Authorization Lapse in Cheque Bounce Cases: Dismiss or Decide Later?

Understanding the Law on Maintainability and Judicial Approach under Section 138 NI Act

The filing of a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) requires that the complainant — whether an individual or a company — be duly entitled or authorized to initiate legal proceedings. But what happens when a complaint is filed by a person on behalf of a company without proper authorization? Should the court dismiss the complaint at the outset, or can this issue wait until the final hearing? And if an accused challenges this at the preliminary stage, is a criminal revision against rejection of such a plea maintainable?

This article examines these issues through the lens of Supreme Court and Bombay High Court precedents.

1. Is the Magistrate’s Order Rejecting Accused’s Objection Interlocutory?

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Supreme court : Accused or person suspected to have committed crime has right to be heard in a revision filed against dismissal of complaint u/s. 203 Cr.P.C.

 The restoration of the complaint by the Additional Sessions Judge was undoubtedly to the prejudice of the Appellant. The right of the Appellant to be heard at this stage need not detain us any further in view of Manharibhai (supra) observing as follows:

53..... We hold, as it must be, that in a revision petition preferred by the complainant before the High Court or the Sessions Judge challenging an order of the Magistrate dismissing the complaint Under Section 203 of the Code at the stage Under Section 200 or after following the process contemplated Under Section 202 of the Code, the Accused or a person who is suspected to have committed the crime is entitled to hearing by the Revisional Court. In other words, where the complaint has been dismissed by the Magistrate Under Section 203 of the Code, upon challenge to the legality of the said order being laid by the complainant in a revision petition before the High Court or the Sessions Judge, the persons who are arraigned as Accused in the complaint have a right to be heard in such revision petition. This is a plain requirement of Section 401(2) of the Code. If the Revisional Court overturns the order of the Magistrate dismissing the complaint and the complaint is restored to the file of the Magistrate and it is sent back for fresh consideration, the persons who are alleged in the complaint to have committed the crime have, however, no right to participate in the proceedings nor are they entitled to any hearing of any sort whatsoever by the Magistrate until the consideration of the matter by the Magistrate for issuance of process. We answer the question accordingly. The judgments of the High Courts to the contrary are overruled.{Para 7}

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 2183 of 2011

Decided On: 18.06.2020

Subhash Sahebrao Deshmukh Vs. Satish Atmaram Talekar and Ors.

Hon'ble Judges/Coram:

Navin Sinha and Indira Banerjee, JJ.

Author: Navin Sinha, J.

Citation:  MANU/SC/0485/2020,(2020) 6 SCC 625.

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Whether the magistrate can dismiss the criminal complaint without examining witnesses of complainant?

A perusal of the complaint shows that eight witnesses were specifically named in the complaint. The learned Magistrate did not examine any of them. In the order dated 18th September, 2008, the learned Magistrate has not recorded reasons for not recording the statements of other witnesses specifically cited in the complaint. The law is well settled, which is found to have

been reiterated in the decision in the case of Mohinder Singh

(supra). After taking recourse to sub-Section (1) of Section

202 of the Cr.P.C., before dismissing a complaint by taking

recourse to Section 203 of the Cr.P.C., the learned

Magistrate has to consider the statements of the complainant

and his witnesses. In this case, the learned Magistrate has

not examined the other witnesses. The view taken by this

Court in the case of Nagawwa (supra) is no different.

5. Therefore, we find no error when the High Court came

to the conclusion that the complaint deserves to be remanded

from the stage of holding an inquiry under sub-Section (1) of

Section 202 of the Cr.P.C.

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 561 OF 2012

DILIP KUMAR  Vs  BRAJRAJ SHRIVASTAVA & ANR.

Author: ABHAY S. OKA, J.

Dated: 26th JULY, 2023.

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Whether Magistrate can dismiss the complaint for dishonour of cheque after recording of evidence of complainant?

