# M/S. MANDVI CO-OP BANK LTD v. NIMESH B. THAKORE

- **Citation:** [2010] 1 S.C.R. 219
- **Court:** Supreme Court of India
- **Decided:** 2010-01-11
- **Case number:** Criminal Appeal No. 72 of 2010
- **Bench:** Tarun Chatterjee, Aftab Alam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-mandvi-co-op-bank-ltd-v-nimesh-b-thakore-26564
- **Pages:** 36

## Headnote

Negotiable Instruments Act, 1881:
A
B
ss.145(1) and (2) -Affidavit of a deponent is in the nature c
of examination-in-Chief -
On being summoned under
s. 145(2), complainant or his witness whose evidence is given
on affidavit is not required to depose in examination-in-chief
all over again - Evidence Act, 1872 - s.165.
ss. 145(1) and (2) - Applicability to the proceedings D
pending on 6.2.2003, the date on which these sections were
inserted in the Act - Held: Applicable as these provisions are
procedural and not substantive in nature.
s.145(1) - Right of accused to give evidence on affidavit E
- Held: s.145(1) confers right on the complainant to give
evidence on affidavit - It does not speak of similar right being
conferred on the accused - On facts, High Court erred in
holding that not mentioning the accused along with the
complainant in sub-section (1) of s.145 was merely an
F
omission by the legislature that it could fill up - Interpretation
of Statutes.
s.145(2) and s.296(2) CrPC - The two sections whether
identical - Held: The two sections are not identical - s.296(2)
deals with evidence of formal nature and is a part of elaborate
G
procedure of regular trial under the Code while the object of
s.145(2), is to design a much simpler and swifter trial
procedure departing from time consuming trial procedure of
219
H
220
SUPREME COURT REPORTS
[2010) 1 S.C.R.
A the Code - Code of Criminal Procedure, 1973 - s.296(2).
Interpretation of Statutes:
It is not permissible for the Cowt to make additions in
the law and to read into it something that is just not there -
B Negotiable Instruments Act, 1881 - s.145(1).
The questions which arose for consideration in these
appeals were whether the right of the accused under
Section 145(2) of Negotiable Instruments Act, 1881 is
c limited to cross-examination of complainant or his
witness giving evidence on affidavit or is it open to the
accused to insist that notwithstanding the evidence
earlier given on affidavit, on coming to the court the
complainant or his witness ought to first give deposition
0 in examination-in-chief before being cross-examined by
him; whether the provisions of sub-sections (1) and (2)
of Section 145 of the Act would apply to proceedings that
were pending on February 6, 2003, the date on which
those provisions were inserted in the Act; and whether
E the right to give evidence on affidavit as provided to the
complainant under section 145(1) of the Act is also
available to the accused.
Disposing of the appeals, the Court
F
HELD: 1.1. The provisions of the newly inserted
Chapter XVII in the Negotiable Instruments Act, 1881, with
effect from April 1, 1989, brought in a veritable deluge of
cases in the criminal court system. In the metropolitan
cities and the commercial centres of the country, it almost
G appeared that the main function of the Magistrate's court
was to recover monies on behalf of parties on the wrong
end of the commercial transactions that had gone sour.
Complaints under section 138 of the Act came to be filed
in such large numbers that it became impossible for the
H courts to handle them within a reasonable time and it also
MANDVI CO-OP BANK LTD. v. NI MESH B. THAKORE .221
had a highly adverse effect on the court's normal work A
in ordinary criminal matters. A remedial measure was
urgently required and the legislature took action by
introducing further amendments in the Act by the
Negotiable Instruments (Amendment and Miscellaneous
Provisions) Act, 2002. The 2002 amend.ment inserted in
B
the Act for the first time sections 143 to 147 besides
bringing about a number of changes in the existing
provisions of sections 138 to 142. Section 143 gave to the
court the power to try cases summarily; section 144
provided for the mode of service of summons; section c
145 made it possible for the complainant to give his
evidence on affidavit; section 146 provided that the
bank's slip would be pr!ma facie evidence of certain facts
and section 147 made the offences under t

## Text

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[2010] 1 S.C.R. 219
M/S. MANDVI CO-OP BANK LTD.
v.
NIMESH B. THAKORE
(Criminal Appeal No. 72 of 2010 )
JANUARY 11, 2010
[TARUN CHATTERJEE AND AFTAB ALAM, JJ.]
