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Monday, December 25, 2017

Cheque Bounce New Law that could award interim compensation in cases relating to dishonoured cheques, both at the trial and appellate stages.

*Cheque Bounce New Law*

The Union Cabinet yesterday approved draft amendments in the Negotiable Instruments Act, 1881, that could award interim compensation in cases relating to dishonoured cheques, both at the trial and appellate stages.

The changes would enable a trial court to order payment of a part of the cheque amount as interim compensation to the receiver. If the drawer is acquitted, the court may direct the receiver to repay the amount paid as interim compensation with interest. Similar provisions would be enabled in case of appeals.

Dishonour of cheques due to inadequate funds in the account of the drawer of the cheque or for other reasons causes serious distress in the trade, business and MSME sectors. It causes incalculable loss and inconvenience to payees and erodes the credibility of cheques to a large extent,” said a government official.

The proposed changes will be placed before the winter session of Parliament, the official said. The changes are meant to address various representations from the public and the trading community.

Legal recourse against dishonoured cheques is long drawn as it is relatively easy to file appeals and obtain a stay on proceedings. A receiver of a dishonoured cheque has to spend considerable time and resources in court proceedings to realise the value of the cheque.

“Such delays compromise the sanctity of the cheque transactions,” said the official quoted above.

Cheques are an integral part of the payments system, and form the backbone of trade, which often serve as the security for underlying trade transactions.
*In the interest of Public at large* https://play.google.com/store/apps/details?id=com.advok8

Thursday, December 21, 2017

Dishonour of cheque-Legally enforceable debt-Cheque in question issued to advocate towards fees claimed on basis of percentage of subject-matter in litigation-Mere issuance of cheque by client may not debar advocate from contesting liability-If liability is disputed

2017 CJ(SC) 1438
Subject: Constitution, Dishonour of Cheque

*Negotiable Instruments Act, 1881, Section 138-Contract Act, 1872, Section 23-Advocates Act, 1961, Section 49(1)(c)-Dishonour of cheque-Legally enforceable debt-Cheque in question issued to advocate towards fees claimed on basis of percentage of subject-matter in litigation-Mere issuance of cheque by client may not debar advocate from contesting liability-If liability is disputed, advocate has to prove contract-Claim of fees by advocate based on percentage of subject-matter in litigation is against public policy and act of professional misconduct-Cannot be basis of complaint under Section 138-Liable to be quashed-Appeal disposed of.

Sunday, December 10, 2017

NI Act S.138 - Offence cannot be adjudicated through the process of plea bargaining - 2017 (5) KHC 16 (SN)

Important Judgments (08/12/2017)

NI Act S.138 - Offence cannot be adjudicated through the process of plea bargaining - 2017 (5) KHC 16 (SN)

Burial and Burning Ground — Practice of cremating body of the dead in the private property of the family of deceased –  District Collector has no jurisdiction to pass prohibitory orders - 2017 (5) KHC 769

Paddy Land Act - Properties not included as paddy land in data bank – Building can be granted if property owner gets an order under Clause 6 of KLU - 2017 (5) KHC 765

Notaries Act, 1952 – Notary attesting power of attorney – However identity of the deponent not ascertained – Is fatal - 2017 (5) KHC 849 (DB)

CrPC S.164 – Any statement given by a person who is accused of an offence cannot be treated as a statement under S.32 of Evidence Act - 2017 (5) KHC 820 (DB)

Service – Appointment — Challenge to — When appointees are identifiable persons, they have been impleaded as party respondents – Resorting to paper publication not proper - 2017 (5) KHC 803  (DB)

Service – KSEB – Causing financial loss – Disciplinary proceedings – Appellate Authority taking disciplinary action – Not improper - 2017 (5) KHC 815

Execution – Amount decreed in an earlier suit between the parties – Cannot be set off in subsequent proceedings - 2017 (5) KHC 15 (DB) (SN)

NI Act S.138 - Accused even after undergoing the sentence can challenge the conviction in appeal - 2017 (5) KHC 17 (SN)

Burial and Burning Ground — Fundamental right is conferred on persons who follow customary or religious rites in the matter of cremation or burial of dead persons as per the respective traditions of the communities concerned - 2017 (5) KHC 769

An order which do not disclose any reason for rejecting the request made to refer the parties to arbitration, cannot be sustained - 2017 (5) KHC 796

Office of the Board of Governors of APJ Abdul Kalam Technological University – Membership is co terminus with the office by virtue of which the member was nominated - 2017 (5) KHC 801 (DB)

There is no mandate that a test identification parade should be conducted for identifying accused - 2017 (5) KHC 820 (DB)

WC Act – Commissioner directing payment of interest at the rate of 12% per annum from the date of accident – Held cannot be said as improper - 2017 (5) KHC 844  (DB)

CPC O.XIII Rule 9 – Return of admitted documents – In a case where Court has found that the deed is forged and for that reason it was set aside, petitioner is not legally entitled to maintain an application for return of documents unless and until the said finding is reversed by Appellate Court - 2017 (5) KHC 846

VAT S.74 — Order permitting to compound, if concluded, cannot be cancelled subsequently - 2017 (5) KHC 858

Thursday, November 30, 2017

whether-minor-driving-motor-cycle.

http://www.lawweb.in/2016/12/whether-minor-driving-motor-cycle.html?m=1

Deduction towards personal expenses – Case of permanent disability and not of fatality

*Important decision reported in ALL MR November 2017 part*

*Accident Claim* – Compensation – Deduction towards personal expenses – Case of permanent disability and not of fatality – Deduction of one-third towards personal expenses, improper.... *2017(6) ALL MR 288*

Friday, November 10, 2017

SC :: Cheque signature mismatch may lead to qualifcation for prosecution under Section 138 N. I. Act.

*SC :: Cheque signature mismatch may lead to qualifcation for prosecution under Section 138 N. I. Act.*
In a case where the cheque is returned unpaid by the bank on the ground that the signature of the drawer on the cheque differs from his specimen signature on record of the bank, a case of dishonour of cheque punishable under Section 138 may be made out if other ingredients of the offence are satisfied. The Supreme Court has ruled that in case of cheque bounce, a mismatch of signatures will be treated on par with insufficiency of funds, "payment stopped" and "closure of account", which are offences under Section 138 of the Negotiable Instruments Act, 1881. But It's not constitute an offence by itself. Such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable. *Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375*

Tuesday, November 7, 2017

MV Act Compensation for Future Prospects, loss of estate, consortium & funeral expenses All Redefined by Constitution Bench(SC)

MV Act Compensation for Future Prospects, loss of estate, consortium & funeral expenses All Redefined by Constitution Bench(SC) Click >https://goo.gl/SNkwQ3

Saturday, November 4, 2017

Cost for delaying tatics

SC:'House Locked' remark on Notice when sent by registered post is good service.

SC:'House Locked' remark on Notice when sent by registered post is good service.

_Cheque bounce cases. When notice sent by registered post returned with postal endorsement "house locked", "not available in the house", "house locked", "shop closed", "addressee not in station" "intimation served, addressee absent" etc, the requirement of Section 138 is complied with. Section 27 of the General Clauses invoked to raise the presumption of service of notice once notice is sent by registered post by correctly addressing to the drawer of the cheque. The accused may rebut the presumption later.

_Case:_
_*N. Parameshwara Unni Vs. G.Kannan and another.

_Citation:_
_*(2017) 5 SCC 737.*_

Thursday, October 26, 2017

Compoundable-offence as oneof under Section-138 of NI-Act-can be referred to Mediation-Delhi-HC-DB* A division bench of Delhi High Court has held that it is legal to refer a criminal compoundable case as one under Section 138 of the NI Act to mediation.

*Compoundable-offence as oneof under Section-138 of NI-Act-can be referred to Mediation-Delhi-HC-DB* A division bench of Delhi High Court has held that it is legal to refer a criminal compoundable case as one under Section 138 of the NI Act to mediation.

The Bench of Acting Chief Justice Gita Mittal and Justice Anu Malhotra was answering a reference made by Metropolitan Magistrate Shri. Bharat Chugh (as he then was).

The bench heard Amicus curiae Mr. J.P. Sengh, Sr. Advocate, Advocates Siddharth Aggarwal and Ms. Veena Ralli in the case.

The bench found that, though the Code of Civil Procedure contains a specific provision in Section 89 of the C.P.C. enabling reference of matters to alternate dispute redressal, however, so far as criminal cases are concerned, it is amply clear that the Code of Criminal Procedure does not contain any express statutory provision enabling the criminal court to refer the parties to a forum for alternate dispute resolution including mediation. The same is the position regarding cases under the NI Act.

“Therefore, the question which first begs an answer is whether the criminal court can in any manner refer parties before it to dispute resolution by mediation”.

Answering the above question, the Bench observed that even though an express statutory provision enabling the criminal court to refer the complainant and accused persons to alternate dispute redressal mechanisms has not been specifically provided by the Legislature, however, the Cr.P.C. does permit and recognize settlement without stipulating or restricting the process by which it may be reached. There is thus no bar to utilizing the alternate dispute mechanisms including arbitration, mediation, conciliation (recognized under Section 89 of CPC) for the purposes of settling disputes which are the subject matter of offences covered under Section 320 of the Cr.P.C.

Finally the Bench has answered the reference as follows;

Question I : What is the legality of referral of a criminal compoundable case (such as on u/s 138 of the NI Act) to mediation?

It is legal to refer a criminal compoundable case as one under Section 138 of the NI Act to mediation.

Question II : Can the Mediation and Conciliation Rules, 2004 formulated in exercise of powers under the CPC, be imported and applied in criminal cases? If not, how to fill the legal vacuum? Is there a need for separate rules framed in this regard (possibly u/s 477 of the CrPC)?

The Delhi Mediation and Conciliation Rules, 2004 issued in exercise of the rule making power under Part-10 and Clause (d) of sub-section (ii) of Section 89 as well as all other powers enabling the High Court of Delhi to make such rules, applies to mediation arising out of civil as well as criminal cases.

Question III : In cases where the dispute has already been referred to mediation – What is the procedure to be followed thereafter? Is the matter to be disposed of taking the very mediated settlement agreement to be evidence of compounding of the case and dispose of the case, or the same is to be kept pending, awaiting compliance thereof (for example, when the payments are spread over a long period of time, as is usually the case in such settlement agreements)?

In the context of reference of the parties, in a case arising under Section 138 of the NI Act, to mediation is concerned, the following procedure is required to be followed:

III (i) When the respondent first enters appearance in a complaint under Section 138 of the NI Act, before proceeding further with the case, the Magistrate may proceed to record admission and denial of documents in accordance with Section 294 of the Cr.P.C., and if satisfied, at any stage before the complaint is taken up for hearing, there exist elements of settlement, the magistrate shall inquire from the parties if they are open to exploring possibility of an amicable resolution of the disputes.

III (ii) If the parties are so inclined, they should be informed by the court of the various mechanisms available to them by which they can arrive at such settlement including out of court settlement; referral to Lok Adalat under the Legal Services Authorities Act, 1987; referral to the court annexed mediation centre; as well as conciliation under the Arbitration and Conciliation Act, 1996.

III (iii) Once the parties have chosen the appropriate mechanism which they would be willing to use to resolve their disputes, the court should refer the parties to such forum while stipulating the prescribed time period, within which the matter should be negotiated (ideally a period of six weeks) and the next date of hearing when the case should be again placed before the concerned court to enable it to monitor the progress and outcome of such negotiations.

III (iv) In the event that the parties seek reference to mediation, the court should list the matter before the concerned mediation centre/mediator on a fixed date directing the presence of the parties/authorized representatives before the mediator on the said date.

III (v) If referred to mediation, the courts, as well as the mediators, should encourage parties to resolve their overall disputes, not confined to the case in which the reference is made or the subject matter of the criminal complaint which relates only to dishonouring of a particular cheque.

III (vi) The parties should endeavour to interact/discuss their individual resolutions/proposals with each other as well and facilitate as many interactions necessary for efficient resolution within the period granted by the court. The parties shall be directed to appear before the mediator in a time bound manner keeping in view the time period fixed by the magistrate.

III (vii) In the event that all parties seek extension of time beyond the initial six week period, the magistrate may, after considering the progress of the mediation proceedings, in the interest of justice, grant extension of time to the parties for facilitating the settlement. For the purposes of such extension, the magistrate may call for an interim report from the mediator, however keeping in mind the confidentiality attached to the mediation process. Upon being satisfied that bona fide and sincere efforts for settlement were being made by the parties, the magistrate may fix a reasonable time period for the parties to appear before the mediator appointing a next date of hearing for a report on the progress in the mediation. Such time period would depend on the facts and circumstances and is best left to the discretion of the magistrate who would appoint the same keeping in view the best interest of both parties.

Contents of the settlement

III (viii) If a settlement is reached during the mediation, the settlement agreement which is drawn-up must incorporate : (a) a clear stipulation as to the amount which is agreed to be paid by the party; (b) a clear and simple mechanism/method of payment and the manner and mode of payment; (c) undertakings of all parties to abide and be bound by the terms of the settlement must be contained in the agreement to ensure that the parties comply with the terms agreed upon; (d) a clear stipulation, if agreed upon, of the penalty which would enure to the party if a default of the agreed terms is committed in addition to the consequences of the breach of the terms of the settlement; (e) an unequivocal declaration that both parties have executed the agreement after understanding the terms of the settlement agreement as well as of the consequences of its breach; (f) a stipulation regarding the voluntariness of the settlement and declaration that the executors of the settlement agreement were executing and signing the same without any kind of force, pressure and undue influence.

III (ix) The mediator should forward a carefully executed settlement agreement duly signed by both parties along with his report to the court on the date fixed, when the parties or their authorized representatives would appear before the court.

Proceedings before the court

III (x) The magistrate would adopt a procedure akin to that followed by the civil court under Order XXIII of the C.P.C.

III (xi) The magistrate should record a statement on oath of the parties affirming the terms of the settlement; that it was entered into voluntarily, of the free will of the parties, after fully understanding the contents and implications thereof, affirming the contents of the agreement placed before the court; confirming their signatures thereon. A clear undertaking to abide by the terms of the settlement should also be recorded as a matter of abundant caution.