 In the instant case, we notice that there is a specific

averment in the Special Leave Petition(s) that the appellant had

led its evidence in the case and thereafter had moved an

application under Section 311 of the Code to summon and

examine further witnesses. In Paragraph 5(u), it is stated that

the trial court as well as the High Court did not take into

consideration that the complainant’s cross-examination had been

over in Complaint Case Nos.621742/16, 621743/16 and

621744/16, and no cross-examination was sought in other cases.

Rather, CW-1’s cross-examination in the above three complaint

cases was adopted. There appears no specific denial of the

aforesaid factual position. However, we find that neither the High Court nor the learned Magistrate has taken notice of the aforesaid position. Both the courts below thus failed to consider whether in the facts of the case under the proviso to sub-section (1) of Section 256, the court could proceed with the matter after

dispensing with the attendance of the complainant. Further, if the complainant had not appeared to press the application under Section 311 of the Code, the learned Magistrate could have rejected the application under Section 311 of the Code and proceeded with the case on basis of the available evidence. We are, therefore, of the considered view that the learned Magistrate was not justified in straight away dismissing the complaint(s) and ordering acquittal of the accused on mere nonappearance

of the complainant. The High Court too failed to take notice of the aforesaid aspects. Thus, the orders impugned are liable to be set aside. {Para 13}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 657-664 OF 2023

M/s. BLS INFRASTRUCTURE LIMITED Vs M/s. RAJWANT SINGH & OTHERS 

Author: MANOJ MISRA, J.

Dated: March 01, 2023

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Whether court must hear accused before setting aside dismissal of criminal complaint U/S 203 of CRPC?

The restoration of the complaint by the Additional Sessions Judge was undoubtedly to the prejudice of the Appellant. The right of the Appellant to be heard at this stage need not detain us any further in view of Manharibhai (supra) observing as follows:

53..... We hold, as it must be, that in a revision petition preferred by the complainant before the High Court or the Sessions Judge challenging an order of the Magistrate dismissing the complaint Under Section 203 of the Code at the stage Under Section 200 or after following the process contemplated Under Section 202 of the Code, the Accused or a person who is suspected to have committed the crime is entitled to hearing by the Revisional Court. In other words, where the complaint has been dismissed by the Magistrate Under Section 203 of the Code, upon challenge to the legality of the said order being laid by the complainant in a revision petition before the High Court or the Sessions Judge, the persons who are arraigned as Accused in the complaint have a right to be heard in such revision petition. This is a plain requirement of Section 401(2) of the Code. If the Revisional Court overturns the order of the Magistrate dismissing the complaint and the complaint is restored to the file of the Magistrate and it is sent back for fresh consideration, the persons who are alleged in the complaint to have committed the crime have, however, no right to participate in the proceedings nor are they entitled to any hearing of any sort whatsoever by the Magistrate until the consideration of the matter by the Magistrate for issuance of process. We answer the question accordingly. The judgments of the High Courts to the contrary are overruled.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 2183 of 2011

Decided On: 18.06.2020

Subhash Sahebrao Deshmukh Vs. Satish Atmaram Talekar and Ors.

Hon'ble Judges/Coram:

Navin Sinha and Indira Banerjee, JJ.

Citation( 2020) 6 SCC 625,MANU/SC/0485/2020

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Whether the court can dismiss the complaint about the dishonour of cheque if an officer of Co-operative society was not duly authorized to give evidence?

