Negotiable instruments: Dishonour of cheque trial directions by Supreme Court

Dishonour of Cheques: directions for expeditious trial of cases.

Delay in cases for dishonour of cheques:

Background for direction:
An Association 174 banks/financial institutions as its members, which functions as think tank for banks in the matters of concern for the whole banking industry, raised issue of considerable national importance owing to the reason that in the era of globalization and rapid  technological developments, financial trust and commercial interest have to be restored. According to them the banking industry has been put to a considerable disadvantage due to the  delay in disposing of the cases relating to Negotiable Instruments Act. The Petitioner banks being custodian of public funds find it difficult to expeditiously recover huge amount of public fund which are blocked in cases pending under Section 138 of the Negotiable Instruments Act, 1881. Petitioners submitted that, in spite of the fact, Chapter XIV has been introduced in the Negotiable Instruments Act by Section 4 of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, to enhance the acceptability of cheques in settlement of liability by making the drawer liable for penalties 2014 in case of bouncing of cheques due to insufficiency of funds, the desired object of the Amendment Act has not been achieved.
Cheque, though acknowledged as a bill of exchange under the Negotiable Instruments Act and readily
accepted in lieu of payment of money and is negotiable, the fact remains that the cheque as a negotiable
instrument started losing its credibility by not being honoured on presentation.

Directions by Supreme Court about trial:

(1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons.

(2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken.

(3) Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest.

(4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re- calling a witness for cross-examination.

(5) The Court concerned must 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 has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for
cross-examination as and when there is direction to this effect by the Court.

[Source: Indian Bank Association vs. Union of India (Supreme Court of India)]


Cognizance: Meaning and Definition in CrPC.

What is ‘taking of cognizance’?

Meaning and Definition of ‘Cognizance’:

Cognizance has not been defined in the Criminal Procedure Code but it connotation is a matter of acronym debates. ‘When does a Magistrate takes cognizance’ is an important issue for determining many things. For example the question of limitation, to see if prosecution is time barred.

Before it can be said that any magistrate has taken cognizance of any offence under section 190(1)(a), Criminal Procedure Code, he must not only have applied his mind to the contents of the petition but he must have done so for the purpose of proceeding in a particular way as indicated in the subsequent provisions of this Chapter – proceeding under section 200 and thereafter sending it for inquiry and report under section 202. When the magistrate applies his mind not for the purpose of proceeding under the subsequent sections of this Chapter, but for taking action of some other kind, e.g. ordering investigation under section 156(3), or issuing a search warrant for the purpose of the investigation, he cannot be said to have taken cognizance of the offence.

[Source: Superintendent and Remembrancer of Legal Affairs, West Bengal v. Abni Kumar Banerjee (by Calcutta High Court) approved by Supreme Court in R. R. Chari v. State of U.P.(1951) SCR 312]

Scope of enquiry at the stage of cognizance:

At the time of taking cognizance of the offence the Court is required to consider the averments made in the complaint or the charge sheet filed under Section 173. It is not open for the Court to analyse the evidence produced at that stage and come to the conclusion that no prima facie case is made out for proceeding further in the matter. However, before issuing the process, it that it is open to the Court to record the evidence and on consideration of the averments made in the complaint and the evidence thus adduced, find out whether an offence has been made out. On finding that such an offence has been made out the Court may direct the issue of process to the respondent and take further steps in the matter.

If it is a charge-sheet filed under Section 173 CrPC, the facts stated by the prosecution in the charge-sheet, on the basis of the evidence collected during investigation, would disclose the offence for which cognizance would be taken by the Court. Thus, it is not the province of the Court at that stage to embark upon and sift the evidence to come to the conclusion whether or not an offence has been made out.

[Source: Subramanium Swamy v. Manmohan Singh. (Supreme Court of India)]

Inspection of place of offence by Magistrate

Local Inspection by Magistrate:

Considerations for local inspection of the place of offence by Magistrate himself:

Section 310 of Criminal Procedure Code 1973 (corresponding to  Section 539 of Criminal Procedure Code) provides about inspection is as under:

310. Local inspection. (1) Any Judge or Magistrate may, at any stage of any inquiry, trial or other proceeding, after due notice to the parties, visit and inspect any place in which an offence is alleged to have been committed, or any other place which it is in his opinion necessary to view for the purpose of properly appreciating the evidence given at such inquiry or trial, and shall without unnecessary delay record a memorandum of any relevant facts observed at such inspection.
(2) Such memorandum shall form part of the record of the case and if the prosecutor, complainant or accused or any other party to the case, so desires, a copy of the memorandum shall be furnished to him free of cost.

