2025 (7) TMI 1528 - HC - Indian Laws

Dishonour of Cheque - funds insufficient - accused failed to pay the cheque amount even after the receipt of demand notice mandated u/s 138 (b) of NI Act - HELD THAT - The counsel for the complainant submitted that he already produced the authorization from the other person and the same is not marked. Considering the facts and circumstances of the case and also considering the amount involved in the cheque one more opportunity can be given to the complainant to produce additional documents. The counsel for the accused submitted that the accused is now undergoing default sentence. If that is the case there can be a direction to release him forthwith. The judgment dated 17.10.2022 in Criminal Appeal No.306/020 of the Court of Additional District Sessions Judge Muvattupuzha and the judgment dated 18.11.2020 in CC No.450/2019 of Tthe Judicial First Class Magistrate Court (Temporary) Muvattupuzha are set aside and the case is remanded to the trial court. This revision petition is allowed.

Summary

ISSUES:

Whether a complainant can prosecute a case under Section 138 of the Negotiable Instruments Act without authorization from all persons entitled to the cheque amount when the debt is owed to multiple persons.Whether the absence of marked authorization documents affects the validity of the prosecution under Section 138 of the Negotiable Instruments Act.Appropriateness of remanding the case for additional evidence without ordering a de novo trial.Whether the accused undergoing default sentence should be released pending further proceedings.

RULINGS / HOLDINGS:

On the issue of prosecution without authorization, the Court held that "the 'payee' or the 'holder in due course' can prosecute a complaint in such a situation only if there is an authorization to him by the other persons." Without "a power of attorney or authorization or any other evidence authorising the payee or the holder in due course," prosecution cannot be sustained.Regarding the missing authorization document, the Court allowed that "one more opportunity can be given to the complainant to produce additional documents" considering the facts and amount involved.The Court set aside the impugned judgments and remanded the case to the trial court with directions that "no denovo trial is necessary" but both parties should be permitted to adduce further evidence.The Court directed that the accused "shall be released forthwith, if his detention is not necessary in any other case" due to undergoing default sentence.

RATIONALE:

The Court applied Section 138 of the Negotiable Instruments Act, emphasizing that the offence arises when a cheque is drawn for "payment of any amount of money to another person" and dishonoured for specified reasons.The Court relied on precedent establishing that when a cheque is issued to one person for payment owed to multiple persons, prosecution requires authorization from the other persons, which may be by "power of attorney" or other modes of authorization.The Court recognized the necessity of authorization to maintain the integrity of prosecution under Section 138 and to ensure that only the entitled persons initiate proceedings.The decision reflects a doctrinal adherence to the principle that authorization is a precondition for prosecution by a payee representing multiple payees, and procedural fairness by allowing further evidence without a fresh trial.