When the Complainant's witness the said Shirodkar was cross-examined on the said Resolution/Authority letter, the Complainant's witness admitted that the said Resolution authorised him to attend Court cases and not to depose on oath. It is contended by learned Counsel on behalf of the accused that this point was raised before both the Courts below. The learned J.M.F.C., merely observed that the Complainant produced on record true extract of the Resolution authorising Gaurish Shirodkar to attend the Court on behalf of the Society. There is no whisper about the said Resolution/Letter of Authority in the Judgment of the learned Appellate Court, which otherwise also is very cryptic. The said Resolution did not authorise the said Gaurish P. Shirodkar, the recovery officer of the Complainant-Co-operative Society, either to file a complaint on behalf of the Complainant, which is a separate legal entity or to depose in support of the Complainant. A complaint under Section 142 of the Act can be filed either by the payee or the holder in due course. The Complainant-Co-operative Society was the payee in his case and the complaint was filed in its name. The authority produced did not sufficiently authorise Shri G. P. Shirodkar either to file the complaint or to depose in support thereof. The Complainant was not sufficiently represented before the Court. Therefore, it could not be said that the complaint filed or the evidence given in support thereof was in accordance with Section 142 of the Act, which requires that the complaint has to be made by the payee or, as the case may be, by the holder in due course of the cheque. In the absence of any Power of Attorney or a valid authority by the Complainant in favour of the said Recovery Officer, the complaint itself could not have been entertained and conviction based on such a complaint, is liable to be set aside.

IN THE HIGH COURT OF BOMBAY AT GOA

C.R.A. No. 32 of 2006

Decided On: 04.10.2006

 Alka Toraskar  Vs.  The Vaishya Urban Co-op. Credit Society Ltd. and Ors.

Hon'ble Judges/Coram:

N.A. Britto, J.

Citation: MANU/MH/1097/2006,2007 CRLJ 858, 2006(6) ALLMR 397

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Whether court should dismiss complaint for dishonour of cheque if cheque amount is more than amount due?

 However, the learned Trial Court found contradiction in the

number of cartons in the complaint as well as in the statement of

the appellant. It was found that the cheque amount is more than

the amount allegedly due on the date when cheque was

presented, therefore, the complaint was dismissed. It held that

there are three different versions as to the number of apple

cartons, therefore, the alleged amount would have been less than

the amount claimed by the complainant.

Once the agent of the respondent has admitted the settlement of

due amount and in absence of any other evidence the Trial Court

or the High Court could not dismiss the complaint only on account

of discrepancies in the determination of the amount due or oral

evidence in the amount due when the written document

crystalizes the amount due for which the cheque was issued.

28. The accused has failed to lead any evidence to rebut the statutory

presumption, a finding returned by both the Trial Court and the

High Court. Both Courts not only erred in law but also committed

perversity when the due amount is said to be disputed only on

account of discrepancy in the cartons, packing material or the rate

to determine the total liability as if the appellant was proving his

debt before the Civil Court. Therefore, it is presumed that the

cheques in question were drawn for consideration and the holder

of the cheques i.e., the appellant received the same in discharge

of an existing debt. The onus, thereafter, shifts on the accusedappellant

to establish a probable defence so as to rebut such a

presumption, which onus has not been discharged by the

respondent.

29. Learned counsel for the respondent has referred to the judgment

reported in M. S. Narayana Menon v. State of Kerala 9 (2006) 6 SCC 39 that evidence adduced by the complainant can be relied upon to rebut

the presumption of consideration. However, said judgment has no

applicability to the facts of the present case as the Trial Court has

found that the presumption is not rebutted but still the Trial Court

dismissed the complaint for the reason that the appellant has

failed to prove the amount mentioned in the cheque as due

amount. Once the cheque is proved to be issued it carries

statutory presumption of consideration. Then the onus is on the

respondent to disprove the presumption at which the respondent

has miserably failed.

30. In Kumar Exports evidence to rebut the presumption was led and

accepted by the Court. In these circumstances, it was held that

the burden shifts back to the complainant and the presumption

under the Act will not again come to his rescue. However, in the

present case, the presumption of consideration has not been

rebutted by the respondent even on the basis of the evidence laid

by the appellant. The difference in the number of cartons supplied

or the rate charged is not relevant when the accounts were settled

in writing to rebut the presumption of consideration of issuance of

a cheque.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1545 OF 2019

UTTAM RAM  Vs DEVINDER SINGH HUDAN 

HEMANT GUPTA, J.

Dated:OCTOBER 17, 2019.

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Whether complaint for dishonour of cheque can be dismissed if complainant fails to pay process fees after appearance of accused?