III (xii) A statement to the above effect may be obtained on affidavit. However, the magistrate must record a statement of the parties proving the affidavit and the settlement agreement on court record.

III (xiii) The magistrate should independently apply his judicial mind and satisfy himself that the settlement agreement is genuine, equitable, lawful, not opposed to public policy, voluntary and that there is no legal impediment in accepting the same.

III (xiv) Pursuant to recording of the statement of the parties, the magistrate should specifically accept the statement of the parties as well as their undertakings and hold them bound by the terms of the settlement terms entered into by and between them. This order should clearly stipulate that in the event of default by either party, the amount agreed to be paid in the settlement agreement will be recoverable in terms of Section 431 read with Section 421 of the Cr.P.C.

III (xv) Upon receiving a request from the complainant, that on account of the compromise vide the settlement agreement, it is withdrawing himself from prosecution, the matter has to be compounded. Such prayer of the complainant has to be accepted in keeping with the scheme of Section 147 of the NI Act. (Ref.:(2005) CriLJ 431, Rameshbhai Somabhai Patel v. Dineshbhai Achalanand Rathi) At this point, the trial court should discharge/acquit the accused person, depending on the stage of the case. This procedure should be followed even where the settlement terms require implementation of the terms and payment over a period of time.

III (xvi) In the event that after various rounds of mediation, the parties conclude that the matter cannot be amicably resolved or settled, information to this effect should be placed before the magistrate who should proceed in that complaint on merits, as per the procedure prescribed by law.

III (xvii) The magistrate should ensure strict compliance with the guidelines and principles laid down by the Supreme Court in the pronouncement reported at (2010) 5 SCC 663, Damodar S. Prabhu v. Sayed Babalal H and so far as the settlement at the later stage is concerned in (2014) 10 SCC 690 Madhya Pradesh State Legal Services Authority v. Prateek Jain.

III (xvii) We may also refer to a criminal case wherein there is an underlying civil dispute. While the parties may not be either permitted in law to compound the criminal case or may not be willing to compound the criminal case, they may be willing to explore the possibility of a negotiated settlement of their civil disputes. There is no legal prohibition to the parties seeking mediation so far as the underlying civil dispute is concerned. In case a settlement is reached, the principles laid down by us would apply to settlement of such underlying civil disputes as well. In case reference in a criminal case is restricted to only an underlying civil dispute and a settlement is reached in mediation, the referring court could require the mediator to place such settlement in the civil litigation between the parties which would proceed in the matter in accordance with prescribed procedure.

Question IV : If the settlement in Mediation is not complied with – is the court required to proceed with the case for a trial on merits, or hold such a settlement agreement to be executable as a decree?

In case the mediation settlement accepted by the court as above is not complied with, the following procedure is required to be followed :

IV (i) In the event of default or non-compliance or breach of the settlement agreement by the accused person, the magistrate would pass an order under Section 431 read with Section 421 of the Cr.P.C. to recover the amount agreed to be paid by the accused in the same manner as a fine would be recovered.

IV (ii) Additionally, for breach of the undertaking given to the magistrate/court, the court would take appropriate action permissible in law to enforce compliance with the undertaking as well as the orders of the court based thereon, including proceeding under Section 2(b) of the Contempt of Courts Act, 1971 for violation thereof.

Question V : If the Mediated Settlement Agreement, by itself, is taken to be tantamount to a decree, then, how the same is to be executed? Is the complainant to be relegated to file an application for execution in a civil court? And if yes, what should be the appropriate orders with respect to the criminal complaint case at hand. What would be the effect of such a mediated settlement vis-à- vis the complaint case? Good Morning💐 *Reg.RCK R Chandra Kumar, Advocate.*

No Pleadings No Ground in Appeal: Motor Vehicles Act (59 of 1988) S.173 — Appeal against award of compensation — Appeal by insurance company on ground of involvement of two other vehicles in accident

No Pleadings No Ground in Appeal:

Motor Vehicles Act (59 of 1988) S.173 — Appeal against award of compensation — Appeal by insurance company on ground of involvement of two other vehicles in accident — Said ground not mentioned in pleadings by insurance company — In absence of pleadings, insurance company could not make out new case in appeal — Ground of involvement of two other vehicles in accident, not acceptable. (Paras 7, 8)

Oriental Insurance
Vs Gaybreanath Khongwir & another
Meghalaya High Court
AIR 2014 MEGHALAYA 28

Disposal Of Appeal In Without Reason: Motor Vehicles Act (59 of 1988) S.173 — Civil P. C. (5 of 1908), O. 20, R. 4 (2), O. 41, R. 31 — First appellate powers — High Court neither set out facts of case

Disposal Of Appeal In Without Reason:

Motor Vehicles Act (59 of 1988) S.173 — Civil P. C. (5 of 1908), O. 20, R. 4 (2), O. 41, R. 31 — First appellate powers — High Court neither set out facts of case — Nor took note of grounds raised by appellant — Nor made any attempt to appreciate evidence — Judgment bereft of concise statement of points for determination, decisions thereon and reasons — Disposal of appeal in cryptic manner — Improper — Matter remanded. (Paras 26, 27) First Appeal from Order No. 1681 of 2014, D/- 28-05-2014 (All.), Partly Reversed.

UPSRTC
Vs  Mamta & others.
Supreme Court of India [DB]
AIR 2016 SC 948

Refund Deposited Amount Under S 140

😇Refund Deposited Amount Under S 140

Motor Vehicles Act (59 of 1988) S.140 — No fault liability — Dismissal of main claim petition — Order to refund deposited amount under S 140 to Insurance company — Not proper — Under S 140 negligence is not required to be proved and interim compensation is not refundable even if negligence is not proved in main claim petition

Rammurti & others
Vs Rudresh B. Tiwari.
Bombay High Court
First Appeal. 336 of 2003
2016 AAC 734

Wednesday, October 25, 2017

Without Any Fitness Certificat

Without Any Fitness Certificate:

Motor Vehicles Act (59 of 1988) S.147 — Liability of insurer — Alleged wilful breach of policy conditions as offending vehicle was driven without any fitness certificate — Insurer failed to show that such condition contained in insurance policy — Insurer also has not led any evidence to infer that driver was not having valid and effective driving licence — Insurer liable to pay compensation (Paras 13, 14)

Parveen Kumar
Vs Sunil Kumar and another
Himachal Pradesh High Court
FAO: 289 /2009
2016 AAC 47 (HP)

Helper taken keys fraudulently from Driver Motor Vehicles Act (59 of 1988) S.147 — Liability to pay compensation —

😎Helper taken keys fraudulently from Driver
Motor Vehicles Act (59 of 1988) S.147 — Liability to pay compensation — Determination — Claimants have proved that accident was outcome of rash and negligent driving of tractor by its driver and saddled liability on owner on ground that driver was not having valid driving licence — Owner pleaded that offending driver was engaged as helper and he had taken keys of offending vehicle fraudulently and driving same at time of accident — No evidence produced by owner to prove his plea nor such FIR has been lodged — Even if offending driver had taken keys fraudulently same amounts to breach on part of owner — Fixing liability on owner proper (Paras 11-19, 22)

Padam Dass and another
Vs Man Kumari and others.
Himachal Pradesh High Court
FAO No. 411 of 2009
2016 AAC 431 (HP)

3rd party claimant is entitled for actual cost:

3rd party claimant is entitled for actual cost:

Motor Vehicles Act (59 of 1988) S.166 — Compensation for damage to vehicle in accident — Cost of repairs — Purchase of new spare parts for making vehicle roadworthy — Third party claimant is entitled for actual cost of spare parts 2009 (4) KLT 679, Overruled

M. Joseph
V/s Venkata Rao M. & others
Kerala High Court [ FB ]
MACA No. 1373 of 2013
AIR 2016 Kerala 101

Monday, October 16, 2017

Dishonour of cheque - Company - Statutory requirements and settled principles of law - Court to ensure strict compliance before making a person vicariously liable. (2017(3) Apex Court Judgments 040 (S.C.)*

*IMPORTANT DECISIONS (17.10.2017)*

*Counter claim - Amendment - Counter claim of declaration and possession of first floor - Dispossession from ground floor during pendency of suit - Amendment of counter claim allowed - 2003(3) Civil Court Cases 133 (Bombay)  distinguished. (2010(1) Civil Court Cases 806 (Allahabad)*

*Dishonour of cheque - Company - Statutory requirements and settled principles of law - Court to ensure strict compliance before making a person vicariously liable. (2017(3) Apex Court Judgments 040 (S.C.)*

*Offence u/s 394 IPC - Compromise - Offence not compoundable - However, Court in view of compromise arrived at between parties  can reduce the sentence imposed while maintaining conviction. (2017(3) Criminal Court Cases 648 (S.C.)*

*Rejection of plaint - Suit for cancellation of sale deed on the ground of fraud and misrepresentation - Civil suit is maintainable. (2017(3) Civil Court Cases 714 (Allahabad)*

*Sale deed - Registered - Sale deed cannot be cancelled by executing a cancellation deed - Sale deed can only be set aside through intervention of Court. (2017(3) Civil Court Cases 832 (Kerala)*

*Temporary injunction - Cannot be granted when suit for permanent injunction is not maintainable. (2014(3) Civil Court Cases 100 (Rajasthan)*

*Witness - When deposes under instructions of a party and further his statement is merely a hearsay then the same cannot form the basis to record a finding.  (2010(1) Civil Court Cases 701 (P&H)*

Tuesday, October 10, 2017

Whether minor driving motor cycle without licence is entitled to get compensation in case of accident

*Whether minor driving motor cycle without licence is entitled to get compensation in case of accident?*

 Heard the learned advocates appearing on behalf of
the respective parties at length. At the outset, it is required to
be noted that in a vehicular accident between the Motorcycle
No.GJ 2 AA 5546, which at the relevant time was being driven
by the original injured claimant-minor and one Jeep No.GJ 2 R
3829, driver of the Motorcycle-original injured claimant
sustained permanent partial disability to the extent of 7%. It
is also required to be noted that as such on appreciation of
evidence, the learned tribunal has held the driver of the Jeep
involved in the accident sole negligent in the accident. Under
the circumstances and normally once the driver of the
offending vehicle is held to be sole negligent for the accident
the original claimant is entitled to the compensation from the
driver-owner and the Insurer of the vehicle whose driver is held
to be sole negligent. As per settled proposition of law only that
much amount is required to be deducted and / or original
claimant is not entitled to the extent he is held contributory
negligent for the accident. However, in the present case, the
learned tribunal has deducted 70% i.e. 10% towards
negligence of the minor injured claimant and 60% towards
negligence of the father-owner of the Motorcycle permitting his
minor son to drive the Motorcycle though he was not holding
valid license to drive the Motorcycle. On the aforesaid ground
no amount of compensation could have been deducted and / or
denied to the original claimant, more particularly, when so far
as the accident is concerned the original injured claimant is
not held negligent / contributory negligent at all. 
*IN THE HIGH COURT OF GUJARAT AT AHMEDABAD*
FIRST APPEAL NO. 2029 of 2008

*MINOR SHAKTISINH ZALA.*
V
*ZALA RANVIRSINH RANUBHA & 4.*
CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
Date : 25/02/2016
*Citation:2016(6) ALLMR(JOURNAL)7*

Whether it is necessary to make enquiry U/S 202 of crpc in case of dishonour of cheque?

🔷 *Whether it is necessary to make enquiry U/S 202 of crpc in case of dishonour of cheque?*

The dictum laid down by the Apex Court in Indian Bank Association
(supra) and the Full Bench of this court in Rajesh Chalke (supra) makes it
clear that in the complaints under section 138 NI Act, the Magistrate is not
obliged to examine the complainant under section 200 Cr.PC and can rely
on affidavit filed along with the complaint. The Magistrate can take
cognizance and issue summons if upon scrutinizing the complaint, the
affidavit and the documents he is satisfied that prima facie offence has been
made out against the accused.
40. It is also pertinent to note that the Negotiable Instruments
(Amendment) Act, 2015 defines and restricts the territorial jurisdiction to a
court specified in Section 142 (2) (a) and (b) of the Act. The said issue of
territorial jurisdiction which has to be decided on the basis of the
documents, eliminates the need for further inquiry on jurisdictional issue.
It therefore follows that the Magistrate can arrive at the requisite
satisfaction about the essential ingredients of the offence including the
issue of territorial jurisdiction at the end of the enquiry under Section 200

Cr.P.C itself and this obviates the need of holding further enquiry under
Section 202 Cr.P.C. This being the position further enquiry under sub
section (1) of Section 202 of the Code, if held to be mandatory in
complaints filed under Section 138 N.I.Act, will be nothing but ritualistic,
idle and an empty formality.
41. It may be mentioned that the decision of the full bench of this court in
Rajesh Chalke (supra_ was not brought to the notice of the learned Single
Judge in Netcore (Cri. Writ Petition No. 138 of 2011). Similarly, the
decision of the Apex Court in M/s. Indian Bank Associates (supra) as well
as the decision of the full bench of this court in Rajesh Chalke were not
brought to the notice of the learned single judge in Vimal Powerloom
(supra). Consequently, the learned Single Judges of this Court had no
occasion to consider the principles laid down by the Apex Court as well as
the full bench of this Court in the aforesaid  decisions. These two decisions
therefore cannot be considered as binding precedents. In any case, upon
consideration of the decision in Indian Banks Association (supra) and
Rajesh Chalke (supra) it would be appropriate to follow the decision in
Bansilal Kabra (supra), and Vinod vs. SBI Global (supra).
*IN THE HIGH* *COURT OF JUDICATURE AT BOMBAY*
*CRIMINAL APPELLATE JURISDICTION*
*CRIMINAL* APPLICATION NO. 716 OF 2015
with
CRIMINAL APPLICATION NO. 717 OF 2015

*Dr. (Mrs) Rajul Ketan Raj v/s. Reliance Capital Ltd. & Anr.*

CORAM : SMT. ANUJA PRABHUDESSAI, J.

PRONOUNCED ON : 12th FEBRUARY, 2016.

