Shri Lakshmi Defence Solutions ... vs State Of U.P. And Anr
2018 Latest Caselaw 1759 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Court No. - 44
 
Case :- APPLICATION U/S 482 No. - 25446 of 2018
 

 
Applicant :- Shri Lakshmi Defence Solutions Ltd. And 3 Ors
 
Opposite Party :- State Of U.P. And Anr
 
Counsel for Applicant :- Manjari Singh,Kunal Ravi Singh
 
Counsel for Opposite Party :- G.A.
 

 
Hon'ble Rajeev Misra,J.

1. This application under section 482 Cr. P. C. has been filed challenging the entire proceedings of Complaint Case No. 3821 of 2015 (I.F.C.I. Vs. Shri Lakshmi Defence Solutions Limited and others), under section 138 N.I. Act, pending in the Court of Additional Chief Metropolitan Magistrate, IX, Kanpur Nagar.

2. Heard Mrs. Manjari Singh, learned counsel for the applicants and the learned A.G.A. for the State.

3. From the record, it appears that three post dated cheques drawn on Bank of Baroda, Birhana Road Branch, Kanpur, bearing No. 000132 dated 30.11.2013, No. 000133 dated 30.12.2013 and No. 000134 dated 30.01.2014 each amounting to Rs.1,00,00,000/- (Rupees one crore) were issued by the applicant No. 2 in favour of the complainant/opposite party No. 2 The said cheques were signed by the applicant No. 2. The complainant-opposite party No. 2 presented the aforesaid cheques to its Banker Karur Vyas Bank Limited No. 3, Sant Nagar, East of Kailash, New Delhi on 21.02.2014. The aforesaid cheques were not encashed and accordingly, returned, vide memo of return dated 22.02.2014. The reason assigned for non payment in the memo of return regarding the return of aforesaid cheques was "Exceeds Arrangement". Consequently, as per the mandate of section 138 sub clause (b) of the Negotiable Instruments Act, 1881, the complainant-opposite party No. 2 sent a legal notice dated 28.02.2014 to the applicants and others demanding payment of the amount payable under the disputed cheques. As no amount was paid in spite of the aforesaid legal notice dated 28.02.2014, the complainant filed a complaint in terms of Section 190 Cr. P. C. read with sections 138, 141 and 142 of the N.I. Act on 09.04.2014 in the Court of Metropolitan Magistrate, Saket Courts, New Delhi. The Metropolitan Magistrate, Saket Courts, New Delhi, vide order dated 15.4.2014, took cognizance and accordingly summoned the applicants, vide order dated 15.04.2014. It is pertinent to mention here that the Metropolitan Magistrate, Saket Courts, New Delhi dropped the names of the accused Nos. 4 and 5 arrayed in the complaint, as according to the Metropolitan Magistrate, no case was made out against them. The said order appears to have become final for want of challenge on the part of the complainant opposite party No. 2. While the matter was pending consideration in the Court of Metropolitan Magistrate, Saket Courts, New Delhi, the Apex Court delivered the judgment in the Case of Dashrath Rup Singh Rathod Versus State of Maharashtra and others, reported in (2014) 9 SCC 129, decided on 01.08.2014. Complying with the mandate of the aforesaid judgment of the Apex Court, the Metropolitan Magistrate, (N.I. Act), Saket Courts New Delhi, passed the order dated 18.9.2014, which is on the record at page 91 of the paper book. The said order is reproduced herein below:-

"Present: Non for the complainant

Accused absent

In the present case, notice has not been framed till date. Therefore, in view of the directions of Hon'ble Supreme Court of India in the case titles a "Dashrath Rup Singh Rathod Versus State of Maharashtra & Anr." in Crl. Appeal No. 2287/09 decided on 01.08.14, this Court has no territorial jurisdiction to try this case. Therefore, the complaint is returned to the complainant to file the same in the court having territorial jurisdiction to try the same within 30 days from today only.

Ahlmad is directed to return the complaint and original documents to the complainant/AR of the complainant or counsel for the complainant after obtaining the certified copies of the same on record.

It is duty of the complainant to pursue the case, but today none has appeared on behalf of the complainant and complainant is directed to comply with this order.