Negotiable Instruments Act, 1881:
A
B
ss.145(1) and (2) -Affidavit of a deponent is in the nature c
of examination-in-Chief -
On being summoned under
s. 145(2), complainant or his witness whose evidence is given
on affidavit is not required to depose in examination-in-chief
all over again - Evidence Act, 1872 - s.165.
ss. 145(1) and (2) - Applicability to the proceedings D
pending on 6.2.2003, the date on which these sections were
inserted in the Act - Held: Applicable as these provisions are
procedural and not substantive in nature.
s.145(1) - Right of accused to give evidence on affidavit E
- Held: s.145(1) confers right on the complainant to give
evidence on affidavit - It does not speak of similar right being
conferred on the accused - On facts, High Court erred in
holding that not mentioning the accused along with the
complainant in sub-section (1) of s.145 was merely an
F
omission by the legislature that it could fill up - Interpretation
of Statutes.
s.145(2) and s.296(2) CrPC - The two sections whether
identical - Held: The two sections are not identical - s.296(2)
deals with evidence of formal nature and is a part of elaborate
G
procedure of regular trial under the Code while the object of
s.145(2), is to design a much simpler and swifter trial
procedure departing from time consuming trial procedure of
219
H
220
SUPREME COURT REPORTS
[2010) 1 S.C.R.
A the Code - Code of Criminal Procedure, 1973 - s.296(2).
Interpretation of Statutes:
It is not permissible for the Cowt to make additions in
the law and to read into it something that is just not there -
B Negotiable Instruments Act, 1881 - s.145(1).
The questions which arose for consideration in these
appeals were whether the right of the accused under
Section 145(2) of Negotiable Instruments Act, 1881 is
c limited to cross-examination of complainant or his
witness giving evidence on affidavit or is it open to the
accused to insist that notwithstanding the evidence
earlier given on affidavit, on coming to the court the
complainant or his witness ought to first give deposition
0 in examination-in-chief before being cross-examined by
him; whether the provisions of sub-sections (1) and (2)
of Section 145 of the Act would apply to proceedings that
were pending on February 6, 2003, the date on which
those provisions were inserted in the Act; and whether
E the right to give evidence on affidavit as provided to the
complainant under section 145(1) of the Act is also
available to the accused.
Disposing of the appeals, the Court
F
HELD: 1.1. The provisions of the newly inserted
Chapter XVII in the Negotiable Instruments Act, 1881, with
effect from April 1, 1989, brought in a veritable deluge of
cases in the criminal court system. In the metropolitan
cities and the commercial centres of the country, it almost
G appeared that the main function of the Magistrate's court
was to recover monies on behalf of parties on the wrong
end of the commercial transactions that had gone sour.
Complaints under section 138 of the Act came to be filed
in such large numbers that it became impossible for the
H courts to handle them within a reasonable time and it also
MANDVI CO-OP BANK LTD. v. NI MESH B. THAKORE .221
had a highly adverse effect on the court's normal work A
in ordinary criminal matters. A remedial measure was
urgently required and the legislature took action by
introducing further amendments in the Act by the
Negotiable Instruments (Amendment and Miscellaneous
Provisions) Act, 2002. The 2002 amend.ment inserted in
B
the Act for the first time sections 143 to 147 besides
bringing about a number of changes in the existing
provisions of sections 138 to 142. Section 143 gave to the
court the power to try cases summarily; section 144
provided for the mode of service of summons; section c
145 made it possible for the complainant to give his
evidence on affidavit; section 146 provided that the
bank's slip would be pr!ma facie evidence of certain facts
and section 147 made the offences under the Act
compoundable. [Para 13] [234-C-H]
0
1.2. The provisions of sections 143, 144, 145 and 147
expressly departed from and overrode the provisions of
the Code of Criminal Procedure, the main body of
adjective law for criminal trials. The provisions of section
146 similarly depart from the principles of the Indian
E
Evidence Act. The procedure of summary trials is adopted
under section 143 subject to the qualification "as far as
possible", thus, leaving sufficient flexibility so as not to
affect the quick flow of the trial process. Even while
following the procedure of summary trials, the nonF
obstante clause and the expression "as far as possible"
used in section 143 coupled with the non-obstante
clause in section 145 allows for the evidence of the
complainant to be given on affidavit, that is, in the
absence of the accused. But the affidavit of the G
complainant (or any of his witnesses) may be read in
evidence "subject to all just exceptions". In other words,
anything inadmissible in evidence, e.g., irrelevant facts or
hearsay matters would not be taken in as evidence, even
though stated on affidavit. Section 146, making a major H
222
SUPREME COURT REPORTS
[2010) 1 S.C.R.
A departure from the principles of the Evidence Act
provides that the bank's slip or memo with the official
mark showing that the cheque was dishonoured would
by itself give rise to the presumption of dishonour of the
cheque, unless and until that fact was disproved. [Para
B 16) [240-A-H; 241-A-B)
1.3. Sections 143 to 147 were designed especially to
lay down a much simplifie~ procedure for the trial of
dishonoured cheque cases with the sole object that the
trial of those cases should follow a course even swifter
C than a summary trial. The claim of the accused that on
being summoned under section 145(2), the complainant
or any of his witnesses whose evidence is given on
affidavit must be made to depose in examination-in-chief
all over again plainly appears to be a demand for
D meaningless duplication, apparently aimed at delaying
the trial. In the event an application is made by the
accused, the court would be obliged to summon the
person giving evidence on affidavit in terms of section
145(1) without having any discretion in the matter. It is
E clear that Section 137 of the· Evidence Act does not define
"examine" to mean and include the three kinds of
examination of a witness; it simply defines "examinationin-chief", "cross-examination" and "re-examination".