*Citation;2016 ALLMR(CRI)1224*

Top 5 Judgments on Negotiable Instrument Act

Top 5 Judgments on Negotiable Instrument Act

 

Canara Bank vs. Canara Sales Corporation & others

Sections 6, 31, 77, 85 and  117 in the Negotiable Instruments Act,  1881 were discussed. The relationship between  Bank and customer of the  Bank are conferred. That of a creditor and debtor-Cheque duly signed by a customer presented-Mandate to Bank to pay the amount. The element of trust between Bank and its customer Exists.  Banking Law: Bank and Customer entries in passbook and statement of accounts furnished by the bank. Customer whether duty bound to intimate discrepancies.  The court held that the when customer’s signature is fake, there is no decree to the bank to pay it.

Harman  Electronics  Pvt.Ltd. v. National Panasonic India Pvt. Ltd

It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that dishonor of a cheque by itself constitutes an offense. For the purpose of proving its case that the accused had committed an offense under Section 138 of the Negotiable Instruments Act, the ingredients thereof are required to be proved. The proviso appended thereto, however, imposes certain further conditions which are required to be fulfilled before cognizance of the offense can be taken. If the ingredients for constitution of the offence laid down in the provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint.
 

Bhutoria Trading Co. v. Allahabad Bank

Messrs. W. F. Ducat & Co.. Ltd. drew an uncrossed cheque on their bankers, the respondent Allahabad Bank Ltd. for the said sum payable to the plaintiff or order in payment of the said price and made over the same to the defendant No. 2 Jeth-mall Chandalia, an employee of the plaintiff. In the plaint, the plaintiff claimed that the defendant No. 2 had no authority to operate on the plaintiff's banking account or to endorse any cheque payable to the plaintiff's order. The court held out that there are no circumstances which afforded a reasonable ground for believing that payee was not permitted to receive payment of cheques, the bank is considered to had made payment in due course.

Prem Chand Vijay Kumar v. Yashpal Singh

Challenge in this appeal is to the legality of the judgment rendered by a learned Single Judge of the Punjab and Haryana High Court holding that the proceedings initiated on the basis of a complaint alleging infraction of Section 138 of the Negotiable Instrument Act, 1881 (in short the 'Act') was not maintainable. Therefore, the proceedings were quashed, allowing the petition filed under Section 482 of the Code of Criminal Procedure, 1973 (in short 'the Code').The court held that upon a notice under Section 138 of the NI Act being issued, a subsequent presentation of a cheque and its dishonor would not create another ‘cause of action’ which could set the Section 138 machinery in motion. 

Rangachari(N.) v.Bharat Sanchar Nigam Ltd.

 

On behalf of the Data Access (India) Limited, two cheques were issued to the respondent  "B.S.N.L. The cheques were duly presented by the B.S.N.L. but were dishonoured for insufficiency of funds. B.S.N.L. thereupon issued requisite notices calling upon the Data Access (India) Limited to pay the amounts due under the cheques. The payments not having been made, B.S.N.L. filed a complaint under Section 138 of the Negotiable Instruments Act. The Court case held that the Law merchant should be treated as negotiable instruments. The also observed that negotiable instruments are only instruments of credit which are readily exchangeable into money & easily drivable from one hand to another hand.

Guidelines of Bombay high court for disposal for motor accident claim petition

Guidelines of Bombay high court for disposal for motor accident claim petition

In view of discussion made above, we pass the following order:-
(i)The state government shall issue a direction to all the concerned
officers of the Motor Vehicles Department to scrupulouslyimplement sub-Rule (2) of Rule 251 of the Maharashtra Rules bysubmitting reports in form R.A.R. The State Government shalltake appropriate decision on the issue of uploading the said formson a website;
(ii)The Director General of Police shall issue instructions to all thePolice Stations in the State to scrupulously follow and implementthe provisions of sub-Rules (6) and (8) of Rule 254 of theMaharashtra Rule read with Section 160 of the M.V.Act. The StateGovernment shall issue a direction for uploading form Comp.AAon either a dedicated website or on its existing website by making aprovision for Police Station wise and date wise search. The StateGovernment shall consider of amending the sub-Rule (8) of Rule
254 for making a provision for submitting information as regardsall the accidents involving bodily injury;
(iii)We hold that the Tribunals are not entitled to insist on personalpresence of the applicants at the time of filing of the claimpetitions;
(iv)Subject to what is observed above, the Tribunals shall not refuse
to accept the filing of the claim petitions on the ground that thedocuments as provided in Rules 254 to 255-A of the Maharashtra
Rules are not filed along with the claim petitions. However,compliance with Rule 256 is mandatory. But attestation by the
Advocate for the applicants onphotographs will be mandatoryprovided the claim petition is either filed or sent by post by an
Advocate;
(iv)We hold that in a given case, on an application made by the
applicant or applicants, or suo motu, the Tribunal can issue a
direction to the Officer In-charge of any Police Station to furnish
information directly to the Tribunal in accordance with Sub-Rule 6
of Rule 254. The Tribunal, in a give case can always issue a
direction to furnish a copy of form Comp.AA. The Tribunal can
also issue a direction to the concerned Officer to produce form
R.A.R. In view of clause (b) of Rule 276 of the Maharashtra Rules,
the Tribunal can exercise the power under Order XVI of the Codeof Civil Procedure, 1908 by issuing a summons to produce the
aforesaid documents. The said power can be exercised at any stage
of the claim petitions. In fact, such a direction can be given by the
Tribunal on its own to ensure that the claim petitions under Section
140 or 163-A are disposed of within the time specified under SubRule
3 of both the Rules 255 and 255-A.
(v)We strongly recommend to the State Government to repeal Rule
263 of Maharashtra Rules which requires payment of process fees
on claim petitions. If Rule 263 is not repealed, it may expose itself
to the vice of being discriminatory and violative of Article 14 of the
Constitution of India. Therefore, the State Government shall take
necessary action in accordance with law;
(vi)The directions issued in the decision of this Court in the case of
Anish Kondra continue to bind all the Tribunals. In addition, If the
address of the owner or driver of the offending vehicle or the
insurer of the vehicle is of a place which is beyond the territorial
jurisdiction of the Tribunal, ordinarily, the notice shall be issued
simultaneously through Bailiff and by R.P.A.D or Speed Post to
facilitate early service.
(vii) It will be appropriate if the State Government amends the
Maharashtra Rules to facilitate service of notice through Courier
service as provided in sub-Rule(3) of Rule 9 of Order V of the
Code of Civil Procedure,1908;
(viii)There is no prohibition on recording the evidence of the
medical practitioner or for that matter other witnesses including
claimants through video conferencing or if video conferencing is
not available, through applications providing for video chat
services. The Tribunals are well advised to take recourse to such
method for recording the evidence of the Medical Practitioners or
other experts. If the evidence of the Medical Practitioners is
recorded in such a manner, their time will not be wasted. The
Registry may consider of issuing a Circular on the administrativeside in this behalf.
(ix)If the Registrar General of this Court has not issued instructions
to all the Tribunals in the State in terms of the directions issued by
the Apex Court in the case of Jai Prakash and the directions issued
by this Court in the case of Amish Kondra, he shall do so in
addition to the directions which are required to be issued in terms of
this decision.
(x)All the aforesaid directions shall be complied with within a
period of three months from today.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELATE JURISDICTION
PUBLIC INTEREST LITIGATION NO.128 OF 2004
Anil Prabhakar Tadkalkar
vs.
State of Maharashtra

CORAM : A.S.OKA & R.D.DHANUKA, JJ.
Dated:DECEMBER 21 ,2016

FACTUAL CONTROVERSY
1 By this Public Interest Litigation, the petitioner has raised several issues
concerning the disposal of claim petitions under of the Motor Vehicles
Act,1988 (for short “M.V.Act”) by the Motor Accidents Tribunals in the State.
2 The petitioner is a practicing Advocate. It is his case that he is
practicing as an Advocate since 31st January 1986. It is pointed out in the
petition that the members of the Motor Accident Claims Tribunals in the State
established under the M.V.Act (for short “the Tribunal” or the Tribunals”)
insist on personal appearance of the claimants at the time of filing of the claim
petitions under Sections 140,163-A, and 166 of the M.V.Act. It is pointed out
that the Tribunal at Pune insists upon the production of form Comp.AA to be
furnished by the claimants/applicants before the notices are issued on the

claim petitions. The attention of the Court is invited to Rule 254 of the
Maharashtra Motor Vehicles Rules. Attention is also invited to the provisions
of sub-Rule 8 of Rule 254. Attention of the Court is also invited to various
difficulties faced in procuring medical certificates certifying the percentage of
disability. The petitioner has contended that the learned Members of the
Motor Accident Claims Tribunal are not abiding by several provisions of the
M.V.Act as well as the Maharashtra Motor Vehicles Rules,1989 (for short
`Maharashtra Rules'). Amended prayer clause (a) made in this petition reads
thus:
“(a) The Hon'ble High Court be pleased to issue a Writ of
Certiorari or any other appropriate Writ or Order or direction,
directing the Learned Members of Motor Accident Claims Tribunal:
(i) not to insist upon presence of Claimants for filing an
Application as under Rule 254 (2);
(ii) Police Authority be directed to follow Rule 254(8)
scrupulously about From Comp AA and the office of the Tribunal
be directed to follow Rule 253 C;
(iii) not to insist upon filing of true copies of Form Comp AA as
Rule 253(C) casts duty upon Tribunal to furnish ones;
(iv) not to insist upon Disability Certificate from first hospital
only;
(v) to repeat directions of this High Court in respect of Rule 255
(3) and 260 (3);
(vi) to pass order u/s 140 within 45 days
(vii) Not to make such administrative Rules which defeat are
contra to spirit and letter of Section 144 of M.V.Act.”
3 Shri Ramesh Shinde the Deputy Secretary of Government of
Maharashtra has filed a reply dated 27th January 2005 on behalf of the State
Government. It is contended that the presence of the claimant/applicant is not

mandatory at the time of filing of the claim petitions. There is another affidavit
filed by the same Officer on 8th February 2005. It is contended that the
directions have been issued by a letter dated 14th August 1996 to the Director
General of Police and also to the Police Commissioners as well as the District
Police Superintendents in the State to ensure that form Comp.AA is provided.
4 There is an affidavit filed on 1st March 2005 by the then Registrar
(Legal) of this Court. It is contended therein that an Advocate cannot appear in
a claim petition as a matter of right. It is contended that the Members of the
Tribunal at Pune have not insisted upon production of disability certificate.
There is a rejoinder filed by the petitioner inviting attention of the Court to
various instances of the cases for showing as to how the cases are being dealt
with by the Members of the Tribunal.
SUBMISSIONS
5 The learned counsel for the petitioner invited our attention to various
provisions of the M.V.Act as well as the Maharashtra Rules. He invited our
attention to the decision of the Apex Court in the case of Jai Prakash vs.
National Insurance Company and others1
. He relied upon the directions issued
under the said Judgment. He also relied upon the decision of a Division
Bench of this Court in case the Amish Ravindra Kondra vs. Motor Accident
Claims Tribunal, Mumbai and another2
. He invited the attention of the Court
to the the observations made in the said decision as well as the directions
issued in paragraph 11 of the said decision. The learned counsel for the High
Court Administration has also assisted the Court by pointing out several
provisions of the Maharashtra Rules. We have also heard the learned AGP for
State.
PROVISIONS OF M.V.ACT
6 Section 165 of the M.V Act provides for constituting the Motor
Accidents Tribunals which reads thus:
1 (2010)2SCC 607
2 2002 ACJ 1755

“165. Claims Tribunals.
1. A State Government may, by notification in the Official Gazette, constitute one
or more Motor Accidents Claims Tribunals (hereafter in this Chapter referred to
as Claims Tribunal) for such area as may be specified in the notification for the
purpose of adjudicating upon claims for compensation in respect of accidents
involving the death of, or bodily injury to, persons arising out of the use of
motor vehicles, or damages to any property of a third party so arising, or both.
Explanation.--For the removal of doubts, it is hereby declared that the expression
"claims for compensation in respect of accidents involving the death of or bodily injury
to persons arising out of the use of motor vehicles" includes claims for compensation
under Section 140.
2. A Claims Tribunal shall consist of such number of members as the State
Government may think fit to appoint and where it consists of two or more
members, one of them shall be appointed as the Chairman thereof.
3. A person shall not be qualified for appointment as a member of a Claims
Tribunal unless he--
a. Is, or has been, a Judge of a High Court, or
b. Is, or has been, a District Judge, or
c. Is qualified for appointment as a Judge of a High Court.
4. Where two or more Claims Tribunals are constituted for any area, the State
Government, may by general or special order, regulate the distribution of
business among them.”
7 Essentially, there are three categories of claim petitions which can be
filed under the provisions of M.V.Act. The first category is of the petitions
under Section 140 which are popularly known as claim petitions filed on the
ground of “No Fault Liability”.
Section 140 reads thus:
“140. Liability to pay compensation in certain cases on the principle
of no fault.—
(1) Where death or permanent disablement of any person has
resulted from an accident arising out of the use of a motor vehicle
or motor vehicles, the owner of the vehicle shall, or, as the case
may be, the owners of the vehicles shall, jointly and severally, be
liable to pay compensation in respect of such death or disablement
in accordance with the provisions of this Section.
(2) The amount of compensation which shall be payable under subSection
(1) in respect of the death of any person shall be a fixed
sum of 1[fifty] thousand rupees and the amount of compensation

payable under that sub-Section in respect of the permanent
disablement of any person shall be a fixed sum of 2[twenty-five]
thousand rupees.
(3) In any claim for compensation under sub-Section (1), the
claimant shall not be required to plead and establish that the death
or permanent disablement in respect of which the claim has been
made was due to any wrongful act, neglect or default of the owner
or owners of the vehicle or vehicles concerned or of any other
person.
(4) A claim for compensation under sub-Section (1) shall not be
defeated by reason of any wrongful act, neglect or default of the
person in respect of whose death or permanent disablement the
claim has been made nor shall the quantum of compensation
recoverable in respect of such death or permanent disablement be
reduced on the basis of the share of such person in the
responsibility for such death or permanent disablement.
[(5) Notwithstanding anything contained in sub-Section (2)
regarding death or bodily injury to any person, for which the owner
of the vehicle is liable to give compensation for relief, he is also
liable to pay compensation under any other law for the time being
in force:
Provided that the amount of such compensation to be given under
any other law shall be reduced from the amount of compensation
payable under this Section or under Section 163-A.]”
8 The second category of petitions is under Section 163-A of the M.V.Act
which are known as the petitions invoking “structured formula”. Section 163-
A reads thus:
“163A. Special provisions as to payment of compensation on
structured formula basis.
“163-A. Special provisions as to payment of compensation on
structured formula basis.—(1) Notwithstanding anything
contained in this Act or in any other law for the time being in force
or instrument having the force of law, the owner of the motor
vehicle or the authorised insurer shall be liable to pay in the case of
death or permanent disablement due to accident arising out of the
use of motor vehicle, compensation, as indicated in the Second
Schedule, to the legal heirs or the victim, as the case may be.