Copy of the order be given Dasti to the complainant.

File be consigned to Record Room."

4. Pursuant to the aforesaid order, the complainant-opposite party No. 2 filed the complaint in the Court of Additional Chief Metropolitan Magistrate, Court No. 9, Kanpur Nagar on 02.03.2015, which is after almost 5 months from the date of passing of the order dated 02.03.2015. Upon the filing of the said case in the Court of Additional Chief Metropolitan Magistrate, Court No. 9, Kanpur Nagar, steps were taken by the Court to secure the presence of the applicants. A perusal of the order sheet of the aforesaid complaint case, which is on the record at page 93 onwards of the paper book will go to show that summons were issued against the applicants, vide order dated 29.7.2016. Thereafter, the Magistrate, vide order dated 14.6.2017, issued bailable warrants against the applicants and ultimately vide order dated 03.11.2017 issued non-bailable warrants against the applicants. From the typed copy of the order sheet of the complaint case pending before the Court below, which alone is on the record, it is not clear as to whether the summons were ever served upon the applicants and similarly the bailable warrants were also ever served upon the applicants. However, this much is clear that the non-bailable warrants, which were subsequently issued by the Court below against the applicants have been operating against the applicants since 03.11.2017 i.e. for the last more than 8 months. It is the case of the applicants that neither the summons nor the bailable warrants were ever served upon the applicants nor any of the applicants was taken in custody pursuant to the non-bailable warrants issued against the applicants on 03.11.2017.

5. Mrs. Manjari Singh, learned counsel for the applicants in challenge to the entire proceedings of the above mentioned complaint case has made the following submissions before the Court:

(a) According to the learned counsel for the applicants, the Metropolitan Magistrate (N.I. Act) Saket Courts, New Delhi, vide order dated 18.9.2014 categorically provided that the complaint is returned to the complainant to file the same in the Court having territorial jurisdiction to try the same within 30 days from today only i.e. 18.09.2014.

(b) It is thus urged that the complainant-opposite party No. 2 was duty bound to file the complaint before the Court below within a period of one month from 18.9.2014, whereas in the present case, the complaint has been filed 02.03.2015, i.e. 5 months beyond the period provided in the order dated 18.9.2014. It is therefore contended that the complaint filed by the complainant-opposite party No. 2 before the Court below was barred by limitation and no summons could have been issued against the applicants without condoning the delay.

(c) As a corollary to the second submission, it is next submitted that by now it is well established that a Court cannot proceed against opposite parties/ respondents/ defendants without condoning the delay, and any such exercise contrary to the aforesaid would prima facie be illegal. In the case in hand, the Court below has proceeded to summon the applicants in ignorance of the order dated 18.9.2014 and that to without condoning the delay in filing the complaint. As such, the summoning of the applicants as well as the consequential proceedings undertaken by the Court below are illegal and without jurisdiction.

(d) On the strength of the aforesaid submission, it is then contended that since the complaint filed by the opposite party No. 2 before the Additional Chief Metropolitan Magistrate, Court No. 9, Kanpur Nagar, was not accompanied with an application under section 5 of the Limitation Act for condonation of delay in filing the complaint. There was no application before the Court for exercising its jurisdiction under section 142 of the N.I. Act to condone the delay. No delay condonation application can be filed subsequently and therefore proceedings of the above mentioned complaint case are liable to quashed by this Court being barred by limitation.

(e) Referring to the provisions of the Negotiable Instruments (Amendment) Ordinance 2015 (Ordinance No. 6 of 2015), it is submitted that the said ordinance came into force on 15.06.2015.

For ready reference, section 142 A, which was inserted in the N.I. Act, by means of the aforesaid Ordinance regarding validation of transfer of pending cases is reproduced herein below:-

"142A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, shall be deemed to have been transferred under this Act, as if that sub-section had been in force at all material times.

(2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.

(3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, before which the first case was filed and is pending, as if that sub-section had been in force at all material times."

On the strength of the aforesaid provision, it is submitted that the complaint case pending before the Court below ought to have been transferred to the Court of Metropolitan Magistrate (Saket Courts), New Delhi. As such it is urged that the proceedings before the Court below i.e. the Court of Additional Chief Metropolitan Magistrate, Kanpur Nagar are without jurisdiction.