What section 145(2) of the Act says is simply that the
F court may, at its discretion, call a person giving his
evidence on affidavit and examine him as to the facts
contained therein. But if an application is made either by
the prosecution or by the accused, the court must call the
person giving his evidence on affidavit, again to be
G examined as to the facts contained therein. What would
be the extent and nature of examination in each case is
a different matter and that has to be reasonably
construed in light of the provision of section 145(1) and
having regard to the object and purpose of the entire
H scheme of sections 143 to 146. The scheme of sections
MANDVI CO-OP BANK LTD. v. NIM ESH B. THAKORE 223
143 to 146 does not in any way affect the judge's powers
A
under section 165 of the Evidence Act. As a matter of fact,
section 145(2) expressly provides that the court may, if it
thinks fit, summon and examine any person giving
evidence on affidavit. The affidavit of the person S<>'
summoned that is already on the record is obviously in
B
the nature of examination-in-chief. Hence, on being
summoned on the application made by the accused the
deponent of the affidavit (the complainant or any of his
witnesses) can only be subjected to cross-examination
as to the facts stated in the affidavit. In so far as the c
prosecution is concerned the occasion to summon any
of its witnesses who has given his evidence on affidavit
may arise in two ways. The prosecution may summon a
person who has given his evidence on affidavit and has
been cross-examined for "re-examination". The 0
prosecution may also have to summon a witness whose
evidence is given on affidavit in case objection is raised
by the defence regarding the validity and/or sufficiency
of proof of some document(s) submitted along with the
affidavit. In that event the witness may be summoned to
E
appear before the court to cure the defect and to have
the document(s) properly proved by following the correct
legal mode. [Paras 20 and 22] [243-C-F; 245-B-H; 246-AC]
Dental Council of India vs. Hari Prakash and Ors., (2001)
F
8 SCC 61 and Nathi Devi vs. Radha Devi, (2005) 2 SCC 271;
Raghunath Rai Bareja vs. Punjab National Bank, (2007) 2
sec 230, referred to.
1.4. The submission that since section 145(2) is
identical to section 296(2) Cr.P.C., it shouid be interpreted
G
in light of the legislative history of section 296(2) is
without merit. Moreover, the crucial difference between
section 296(2) Cr.P.C. and section 145(2) of the Act is that
the former deals with the evidence of a formal nature
H
224
SUPREME COURT REPORTS
[201 OJ 1 S.C.R.
A whereas under the latter provision, all evidences
including substantive evidence may be given on affidavit.
Section 296 is part of the elaborate procedure of a regular
trial under the Code while the whole object of section
145(2) of the Act is to design a much simpler and swifter
B trial procedure departing from the elaborate and time
consuming trial procedure of the Code. Hence,
notwithstanding the apparent verbal similarity between
section 145(2) of the Act and section 296(2) Cr.P.C., it
would be completely wrong to interpret the true scope
c and meaning of the one in the light of the other. [Paras
24 and 25] [246-G-H; 247-C-F]
State of Punjab v. Naib Din (2001) 8 SCC 578,
distinguished.
o
1.5. The evidence given on affidavit by the
complainant is "subject to all just exceptions". This
simply means that the evidence given on affidavit must
be admissible and it must not include inadmissible
materials such as facts not relevant to the issue or any
E hearsay statements. In case the complainant's affidavits
contain statements that are not admissible in evidence it
is always open to the accused to point those out to the
court and the court would then surely deal with the
objections in accordance with law. There is no merit in
F submission that when the complainant gives his
evidence on affidavit, then the documents produced
along with the affidavit(s) are not proved automatically
and unless the accused admits those documents under
section 294 Cr.P.C. the documents must be proved by
oral testimony. In case, however, the accused raises any
G objections with regard to the validity or sufficiency of
proof of the documents submitted along with the affidavit
and if the objections are sustained by the court it is
always open to the prosecution to have the concerned
witness summoned and get the lacuna in the proof of the
H documents corrected. [Paras 26 and 27] [248-A-F]
MANDVI CO-OP BANK LTD. v. NIM ESH B. THAKORE 225
2. The provisions of Sections 143 to 147 do not take
A
away any substantive rights of the accused. Those
provisions are not substantive but procedural in nature
and would, therefore, undoubtedly, apply to the cases
that were pending on the date the provisions came into
force. [Para 28) [248-F-G]
B
Gurbachan Singh v. Satpal Singh and Ors. 1990 (1) SCC
445, relied on.
