Cheque dishonour proceedings upon reaching the stage of Section 145(2) of NI Act or beyond to continue in Court conducting trial

It is only when the stage of proceedings in cases filed under Section 138 of the Act has reached the stage of Section 145(2) of the Act or beyond thereof, such case shall continue to be dealt with by the Court where it is pending trial.

Complaint under Section 138 of Negotiable Instruments Act, 1881 (Act) pertaining to dishonour of cheques drawn on bank located in Mumbai was filed in Delhi. Civil recovery proceedings under Order XXXVII of the Code of Civil Procedure, 1908 were also initiated. Subsequently proceedings were compromised before the Mediation Centre, Delhi and those under Section 138 of the Act were withdrawn and the suit was disposed of as compromised. In compliance of the order pursuant to compromise, the accused issued a post dated cheque drawn on Bank located in Mumbai which upon presentation was dishonoured. Despite statutory notice no payment against the dishonoured cheque was made.

Cognizance of the offence under Section 138 of the Act was taken by Delhi Court and accused persons were summoned and after they entering appearance notice was framed against them.

An application under Section 145(2) of the Act was filed on behalf of the accused persons was allowed. After recording of Examination-in-chief of authorized representative of the Complainant the cross-examination was deferred at the request of accused persons.

Later, a submission was made by one of the accused that since recording of evidence has not commenced, the complaint be returned to the complainant for filing the same in appropriate Court in terms of judgment of Supreme Court in ‘Dashrath Rupsingh Rathod vs. State of Maharashtra and Another’. This request was declined by the trial court vide impugned order.

Complainant on the other hand contended that notice under Section 251 of Cr.P.C. was already served on the accused and also to other accused. The application under section 145(2) of the Act was also allowed and in these circumstances, the judgment in ‘Dashrath Rupsingh Rathod’s case was not fully applicable and the complaint hence could not be returned.

It was held that as per Section 145(1), the legislature has allowed complainant to give his evidence by way of an affidavit during the course of trial in respect of offence punishable under Section 138 of the Act and sub-section (2) thereof provides that the Magistrate may on the application moved by the accused, summon the complainant for his cross-examination as to the effect contained therein.

The provision has to be read rationally. The nature of examination in each case is a different matter which has to be considered differently by the court in different circumstances. However, such a consideration has to be made keeping the provision of Section 145(1) and having regard to the object and purpose of the entire scheme of Sections 143 to 146 of the Act.

After serving notice in terms of Section 251 of Cr.P.C. upon an accused, the Magistrate shall fix the case for defence evidence, unless an application is made by an accused under Section 145(2) of the Act for recalling a witness for cross-examination. The concerned Magistrate has to ensure that examination-in-chief, cross-examination and re-examination of the complainant must be conducted within three months of assigning the case.

The Court further clarified that there may be three situations when notice in terms of Section 251 of Cr.P.C. is served upon an accused; (i) After framing of notice in terms of Section 251 of Cr.P.C. the matter is fixed for DE as no application as envisaged in Section 145(2) of the Act is moved by the accused; (ii) After framing of notice in terms of Section 251 of Cr.P.C., an application under Section 145(2) of the Act is moved by an accused but it is yet to be allowed by a Magistrate; and (iii) After serving notice under Section 251 Cr.P.C., the application moved under Section 145(2) of the Act by an accused for cross-examination of the complainant, has been allowed by the Magistrate.

Answer to a question as to whether trial would be said to have commenced in all the aforesaid three situations or not, would be in negative in first two situations. It is only in the third situation when the application under Section 145(2) of the Act has been allowed by the Magistrate only then trial would be said to have commenced within the meaning of Section 145(2) of the Act.

In the instant case, it was an undisputed fact that request to cross examine the complainant in terms of Section 145(2) of the Act made by the accused had already been allowed by the trial court and the examination-in-chief of of the complainant was also recorded and the cross-examination was deferred at the request of accused persons.
The trial thus has reached beyond the stage of Section 145(2) of the Act and trial hence would continue to be at Delhi Court.

[New Delhi Tele Tech Pvt. Ltd. vs. CISCO Systems Capital (India) Pvt. Ltd.]
(Delhi HC, 12.01.2015)