(f) Lastly, it is urged that no liability can be fastened upon the applicants under the disputed cheques, as the same was bona fidely given as security and not in discharge of any liability, which could be recovered as a legally chargeable debt.

6. On the cumulative strength of the aforesaid submissions, the learned counsel for the applicants Mrs. Manjari Singh, vehemently urged that by no stretch of imagination, the proceedings of the complaint case referred to above can be sustained in law and fact and are, therefore, liable to be quashed by this Court.

7. The grounds urged by the learned counsel for the applicants in challenge to the proceedings of the above mentioned complaint case giving rise to the present criminal misc. application are accordingly being dealt with.

8. The last point urged by the learned counsel for the applicants, which is in respect of the liability under the disputed cheques is being taken up first. It is not in dispute that three cheques valued at Rs. 1 crore each dated 30.11.2013, 30.12.2013 and 30.01.2014 were issued by the applicant No. 2 in favour of the complainant opposite party No. 2. The same was not encahsed and returned vide memo of return dated 22.02.2014 with the remark "Exceeds Arrangement". Consequently, the contingency necessary to attract the penal provisions of Section 138 N.I.Act stood clearly attracted. At this stage, it will be useful to refer the judgment of the Apex Court in the case of Raj Kumar Khurana vs. State of N.C.T. of Delhi & Another reported 2009 (6) SCC 72, wherein the following has been observed in paragraphs 10, 11, 12, 13 and 14:

"10.

........

A bare perusal of the aforementioned provision would clearly go to show that by reason thereof a legal fiction has been created. A legal fiction, as is well known, although is required to be given full effect, has its own limitations. It cannot be taken recourse to for any purpose other than the one mentioned in the statute itself. InState of A.P.v.A.P. Pensioners' Assn.[(2005) 13 SCC 161 : 2006 SCC (L&S) 666] this Court held: (SCC p. 169, para 30)

In other words, all the consequences ordinarily flowing from a rule would be given effect to if the rule otherwise does not limit the operation thereof. If the rule itself provides a limitation on its operation, the consequences flowing from the legal fiction have to be understood in the light of the limitations prescribed. Thus, it is not possible to construe the legal fiction as simply as suggested by Mr Lalit."

11. Section 138 of the Act moreover provides for a penal provision. A penal provision created by reason of a legal fiction must receive strict construction. (SeeR. Kalyani v.Janak C. Mehta [(2009) 1 SCC 516 and DCM Financial Services Ltd. v.J.N. Sareen[(2008) 8 SCC 1. Such a penal provision, enacted in terms of the legal fiction drawn would be attracted when a cheque is returned by the bank unpaid. Such non-payment may either be (i) because of the amount of money standing to the credit of that account is insufficient to honour the cheque, or (ii) it exceeds the amount arranged to be paid from that account by an agreement made with that bank.

Before a proceeding thereunder is initiated, all the legal requirements therefor must be complied with. The court must be satisfied that all the ingredients of commission of an offence under the said provision have been complied with.

12.The parameters for invoking the provisions of Section 138 of the Act, thus, being limited, we are of the opinion that refusal on the part of the bank to honour the cheque would not bring the matter within the mischief of the provisions of Section 138 of the Act.

13.The court while exercising its jurisdiction for taking cognizance of an offence under Section 138 of the Act was required to consider only the allegations made in the complaint petition and the evidence of the complainant and his witnesses, if any. It could not have taken into consideration the result of the complaint petition filed by Respondent 2 or the closer report filed by the Superintendent of Police in the first information report lodged by the appellant against him.

14.Before us a contention has been raised that the appellant did not have sufficient funds in his bank account. Such an allegation has not been made in the complaint petition. In any event, it was for the Bank only to say so, as the complainant is not supposed to have knowledge in regard to the amount available in the account of the appellant."

9. Whether the aforesaid cheques were given by the applicant No. 2 in discharge of a legally enforceable debt or not is a question of fact and a disputed defence of the applicants. Can such a defence of the accused be examined by the High Court at pre-trial stage is the issue emerging for consideration.