Explanation.—For the purposes of this sub-Section, “permanent
disability” shall have the same meaning and extent as in the
Workmen's Compensation Act, 1923 (8 of 1923).
(2) In any claim for compensation under sub-Section (1), the
claimant shall not be required to plead or establish that the death or
permanent disablement in respect of which the claim has been made
was due to any wrongful act or neglect or default of the owner of
the vehicle or vehicles concerned or of any other person.
(3) The Central Government may, keeping in view the cost of living
by notification in the Official Gazette, from time to time amend the
Second Schedule.”
9 The third category is of regular claim petitions under Section 166 of the
M.V.Act. The relevant provisions dealing with the said category of petitions
are Sections 166 to 168 which read thus:
“166. Application for compensation.—
(1) An application for compensation arising out of an accident of
the nature specified in sub-Section (1) of Section 165 may be made

(a) by the person who has sustained the injury; or
(b) by the owner of the property; or
(c) where death has resulted from the accident, by all or any of the
legal representatives of the deceased; or
(d) by any agent duly authorised by the person injured or all or any
of the legal representatives of the deceased, as the case may be:
Provided that where all the legal representatives of the deceased
have not joined in any such application for compensation, the
application shall be made on behalf of or for the benefit of all the
legal representatives of the deceased and the legal representatives
who have not so joined, shall be impleaded as respondents to the
application.
1[(2) Every application under sub-Section (1) shall be made, at the
option of the claimant, either to the Claims Tribunal having
jurisdiction over the area in which the accident occurred, or to the
Claims Tribunal within the local limits of whose jurisdiction the
claimant resides or carries on business or within the local limits of
whose jurisdiction the defendant resides, and shall be in such form
and contain such particulars as may be prescribed:

Provided that where no claim for compensation under Section 140
is made in such application, the application shall contain a separate
statement to that effect immediately before the signature of the
applicant.]
(3) [* * *]
3[(4) The Claims Tribunal shall treat any report of accidents
forwarded to it under sub-Section (6) of Section 158 as an
application for compensation under this Act.]”
[Sub-Section (4) was substituted by Act 54 of 1994, S. 53 (w.e.f. 14-11-
1994). Before substitution, sub-Section (4) read :
“(4) Where a police officer has filed a copy of the report regarding an
accident to a Claims Tribunal under this Act, the Claims Tribunal may, if
it thinks necessary so to do, treat the report as if it were an application for
compensation under this Act.]
167. Option regarding claims for compensation in certain cases.
Notwithstanding anything contained in the Workmen's
Compensation Act, (8 of 1923.) where the death of, or bodily injury
to, any person gives rise to a claim for compensation under this Act
and also under the Workmen's Compensation Act, 1923, the person
entitled to compensation may without prejudice to the provisions of
Chapter X claim such compensation under either of those Acts but
not under both.
168. Award of the Claims Tribunal.
1. On receipt of an application for compensation made under
Section 166, the Claims Tribunal shall, after giving notice of
the application to the insurer and after giving the parties
(including the insurer) an opportunity of being heard, hold an
inquiry into the claim or, as the case may be, each of the
claims and, subject to the provisions of Section 162 may
make an award determining the amount of compensation
which appears to it to be just and specifying the person or
persons to whom compensation shall be paid and in making
the award the Claims Tribunal shall specify the amount
which shall be paid by the insurer or owner or driver of the
vehicle involved in the accident or by all or any of them, as
the case may be:
Provided that where such application makes a claim for
compensation under Section 140 in respect of the death or

permanent disablement of any person, such claim and any other
claim (whether made in such application or otherwise) for
compensation in respect of such death or permanent disablement
shall be disposed of in accordance with the provisions of Chapter
X.
2. The Claims Tribunal shall arrange to deliver copies of the
award to the parties concerned expeditiously and in any case
within a period of fifteen days from the date of the award.
3. When an award is made under this Section, the person who
is required to pay any amount in terms of such award shall,
within thirty days of the date of announcing the award by the
Claims Tribunal, deposit the entire amount awarded in such
manner as the Claims Tribunal may direct.”

CONSIDERATION OF THE MAHARASHTRA RULES
10 Now, we deal with the provisions of the Maharashtra Rules.
Rule 253 reads thus:
“253. Information to be furnished to Insurance Company by Claimants.-
(a) The Regional Transport Officer shall comply with the requisition from the
concerned Divisional Manager, in respect of any motor vehicle involved in an
accident.
(b) On receipt of a requisition in Form “Comp AAA" of the First Schedule
from a Divisional Manager of an Insurance Company with which a motor
vehicle involved in an accident may be insured, the Regional Transport
Officer, to whom it may be addressed shall return the same form, duly filled
in, in duplicate; within 2 weeks from its receipt.
(c) The Office of the Tribunal shall make available to any applicant on
payment of the scheduled charges, a certified copy of the Form ‘Comp
AA’ of the First Schedule required by him. as mentioned in Rule 254(8)
and such of the information as may be contained in it may be used as
genuine and authentic, by any claimant, for the grant of compensation,
on any account.”
(emphasis added)
Rule 254 reads thus:
“254. Application for compensation arising out of an accident.- (l) An
application for compensation arising out of an accident of the nature specified
under this Act shall be made to the Claims Tribunal, having jurisdiction over
the area in which the accident occurred, which shall be in Form ‘COMP’ of
the First Schedule to these Rules with particulars specified in that form.
(2) Every such application shall be sent to the said Claims Tribunal or to the
Chairman, in case the Tribunal consists of more than one member, by
registered post or may be presented to such Claims Tribunal and shall, unless

the Claims Tribunal or its Chairman otherwise directs, be made in duplicate
and shall be signed by the applicant.
(3) In case the Tribunal consists of more than one member, the State
Government shall designate one of them as the Chairman of the Tribunal.
(4) The Chairman of the Tribunal shall have power to transfer any claim
petition from the file of any member to the file of any other member.
(5) There shall be appended to every such application, the following
documents, namely :-
i. injury certificate or in case of death. post-mortem report, or Death
Certificate;
ii. True copy of First information Report or Police Station Diary Entry
or Traffic Accident Report duly certified by the Police Officer of the Police
Station concerned. in respect of the accident; and
iii. Certified copy of the Form Comp ‘AA’ of the First Schedule
mentioned in sub-Rule (8) of this Rule.
iv. If the accident has occurred out of the jurisdiction of the Claims
Tribunal and the claimant has opted to file the application for compensation
before the Claims Tribunal within whose jurisdiction the claimant resides or
carries on business or the claimant has opted to file the application for
compensation before the Claims Tribunal within whose jurisdiction the
defendant resides. a document showing that the defendant resides within the
local limits of jurisdiction of the said Tribunal.
(6) The Officer-in-charge of the Police Station shall. on demand by a person
who wishes to make an application for compensation and who is involved in
an accident arising out of the use of a motor vehicle or the legal successor of
the deceased, shall furnish to him such information and particulars mentioned
under Section 160 and within 15 days from the date of such demand.
(7) If any of the documents specified in sub-Rule (5) are not appended to
the application the reasons for not appending them shall be stated, and if
the Tribunal is satisfied. it may proceed with the application, and require
production thereof at a later stage.
(8) The police station concerned, within whose jurisdiction the accident
for any motor vehicle occurs shall submit a detailed report regarding an
accident to a Claims Tribunal having jurisdiction over the area under
Section 166(4) of the Act and obtain an acknowledgement for it. The
information shall be submitted by the Police Station in Form Comp AA
within one month from the date of accident. Such information shall be
submitted only in respect of accidents which are of fatal or serious in
nature.
(9) True copies of the annexures referred to in sub-Rule (5) shall also be
attached to the copies of the main application to be served on the opposite
parties and the Insurance.”
(emphasis added)
1.
Clause(c) of Rule 253 provides that an Officer of the Tribunal shall

make available to any applicant on payment of scheduled charges a
certified copy of form Comp. AA of the first schedule required by him
for the purpose of filing the claim petition.
11 We have perused the form Comp.AA. It is a form of report about the
motor vehicle accidents. The form contains particulars such as the name of
the police station, C.R.No. and date, time and place of the accident, number of
vehicles and type of vehicles involved in the accident, names and addresses of
the owners of the vehicles, the names and addresses of the drivers of the
vehicles, the details of the insurance policies of the vehicles. Below the form,
a note has been appended stating that the form should accompany copies of (i)
FIR, (ii) Panchanama, and (iii) Medical certificate/ Post Mortem Report. SubRule
8 of Rule 254 provides that the Police Station within whose jurisdiction
the accident of any vehicle has occurred shall submit a detailed report
regarding accidents to Claims Tribunal having jurisdiction over an area under
sub-Section 4 of Section 166 of the M.V.Act and obtain acknowledgment for
it. Information is required to be submitted by the Police Station in form
Comp.AA within a period of one month from the date of accident. It is
provided that the said information shall be submitted only in respect of the
accidents which are fatal or of serious nature. Object of sub-Rule 8 of Rule
254 appears to be that the Motor Accident Claims Tribunal having jurisdiction
over the area in which accident has occurred should get detailed information
about the accident which can be made available to the claimant so that the
claimant is not required to run from pillar to post for getting the requisite
information. In fact clause (c ) of Rule 253 lays down that the Officer of the
Tribunal is under an obligation to make available to the applicant in a claim
petition, a certified copy of form Comp.AA. Perusal of the form Comp.AA
shows that the information required to be set out therein is essential for filing
claim petition. This requirement of sub-Rule (8) of Rule 254 is in terms of
sub-Section (6) of Section 158 of the M.V.Act which reads thus:
“(6) As soon as any information regarding any accident involving death or

bodily injury to any person is recorded or report under this Section is completed
by a police officer, the officer incharge of the police station shall forward a
copy of the same within thirty days from the date of recording of information
or, as the case may be, on completion of such report to the Claims Tribunal
having jurisdiction and a copy thereof to the concerned insurer, and where a
copy is made available to the owner, he shall also within thirty days of receipt
of such report, forward the same to such Claims Tribunal and Insurer.”
12 As far as the information regarding the accidents is concerned, even
Rule 251 is relevant which reads thus:
“251. Inspection of vehicle Involved in an accident.— '
( 1) Any officer of the Motor Vehicles Department, not below the rank of
an Inspector of Motor Vehicles, shall inspect the motor vehicle involved
in an accident and for that purpose may enter at any reasonable time any
premises where the vehicle may be and may remove the vehicle for
inspection.
(2) The Officer empowered under sub-Rule (1) shall, submit his
report to the Transport Commissioner, the District Magistrate and
Superintendent of Police, Commissioner of Police concerned and the
Director General of Police, Maharashtra State in Form R.A.R. of
the-First Schedule.)”
(emphasis added)
13 We have perused the form R.A.R. It contains very detailed information
about the accident. It provides for a sketch of accident, the details of the
accident such of the details of the vehicles involved and the victims, the
condition of the road at the spot of accident etc. The information in form
R.A.R is so exhaustive that the State Government should consider of
forwarding R.A.R form to the concerned Tribunals. 11. It is an accepted fact
there is hardly any implementation of Sub-Rule 8 of Rule 254. We may note
here that the said Rule has been enacted before the 1994 amendment to
Section 166 of the M.V.Act which now provides that it is not necessary to file
the claim petition within the jurisdiction of the Tribunal where the accident
has occurred. In fact choice of forum has been provided to the applicants.

Therefore, Sub-Rule 8 of Rule 254 needs modification. Moreover, Sub-Rule 8
of Rule 254 does not provide that the form Comp.AA is required to be issued
in case of all the accidents involving the bodily injury.
14 In our view, the State Legislature should step in by providing that the
information in Form Comp.AA shall be furnished by the Police Stations in the
case of not only fatal or serious accidents but of all the accidents where
injuries are caused to the concerned person/persons. In view of the
amendment to Section 166, only way by which information can be made
available in the form of Comp.AA to all the Tribunals where claim petitions
could be filed, is to ensure that the same is uploaded together with all its
accompaniments such as copy of FIR on a dedicated website or the website of
the Transport Department within a specified time. For making this provision,
it is not necessary to wait till an amendment is made to the Maharashtra Rules
and therefore, we propose to issue necessary directions in that behalf. The
State Government should consider of uploading form R.A.R along with
Comp.AA form. The Rules can be amended to provide that production of a
print out of a downloaded form Comp.AA with the claim petition will be
treated as a sufficient compliance. In fact, we may note here that clause (iv) of
Sub-Rule 5 of Rule 254 was incorporated on 16th August 1996 after the
amendment of the M.V.Act was made. At that stage, an amendment of the
Maharashtra Rules could have been made for giving effect to amended subSection
(2) of Section 166.
REQUIREMENT OF THE PERSONAL PRESENCE OF THE CLAIMANTS
AT THE TIME OF FILING CLAIM PETITIONS AND REPRESENTATION
OF THE CLAIMANTS BY ADVOCATES
15 Rule 256 provides that while filing the petitions covered by Rules 254
(under Section 166 of the M.V.Act), 255 (under Section 140 of the M.V.Act)
and 255-A (under Section 163-A of the M.V.Act), the applicant must produce
his recent passport size photograph which is required to be either affixed to the

claim petition or affixed on a separate sheet of paper annexed to the claim
petition. Rule 258 confers power on the Tribunal to examine the applicant on
oath as provided therein. Rule 264 provides that the Claims Tribunal may, in
its discretion, allow any party to appear through a legal practitioner. SubRule
2 of Rule 254 provides that every application under Section 254 shall be
sent to the Claims Tribunal by registered post or may be presented to such
Claims Tribunal. On perusal of the Rules in Chapter IX of the Maharashtra
Rules, we find that there is no requirement of the applicant or applicants
personally remaining present in the office of the Tribunal at the time of
presenting claim petitions under any of the three Sections. The requirement of
affixing photograph as provided in Rule 256 is mandatory, but the requirement
of the Advocate signing or attesting photograph will become mandatory only
in those cases where at the time of filing the claim petitions, the Tribunal
grants permission to an Advocate to represent the applicant or applicants in
accordance with Rule 264.
16 If applicant wants to engage an Advocate, at the time of filing the claim
petition itself, the claim petition shall be accompanied by an application in
writing to that effect signed by the applicant . At the time of presentation of
the claim petition, the Registrar of the Tribunal or the Administrative incharge
of the office of the Tribunal shall place the application before the
learned Member of the Tribunal who is required to pass appropriate order
thereon immediately. If the Tribunal refuses permission to engage an
Advocate, notwithstanding the said order, filing of the claim petition should be
accepted and the office of the Tribunal shall intimate the applicant regarding
the refusal of the Tribunal to grant permission to engage the Advocate. We
may note here in many cases, the Tribunal may need assistance of a Member
of the Bar for effectively disposing of the cases. Therefore, in a normal
course, when a permission under Section 264 is sought, the Tribunal should
grant permission to engage an Advocate and the refusal should be only in
exceptional cases.

