunita Burkule – Accused No. 4 in the subject complaint, pending on the file of Judicial Magistrate First Class, Thane. The statement is accepted. In consequence, the process issued against Accused No.4 – Ms. Sunita Burkule is quashed and set aside. Having said that, Petitioners shall pay cost Rs. 50,000/- to Respondent No.4, in view of the fact that she was neither partner, nor signatory of disputed cheque. Moreover, the Respondents in their notice reply dated 31st October, 2018, brought this fact to the notice of the Petitioner. Yet they proceeded against her and impleaded her as party Respondent and caused inconvinience to her. 18. As a result, the ‘issue process’ order passed by the learned Magistrate on 16th January, 2019 is upheld. Impugned order is quashed and set aside. Rule is made absolute in the aforesaid terms. Application is allowed and disposed of.