10. This issue has also been set at rest by the Apex Court in the case of Kishan Rao vs. Shankargouda, reported in 2018 AIR SC 3173 also reported in 2018 (8) SCALE, 341. Following has been observed in paragraphs 18, 19, 20, 21 and 22 of the judgement which is quoted herein below:-

"17. Section 139 of the Act, 1881 provides for drawing the presumption in favour of holder. Section 139 is to the following effect:

139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.

18. This Court in Kumar Exports vs. Sharma Carpets, 2009 (2) SCC 513, had considered the provisions of Negotiable Instruments Act as well Evidence Act. Referring to Section 139, this Court laid down following in paragraphs 14, 15, 18 and 19:

"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.

15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable 13 reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".

18. Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as pres.........umed, the purpose of the presumption is over."

19. This Court held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve any purpose. Following was held in paragraph 20:

"20....The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant.

To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist..."

20. In the present case, the trial court as well as the Appellate Court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did not come in the witness box to support his case. In the reply to the notice which was given by the appellant the accused took the defence that the cheque was stolen by the appellant. The said defence was rejected by the trial court after considering the evidence on record with regard to which no contrary view has also been expressed by the High Court.

21. Another judgment which needs to be looked into is Rangappa vs. Sri Mohan, 2010 (11) SCC 441. A three Judge Bench of this Court had occasion to examine the presumption under Section 139 of the Act, 1881. This Court in the aforesaid case has held that in the event 16 the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paragraphs 26 and 27:

"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat, (2008) 4 SCC 54, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.

27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof."

22. No evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW.1, himself has not been explained by the High court."

11. In the light of the observations made by the Apex Court as noted above, there is no room of doubt that this Court in exercise of its jurisdiction under section 482 Cr. P. C. cannot accept the defence set up by the applicants that the disputed cheques were bona fidely given as security and not in discharge of any legal debt particularly when it is an admitted fact as per the averments made in paragraph No. 4 of the affidavit, which reads as under:-

"That M/s Shri Lakshmi Defence Solutions (applicant no. 1) is a public limited company established in the year 1998 under the Companies Act 1956 primarily dealing in defense equipments. In order to expand its business and fulfil its working capital requirements it availed a loan to the tune of Rs. 12 Crore from the complainant by way of Corporate loan agreement dated 11.04.2013. A copy of the aforesaid Corporate Loan agreement between the parties is being filed herewith as ANNEXURE-2."

12. There is no pleading in the entire affidavit that the loan released in favour of the applicants pursuant to the aforesaid loan agreement stands repaid. As such, the plea raised on behalf of the applicants that the disputed cheque was given as security of the loan taken by the applicants is therefore, liable to be disbelieved. Accordingly, it is concluded at this stage that the disputed cheques were given by the applicants towards the repayment of liability arising out of the loan agreement dated 11.04.2013 and was therefore, a legally chargeable debt.

13. Having arrived at the said conclusion that the complainant had the right to recover a legally chargeable debt and the disputed cheques were given by the applicants towards the repayment of the said debt, the next issue which falls for determination is the effect of Section 142-A of the Act inserted vide Ordinance No. 6 of 2015. The answer to the aforesaid issue will decide the necessity of dealing with the other submissions urged by the learned counsel for the applicants in challenge to the proceedings of the above mentioned complaint case.

14. Section 142-A of the N.I. Act contains a deeming clause or rather a legal fiction. It is by now well settled that a legal fiction is created to achieve an object and do away with the mischief or an anomalous situation which has arisen with the passage of time.

15. Consequently, before proceeding to consider the effect of the deeming provision as occurring in Section 142-A of the N.I.Act it is imperative to take note of the circumstances necessitating the promulgation of Ordinance No.6 of 2015 and also the reasons leading to the promulgation of the said Ordinance and the object sought to be achieved by the said Ordinance.

16. The Apex Court delivered the judgment in the case of K. Bhaskaran vs. Sankaran Vaidhyan Balan & Another reported in (1999) 7 SCC 510, wherein the following was observed in Paragraphs 13, 14, 15 and 16:

"13. The above provisions in the Code should have been borne in mind when the question regarding territorial jurisdiction of the Courts to try the offence was sought to be determined.