3. On a bare reading of Section 143, it is clear that the
legislature provided for the complainant to give his C
evidence on affidavit and did not provide for the accused
to similarly do so. High Court thought that not mentioning
the accused along with the complainant in sub-section
(1) of section 145 was merely an omission by the
legislature that it could fill up without difficulty. There are
D
two errors apparent in the reasoning of the High Court.
First, if the legislature in their wisdom did not think "it
proper to incorporate a word 'accused' with the word
'complainant' in section 145(1) ...... ", it was not open to
the High Court to fill up the self perceived blank.
E
Secondly, the High Court was in error in drawing an
analogy between the evidences of the complainant and
the accused in a case of dishonoured cheque. The case
of the complainant in a complaint under section 138 of
the Act would be based largely on documentary
F
evidence. The accused, on the other hand, in a large
number of cases, may not lead any evidence at all and
let the prosecution stand or fall on its own evidence. In
case the defence does lead any evidence, the nature of
its evidence may not be necessarily documentary; in all
G
likelihood the defence would lead other kinds of
evidences to rebut the presumption that the issuance of
the cheque was not in the discharge of any debt or
liability. This is the basic difference between the nature
of the complainant's evidence and the evidence of the' H
226
SUPREME COURT REPORTS
[2010) 1 S.C.R.
A accused in a case of dishonoured cheque. It is, therefore,
wrong to equate the defence evidence with the
complainant's evidence and to extend the same option
to the accused as well. It is not permissible for the court
to make additions in the law and to read into it something
B that is just not there. [Paras 32 and 33] [251-A-H; 252-AB]
Union of India and Anr. v. Deoki Nandan Aggarwal 1992
Supp. (1) SCC 323; Raghunath Rai Bareja and Anr. v.
Punjab National Bank and Ors., (2007) 2 SCC 230; Duport
C Steels Ltd. vs. Sirs, 1980 1 All ER 534, relied on.
D
E
F
Case Law Reference:
(2001) 8 sec s1
referred to
Para 21
(2005) 2 sec 211
referred to
Para 21
(2001) 2 sec 230
referred to
Para 21
(2001) 8 sec 578
distinguished
Para 23
1990 (1) sec 445
relied on
Para 23
1992 Supp. 1 SCC 323 relied on
Para 33
(2007) 2 sec 230
relied on
Para 34
1980 1 All ER 534
relied on
Para 35
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 72 of 2010.
From the Judgment & Order dated 14.7.2006 of the High
Court of Judicature at Bombay in Criminal Writ Petition No.
G 2302 of 2005 ..
WITH
Crl. A. No. 73, 74, 75, 76, 77 and 78 of 2010.
H
Ranjit Kumar, Bhargava V. Desai, Rahul Gupta, Reema
MANDVI CO-OP BANK LTD. v. NIMESH B. THAKORE 227
Sharma, Jatin Zaveri, Gagan Chhabra, Dr. Vipin Gupta,
A
Siddharth Bhatnagar, Pawan Kumar Bansal, T. Mahipal, Jay
Savla, Anmol Doijode, Manju Sharma, V.B. Joshi, Kailash
Pandey, Pragya S. Baghel, Ravi Naik, Manik Karanjawala,
Sonia Nigam, Rachna Gupta, Niraj Sharma and Ravindra
Keshavrao Adsure for the appearing parties.
B
The Judgment of the Court was delivered by
AFTAB ALAM, J. 1. Leave granted
2. In these appeals we are required to consider the c
special provisions laid down by section 145 of the Negotiable
Instruments Act, 1881 ('the Act', hereinafter) for a dishonoured
cheque trial and to consider how far certain assertions made
by the accused are in accordance with the provisions contained
in the two sub-sections of that section.
3. The High Court had before it a large number of writ
petitions and applications under section 482 of the Code of
Criminal Procedure. Most of those petitions were filed on behalf
D
of the accused but a few were also at the instance of the
complainants. On the basis of the grievances made and reliefs
E
prayed for in those petitions the High Court framed the following
two questions as arising for its consideration:
"(A) Whether sub-section (2) of section 145 of the
Negotiable Instruments Act, 1881, (for short, "the Act")
F
confers an unfettered right on the complainant and the
accused to apply to the court seeking direction to give oral
examination-in-chief of a person giving evidence on
affidavit, even in respect of the facts stated therein and that
if such a right is exercised, whether the court is obliged to
G
examine such a person in spite of the mandate of section
145(1) ofthe Act?
(B) Whether the provisions of section 145 of the Act, as
amended by the Negotiable Instruments (Amendment and
H
228
SUPREME COURT REPORTS
[2010] 1 S.C.R.