Scope of power of local inspection:

If a Magistrate makes use of knowledge derived from a local inspection without affording the accused an opportunity to cross-examine or to explain the points against him, he acts with material irregularity sufficient to vitiate the trial. It was also held that a local inspection of the Magistrate is permitted for the purpose of properly appreciating the evidence in this case and cannot take the place of evidence itself. [Source: Tirkah v. Nanak AIR 1927 All. 350]

In another case the Magistrate visited the spot on the evening and came to the conclusion that there was sufficient light to enable anybody to mark closely the features of a stranger. The High Court held that the learned Magistrate assumed that the condition of the light and atmosphere were the same on the night that he went to the spot as they were at the time of the occurrence. It was held that the Magistrate had gone beyond the scope of Section 539(b) and result of such inspection could not be made the basis of conviction. [Source: Sheik Badasah v. Emperor, (1939) 40 Crl. Law Journal 624]

The only purpose of local inspection being to properly appreciate the evidence given at the trial and it is only reasonable that the local inspection should, as a rule, come after all the evidence is recorded…. Even that should be resorted to very sparingly, the Court taking special precautions to prevent itself becoming a witness unconsciously. On some occasions, it is practically impossible for the Court to make a local inspection, and not import new materials collected by it. The moment the Court collects new materials it becomes a witness, and as it cannot cross-examine itself, it cannot try the case.

[Source: Dwaraka Prasad v. Ram Nath Modi, AIR 1951 Vindhyapradesh 1]

Code provides for the Judge making a local inspection himself. That inspection can be used by him for properly appreciating the evidence in the case and for no other purpose. It cannot be used for preparation of the background for appreciating the evidence of the witnesses because preparation of the background has to be made by the parties themselves by letting in evidence forthat purpose and the Judge is not expected to supply that lacuna in evidence. Preparation of the background to appreciate the evidence of witnesses is not the same as “properly appreciating the evidence’contemplated by the Section.  …If the impressions gained by the Judge on controversial matters are allowed to get in without being tested by cross-examination there is the likelihood of miscarriage of justice resulting from it.

[Source: State of Kerala v. Chandran 1973 KLT 625 DB: 1974 Crl. Law Journal 52.]

In Pritam Singh v. State of Punjab a three Judge Bench of the Supreme Court held that a Magistrate is not entitled to allow his views or observations to take the place of evidence because such view or observation cannot be tested by cross-examination.

A local inspection may be made for the purpose of properly appreciating the evidence given during the trial. The magistrate should not, in making the local inspection, do any thing which would reduce him to the position of a witness.

In the present case, it is seen from the notes of the learned Magistrate pertaining to his local inspection, that he did not stop merely at observing the spot where the occurrence is alleged to have taken place, He seems to have conducted some sort of an investigation at the spot to find out whether a hole in the ground was or was not of recent origin. He also seems to have taken certain measurements. He appears also to have made enquiries of the people there, including the accused and the complainant. That he did all these things can be seen, from his notes pertaining to his local inspection.
He has repeatedly referred in his judgment to a sketch prepared by him. That sketch does not appear to have been put into evidence at all; but the learned Magistrate has not hesitated to make liberal use of that sketch. It does not appear to have been in the mind of the learned Magistrate that the local inspection should have been confined only to the purpose of properly appreciating the evidence on record.

What Section 539-B contemplates is the local inspection of the topography of the place in which the offence was alleged to have been committed or its local peculiarities for the purpose of properly appreciating the evidence which was already on record.

[Source: State of Uttar Pradesh v. Het Ram and Ors. AIR 1976 SC 2124]

Normally a Court is not entitled to make a local inspection and even if such an inspection is made, it can never take the place of evidence or proof but is really meant for appreciating the position at the spot. In the present case the Sessions Judge by making a local inspection converted himself into a witness in order to draw full support to the defence case by what he may have seen. By doing so the Sessions Judge exceeded his jurisdiction.

[Source: Keisam Kumar Singh and Anr. v. State of Manipur ]

…the local inspection envisaged under Section 310 Cr.P.C. is for the purpose of properly appreciating the evidence already recorded during the trial. Memorandum of spot inspection recorded by the trial Judge has to be appreciated in conjunction with the evidence already recorded. Any omission and/or commission in the memorandum recorded by the trial Judge by itself would not constitute material irregularity, which would vitiate the prosecution case.

[Source: State of H.P. v. Mast Ram (Supreme Court of India)]

The Magistrate has power to conduct a local inspection that can only be for the purpose of appreciating the evidence on record and that shall not be done in a manner so as to reduce the Magistrate as a witness.

[Source: Sr. Abaya vs Unknown,  2006 CriLJ 3843, 2006 (2) KLT 1001 Ker.]