14. The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence : (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice.

15. It is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at 5 different localities. But concatenation of all the above five is a sine qua non for the completion of the offence under Section 138 of the Code. In this context a reference to Section 178(d) of the Code is useful. It is extracted below :

"178. (a)-(c) * * * *

(d) where the offence consists of several acts done in different local areas, it may be enquired into or tried by a Court having jurisdiction over any of such local areas."

16. Thus it is clear, if the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act."

17. The said judgment created a total unrest and large number of complaints were returned or transferred for presentation or trial before the appropriate Court.

18. Subsequently the aforesaid judgment was reversed by the Apex Court in the case of Dashrath Rup Singh Rathod Versus State of Maharashtra & Others reported in (2014) 9 SCC 129. The effect of the aforesaid judgment of the Apex Court was that all cases under the N.I. Act which had been filed in the Court having the jurisdiction over the Bank from which the cheque was issued were required to be filed at a place where it was presented for encashment. Consequently, the said judgment resulted in mass scale refiling of the complaint cases by the complainant himself or transfer to the competent court. This created an anomalous situation as is also in the present case.

19. It was in the light of the aforesaid resulting situation that the Negotiable Instruments (Amendment) Bill, 2015 ("the Bill') was introduced in Lok Sabha on 6th May, 2015 and considered and passed by Lok Sabha on 13th may, 2015. However, since the Rajya Sabha was adjourned sine die on 13th May, 2015, the Bill could not be discussed and passed by that House and the Bill could not be enacted. Consequently, the President of Indian promulgated Ordinance No. 6 of 2015. The reasons for promulgation of the aforesaid Ordinance and the object sought to be achieved by the said Ordinance can be gathered from the statement of the reasons and objects of the Bill i.e. the Negotiable Instruments (Amendment) Bill, 2015. For ready reference the same is quoted herein-under:

"The Negotiable Instruments Act, 1881 was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 inserted in the Negotiable Instruments Act, 1881(hereinafter called the said Act), a new Chapter XVII, comprising sections 138 to 142 with effect from 1st April, 1989. Section 138 of the said Act provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque.

2. As sections 138 to 142 of the said Act were found deficient in dealing with dishonour of cheques, the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, inter alia, amended sections 138, 141 and 142 and inserted new sections 143 to 147 in the said Act aimed at speedy disposal of cases relating to dishonour of cheque through their summary trial as well as making them compoundable. Punishment provided under section 138 too was enhanced from one year to two years. These legislative reforms are aimed at encouraging the usage of cheque and enhancing the credibility of the instrument so that the normal business transactions and settlement of liabilities could be ensured.

3. The Supreme Court, in its judgment dated 1st August, 2014, in the case of Dashrath Rupsingh Rathod versus State of Maharashtra and another (Criminal Appeal No. 2287 of 2009), held that the territorial jurisdiction for dishonour of cheques is restricted to the court within whose local jurisdiction the offence was committed, which in the present context is where the cheque is dishonoured by the bank on which it is drawn. The Supreme Court has directed that only those cases where, post the summoning and appearance of the alleged accused, the recording of evidence has commenced as envisaged in section 145(2) of the Negotiable Instruments Act, 1881, will proceeding continue at that place. All other complaints (including those where the accused/respondent has not been properly served) shall be returned to the complainant for filing in the proper court, in consonance with exposition of the law, as determined by the Supreme Court.

4. Pursuant to the judgment of the Supreme Court, representations have been made to the Government by various stakeholders, including industry associations and financial institutions, expressing concerns about the wide i"13. The above provisions in the Code should have been borne in mind when the question regarding territorial jurisdiction of the Courts to try the offence was sought to be determined.