A
Miscellaneous Provisions) Act, 2002, (for short "the
amending Act of 2002") are applicable to the complaints
under section 138 of the Act pending on the date on which.
the amendment came into force? In other words, do the
amended provisions of section 145(1) and (2) of the Act
B
operate retrospectively? "
4. Answering the questions after a detailed and careful
consideration of all the relevant provisions and earlier decisions
of courts, the High Court held that the person (complainant or
his witness) giving evidence on affidavit may be summoned by
C the court for putting questions as envisaged under section 165
of the Evidence Act (vide paragraph 24 of the judgment). He
would also be summoned on an application made by the
accused but the right of the accused is limited to crossexamination of the witness. In terms of section 145(2) the
D accused can undoubtedly cross-examine a person whose
evidence is given on affidavit but the accused cannot insist that
the witness, on coming to court, should first depose in
examination-in-chief even in respect of matters which are
already stated by him on affidavit (vide paragraph 25 of the
E judgment). The High Court further explained that for the
prosecution the occasion to summon any of its witnesses who
have given their evidence on affidavit may arise in two ways.
The prosecution may summon a person who has given his
evidence on affidavit and has been cross-examined for "reF examination". This right of the prosecution, the High Court
observed, was not in dispute before it. The prosecution may
also have to summon a witness whose evidence is given on
affidavit in case objection is raised by the defence regarding
the validity and/or sufficiency of proof of some document(s)
G submitted along with the affidavit. In that event the witness may
be summoned to appear before the court to cure the defect and
to have the document(s) properly proved by following the
correct legal mode (vide paragraph 26 of the judgment).
H
5. The High Court then considered the claim of the
MANDVI CO-OP BANK LTD. v. NIMESH B. THAKORE 229
[AFTAB ALAM, J.]
accused that any evidence in defence, like the complainant's
A
evidence, may also be given on affidavit. It upheld the claim
observing as follows:
" .... Merely because, section 145(1) does not expressly
permit the accused to do so, does not mean that the
8
Magistrate cannot allow the accused to give his evidence
on affidavit by applying the same analogy unless there is
just and reasonable ground to refuse such permission.
There is no express bar on ttie accused to give evidence
on affidavit either in the Act or in the Code ......... I find no
C
justified reason to refuse permission to the accused to
give his evidence on affidavit subject to the provisions
contained in sections 315 and 316 of the Code."
6. Coming then to the question (8), the High Court had no
difficulty in holding that the provisions of sub-sections (1) and
D
(2) of section 145 were not substantive but only procedural in
nature and, therefore, those provisions would be applicable to
the cases pending on the date they came into force.
7. Apart from considering the two questions the High Court
E
also laid down, on the request of the parties, a number of
guidelines (vide sub-paragraphs (a) to (r) of paragraph 45 of
the judgment) in regard to the procedure that the trial court, the
complainant and the accused should follow in a dishonoured
cheque trial on a complaint made under section 138 of the Act.
F
We may have to refer to some of those guidelines later, at an
appropriate place in this judgment.
8. The High Court judgment has given rise to these seven
appeals, in which the following three issues arise for
consideration by this court:
G
1.
The extent of the right of the accused under section
145(2) of the Act: whether the right of the accused
,
is limited to cross-examination of any person giving
evidence on affidavit or is it open to the accused
H
A
B
c
D
E
230
SUPREME COURT REPORTS
[2010] 1 S.C.R.
to insist that notwithstanding the evidence earlier
given on affidavit, on coming to the court the
complainant or his witness should first give
deposition in examination-in-chief before being
cross-examined by him? (appeals arising from
SLP (Crl.) No.4760/2006, SLP (Crl.) No.5689/2006,
SLP (Crl.) No.1106/2007, SLP (Crl.) No.6442/2007,
SLP (Crl.) No.6443/2007, SLP (Crl.) No.6703/
2007)
2.
Whether the provisions of sub-sections (1) and (2)
of section 145 of the Act would apply to
proceedings that were pending on February 6,
2003, the date on which those provisions were
inserted in the Act? (appeal arising from SLP (Crl.)
No.4760/2006).
3.
Whether the right to give evidence on affidavit as
provided to the complainant under section 145(1)
of the Act is also available to the accused? (appeal
arising from SLP (Crl.) No.3915/2006)
9. For a proper appreciation of the issues it would be
necessary to examine the relevant legal provisions and to
ascertain the object and reasons for which those provisions
were brought into existence by making amendments in the
F Negotiable Instruments Act, 1881. The Negotiable Instruments
Act was amended first by the Banking Public Financial
Institutions and Negotiable Instruments Laws (Amendment)
Act, 1988 and a second time by the Negotiable Instruments
(Amendment and Miscellaneous Provisions) Act, 2002. The
first amendment inserted Chapter XVII in the Act, comprising
G sections 138 to 143. Section 138 made, for the first time in the
legislative history of the country, the issuance of a cheque by
any person in discharge of any debt or liability owed by him to
its holder, that was not honoured by the banker because of
insufficiency of funds in the account, a penal offence for the
H drawer that would make him liable to punishment with
MANDVI CO-OP BANK LTD. v. NIMESH B. THAKORE 231
[AFTAB ALAM, J.]
imprisonment that might extend to one year (now, two years
A
after the second amendment with effect from February 6, 2003)
or with fine that might extend to twice the amount of the cheque
or both; the four clauses of the proviso then laid down the
preconditions to attract the section, as safeguards for the
honest drawer. Section 139 created a presumption (rebuttable!)