It is explicit that the Legislature never intended to dismiss the complaint for non-payment of the process fees after the service of summons on the accused or after his appearance before the Court or after his production before the Court.

 In the present case, the complaint was dismissed by the court below only after the appearance of the accused before the court below for the non-payment of process-fee for issuing steps under sections 82 and 83 of the code against the accused. It is true that the complainant was not present before the court below on that day. There was also no representation for the complainant before the court below on that day. However, the court below did not dismiss the complaint for the absence of the complainant, but for the failure of the complainant to pay the process-fee. Since the warrant, resulting in the issuance of proclamation under section 82 of the Code and attachment under section 83 of the Code, was issued in this case under section 87(b) of the Code, the complainant should not have been required to pay the process fees for issuing the proclamation under section 82 of the Code or attachment under section 83 of the Code and consequently, the complaint should not have been dismissed under section 204(4) of the Code. Therefore, the order impugned cannot be said to be legal, proper and correct and consequently, the same cannot be sustained.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

Crl. Rev. Pet. No. 1003 of 2015

Decided On: 22.09.2015

Ayodya Printers Ltd. Vs. State of Kerala and Ors.

Hon'ble Judges/Coram:

Bhaskaran Pillai Sudheendra Kumar, J.

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Whether dismissal of complaint in cheque dishonour case will result in acquittal of accused?

 After hearing the learned Counsel for the parties, we find that there is some force in the submissions made by learned Counsel appearing for the Appellant and we hold, in the facts of the case, that dismissal of the complaint for non-appearance of the complainant amounts to acquittal as contemplated in Section 256 of the Code of Criminal Procedure.

IN THE SUPREME COURT OF INDIA

Crl. A. No. 184 of 2016 

Decided On: 29.02.2016

V.K. Bhat  Vs.  G. Ravi Kishore and Ors.

Hon'ble Judges/Coram:

Pinaki Chandra Ghose and Amitava Roy, JJ.

Citation:(2016) 13 SCC 243

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Whether Magistrate can dismiss complaint without recording verification?

The limited question is, whether
opportunity should have been given to the complainant to record
his verification. The question of issue of process is to be
considered under Chapter XV of the Code of Criminal Procedure.
The stage of Section 256 of the Code of Criminal Procedure was
not yet reached because Section 256 provides that, if summons
has been issued on complaint and thereafter complainant
remains absent, the Magistrate would have discretion to acquit
the accused.

2. The learned counsel for the applicant - complainant
has tendered across the bar certified copy of application which
was filed on 15.4.2015 for adjournment as the complainant had
some difficulty. It was a fresh matter dated 3.3.2015, which had
been registered by the Court of Judicial Magistrate, First Class on
9.3.2015. It is not clear how the Magistrate observed that the
complaint had been filed on 5.2.2015 and proceeded to reject the
application and dismiss the complaint. It was unreasonable on
the part of the trial Court not to give some breathing time to the
complainant especially when the complainant had filed an
application.
The trial Court, without recording
verification, passed orders stating that the complaint was being
dismissed for want of verification under section 203 of the Code

of Criminal Procedure. Section 203 of the Code of Criminal
Procedure can be invoked only after considering the statement
on oath, if any, of the complainant and of the witnesses, and the
result of the enquiry or investigation, if any, under section 202.
The said stage was yet not reached. Thus, the impugned order
cannot be maintained.
 IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
BENCH AT AURANGABAD

CRIMINAL APPLICATION NO.3714 OF 2015
M/s Umedmal Bhikulal,

V
 Saibaba Trading Company,

CORAM: A.I.S. CHEEMA, J.
DATED: 5th May, 2016.
Citation: 2017 ALLMR(CRI) 1077

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When Complaint filed under PCPNDT Act can be dismissed?