5. To address the difficulties faced by the payee or the lender of the money in filing the case under section 138 of the said Act, because of which, large number of cases are stuck, the jurisdiction for offence under section 138 has been clearly defined. The Negotiable Instruments (Amendment) Bill, 2015 provides for the following, namely:---

(i ) filing of cases only by a court within whose local jurisdiction the bank

branch of the payee, where the payee presents the cheque for payment, is situated;

(ii ) stipulating that where a complaint has been filed against the drawer of a cheque in the court having jurisdiction under the new scheme of jurisdiction, all subsequent complaints arising out of section 138 of the said Act against the same drawer shall be filed before the same court, irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court;

(iii ) stipulating that if more than one prosecution is filed against the same drawer of cheques before different courts, upon the said fact having been brought to the notice of the court, the court shall transfer the case to the court having jurisdiction as per the new scheme of jurisdiction; and

(iv ) amending Explanation I under section 6 of the said Act relating to the meaning of expression "a cheque in the electronic form", as the said meaning is found to be deficient because it presumes drawing of a physical cheque, which is not the objective in preparing "a cheque in the electronic form" and inserting a new Explanation III in the said section giving reference of the expressions contained in the Information Technology Act, 2000.

6. It is expected that the proposed amendments to the Negotiable Instruments Act, 1881 would help in ensuring that a fair trial of cases under section 138 of the said Act is conducted keeping in view the interests of the complainant by clarifying the territorial jurisdiction for trying the cases for dishonour of cheques.

7. The Bill seeks to achieve the above objects."

20. Having elaborated the circumstances, which led to the impelling necessity to bring an Ordinance, the reasos for promulgating the same and the object sought to be achieved by the said Ordinance, lead to the evaluation of the issue regarding the effect required to be attached to the legal fiction occurring in Section 142-A of the N.I. Act as introduced by Ordinance No. 6 of 2015.

21. Reference at this stage be made to the judgment of the Apex Court in the case of State of Travancore versus Shammugha Vilas Cashewnut Factory reported in AIR 1953 SC 333, wherein the following has been observed:

"(38) When a legal fiction is thus created, for what purpose, one is led to ask at once, is it so created? In In re Coal Economising Gas Company, (1875) 1 ch. D. 182 (H), the question arose as to whether under section 38 of the Companies Act, 1867, a shareholder could get his name removed from the register on the ground that the prospectus was fraudulent in that it did not disclose certain facts, or whether his remedy was against the promoter only. James, L.J., said at pages 188-9:

"The Act says that an omission shall be deemed fraudulent. It provides that something which under the general law would not be fraudulent shall be deemed fraudulent and we are dealing with a case of that kind. Where the Legislature provides that something is to be deemed other than it is, we must be careful to see within what bounds and for what purpose it is to be so deemed. Now the Act does not say that the prospectus shall be deemed fraudulent simpliciter but that it shall be deemed fraudulent on the part of the person wilfully making the omission as against a shareholder having no notice of the matter omitted ; and I am of opinion that the true intent and meaning of that provision is to give a personal remedy against the wrongdoer in favour of the shareholder."

So it was held that the fiction did not operate as against the company and there could, therefore, be no rectification of the register. Again, in Ex parte Walton, In re Levy, (1881) 17Ch.d.746 at P. 756 (i) referring to section 23 of the English Bankruptcy Act, 1869, James L.J. said:

"When a statute enacts that something shall be deemed to have been done, which in fact and in truth was not done, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to."

The above observations were quoted with approval by Lord Cairns and Lord Blackburn in Arthur Hill v. East and West India Dock Company (1884) 9 A.C.448 (J.) Lord Blackburn went on to add at page 458:

"I think the words here 'shall be deemed to have surrendered................ mean, shall be surrendered so far as is necessary to effectuate the purposes of the Act and no further;................."

In the case now before us, we have fortunately not to speculate as to the purpose for which the Explanation has introduced the fiction. It will be noticed that the Explanation does not say simpliciter that the sale or purchase is to be deemed to take place in the delivery State. By its opening words it expressly says that the sale or purchase is to be deemed to take place in the delivery State for the purposes of clause (1)(a). Therefore, the only effect of this assignment of a fictional location to a particular kind of sale or purchase in a particular State is to attract the ban of clause (1)(a) and to take away the taxing power of all other States in relation to such a sale or purchase even though the other ingredients which go towards the making up of a sale or purchase are to be found within these States or even if under the general law the property in the goods passes in any of those States. The purpose of the Explanation ends there and cannot be stretched or extended beyond that purpose."