B
that the cheque was issued by the drawer in discharge of any
debt or liability owed by him to its holder. Section 140 provided
that it would not be open to the accused in a prosecution under
section 138 to take the plea th~t when he issued the cheque
he had no reason to believe that on presentation, the cheque c
may be dishonoured for the reasons stated in that section.
Section 141 dealt with offences by companies. Section 142
laid down the conditions subject to which alone the court would
take cognizance of any offence punishable under section 138
of the Act.
10. The statement of objects and reasons appended to the
bill explaining the provisions of the new chapter stated as
follows:
D
''This clause (clause (4) of the Bill] inserts a new Chapter
E
XVI I in the Negotiable Instruments Act, 1881. The
provisions contained in the new Chapter provide that
where any cheque drawn by a person for the discharge of
any liability is returned by the bank unpaid for the reason
of the insufficiency of the amount of money standing to the
F
credit of the account on which the cheque was drawn or
for the reason that it exceeds the arrangements made by
the drawer of the cheque with the bankers for that. account,
the drawer of such cheque shall be deemed to have
committed an offence. In that case, the drawer, without G
. prejudice to the other provisions of the said Act, shall be
punishable with imprisonment for a term which may extend
to one year, or with fine which may extend to twice the
amount of the cheque, or with both.
H
A
B
c
D
E
F
G
232
SUPREME COURT REPORTS
[2010] 1 S.C.R.
The provisions have also been made that to
constitute the said offence-
(a) such cheque should have been presented to the bank
within a period of six months of the date of its drawal or
within the period of its validity, whichever is earlier; and
(b) the payee or holder in due course of such cheque
should have made a demand for the payment of the said
amount of money by giving a notice, in writing, to the
drawer of the cheque within fifteen days of the receipt of
the information by him from the bank regarding the return
of the cheque unpaid; and
(c) the drawer of such cheque should have failed to make
the payment of the said amount of money to the payee or
the holder in due course of the cheque within fifteen days
of the receipt of the said notice.
It has also been provided that it shall be presumed, unless
the contrary is proved, that the holder of such cheque
received the cheque in the discharge of a liability.
Defences which may or may not be allowed in any
prosecution for such offence have also been provided to
make the provisions effective. Usual provision relating to
offences by companies has also been included in the said
new Chapter. In order to ensure that genuine and honest
bank customers are not harassed or put to inconvenience,
sufficient safeguards have also been provided in the
proposed new Chapter. Such safeguards are-
(a) that no court shall take cognizance of such offence
except on a complaint, in writing, made by the payee or
the holder in due course of the cheque;
(b) that such complaint is made within one month of the
date on which the cause of action arises; and
H
(c) that no court inferior to that of a Metropolitan Magistrate
MANDVI CO-OP BANK LTD. v. NIMESH B. THAKORE 233
[AFTAB ALAM, J.]
or a Judicial Magistrate or a Judicial Magistrate of the first
A
class shall try any such offence."
11. The speech of the Minister of Finance on December
2, 1988 in course of the debate on the Bill in the Lok Sabha
tells us that Chapter XVII was inserted in the Act, in light of the
B
Report submitted in the year 1975 by the Committee on Banking
Laws headed by Dr. Rajamannar. It appears that in course of
the debate some members had expressed the view that the
provisions of Chapter XVII sought to be inserted in the Act,
contained very abnormal, rather very dangerous provisions, in
C
that a kind of civil liability is supposed to be converted into a
kind of criminal act which would have far reaching
consequences. Dispelling the apprehensions of those
members the Minister pointed out that the proposed
amendments were along the same lines as the law prevailing
in other countries such as the UK, the USA, Belgium, Portugal,
D
Argentina, etc. Further, in regard to the object of the provisions,
the Minister stated as follows:
"In fact, the whole purpose of bringing about this provision
is to make the drawing of cheque a regular mode of E
payment. Unfortunately, today if a cheque is given to a
party, they will not consider it a sufficient means of
payment, they will insist that unless the cheque is encashecl,
they will not take that as a kind of payment made."
(emphasis added)
12. The Minister then elaborated on the safeguards
provided in the law to save an honest drawer from coming
under the rigours of the section due to any bona fide mistake
and finally went on to say as follows:
"But in spite of time for payment and all other provisions
that are made, if the party is not able to make good the
amount of money which he owes to a particular party and
F
G
in spite of the notice also he does not act, the conclusion
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is inescapable that he will be prosecuted, legal action will
have to be taken. It is for the court to take a decision,
whether he be imprisoned for one year, or double the
amount that would be paid as fine or both things will have
to be taken together. Ultimately, it is for the court to take
a decision. But these are the provisions which have been
provided for so that the parties drawing the cheques are
careful enough to see that there are enough resources
available in their bank account and if a cheque is drawn,
it will not be returned."