17 If a petition is received through registered post or is filed by the the
Advocate in absence of the applicant or applicants and if the Claims Tribunal
entertains any doubt about the genuineness of the applicant or applicants, it
can always exercise the power of enforcing the personal presence of the
applicant or applicants as the case may be. In view of the power conferred on
the Tribunal by Sub-Rule 1 of Rule 276, in a given case, the Tribunal can take
recourse to the examination of the applicant or applicants under Rule 258
after issuing a notice for enforcing their presence.

FURNISHING THE DETAILED INFORMATION ABOUT THE
ACCIDENTS WITH ALL PARTICULARS
18 Rules 254, 255 and 255-A lay down what documents should be
appended to the claim petitions under Sections 140, 163-A and 166 of the
M.V.Act. As regards form Comp. AA, as noted earlier, we propose to issue
necessary directions. Sub-Rule 6 of Rule 254 provides that every Officer Incharge
of a Police Station is under a mandate to furnish information to a
person who wishes to make an application for grant of compensation. The
mandate is to provide information to such persons as mentioned in Section
160 within a period of 15 days of the demand. Section 160 of the M.V.Act
reads thus:
160. Duty to furnish particulars of vehicle involved in accident.
A registering authority or the officer in charge of a police station shall, if so required by
a person who alleges that he is entitled to claim compensation in respect of an accident
arising out of the use of a motor vehicle, or if so required by an insurer against whom a
claim has been made in respect of any motor vehicle, furnish to that person or to that
insurer, as the case may be, on payment of the prescribed fee any information at the
disposal of the said authority or the said authority or the said police officer relating to
the identification marks and other particulars of the vehicle and the name and address of
the person who was using the vehicle at the time of the accident or was injured by it and
the property, if any damaged in such form and within such time as the Central
Government may prescribe.
19 We propose to issue necessary directions to the State to ensure that the
Officers in-charge of each police station strictly comply with Sub-Rules 6 and
8 of Rule 254. In a given case, on an application made by the applicant or

applicants, the Claims Tribunal can issue a direction to the Officer In-charge
of any Police Station to furnish information directly to the Tribunal in
accordance with Sub-Rule 6 of Rule 254. The Tribunal, in a given case can
issue a direction to furnish a copy of form Comp.AA. In view of clause (b) of
Rule 276 of the Maharashtra Rules, the Tribunal can exercise the said power
under Order XVI by issuing summons to produce the documents. The said
power can be exercised at any stage of the claim petitions. In fact, such a
direction can be also issued by the Tribunal on its own to ensure that the claim
petitions under Section 140 or 163-A are disposed of within the time specified
under Sub-Rule 3 of both the Rules 255 and 255-A.
EFFECT OF THE NON PRODUCTION OF THE DOCUMENTS
20 Sub Rule 7 of Rule 254 makes it very clear that the Claim petition
under Section 166 of the M.V.Act is not rendered per se illegal or invalid if the
documents set out under sub-Rule (5) of Rule 254 are not appended to the
claim petitions or not produced with the claim petitions. The same is the case
with the claim petitions under Sections 140 and 163-A. The relevant subRules
grant power to the Tribunal to proceed with the applications, if the
reasons for not appending the necessary documents are stated in the Claim
Applications. Thus, the Tribunal cannot refuse to accept the filing of the
claim petitions on the ground that the necessary documents are not filed.
21 In a given case, if the Tribunal is satisfied on the basis of of the
available documents that a case is made out for grant of compensation, it can
always proceed to decide the Claim Petition in accordance with law
notwithstanding the fact set out in Rule 254, 255 and 255-A are not appended
to the Claim Petition.
SERVICE OF NOTICES
22 Now, coming to the service of notices on claim petitions, Rule 263
provides for payment process fees. In the State of Maharashtra, now the

payment of process fees in this Court as well as Civil Courts has been
abolished by virtue of the Bombay High Court Process Fees Repeal Rules,
2014. We, therefore, strongly recommend to the State Government to repeal
Rule 263 which requires payment of process fees. If Rule 263 is not repealed,
it may expose itself to the vice of being discriminatory and in breach of Article
14 of the Constitution of India. We propose to direct the State Government to
initiate appropriate action in this behalf. Moreover, the disposal of the claim
petitions is delayed in many cases as process fee is not paid within the
stipulated time.
23 We have perused the decision of a Division Bench in the case of Amish
Kondra. In paragraph 11 of the Judgment the Division Bench has issued
following directions:
11.In the circumstances of the case, in our opinion, the following
directions will serve the ends of justice:
(i)Tribunal shall scrupulously follow Rules 255(3) and 260(3) of the
Maharashtra Motor Vehicles Rules, 1989;
(ii) Ordinarily the notice period provided in Rule 260(3) of the said Rules
shall not exceed 15 days from the date of issue of such notice
contemplated therein;
(iii) Only in exceptional cases can the Tribunal extend the said period of
15 days, but while extending it beyond the period of 15 days the Tribunal
will have to record reasons in writing as to why the period is so extended;
(iv) In no case, however, the notice period shall extend beyond the period
of four weeks from the date of issue of such notice.
24 The said directions continue to bind the Tribunals in the State. We may
note here that Sub-Rule 2 of Rule 260 provides that service of notice shall be
by way of personal service through Bailiff or R.P.A.D or by both. If the
address of the owner or driver of the offending vehicle or the insurer of the
vehicle is of a place which beyond the territorial jurisdiction of the Motor
Accident Claims Tribunal, ordinarily, the notice shall be issued simultaneously

through Bailiff and by R.P.A.D or speed post to facilitate early service. The
State will have to consider of amending the Maharashtra Rules for
incorporating the provision regarding service of notice through courier
services.
RELUCTANCE OF THE DOCTORS TO ISSUE DISABILITY
CERTIFICATES

25 Another issue raised is as regards the reluctance of the reputed Doctors
or even the hospitals to issue disability certificates though they willingly
provide treatment to the victims. One of the reasons is that the disability
certificates are not accepted by the insurers and therefore, the concerned
Doctors are compelled to attend the Tribunal for giving evidence. In all the
Districts in the State (except Mumbai), the District Judges who are holding
posts of Chairman or Members of the Tribunal are also entrusted with the
other civil and criminal work. On occasions, there are adjournments sought by
the lawyers. Very often the Members of the medical profession are required to
wait for several hours for recording their evidence. On many occasions, they
are required to go back without their evidence being recorded. Perhaps, the
witnesses are treated on par with the litigants and are made to wait in a queue.
Rule 267 provides that the evidence of medical witnesses shall be taken down
as nearly as may be, word to word. There is no prohibition on recording the
evidence of the medical practitioners or for that matter other witnesses
including claimants/applicants through video conferencing or if video
conferencing is not available, through applications providing for video chat
services such as skype. The Tribunals are well advised to take recourse to
such methods for recording the evidence of the Doctors or other experts. If
the evidence of the medical practitioners is recorded in such a manner, their
time will not be wasted and there may not be any reluctance on their part to
issue disability certificates. The Registry may consider of issuing a Circular on
the administrative side in this behalf.
DIRECTIONS OF THE APEX COURT IN THE CASE OF JAI PRAKASH

26 Our attention is invited to the decision of the Apex Court in the case of
Jai Prakash. In paragraphs 9 and 10, the Apex Court observed thus:
9. The legislature tried to reduce the period of pendency of claim cases and
quicken the process of determination of compensation by making two significant changes in
the Act, by Amendment Act 54 of 1994, making it mandatory for registration of a motor
accident claim within one month of receipt of first information of the accident, without the
claimants having to file a claim petition. Sub-Section (6) of Section 158 of the Act provides:
“158. (6) As soon as any information regarding any accident involving death or bodily
injury to any person is recorded or report under this Section is completed by a police officer,
the officer in charge of the police station shall forward a copy of the same within thirty days
from the date of recording of information or, as the case may be, on completion of such
report to the Claims Tribunal having jurisdiction and a copy thereof to the insurer
concerned, and where a copy is made available to the owner, he shall also within thirty days
of receipt of such report, forward the same to such Claims Tribunal and insurer.”
Sub-Section (4) of Section 166 of the Act reads thus:
“166. (4) The Claims Tribunal shall treat any report of accidents forwarded to it under subSection
(6) of Section 158 as an application for compensation under this Act.”

“12. But unfortunately neither the police nor the Motor Accidents Claims Tribunals have
made any effort to implement these mandatory provisions of the Act. If these provisions are
faithfully and effectively implemented, it will be possible for the victims of accident and/or
their families to get compensation, in a span of few months. There is, therefore, an urgent
need for the police authorities concerned and the Tribunals to follow the mandate of these
provisions.”
In paragraph 16 and 20 following directions were issued:-
“16. The Director General of Police of each State is directed to instruct all police stations in
his State to comply with the provisions of Section 158(6) of the Act. For this purpose, the
following steps will have to be taken by the Station House Officers of the jurisdictional
police stations:
(i) Accident information report (“AIR”, for short) in Form No. 54 of the Central Motor
Vehicles Rules, 1989 shall be submitted by the police (Station House Officer) to the
jurisdictional Motor Accidents Claims Tribunal, within 30 days of the registration of the
FIR. In addition to the particulars required to be furnished in Form No. 54, the police
should also collect and furnish the following additional particulars in the AIR to the
Tribunal:
(i) The age of the victims at the time of accident;
(ii) The income of the victim;
(iii) The names and ages of the dependent family members.
(ii) The AIR shall be accompanied by the attested copies of the FIR, site
sketch/mahazar/photographs of the place of occurrence, driving licence of the driver,
insurance policy (and if necessary, fitness certificate) of the vehicle and post-mortem report
(in case of death) or the injury/wound certificate (in case of injuries). The names/addresses
of injured or dependent family members of the deceased should also be furnished to the
Tribunal.
(iii) Simultaneously, a copy of the AIR with annexures thereto shall be furnished to the
insurance company concerned to enable the insurer to process the claim.
(iv) The police shall notify the first date of hearing fixed by the Tribunal to the victim
(injured) or the family of the victim (in case of death) and the driver, owner and insurer. If
so directed by the Tribunal, the police may secure their presence on the first date of
hearing.”

“Directions to the Claims Tribunals
“20. The Registrar General of each High Court is directed to instruct all Claims Tribunals
in his State to register the reports of accidents received under Section 158(6) of the Act as
applications for compensation under Section 166(4) of the Act and deal with them without
waiting for the filing of claim applications by the injured or by the family of the deceased.
The Registrar General shall ensure that necessary registers, forms and other support is
extended to the Tribunal to give effect to Section 166(4) of the Act.”
27 If the Registrar General of this Court has not issued instructions in
terms of the said directions, he shall do so immediately in addition to the
directions which are required to be issued in terms of this decision.
28 A grievance was made across the bar that even the hospitals run by the
State Government and public authorities like Municipal Corporations are
reluctant to issue disability certificate setting out specified percentage of
disability though victims are treated in the said hospital. The State
Government will have to be look into this aspect and issue appropriate
directions.
29 It is urged that the Tribunals are not disposing of the claim petitions
under Sections 163-A and 140 of the M.V.Act within the outer limit provided
under the Rules 255 and 255A. It must me noted that the Courts in the state
are not operating in ideal conditions. They lack proper infrastructure. There is
always a problem of overflowing dockets. Every Member of the Tribunal is
fully aware of the urgency involved in such cases. They are always sensitive
about the plight of the claimants. Hence, we are not issuing any directions on
this aspect.
30 In view of discussion made above, we pass the following order:-
(i)The state government shall issue a direction to all the concerned
officers of the Motor Vehicles Department to scrupulously
implement sub-Rule (2) of Rule 251 of the Maharashtra Rules by
submitting reports in form R.A.R. The State Government shall

take appropriate decision on the issue of uploading the said forms
on a website;
(ii)The Director General of Police shall issue instructions to all the
Police Stations in the State to scrupulously follow and implement
the provisions of sub-Rules (6) and (8) of Rule 254 of the
Maharashtra Rule read with Section 160 of the M.V.Act. The State
Government shall issue a direction for uploading form Comp.AA
on either a dedicated website or on its existing website by making a
provision for Police Station wise and date wise search. The State
Government shall consider of amending the sub-Rule (8) of Rule
254 for making a provision for submitting information as regards
all the accidents involving bodily injury;
(iii)We hold that the Tribunals are not entitled to insist on personal
presence of the applicants at the time of filing of the claim
petitions;
(iv)Subject to what is observed above, the Tribunals shall not refuse
to accept the filing of the claim petitions on the ground that the
documents as provided in Rules 254 to 255-A of the Maharashtra
Rules are not filed along with the claim petitions. However,
compliance with Rule 256 is mandatory. But attestation by the
Advocate for the applicants on photographs will be mandatory
provided the claim petition is either filed or sent by post by an
Advocate;
(iv)We hold that in a given case, on an application made by the
applicant or applicants, or suo motu, the Tribunal can issue a
direction to the Officer In-charge of any Police Station to furnish
information directly to the Tribunal in accordance with Sub-Rule 6
of Rule 254. The Tribunal, in a give case can always issue a
direction to furnish a copy of form Comp.AA. The Tribunal can
also issue a direction to the concerned Officer to produce form
R.A.R. In view of clause (b) of Rule 276 of the Maharashtra Rules,
the Tribunal can exercise the power under Order XVI of the Code