22. Similarly, in the case of State of Bombay vs. Pandurang Vinayak reported in AIR 1953 SC 244, the following was observed:

"When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion. [Vide Lord Justice James in Ex parte Walton : In re Levy (1881) 17 ch. D. 746 at page 756 (a). If the purpose of the statutory fiction mentioned in section 15 is kept in view, then it follows that the purpose of that fiction would be completely defeated if the notification was construed in the literal manner in which it has been construed by the High Court. In East End Dwellings Co. Ltd. v. Finsbury Borough Council (1992) A.C. 109 (B), Lord Asquith while dealing with the provisions of the Town and County Planning Act, 1947, made reference to the same principle and observed as follows:-

"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it........ The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs."

The corollary thus of declaring the provisions of section 25, Bombay General Clauses Act applicable to the repeal of the ordinance and of deeming that ordinance an enactment is that wherever the word "ordinance" occurs in the notification, that word has to be read as an enactment."

23. In the light of the discussion made herein above, the crucial issue which arises for adjudication in the present case is whether the legal fiction/deeming clause as occurring Section 142-A of the N.I. Act will have an overriding effect and will consequently do away with the complexity arising out of the order dated 18.09.2014 passed by the Metropolitan Magistrate (N.I. Act), Saket Courts, New Delhi. As such, the Court is required to assign meaning to the phrase "shall be deemed to have been transferred" as occurring in the last part of section 142 (1) of the N.I. Act, as inserted vide Ordinance No. 6 of 2015.

24. The answer to the said question will decide the relevancy of dealing with the other submissions urged by the applicant's counsel as to why the proceedings of the complaint case referred to above be quashed. If the deeming clause or rather the legal fiction occurring in Section 142-A as quoted herein above is taken to mean as is apparent from the plain reading of Section 142-A then in that eventuality the numerous submissions urged by the learned counsel for the applicant in support of her case that the proceedings of the above mentioned complaint case are liable to be quashed will fall automatically. But if the import of the deeming clause/legal fiction as occurring in Section 142-A of the N.I. Act could be circumferenced by a different interpretation that such transfer is not automatic then in that situation the answer would be otherwise.

25. A deeming clause in juris prudence is referred to as a legal fiction. I have already discussed that the accepted rule for interpreting a deeming clause/ legal fiction, which is to interpret the same by considering the purpose sought to be achieved by the legal fiction. In answer to the same, reference has already been made to the circumstances leading to the promulgation of Ordinance No. 6 of 2015 by which Section 142-A which contains the debatable deeming clause/legal fiction was brought in. The object and reason of the same have also been detailed in continuation of the same. The issue, however, does not rest here. Subsequent to the judgment of the Apex Court in the case of Dashrath Rup Singh Rathaur (Supra) the Courts all over the country have returned the complaint for presentation before the appropriate Court and in some cases within the time period as mentioned in the order of the Court returning the complaint for presentation before the appropriate Court as has happened in the present case. Therefore, the order of the Metropolitan Magistrate (N.I. Act), Saket Courts, New Delhi, which is dated 18.09.2014 will have to be interpreted in the light of the effect caused by the legal fiction/deeming clause as occurring in Section 142-A of the N.I. Act, which came into force on 15.06.2015 i.e. subsequent to the order dated 18.09.2014.

26. The Apex Court in the case of State of Travancore and State of Bombay (Supra) has already held that a deeming clause/legal fiction is engrafted in a Statute to achieve an object. Therefore, the object sought to be achieved by Ordinance No. 6 of 2015 will decide the effect of the same on the order dated 18.09.2014 passed by the Metropolitan Magistrate (N.I. Act), Saket Courts, New Delhi.

27. After the judgment of the Apex Court in the case of Dashrath Rup Singh Rathaur (Supra) large number of complaints were returned for presentation before the appropriate Court and subsequently after the promulgation of Ordinance No. 6 of 2015 were transferred to the Court which would now have the jurisdiction as per the aforesaid judgment of the Apex Court. Can the right of a bona fide litigant to pursue the complaint filed under Section 138 N.I. Act can be diminished or curtailed by observing that the said complaint upon transfer shall be presented within the time period prescribed by the order of the Court releasing the matter for presentation before the Court having jurisdiction, failing which the complaint shall become time barred when originally it was presented within time. Whether by a consequential action undertaken pursuant to a judgment can the rule of sufficient and truthful cause for condonation of delay be pressed to defeat the right of a bona fide litigant when the original complaint was presented within time. This needs to be examined keeping in mind the right of the complainant to recover the amount by resorting to the provisions of Section 138 N.I. Act, which is the special procedure provided and ousts the jurisdiction of ordinary criminal courts by virtue of Section 4 Cr.P.C.