(emphasis added)
13. The provisions of the newly inserted Chapter XVII, on
coming into force with effect from April 1, 1989, brought in a
veritable deluge of cases in the criminal court system. In the
D metropolitan cities and the commercial centres of the country,
it almost appeared that the main function of the Magistrate's
court was to recover monies on behalf of parties on the wrong
end of the commercial transactions that had gone sour.
Complaints under section 138 of the Act came to be filed in
E such large numbers that it became impossible for the courts
to handle them within a reasonable time and it also had a highly
adverse effect on the court's normal work in ordinary criminal
matters. A remedial measure was urgently required and the
legislature took action by introducing further amendments in the
F Act by the Negotiable Instruments (Amendment and
Miscellaneous Provisions) Act, 2002. The 2002 amendment
inserted in the Act for the first time sections 143 to 147 besides
bringing about a number of changes in the existing provisions
of sections 138 to 142. Section 143 gave to the court the power
G to try cases summarily; section 144 provided for the mode of
service of summons; section 145 made it possible for the
complainant to give his evidence on affidavit; section 146
provided that the bank's slip would be prima facie evidence of
certain facts and section 147 made the offences under the Act
H compoundable.
MANDVI CO-OP BANK LTD. v. NIMESH B. THAKORE 235
[AFTAB ALAM, J.)
14. The statement of objects and reasons appended to the
A
bill stated as follows:
"The Negotiable Instruments Act, 1881 was amended by
the Banking, Public Financial Institutions and Negotiable
Instruments Laws (Amendment) Act, 1988 wherein a new
B
Chapter XVII was incorporated for penalties in case of
dishonour of cheques due to insufficiency of funds in the
account of the drawer of the cheque. These provisions
were incorporated with a view to encourage the culture of
use of cheques and enhancing the credibility of the
instrument. The existing provisions in the Negotiable C
Instruments Act, 1881, namely, sections 138 to 142 in
Chapter XVI I have been found deficient in dealing with
dishonour of cheques. Not only the punishment provided
in the Act has proved to be inadequate, the procedure
prescribed for the courts to deal with such matters has D
been found to be cumbersome. The courts are unable
to dispose of such cases expeditiously in a time bound
manner in view of the procedure contained in the Act.
2. A large number of cases are reported to be pending
E
under sections 138 to 142 of the Negotiable Instruments
Act in various courts in the country. Keeping in view the
large number of complaints under the said Act pending in
various courts, a Working Group was constituted to review
section 138 of the Negotiable Instruments Act, 1881 and
F
make recommendations as to what changes were needed
to effectively achieve the purpose of that section.
3. The recommendations of the Working Group along with
other representations from various institutions and
organisations were examined by the Government in
G
consultation with the Reserve Bank of India and other legal
experts, and a Bill, namely, the Negotiable Instruments
(Amendment) Bill, 2001 was introduced in the Lok Sabha
on 24th July, 2001. The Bill was referred to Standing
Committee
on
Finance
which
made
certain
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recommendations in its report submitted to Lok Sabha in
November, 2001.
4. Keeping in view the recommendations of the Standing
Committee on Finance and other representations, it has
been decided to bring out, inter alia, the following
amendments in the Negotiable Instruments Act, 1881,
namely:-
(i) to increase the punishment as prescribed under the Act
from one year to two years;
(ii) to increase the period for issue of notice by the payee
to the drawer from 15 days to 30 days;
(iii) to provide discretion to the court to waive the period
of one month, which has been prescribed for taking
cognizance of the case under the Act;
(iv) to prescribe procedure for dispensing with
preliminary evidence of the complainant;
(v) to prescribe procedure for servicing of summons to the
accused or witness by the court through speed post or
empanelled private couriers;
(vi) to provide for summary trial of the cases under the Act
with a view to speeding up disposal of cases;
(vii) to make the offences under the Act compoundable;
(viii) to exempt those directors from prosecution under
section 141 of the Act who are nominated as directors of
a company by virtue of their holding any office or
employment in the Central Government or State
Government or a financial corporation owned or controlled
by the Central Government, or the State Government, as
the case may be;
(ix) to provide that the Magistrate trying an offence shall
MANDVI CO-OP BANK LTD. v. NIMESH B. THAKORE 237
[AFTAB ALAM, J.]
have power to pass sentence of imprisonment for a term
A
exceeding one year and amount of fine exceeding five
thousand rupees;
(x) to make the Information Technology Act, 2000
applicable to the Negotiable Instruments Act,1881 in
B
relation to electronic cheques and truncated cheques
subject to such modifications and amendments as the
Central Government, in consultation with the Reserve Bank
of India, considers necessary for carrying out the purposes
of the Act, by notification in the Official Gazette; and
(xi) to amend definitions of "bankers' books" and "certified
copy" given in the Bankers' Books Evidence Act, 1891.
c
5. The proposed amendments in the Act are aimed at
early disposal of cases relating to dishonour of cheques, o
enhancing punishment for offenders, introducing electronic
image of a truncated cheque and a cheque in the electronic
form as well as exempting an official nominee director
from prosecution under the Negotiable Instruments Act,
1881.