of Civil Procedure, 1908 by issuing a summons to produce the
aforesaid documents. The said power can be exercised at any stage
of the claim petitions. In fact, such a direction can be given by the
Tribunal on its own to ensure that the claim petitions under Section
140 or 163-A are disposed of within the time specified under SubRule
3 of both the Rules 255 and 255-A.
(v)We strongly recommend to the State Government to repeal Rule
263 of Maharashtra Rules which requires payment of process fees
on claim petitions. If Rule 263 is not repealed, it may expose itself
to the vice of being discriminatory and violative of Article 14 of the
Constitution of India. Therefore, the State Government shall take
necessary action in accordance with law;
(vi)The directions issued in the decision of this Court in the case of
Anish Kondra continue to bind all the Tribunals. In addition, If the
address of the owner or driver of the offending vehicle or the
insurer of the vehicle is of a place which is beyond the territorial
jurisdiction of the Tribunal, ordinarily, the notice shall be issued
simultaneously through Bailiff and by R.P.A.D or Speed Post to
facilitate early service.
(vii) It will be appropriate if the State Government amends the
Maharashtra Rules to facilitate service of notice through Courier
service as provided in sub-Rule(3) of Rule 9 of Order V of the
Code of Civil Procedure,1908;
(viii)There is no prohibition on recording the evidence of the
medical practitioner or for that matter other witnesses including
claimants through video conferencing or if video conferencing is
not available, through applications providing for video chat
services. The Tribunals are well advised to take recourse to such
method for recording the evidence of the Medical Practitioners or
other experts. If the evidence of the Medical Practitioners is
recorded in such a manner, their time will not be wasted. The
Registry may consider of issuing a Circular on the administrative

side in this behalf.
(ix)If the Regist

Motor Vehicles Act, 1988, Section 166-Motor accident-Deceased was a Government employee and was also doing Insurance business-Claimants are entitled to future loss of income from Insurance business-Claim cannot be rejected on the ground that claimants were to receive commission due to the death of deceased-Appeal allowed.*

2017 CJ(SC) 889

Subject: Motor Vehicle

*Motor Vehicles Act, 1988, Section 166-Motor accident-Deceased was a Government employee and was also doing Insurance business-Claimants are entitled to future loss of income from Insurance business-Claim cannot be rejected on the ground that claimants were to receive commission due to the death of deceased-Appeal allowed.*
*=========================*
*_😊Hav A Good Day😊_*
*=========================*

Dishonour of cheque-amount not disclosed in income tax can be recovered

Dishonour of cheque-amount not disclosed in income tax can be recovered

“......The learned J.M.F.C. has also held
against the complainant the fact that the
complainant had not shown the amount advanced
by him in his income tax returns. I do not think
that every person who gives friendly loans does in
all cases show such loans in their income tax
returns more so if they are payable on demand
after short time. The learned acquitting J.M.F.C.
entirely lost sight of the several presumptions
which the law has enacted in favour of the

complainant.

IN THE HIGH COURT OF BOMBAY AT GOA
CRIMINAL APPEAL NO.6 OF 2012
Mr. Krishna P. Morajkar V/s Mr. Joe Ferrao,

CORAM : R.C. CHAVAN, J.

Pronounced Date : 19th JULY, 2013
Citation;2013 CR l J(NOC)572 Bombay

This appeal questions appellate judgment of the learned Additional
Sessions Judge, Mapusa whereby the learned Additional Sessions Judge
set aside judgment of conviction of the respondent for offence punishable
under Section 138 of the Negotiable Instruments Act and sentence of
paying compensation quantified at Rs.4,00,000/- or in default to suffer

imprisonment for one year imposed upon the respondent by the learned
JMFC, 'E' Court, Mapusa Goa on the conclusion of trial of Criminal Case
no.OA/NIA/759/P/O6/E before the learned Magistrate.
2.
The facts which are material for deciding this appeal are as under:
The appellant claimed to be a friend of respondent. The respondent
approached the appellant in last week of March, 2006 stating that the
respondent wanted to renovate his premises and, therefore, needed a sum
of Rs.3 lacs which he would repay in about 7 to 8 months. The appellant
claimed to have advanced a sum of Rs.2,40,000/- against which the
respondent issued 10 cheques dated 31/03/2006 to 30/09/2006 for
amounts ranging from Rs.20,000/- to Rs.35,000/-. The first cheque for
Rs.20,000/- dated 31/03/2006 was realised.
The second cheque was
dishonoured on the ground that the funds were insufficient. In respect of
this second cheque dated 30/04/2006, the appellant issued a notice and
upon failure of the respondent to pay the amount demanded, filed a
criminal case bearing no.478/2006, which was pending when the
complaint dated 18/12/2006 was filed in respect of dishonour of the
remaining cheques. The appellant presented the remaining cheques on
the dates they were due and since those cheques were dishonoured, the
appellant issued notice to the respondent calling upon the respondent to

pay the amounts under those cheques. Since the respondent did not pay
the amount of Rs.2 lacs demanded within 15 days of the receipt of notice,
the appellant filed the complaint before the learned Magistrate at Mapusa.
After examining the complainant, the learned Magistrate directed
issuance of process.
3.
After respondent appeared, substance of acquisition was explained
to the respondent and since he pleaded not guilty, he was put on trial at
which the appellant examined himself in order to prove his case. The
respondent was examined under Section 313 of the Criminal Procedure
Code and sought to tender evidence in defence. He examined himself as
DW1 and one Lawrence Fernandes as DW2.
The defence of the
respondent was that the appellant came to his house on 31/03/2006 at
about 9.30 a.m. with unknown persons and demanded “hafta”, protection
money of Rs.3 lacs possibly alleging that the respondent had sold his
premises and, therefore, respondent had huge amount with him. On
respondent telling the appellant that he had no money, the appellant saw
the cheque book lying on the table and forced the respondent to write the
cheques in question. The respondent stated that there was no question of
respondent being in need of money to renovate his business premises by
name 'Sunrise Bar and Restaurant', since he had already sold the premises
4
cria no.6 of 2012
'Sunrise Bar and Restaurant' on 11/08/2005 and had placed DW2
Lawrence Fernandes in its possession. In fact, a shop by name M/s.
Elisha Enterprises dealing with consumer goods had been inaugurated in
the premises on 11/10/2005.
Further, there was no question of the
appellant being in a position to advance any amount to the respondent in
the shop on 31/03/2006. After considering this evidence tendered before
the learned Magistrate, the learned Magistrate held that the appellant had
proved the charge and convicted the respondent as aforementioned.
Aggrieved thereby, the respondent preferred an appeal before the Court of
Sessions.
4.
The learned Additional Sessions Judge held that the respondent had
proved that the defence was probable and, therefore, set aside the
conviction. While doing so, he relied on several judgments and also
invoked provisions of Section 269SS and 271D of the Income Tax Act.
He observed that the appellant had not produced the books of account to
show that he had sum of Rs.2,40,000/- to be advanced to the respondent.
The learned Additional Sessions Judge relied on the judgments of
Supreme Court in Krishna Janardhan Bhat vs Dattatraya G. Hegde
reported at 2008 (4) SCC 54 and Kamala S. V/s. Vidyadharan M.J. &
anr. reported at 2007 (2) Bom.C.R. 570 as also judgment of this Court in
5
cria no.6 of 2012
Vinay Parulekar V/s. Pramod Meshram reported at 2008 (1) Mh.L.J.
(Cri) 517.
5.
I have heard the learned Counsel for the appellant and the learned
Counsel for the respondent and with the help of both, I have gone through
the entire evidence on record. The learned Counsel for the respondent
first submitted that it would not be open to this Court to set aside an
acquittal unless the judgment of the acquittal was shown to be perverse or
based on untenable evidence. He submitted that if the view taken by the
learned Additional Sessions Judge was probable this Court may not
interfere with such a finding.
There can be no doubt about this
proposition of law. It would therefore be necessary to find out whether
the learned Judge was justified in setting aside conviction recorded by the
learned Magistrate.
6.
The learned Counsel for the appellant submitted that the learned
Additional Sessions Judge was not justified in coming to the conclusion
that the appellant could not at all have advanced a sum of Rs.2,40,000/- to
the respondent or that the defence of the respondent was probabalised.
He submitted that if the respondent really had no need of money and had
not received any amount from the appellant there is no reason why the

respondent allowed a cheque of Rs.20,000/- to be honoured. The learned
Counsel further pointed out that the appellant had in fact filed another
criminal case against the respondent upon dishonour of the second cheque
in the series. In that case bearing no.478/06/C, the respondent had filed
an application at exhibit 34 on 8/01/2007 making a payment of
Rs.20,000/- to the appellant. This application is at page 170 of the
compilation. The respondent had admitted in his deposition in the present
case that he thus paid a sum of Rs.40,000/- towards the cheques issued.
The learned Counsel for the appellant wondered as to why the respondent
could be paying a sum of Rs.40,000/- if the cheques were obtained by the
appellant by force. He also submitted that the respondent had ample
opportunity to make a complaint to the police about his being forced to
sign the cheques, but he had not done so. The learned Counsel submitted
that if the respondent claimed that appellant was a bully and, therefore, he
was under fear, there is no reason as to how this fear had gone away when
the respondent avoided payment towards the remaining cheques.
7.
The learned Counsel for the respondent submitted that the
respondent filed an application in the case no.478/06/C on 8/01/2007,
unconditionally proposing to pay a sum of Rs.20,000/- with the
understanding that the appellant would withdraw even the present case

i.e. Criminal Case No.759/06, if he made that payment. This according to
the learned Counsel for the appellant appears to be farfetched since the
order passed by the learned Magistrate on application at exhibit 15 in the
said case no.478/06 shows that the complainant was not willing to
compound the matter though the appellant was ready to pay a sum of
Rs.20,000/-.
Therefore, there is no question of there being any
understanding reached between the parties. Therefore, the payment of
Rs.20,000/- by allowing a cheque to be encashed, and an offer to pay a
sum of Rs.20,000/- made in case no.478/06 are inexplicable and would be
indicative of the respondent having some liability towards the appellant.
8.
The learned Counsel for the appellant submitted that the story put
forth by the respondent that he had no need of money is itself not proved.
First, if the respondent was not in need of money it is not clear as to why
he came up with the case of sale of his premises to DW2/Lawrence
Fernandes. Secondly, though the respondent claimed to have received
consideration towards the premises from DW2/Lawrence Fernandes, the
evidence of Lawrence Fernandes in the present case as also in the earlier
case no.478/06 which have been duly considered by the learned
Magistrate show that the story sought to be made out by the respondent is
without any foundation. According to the respondent, the respondent had

sold the premises to Lawrence Fernandes on 11/08/2005 and had placed
Lawrence Fernandes in possession on the same day.
But, in his
examination-in-chief itself, the respondent stated that possession of
second shop was also given but the agreement was made later. He then
stated “we” started business in the said shop in October 2005”. The
learned Counsel for the respondent stated that “we” should be read as
“he” referring to Lawrence Fernandes.
The agreements which were
produced were of 11/08/2005 and 17/02/2006. There are two telephone
bills of 7/01/2006 and 7/12/2005, which show that the telephone stood in
the name of Lawrence Fernandes. It was also sought to be proved that a
labour inspector had visited the shop. DW3/Rupesh Kotambikar, Labour
Inspector had visited the shop on 23/01/2006 and found that in the shop
sale of electronic items was going on. The name of the shop was Elisha
Enterprises with the address of 4-5 Punam Apartments, Angod Mapusa.
The evidence of this witness, particularly, cross-examination, shows that
the witness did not in fact remember anything. The learned Additional
Sessions Judge, however, seems to have believed the evidence of
DW3/Rupesh Kotambikar, since he was a government servant and
performing his duty in official capacity and, therefore, could not have any
reason to create fake documents with the so intention of helping the
appellant.

9.

The learned Counsel for the appellant submitted that the two
agreements which have been placed on record show that the first
agreement is in respect of shop no.4. This dated 11/08/2005. The second
agreement is dated 17/02/2006 and is in respect of shop no.5. Though the
respondent claimed that he had placed Lawrence Fernandes in possession
of both the shops on 11/08/2005, the evidence of Lawrence Fernandes
would create a doubt about the truthfulness of what the respondent stated.
Lawrence Fernandes stated in his cross-examination that though the
schedule of payment was mentioned in the agreements there was some
delay in payment of amounts under the agreement. The payment under
the first agreement was delayed by 2 to 3 months and payment under the
second agreement was delayed by about an year.
DW2/Lawrence
Fernandes denied having ever stated in the earlier criminal case, where he
was examined, that he had received possession of shop no.5 in
compliance with agreement dated 17/02/2006. He was confronted with
his evidence in the earlier case, where it was mentioned that it was true
that possession of shop no.4 was given in compliance with exhibit 33 and
shop no.5 was given in compliance with exhibit 34. On being confronted
with this statement the witness stated that it may be due to some mistake
that he made such a statement.
If he was so casual about making

statement on oath in Court, it cannot be said that the learned Magistrate
was off the mark in branding Lawrence Fernandes as a lier. In any case,
on his own admission, the entire consideration has not been paid to the
respondent.
Therefore, to say that the respondent was not at all in
possession of any part of the premises would be farfetched.
10.
Further, as rightly submitted by the learned Counsel for the
appellant this aspect is relevant only for testing the reliability of the
statement made by the appellant that he met the respondent on
31/03/2006 in the premises in question. Even if the respondent may have
sold the premises to Lawrence Fernandes or have handed over possession
to Lawrence Fernandes or even if it is accepted that Lawrence Fernandes
had started some business of the consumer goods in the premises, that
will not prevent the appellant and the respondent to meet in the said shop.
Where the parties met may not be determinative of the question whether
the appellant had advanced a sum of Rs.2,40,000/- to the respondent as
claimed by the appellant. Therefore, on facts, there was no reason to give
any extra weightage to the claim of the respondent based on his story
about sale of premises to Lawrence Fernandes, particularly, when
Lawrence Fernandes had no compunction in contradicting himself with
reference to his deposition in earlier case.