In the result, I find that the complaint, having not been filed
either by the appropriate Authority or an officer authorized by the
appropriate Authority, ought to have been dismissed by the learned
Magistrate.     Both   the   Courts   below   have   not   considered   these
essential requirements of the Act, 1994 and passed the orders which
are not sustainable in law.
13] In the circumstances, I am of the view, that the application
deserves   to   be   allowed.     Accordingly,   the   complaint   filed   by   Dr.
Ramteke  against the present applicant stands rejected.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY :
NAGPUR BENCH : NAGPUR.
Criminal Application (APL) No.520 of 2013.
Dr. Sandhya Arun Kulkarni,

Versus
The State of Maharashtra

Coram :  S.B. Shukre, J.
    Dated  : 26th February, 2015.
Citation; 2016 ALLMR(CRI)963

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When complaint for dishonour of cheque should not be dismissed in default?

In the present case, the complainant was not warned
nor any peremptory order was passed. For failing to pay
process fee the complainant will be put to inconvenience
and the case would be thrown away without being decided
on merits.
 MADHYA PRADESH HIGH COURT
 CRR.289/2015
 (Bhupendra Singh Vs. Saket Kumar)
Dated;31.07.2015

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Whether dismissal of complaint case for non-appearance of complainant in warrant trial will amount to discharge of accused?

So far as the accused is concerned, dismissal of a complaint for non-appearance of the complainant or his discharge or acquittal on the same ground is a final order and in the absence of any specific provision in the Code, a Magistrate cannot exercise any inherent jurisdiction."

From the aforesaid judgment of the Apex Court no doubt is left and rather law has been settled that dismissal of a complaint for non-appearance of the complainant in the warrant case would result in discharge and that would be final order and similarly the dismissal of the complainant for non-appearance of the complainant in the summons case would result in acquittal and the same would be final order and in the absence of any specific provision in the Code of Criminal Procedure, 1973, the Magistrate cannot revive the said order. That being the settled legal position, making of an application by the complainant on 21-9-1991 for restoration of the complaint was wholly misplaced and misconceived and therefore cannot be said to be done in good faith and the order passed by the trial Court on that application restoring and reviving the complaint was also not only erroneous but without jurisdiction and further proceedings pursuant thereto were also non est and void.

IN THE HIGH COURT OF BOMBAY

Criminal Application No. 1061 of 1994

Decided On: 17.08.1995

Narayandas Gulabchand Agrawal Vs. Rakesh Kumar S/o Nem Kumar Porwal

Hon'ble Judges/Coram:

R.M. Lodha, J.

Citation: 1996 CivilCC 592, 1996 CriLJ 29, 1996(2)MhLJ463

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Whether Magistrate can acquit accused when complaint U/S 138 of NI Act is held to be not maintainable?

In all the circumstances above, the impugned judgment of the trial Magistrate holding that the complaint is not maintainable, is not sustainable. The impugned judgment and order is liable to be quashed and set aside. Though the trial Magistrate stated in the final order that the accused is acquitted, however, since the complaint has been held to be not maintainable, and since there was no decision on merits, the final order ought to have been that the complaint is dismissed as not maintainable and that the accused is discharged. It is, therefore, necessary that the matter is remanded to the trial Magistrate for being decided now on merits.

IN THE HIGH COURT OF BOMBAY

Criminal Revision Application No. 17 of 2014

Decided On: 02.04.2014

Reshmi Constructions Vs. Vs. Laxman Vithal Chunekar
  Vithal Chunekar

Hon'ble Judges/Coram:U.V. Bakre, J.

 Citation: 2014(2)BomCR(Cri)297,2014(5)MHLJ 537

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Distinction between rejection of Criminal complaint and dismissal of Criminal complaint

The legal position can thus be summed up as hereinbelow:-

On receipt of a written complaint, the 5 options available to a Judicial Magistrate who is competent to take cognizance of the case can be summarised as follows:- 