6. The Bill seeks to achieve the above objects."
(emphasis added)
E
15. Though, in these appeals, we are mainly concerned
F
with the provisions of section 145, it would be useful here to
take a look at all the five sections introduced by the 2002
amendment.
"143. Power of court to try cases summarily.
(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), all offences under
this Chapter shall be tried by a Judicial Magistrate of the
first class or by a Metropolitan Magistrate and the
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provisions of sections 262 to 265 (both inclusive) of the
said Code shall, as far as may be, apply to such trials:
Provided that in the case of any conviction in a
summary trial under this section, it shall be lawful for the
Magistrate to pass a sentence of imprisonment for a term
not exceeding one year and an amount of fine exceeding
five thousand rupees;
Provided further that when at the commencement of,
or in the course of, a summary trial under this section, it
appears to the Magistrate that the nature of the case is
such that a sentence of imprisonment for a term exceeding
one year may have to be passed or that it is, for any other
reason, undesirable to try the case summarily, the
Magistrate shall after hearing the parties, record an order
to that effect and thereafter recall any witness who may
have been examined and proceed to hear or rehear the
case in the manner provided by the said Code.
(2) The trial of a case under this section shall, so far as
practicable, consistently with the interests of justice, be
continued from day to day until its conclusion, unless the
court finds the adjournment of the trial beyond the following
day to be necessary for reasons to be recorded in writing.
(3) Every trial under this section shall be conducted as
expeditiously as possible and an endeavour shall be made
to conclude the trial within six months from the date of filing
of the complaint.
144. Mode of service of summons.
(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), and for the
purposes of this Chapter, a Magistrate issuing a summons
to an accused or a witness may direct a copy of summons
to be served at the place where such accused or witness
ordinarily resides or carries on business or personally
MANDVI CO-OP BANK LTD. v. NI MESH B. THAKORE 239
[AFTAB ALAM, J.]
works; for gain, by speed post or by such courier services
A
as are approved by a Court of Session.
(2) Where an acknowledgment purporting to be signed by
the
accused or the witness or an endorsement purported to
B
be made by any person authorised by the postal
department or the courier services that the accused or the
witness refused to take delivery of summons has been
received, the court issuing the summons may declare that
the summons has been duly served.
C
145. Evidence on affidavit.
(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2of1974), the evidence of the
0
complainant may be given by him on affidavit and may,
subject to all just exceptions be read in evidence in any
enquiry, trial or other proceeding under the said Code.
(2) The court may, if it thinks fit, and shall, on the application
of the prosecution or the accused, summon and examine
E
any person giving evidence on affidavit as to the facts
contained therein.
146. Bank's slip prima facie evidence of certain facts.
The court shall, in respect of every proceeding under this
F
Chapter, on production of bank's slip or memo having
thereon the official mark denoting that the cheque has been
dishonoured, presume the fact of dishonour of such
cheque, unless and until such fact is disproved.
147. Offences to be compoundable.
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), every offence
punishable under this Act sha!! be compoundable."
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A
16. It may be noted that the provisions of sections 143,
144, 145 and 147 expressly depart from and override the
provisions of the Code of Criminal Procedure, the main body
of adjective law for criminal trials. The provisions of section 146
similarly depart from the principles of the Indian Evidence Act.
B Section 143 makes it possible for the complaints under section
13£3 of the Act to be tried in the summary manner, except, of
course, for the relatively small number of cases where the
Magistrate feels that the nature of the case is such that a
sentence of imprisonment for a term exceeding one year may
C have to be passed or that it is, for any other reason, undesirable
to try the case summarily. It is, however, significant that the
procedure of summary trials is adopted under section 143
subject to the qualification "as far as possible'', thus, leaving
sufficient flexibility so as not to affect the quick flow of the trial
0 process. Even while following the procedure of summary trials,
the non-obstante clause and the expression "as far as
possible" used in section 143 coupled with the non-obstante
clause in section 145 allow for the evidence of the complainant
to be given on affidavit, that is, in the absence of the accused.
This would have been impermissible (even in a summary trial
E under the Code of Criminal Procedure) in view of sections 251
and 254 and especially section 273 of the Code. The accused,
however, is fully protected, as under sub-section (2) of section
145 he has the absolute and unqualified right to have the
complainant and any or all of his witnesses summoned for
F cross-examination. Sub-section (3) of section 143 mandates
that the trial would proceed, as far as practicable, on a day-today basis and sub-section (4) of the section requires the
Magistrate to make the endeavour to conclude the trial within
six months from the date of filing of the complaint.