11.

The learned Additional Sessions Judge had observed that
since the respondent had received about Rs.18 lacs, it was difficult to
believe that he would be in need of another sum of Rs.3 lacs. Now, if
Lawrence Fernandes himself admits that there was some delay in
payment of the amounts and that delay in respect of the first agreement
was about three months and in respect of the second agreement about one
year, obviously, the respondent could not claim to have received the
amounts under the agreement.
If it is taken for a while that the
respondent was in need of money and, therefore, he sold those premises
and if the payment was not forthwith coming as per the schedule, there
will be nothing wrong in the respondent seeking to get some help from
the complainant. Therefore, the learned Additional Sessions Judge need
not have rejected the appellant's case on the ground that the accused was
not in need of money.
12.
On the question of fact, it has to be held that the learned Additional
Sessions Judge erred in coming to the conclusion that since the
respondent had agreed to sell his business he had enough money with him
making it unnecessary for him to borrow any sum from the appellant-
complainant.
This is so because the evidence of DW2/Lawrence

Fernandes itself shows that the payment was not being made as per
schedule and that in respect of the second agreement the payment was
lagging behind by almost an year. Therefore, if the accused had in fact
agreed to sell his premises, presumably because he needed money, rather
than the premises, and if money was not forthcoming for whatever needs
he had, it cannot be said that he had no reason to borrow from the
complainant. This is also to be considered in the context of the fact that
the accused agreed to repay in instalments which may be consistent with
the promise of the purchaser Lawrence Fernandes to pay according to a
schedule fixed in the agreements and not in one lump sum.
13.
As to the question whether the appellant-complainant was right in
claiming that the accused had sought this advance for renovating his bar,
this need not have influenced the learned Additional Sessions Judge, even
if it is taken that the complainant's word on this count was not true, since
the complainant would depend on what the accused told him and would
have no reasons to check up whether the accused really needed money for
the purpose for which he was seeking it. Therefore, these things could
not be said to be so material to outweigh the presumption that the amount
represented in the cheque was for legally enforceable debt or liability.

14.

These conclusions are fortified by the fact that the accused had in
fact allowed a cheque of Rs.20,000/- to be honoured and was ready to pay
a further sum of Rs.20,000/- when another case of dishonour of cheque
issued in the same series was before the same Magistrate.
Had the
complainant been a bully and had snatched the cheques from the accused
and had the accused been really scared and, therefore, not made a
complaint to the police, he would at least not have offered to pay
Rs.20,000/-, when a case was already filed against him and when he was
before the Court.
Therefore, the learned Additional Sessions Judge
should have noted these aspects and held as a matter of fact that the story
of complainant having made an advance of Rs.2,40,000/- had not been
rebutted.
15.
The learned Additional Sessions Judge next held that the
complainant did not produce his books of accounts to show that he had
sum of Rs.2,40,000/- with him which he could have advanced, since the
complainant had not filed any income tax returns. The learned Judge then
referred to provisions of Section 269 SS and 271 D of the Income Tax Act
and the judgment of the Supreme court in Krishna Janardhan Bhat
(supra). The reference to these provisions surfaced in the judgment of the
Supreme Court in Krishna Janardhan Bhat (supra). In that judgment,

the Supreme Court held that existence of legally enforceable debt is not a
matter of presumption under Section 139 of the Negotiable Instruments
Act.
As far as this aspect is concerned, this judgment has been
specifically overruled by a three Judges Bench of the Supreme Court in
Rangappa V/s. Sri Mohan reported at 2010 (11) SCC 441.
16.
In Krishna Janardhan Bhat (supra), the two Judges Bench of the
Supreme Court was considering the case of four blank cheques having
been issued by the accused. The trial Court had convicted the accused.
The Sessions Court dismissed the appeal and in the High Court while
conviction was maintained, sentence was reduced. The Supreme Court
observed in para 26 & 27 of the judgment as under :
“26. The courts below failed to notice that
ordinarily in terms of Section 269SS of the
Income Tax Act, any advance taken by way of any
loan of more than Rs.20,000/- was to be made by
way of an account payee cheque only.
27. Section 271D of the Income Tax Act reads as
under:
“271D. Penalty for failure to comply with the
provisions of Section 269SS - (1) If a person takes
or accepts any loan or deposit in contravention of
the provisions of Section 269SS, he shall be liable
to pay, by way of penalty, a sum equal to the
amount of the loan or deposit so taken or
accepted.
(2) Any penalty imposable under sub-section (1)
shall be imposed by the Joint Commissioner.”

(emphasis supplied).
The Supreme Court then allowed appeal and set aside the conviction of
the accused.
17.
As already observed the judgment in Krishna Janardhan Bhat
(supra), in so far as it relates to interpretation of Section 139 of the
Negotiable Instrument Act, has been overruled by a three Judges Bench
of the Supreme Court in Rangappa (supra). In Rangappa (supra) the
Supreme Court was considering an appeal against conviction recorded by
the High Court reversing an acquittal by the Court below for the offence
punishable under Section 138 of the Negotiable Instrument Act. In that
case, the complainant had stated that the accused requested him for a
handloan of Rs.45,000/- in order to meet construction expenses and the
complainant paid Rs.45,000/- by way of cash. The accused assured to
repay the amount but failed to do so and then issued cheque for
Rs.45,000/- which was dishonoured. The accused took defence that he
had lost a signed blank cheque. The Court considered the presumption
under Section 118 and 139 of the Negotiable Instruments Act and also the
judgment of the two Judge Bench in Krishna Janardhan Bhat (supra).
After considering several judgments the Supreme Court observed in para
26 as under:

“14. 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 (supra)
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.” (emphasis supplied).
Thus, on the question of presumption about existence of legally
enforceable debt or liability Krishna Janardhan Bhat (supra) stood
expressly overruled.
18.
The learned Counsel for the respondent submitted that the
observations of the Supreme Court in para 14 of the judgment in
Rangappa (supra) show that the Supreme Court had not in any way cast
any doubt on the correctness of the decision in Krishna Janardhan Bhat
(supra), as it was based on specific facts and circumstances therein.
Therefore, he submitted that observations in Krishna Janardhan Bhat
(supra) about non-compliance of provisions of Section 269SS and the
implications of Section 271D of the Income Tax Act would still stand as

good law. The learned Counsel for the appellant submitted that even
these observations would stand impliedly overruled. He pointed out that
what was held in Krishna Janardhan Bhat (supra) was that advance
taken by way of loan of more than Rs.20,000/- was only to be made by
way of an account payee cheque. He submitted that in Rangappa (supra)
the Supreme Court was specifically considering the case of an advance of
Rs.45,000/- made in cash and yet the Supreme Court had upheld the
conviction recorded.
Thus even those observations based on the
provisions of Section 269SS and 271D of the Income Tax Act made in
Krishna Janardhan Bhat (supra) would stand impliedly overruled. I am
entirely in agreement with the learned Counsel for the appellant because
the Supreme court in Rangappa (supra) had specifically noted the
judgment in Krishna Janardhan Bhat (supra). The Supreme Court had
obviously noted the observations in para 26 in Krishna Janardhan Bhat
(supra) that advance of more than Rs.20,000/- was to be made only by
way of an account payee cheque, and yet the Supreme Court accepted
case of a complainant who claimed to have made an advance of
Rs.45,000/- in cash and proceeded to uphold the conviction, even though
the case rested on the fact that cash advance of a sum more than
Rs.20,000/- was made. Thus, on this aspect also Krishna Janardhan
Bhat (supra) stood impliedly overruled by Rangapaa (supra), and the

judgment is to be held rendered on the facts of that case, not laying down
any law. Therefore, judgments which follow Krishna Janardhan Bhat
(supra) can be safely ignored.
19.
There is another aspect of the matter. The learned Counsel for the
respondent pointed out that in Krishna Janardhan Bhat (supra) attention
of the Supreme Court was possibly not drawn to the actual wording of
Section 269SS of the Income Tax Act. He submitted that Section 269SS
of the Income Tax Act, in fact, does not cast any burden upon a person
making advance in cash to record it in his returns and does not prevent
any such cash advance from being made. It may be useful to quote
provisions of Section 269SS and 271D of the Income Tax Act as under:
Section 269SS: No person shall, after the 30th day
of June, 1984, take or accept from any other person
(hereafter in this section referred to as the
depositor), any loan or deposit otherwise than by
an account payee cheque or account payee bank
draft if, -
(a) the amount of such loan or deposit or the
aggregate amount of such loan and deposit ; or
(b) on the date of taking or accepting such loan or
deposit, any loan or deposit taken or accepted
earlier by such person from the depositor is
remaining unpaid (whether repayment has fallen
due or not), the amount or the aggregate amount
remaining unpaid ; or
(c) the amount or the aggregate amount referred to
in clause (a) together with the amount or the

aggregate amount referred to in clause (b), is
twenty thousand rupees or more :
Provided that the provisions of this section shall
not apply to any loan or deposit taken or accepted
from, or any loan or deposit taken or accepted by-
(a) Government ;
(b) any banking company, post office savings bank
or co-operative bank;
(c) any corporation established by a Central,
State or Provincial Act;
(d) any Government company as defined in
section 617 of the Companies Act, 1956 (1 of
1956);
(e) such other institution, association or body or
class of institutions, associations or bodies which
the Central Government may, for reasons to be
recorded in writing, notify in this behalf in the
Official Gazette:
[Provided further that the provisions of this section
shall not apply to any loan or deposit where the
person from whom the loan or deposit is taken or
accepted and the person by whom the loan or
deposit is taken or accepted are both having
agricultural income and neither of them had any
income chargeable to tax under this Act.]
Section 271D – (1) If a person takes or accepts
any loan or deposit in contravention of the
provisions of section 269SS, he shall be liable to
pay, by way of penalty, a sum equal to the amount
of the loan or deposit so taken or accepted.
(2) any penalty imposable under sub-section (1)
shall be imposed by the joint Commissioner.
(emphasis supplied).
A plain reading of Section 269SS shows that no person can accept
any loan or deposit of a sum of Rs.20,000/- or more otherwise than by an

account payee cheque or account payee bank draft. It does not say that a
person cannot advance more than Rs.20,000/- in cash to another person.
It is clear that the restriction on cash advances was in fact on the taker
and not the person who makes the advance. The penalty for taking such
advance or deposit in contravention of provisions of Section 269SS was
to be suffered by one who takes the advance. Therefore, it was obviously
impermissible to invoke these provisions for preventing a person from
recovering the advance which he has made.
20.
The learned Counsel for the respondent submitted that the view
taken in Krishna Janardhan Bhat (supra) has been consistently followed
by this Court. He also relied on judgment of this Court in Sayeeda Iqbal
Vakil V/s. Javed Abdul Latif Shaikh & anr. reported at 2008 (2)
Bom.C.R. (Cri). 258 and Patricio D'Souza V/s. Oscar D'Souza & Anr.
reported at 2009 (1) Bom.C.R. (Cri.) 710 which in turn relied on
observations in Vasudev Ramchand Ahuja V/s. Vilas Shripati Kamble
reported at 2006 (2) Bom.C.R. (Cri.) 1 to the following effect:
“The observation seen by the trial Court that
amount allegedly paid by complainant during
period has not been reflected in Income Tax
returns as well as in books of account. Reasons
recorded by the Court below on appreciation of
evidence on record, impugned judgment cannot be
said to be unreasonable and perverse.”

This and some other circumstances led the Court to refuse leave to
file appeal against acquittal.
21.
In Peter Mascarenhas V/s. Monsabre Ashley Oswald Dias
reported at 2010 (2) Bom.C.R. (Cri.) 38 and Sandeep Shirodkar V/s.
Shankar Dhawaskar & anr. reported at 2010 (2) Bom.C.R. (Cri.) 867 on
which the learned Counsel for the respondent placed reliance, the Court
had quoted from Krishna Janardhan Bhat (supra).
The Court then
observed that the judgment in Krishna Janardhan Bhat (supra) lays
down a proposition that existence of a legally enforceable debt is not a
matter of presumption under Section 139 of the Act.
22.
As already observed, since Krishna Janardhan Bhat (supra) does
not lay down any proposition of law, judgments which follow Krishna
Janardhan Bhat (supra) would have to be ignored. This leaves question
of advance not being reflected in books of account. The learned Counsel
for the respondent relied on judgment in Sanjay Mishra V/s. Kanishka
Kapoor @ Nikki & anr. reported at 2009 (3) Bom.C.R. (Cri.) 157 = 2009
(4) Mah.L.J. 155 where the question of unaccounted money is
considered. In this judgment too, a learned Single Judge of this Court

copiously quoted from the judgment of Supreme court in Krishna
Janardhan Bhat (supra) in paragraphs 9,10 & 11. It need not be restated
that since Krishna Janardhan Bhat (supra) was expressly overruled on
the nature of presumption under Section 139 and impliedly on the
question of cash advances, it remains a decision on facts of that case and
so the observations in Sanjay Mishra (supra) based on Krishna
Janardhan Bhat (supra) may be safely excluded from consideration.
23.
In Sanjay Mishra (supra) the Court had also noted in para 14 the
observations of the Supreme Court in Dalmia Cement (Bharat) Ltd Vs.
Galaxy Traders & Agencies Ltd & Ors. reported at (2001) 6 Supreme
Court Cases 463 and, ultimately, refused leave for filing an appeal
against acquittal, possibly principally on account of the following facts
noted by the Court in paras 6,7 & 8 of the judgment.
“6. I have given careful consideration to the
submissions. I have perused a copy of the
complaint and notes of evidence. In the cross-
examination, the applicant has categorically stated
thus:
".... The entire amount was given in cash. The
entire amount was my cash amount. The cash
amount was kept at my Chembur's residence. At
that time, it was unaccounted. I had not disclosed
this amount to the Income Tax after giving the
loan till date. There was no agreement for interest
on the amount given. ....." (Emphasis added)

The complaint was filed in the year 2005. The
evidence of the applicant was recorded on 28th
February 2006. The applicant admitted that the
amount allegedly paid by him to the 1st
respondent by way of loan was a cash amount
kept at his residence and at that time it was an
unaccounted amount. He categorically admitted
that till date (i.e. till 28th February 2006) he has
not disclosed the amount to the Income Tax.
According to the case of the complainant, he had
advanced loan on 14th September 2004 which
was repayable within 90 days. Thus, on 14th
September 2004 the amount allegedly paid by him
to the 1st respondent was stated to be an
unaccounted amount which was kept at the
residence of the applicant. Moreover, till February
2006, when the evidence was recorded, the said
amount was not disclosed in the Income Tax
Returns of the applicant. Thus it continued to be
an unaccounted amount.
7. It is true that merely because amount advanced
is not shown in Income Tax Return, in every case,
one cannot jump to the conclusion that the
presumption under section 139 of the said Act
stands rebutted. There may be cases where a small
amount less than a sum of Rs.20,000/- is advanced
in cash by way of loan which may be repayable
within few days or within few months. A
complainant may not show the said amount in the
Income Tax Return as it is repayable within few
days or few months in the same financial year. In
such a case the failure to show the amount in the
Income Tax Return may not by itself amount to
rebuttal of presumption under section 139 of the
said Act. If in a given case the amount advanced
by the complainant to the accused is a large
amount and is not repayable within few months,
the failure to disclose the amount in Income-Tax
return or Books of Accounts of the complainant
may be sufficient to rebut the presumption under
section 139 of the said Act.