28. In the case in hand, the opposite party no.2 had filed the complaint within the period of limitation before the Saket Courts, New Delhi. However, prior to the appearance of the present applicants in the aforesaid complaint case and further before the promulgation of Ordinance No. 6 of 2015 the complaint was returned for presentation before the appropriate Court at Kanpur Nagar. As such, there was no deliberate negligence or laches on the part of the complainant-opposite party no.2 in filing the complaint before the Court having the jurisdiction to try the complaint.

29. The arguments urged by the learned counsel for the applicant that since the order dated 18.09.2014 passed by the Metropolitan Magistrate (N.I. Act), Saket Courts, New Delhi is a judicial order, therefore, the effect of the same shall remain intact and unfettered even with the passing of the subsequent legislation. Elaborating the said submission, it is urged that a judicial order continues to bind the parties till it is set aside by a superior court or modified by the court itself which had passed the order. As none of the aforesaid eventualities occurred in the present case, the order dated 18.09.2014 will continue to stand and the effect of the same cannot be said to be diluted on account of the promulgation of Ordinance No. 6 of 2015, whereby Section 142-A, which contains the deeming clause/legal fiction, was enacted.

30. The argument so raised by the learned counsel for the applicant at this stage may appear to be attractive but on a deeper scrutiny will not stand the test of law. It is well settled that there can be no estoppel against a Statute nor a judicial order can put a full stop to the march of a Statute. Having noted the purpose sought to be achieved by incorporating the deeming clause/legal fiction in Section 142-A of the N.I. Act, any parochial interpretation regarding the effect of deeming clause/legal fiction will practically undo the object sought to be achieved by incorporating the legal fiction in the aforesaid section. Therefore, this Court is of the considered opinion that the purpose behind incorporating Section 142-A which contains the deeming clause/legal fiction was to do away with the prejudice/difficulties which might arise on account of the transfer of the complaints under Section 138 of the N.I. Act. Admittedly, the transfer of the complaints to the place, where the cheque had been presented for encashment was pursuant to a judicial order and not on the personal ground of the complainant of either having prejudiced with the Presiding Officer or the Court, where the complaint was pending. In such a scenario to submit that the complainant would be bound by the terms of the order dated 18.09.2014 passed by the Metropolitan Magistrate (N.I. Act) Saket Courts, New Delhi returning the complaint to the complainant-opposite party no.2 for presentation before the appropriate Court within the time period prescribed under the order dated 18.09.2014 would be anti-thesis to the deeming clause/legal fiction occurring in Section 142-A of N.I. Act.

31. Thus, this Court has no hesitation in holding that by virtue of the provisions contained in Section 142-A of the Act the complaint filed by the opposite party no.2 stood transferred on account of a deeming clause/legal fiction and therefore, the injunction contained in the order dated 18.09.2014 directing the complainant to present the complaint before the appropriate Court within a period of the 30 days from the date of passing of the order dated 18.09.2014 stood automatically diluted.

32. Consequently, in view of the discussion made above the various other submissions urged by the learned counsel for the applicant in challenge to the proceeding of the above mentioned complaint left untouched are not required to be dealt with either summarily or in length and detail.

33. Thus, the inescapable conclusion is that the complaint filed by the opposite party no.2 before the concerned Court at Kanpur Nagar is saved from the vice of the order dated 18.09.2014 by virtue of Section 142-A of the N.I. Act as inserted by Ordinance No. 6 of 2015 and therefore, the filing of the complaint by the opposite party no.2 as well as the proceeding of the said complaint are perfectly just and legal and cannot be quashed on the grounds urged by the learned counsel for the applicant.

34. Consequently, the present application fails and is, accordingly, dismissed.

Order Date :- 30.7.2018

HSM