1) Rejection of complaint If the complaint on the face of it does not at all make out any offence, then the Magistrate may reject the complaint. This power of rejection at the pre-cognizance stage is inherent in any Magistrate and the said power should not be mistaken for the power of dismissal available to the Magistrate under Sec. 203 Cr.P.C. since the latter power of dismissal is one which can be exercised only at the post-cognizance stage. (See Raju Puzhankara v. State of Kerala - 2008 (2) KLT 467 - Also see CREF Finance Ltd. v. Sree Shanthi Homes (P) Ltd. (2005) 7 SCC 467, Govind Mehta v State of Bihar - AIR 1971 SC 1708, Nagraj v. State of Mysore - AIR 1964 SC 269). 2) Where the Magistrate does not reject the complaint at the threshold, the Magistrate may, without taking cognizance of the offence, order an investigation by the police under Sec. 156 (3) Cr.P.C. and forward the complaint to the officer in- charge of the police station concerned provided that the complaint alleges the commission of a cognizable offence. Such a course can be adopted by the Magistrate only at the pre-cognizance stage. (See Dilawar Singh v. State of Delhi - AIR 2007 SC 3234 & Suresh Chand Jain v. State of M.P. - AIR 2001 SC 571) Even a complaint alleging the commission of offences exclusively triable by a

Court of Session can also be so forwarded under Sec. 156 (3) Cr.P.C. (See Tula Ram v. Kishore Singh - 1977 (4) SCC 459 = AIR 1977 SC 2401). The Station House Officer ("S.H.O." for short) who receives such a complaint forwarded under Sec. 156 (3) Cr.P.C. will have to treat the complaint as a First Information Report within the meaning of Sec. 154 Cr.P.C. and is bound to register a crime and proceed to conduct an investigation as provided under Sec. 157 Cr.P.C. (See Mohammed Yousuff v. Smt. Afaq Jahan - AIR 2006 SC 705 = 2006 (1) KLT 939 (SC). The S.H.O. is obliged to register a crime whether or not such S.H.O. has the territorial jurisdiction to investigate the offence within the meaning of Sec. 156 (1) Cr.P.C. In a case where the S.H.O. has no territorial jurisdiction, the S.H.O. will have to register the crime and then transfer the same to the Police Station having jurisdiction. (See Madhubala v. Suresh Kumar - 1997 (8) SCC 476). This power of the Magistrate under Sec. 156 (3) Cr.P.C. cannot be exercised by him after taking cognizance. (See Tula Ram v. Kishore Singh - AIR 1977 SC 2401 - Also see George v. Jacob Mathews - 1996 (1) KLT 73).

3) Taking cognizance of the offence Where the Magistrate does not order investigation by the police under Sec. 156 (3) Cr.P.C. at the pre-cognizance stage and does not reject the complaint at the threshold,  

then the magistrate may decide to proceed under Chapter XV Cr.P.C. and thereby take cognizance of the offence provided the allegations in the complaint prima facie make out an offence.

Kerala High Court

Biju Purushothaman vs The State Of Kerala, Represented ... on 20 June, 2008

Coram: The Hon'ble MR. Justice V.RAMKUMAR

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Supreme Court: High court or Session court must hear accused in revision against order of magistrate of dismissal of complaint

 We hold, as it must be, that in a revision petition preferred by complainant before the High Court or the Sessions Judge challenging an order of the Magistrate dismissing the complaint under Section 203 of the Code at the stage under Section 200 or after following the process contemplated under Section 202 of the Code, the accused or a person who is suspected to have committed crime is entitled to hearing by the revisional court. In other words, where complaint has been dismissed by the Magistrate under Section 203 of the Code, upon challenge to the legality of the said order being laid by the complainant in a revision petition before the High Court or the Sessions Judge, the persons who are arraigned as accused in the complaint have a right to be heard in such revision petition. This is a plain requirement of Section 401(2) of the Code. {Para 58}

Supreme Court of India

Manharibhai Muljibhai Kakadia & ... vs Shaileshbhai Mohanbhai Patel & ... on 1 October, 2012

Author: R Lodha

Bench: R.M. Lodha, Chandramauli Kr. Prasad, Sudhansu Jyoti Mukhopadhaya

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