8.
In the present case, the amount was
allegedly advanced in September 2004. The
amount is a large amount of Rs.15 lacs. This is a
case where not only that there is a failure to
disclose the amount of loan in the Income Tax
Return of the applicant till the year 2006 but there
is a categorical admission on the part of the
applicant that the amount was an "unaccounted"
amount.” (emphasis supplied).
24.
It may be seen that even in Sanjay Mishra (supra) failure to show
the advances in income tax returns is not held to be always fatal. While
observing that small amounts of less than Rs.20,000/- could be so
advanced, the Court was obviously influenced by observations in
Krishna Janardhan Bhat (supra) and provisions of Sections 269SS and
271D of Income Tax Act, which as already pointed out, require a
borrower to receive amount in excess of Rs.20,000/- only by cheques. In
the case at hand, the amount was advanced in the last week of March,
2006 and was to be repaid by 30/09/2006 i.e. within 6 months. Thus,
even observations in Sanjay Mishra (supra) (minus the ceiling of
Rs.20,000/- which has no legal sanctity), would not make the appellant's
case untenable.
25.
The learned Counsel for the appellant submitted that the amounts
which were not reflected in the income tax returns or in the books of

accounts do not become irrecoverable. He relied on a judgment of this
Court in Shri Deelip Apte V/s. Nilesh P. Salgaonkar & Ors. reported at
2006 (2) Goa L.R. 229 in support of this proposition. It was observed
therein at para 4 as under:
“4. It is now common knowledge that the
Negotiable Instruments Act, 1881, was amended
with a view to enhance the acceptability of
cheques in settlement of liabilities by making the
drawer liable for penalties in case of bouncing of
cheques due to insufficiency of funds in the
accounts or for the reason that it exceeds the
arrangements made by the drawer, with adequate
safeguards to prevent harassment of honest
drawers, as the evil practice of issuing cheques in
settlement of liabilities without there being
adequate amount in the accounts had become
rampant and the amendment was carried out with
a view to curb the same effectively by enacting a
stringent law while at the same time taking care to
safeguard the interest of honest drawers. If that be
the object of the amendments, the provisions of
the Act are required to be interpreted in the light
of the said objects intended to be achieved.”
The Court further observed in respect of requirement to show
advances in the income tax returns as under:
“......The learned J.M.F.C. has also held
against the complainant the fact that the
complainant had not shown the amount advanced
by him in his income tax returns. I do not think
that every person who gives friendly loans does in
all cases show such loans in their income tax
returns more so if they are payable on demand
after short time. The learned acquitting J.M.F.C.
entirely lost sight of the several presumptions
which the law has enacted in favour of the

complainant. As already stated in the case at hand,
the complainant had sufficiently discharged his
initial burden by deposing that the complainant
had given a loan in the sum of Rs. 1,70,000/-
towards the repayment of which the accused had
issued the said cheques. In one of the cases, the
accused took a plea that although the cheque was
signed and filled by him, the amount of the loan
was not written by the accused. In this context, it
may be stated that the complainant had denied the
suggestion that he had taken three blank cheques
without the date and amount from the accused as
security. As regards the date, reference could be
made to Section 118(b) of the Act, which provides
that only when the contrary is proved, a
negotiable instrument is presumed to have been
made on the date shown on the instrument.”
26.
Incidentally in Sanjay Mishra (supra) on which the learned
Counsel for the respondent relied on the question of object of Section 138
of the Negotiable Instruments Act, this Court held in para 15 as under:
“15. The Apex Court has held that the laws
relating to the said Act are required to be
interpreted in the light of the object intended to be
achieved by it despite there being deviation from
general law. The Apex Court expressed that the
object of section 138 of the said Act was to ensure
that commercial and mercantile activities are
conducted in smooth and healthy manner. The
explanation to section 138 of the said Act clearly
provides that a debt or other liability referred to in
section means a legally enforceable debt or other
liability. The alleged liability to repay an
unaccounted cash amount admittedly not
disclosed in the Income Tax Return cannot be a
legally recoverable liability. If such liability is
held to be a legally recoverable debt, it will render
27
cria no.6 of 2012
the explanation to section 138 of the said Act
nugatory. It will defeat the very object of section
138 of the Act of ensuring that the commercial
and mercantile activities are conducted in a
healthy manner. The provision of section 138
cannot be resorted to for recovery of an
unaccounted amount. A cheque issued in
discharge of alleged liability of repaying
"unaccounted" cash amount cannot be said to be a
cheque issued in discharge of a legally
enforceable debt or liability within the meaning of
explanation of section 138 of the said Act. Such an
effort to misuse the provision of section 138 of the
said Act has to be discouraged.” (emphasis
supplied).
The underlined observations do not disclose as to where can one
find a prohibition on recovering amounts not disclosed in income tax
returns. With utmost humility, I have to state that I have not come across
any provision of Income Tax Act, which makes an amount not shown in
the income tax returns unrecoverable. The entire scheme of the Income
Tax Act is for ensuring that all amounts are accounted for. If some
amounts are not accounted for, the person would be visited with the
penalty or at times even prosecution under the Income Tax Act, but it
does not mean that the borrower can refuse to pay the amount which he
has borrowed simply, because there is some infraction of the provisions
of the Income Tax Act. Infraction of provisions of Income Tax Act would
be a matter between the revenue and the defaulter and advantage thereof
28
cria no.6 of 2012
cannot be taken by the borrower. In my humble view, to say that an
amount not disclosed in the income tax returns becomes irrecoverable
would itself defeat the provisions of Section 138 of the Negotiable
Instruments Act. Apart from the purpose of this Act, which has been
outlined by the learned Single Judge in Shri Deelip Apte (supra) as well
as in Sanjay Mishra (supra), it ought to be seen that the moment a person
seeks to recover through a cheque an amount advanced in cash it gets
amounted for in the system and the revenue authorities can keep a track
of that and if necessary tax the person. To brand an amount which is not
shown in Income Tax Act as unaccounted money would be too farfetched
and, therefore, I am in respectful disagreement with the observations in
Sanjay Mishra (supra), which in fact amounts to reading an additional
requirement in Section 138 of the Negotiable Instruments Act, and
legislating that such amounts becomes irrecoverable. At the cost of
repetition, for saying that an amount not disclosed in income tax returns
cannot be legally recoverable liability, some provisions of law to that
effect would have to be shown. Such provision was not noticed by me
and even the learned Counsel for the respondent could not show any such
provision to me. For this reason, the judgment in Sayeeda Iqbal Vakil
(supra) and Vassudev Ramchand Ahuja (supra) cannot be followed.
Judgments in Patricio D'Souza V/s. Oscar D'Souza & anr. reported at
29
cria no.6 of 2012
2009 (1) Bom.C.R. (Cri.) 710 and Sandeep Shirodkar V/s. Shankar
Dhawaskar & anr. reported at 2010 (2) Bom.C.R.(Cri.) 867 are on facts
unfolded in those cases.
27.
The learned Counsel for the respondent submitted that if this Court
was taking a view different from that taken in Vassudev Ramchand
Ahuja (supra) or Sanjay Mishra (supra), this Court ought to make a
reference to a Division Bench. I do not think it is necessary because first
there is also a judgment of Single Judge of this Court in Shri Deelip Apte
(supra) which has already taken such a view and, secondly, in the absence
of express provision which would make such loans unrecoverable it
would not be possible for any Court to so hold.
28.
The learned Counsel for the respondent next submitted that the
presumptions are rebutable and the accused is not required to tender
evidence or bear burden of proof of the same magnitude as the
prosecution. The learned Counsel for the respondent relied on judgment
of Supreme Court in M.S. Narayana Menon alias Mani V/s. State of
Kerala & Anr. reported at 2006 (6) SCC 39, which deals with how
presumptions under the Evidence Act as also under the Negotiable
Instruments Act could be rebutted and the Court observed on the
30
cria no.6 of 2012
consideration of facts in that case, that the standard of proof is
preponderance of probabilities and inference of preponderance of
probabilities can be drawn, not only from the materials on record, but also
by reference to the circumstances upon which the accused relies. The
Court also observed that the accused need not disprove the existence of
consideration by way of direct evidence and that the onus on an accused
is not as heavy as that of the prosecution and that it is comparable with
that on a defendant in civil proceedings. There can be no dispute about
this proposition. In fact, similar are the observations of three Judge bench
of Supreme Court in Rangappa (supra) where the Court held as under :
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 21 test of
proportionality should guide the construction and
interpretation of reverse onus clauses and the
accused/defendant cannot be expected to
discharge an unduly high standard or proof.
31
cria no.6 of 2012
28. In the absence of compelling justifications,
reverse onus clauses usually impose an
evidentiary burden and not a persuasive burden.
Keeping this in view, it is a settled position that
when an accused has to rebut the presumption
under Section 139, the standard of proof for doing
so is that of `preponderance of probabilities'.
Therefore, if the accused is able to raise a
probable defence which creates doubts about the
existence of a legally enforceable debt or liability,
the prosecution can fail. As clarified in the
citations, the accused can rely on the materials
submitted by the complainant in order to raise
such a defence and it is conceivable that in some
cases the accused may not need to adduce
evidence of his/her own.
29.
The question in this case is however that the defence evidence
tendered by the accused in this case, far from rebutting the burden, only
reinforces the case of the complainant. There would be no reason for the
accused to allow the cheque of sum of Rs.20,000/- to be honoured and
offer to pay another sum of Rs.20,000/- if in fact nothing was due and he
had been forced to write the cheques. This itself makes the story of the
accused suspicious.
30.
The learned Counsel for the respondent next submitted that since
this Court is considering an appeal against acquittal, this Court ought to
be extremely slow in setting aside an acquittal. There can be no doubt
about this proposition. In fact, the learned Counsel for the appellant
32
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himself drew my attention to four judgments which discuss as to when a
judgment of acquittal could be set aside. They are:
(1) Bhajan Singh alias Harbhajan Singh & Ors. V/s.
State of Haryana (2011) 7 SCC 421,
(2) State of Maharashtra V/s. Haribhau Krishnaji
Deshmukh & Ors. 2003 ALL MR (Cri.) 1441,
(3) Fahim Khan V/s. State of Bihar Noe Jharkhand
(2011) 13 SCC 142,
(4) Babu V/s. State of Kerala (2010) 9 SCC 189,
I have carefully gone through the judgments. In the case at hand,
the conclusions drawn by the learned Additional Sessions Judge were
thoroughly unwarranted and based on an untenable appreciation of the
evidence. As already observed, the learned Additional Sessions Judge
had principally relied on provisions of Section 269SS and 271D of the
Income Tax Act, which have absolutely no bearing and therefore the
judgment is unsustainable.
31.
Before I conclude, with all humility at my command, it has to be
noted that even after noticing the object of enacting Section 138 of
Negotiable Instruments Act, namely to enhance the acceptability of
cheques, Courts have been accepting virtually any argument advanced to
nullify the liability created, like ignoring or misreading presumption
under Section 139 of the Act, misreading provisions of Sections 269SS
and 271D of the Income Tax Act, unmindful of the consequence that
33
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unscrupulous individuals go on signing cheques irresponsibly. When a
person signs a cheque and delivers it, even if it is a blank cheque or a post
dated cheque, presumptions under Section 118(b) and 139 of the
Negotiable Instruments Act would have to be raised and would have to be
rebutted by the aced, albeit by raising a probability. Unless the Courts
start discouraging flimsy defences, acceptability of cheques would not
increase.
The problem of unaccounted money would be reduced if
transactions take place by cheques. Even a cash advance when repaid by
cheque gets accounted. Making it unrecoverable, would only push the
persons to extra judicial methods of recovery. The Courts would thus not
only be defeating the object of the provision but also indirectly be party
to increase lawlessness. This, in my humble view, cannot be allowed by
Courts.
32.
In view of this, the appeal is allowed. The judgment of the learned
Additional Sessions Judge is set aside and the judgment convicting the
respondent of offence punishable under Section 138 of the Negotiable
Instruments Act is restored. The learned Counsel for the respondent
submitted that since the respondent wants to take the matter to higher
forum the judgment may be kept in abeyance for a period of 8 weeks. If
the compensation is not deposited within a period for 8 weeks the learned
34
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Magistrate shall proceed to execute the sentence in default.
R.C. CHAVAN, J.
NH/-