138. Dishonour of cheque for insufficiency, etc., of funds in the account.

Where any cheque drawn by a person on an account maintained by him with a banker
for payment of any amount of money to another person from out of that account for
the discharge, in whole or in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money standing to the credit of that
account is insufficient to honour the cheque or that it exceeds the amount arranged to
be paid from that account by an agreement made with that bank, such person shall be
deemed to have committed an offence and shall, without prejudice to any other
provisions of this Act, be punished with imprisonment for [a term which may be
extended to two years], or with fine which may extend to twice the amount of the
cheque, or with both: Provided that nothing contained in this section shall apply
unless—
(a) the cheque has been presented to the bank within a period of six months from the
date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the said amount of money by giving a notice in writing, to
the drawer of the cheque, 20 [within thirty days] of the receipt of information by him
from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money
to the payee or, as the case may be, to the holder in due course of the cheque, within
fifteen days of the receipt of the said notice.
Explanation.— For the purposes of this section, “debt or other liability” means a
legally enforceable debt or other liability.]

139. Presumption in favour of holder.

It shall be presumed, unless the contrary is proved, that the holder of a cheque
received the cheque of the nature referred to in section 138 for the discharge, in
whole or in part, of any debt or other liability.
140. Defence which may not be allowed in any prosecution under section 138.
It shall not be a defence in a prosecution for an offence under section 138 that the
drawer had no reason to believe when he issued the cheque that the cheque may be
dishonoured on presentment for the reasons stated in that section.

141. Offences by companies.

(1) If the person committing an offence under section 138 is a company, every person
who, at the time the offence was committed, was in charge of, and was responsible to,
the company for the conduct of the business of the company, as well as the company,
shall be deemed to be guilty of the offence and shall be liable to be proceeded against
and punished accordingly:
Provided that nothing contained in this sub-section shall render any person liable to
punishment if he proves that the offence was committed without his knowledge, or
that he had exercised all due diligence to prevent the commission of such offence:
1[Provided further that where a person is nominated as a Director of a company by
virtue of his holding any office or employment in the Central Government or State
Government or a financial corporation owned or controlled by the Central
Government or the State Government, as the case may be, he shall not be liable for
prosecution under this Chapter.]
(2) Notwithstanding anything contained in sub-section (1), where any offence under
this Act has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to, any neglect on the
part of, any director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purposes of this section, —
(a) “company” means anybody corporate and includes a firm or other association of
individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.
142. Cognizance of offences.
[(1)] Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974),—
(a) no court shall take cognizance of any offence punishable under section 138 except
upon a complaint, in writing, made by the payee or, as the case may be, the holder in
due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action
arises under clause (c) of the proviso to section 138:
3[Provided that the cognizance of a complaint may be taken by the Court after the
prescribed period, if the complainant satisfies the Court that he had sufficient cause
for not making a complaint within such period;]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of
the first class shall try any offence punishable under section 138.].
4[(2) The offence under section 138 shall be inquired into and tried only by a court
within whose local local jurisdiction,—
(a) if the cheque is delivered for collection through an account, the branch of the bank
where the payee or holder in due course, as the case may be, maintains the account, is
situated; or
(b) if the cheque is presented for payment by the payee or holder in due course,
otherwise through an account, the branch of the drawee bank where the drawer
maintains the account, is situated.

143. Power of court to try cases summarily.

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), all offences under this Chapter shall be tried by a Judicial Magistrate of the
first class or by a Metropolitan Magistrate and the provisions of sections 262 to 265
(both inclusive) of the said Code shall, as far as may be, apply to such trials:
Provided that in the case of any conviction in a summary trial under this section, it
shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not
exceeding one year and an amount of fine exceeding five thousand rupees;
Provided further that when at the commencement of, or in the course of, a summary
trial under this section, it appears to the Magistrate that the nature of the case is such
that a sentence of imprisonment for a term exceeding one year may have to be passed
or that it is, for any other reason, undesirable to try the case summarily, the
Magistrate shall after hearing the parties, record an order to that effect and thereafter
recall any witness who may have been examined and proceed to hear or rehear the
case in the manner provided by the said Code.
(2) The trial of a case under this section shall, so far as practicable, consistently with
the interests of justice, be continued from day to day until its conclusion, unless the
court finds the adjournment of the trial beyond the following day to be necessary for
reasons to be recorded in writing.
(3) Every trial under this section shall be conducted as expeditiously as possible and
an endeavour shall be made to conclude the trial within six months from the date of
filing of the complaint.

144. Mode of service of summons.

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), and for the purposes of this Chapter, a Magistrate issuing a summons to
an accused or a witness may direct a copy of summons to be served at the place
where such accused or witness ordinarily resides or carries on business or
personally works; for gain, by speed post or by such courier services as are
approved by a Court of Session.
(2) Where an acknowledgment purporting to be signed by the accused or the witness
or an endorsement purported to be made by any person authorised by the postal
department or the courier services that the accused or the witness refused to take
delivery of summons has been received, the court issuing the summons may
declare that the summons has been duly served.
145. Evidence on affidavit.
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), the evidence of the complainant may be given by him on affidavit and may,
subject to all just exceptions be read in evidence in any enquiry, trial or other
proceeding under the said Code.
(2) The court may, if it thinks fit, and shall, on the application of the prosecution or
the accused, summon and examine any person giving evidence on affidavit as to the
facts contained therein.

146. Bank's slip prima facie evidence of certain facts.

The court shall, in respect of every proceeding under this Chapter, on production of
bank's slip or memo having thereon the official mark denoting that the cheque has
been dishonoured, presume the fact of dishonour of such cheque, unless and until
such fact is disproved.

147. Offences to be compoundable.

Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of
1974), every offence punishable under this Act shall be compoundable."

165. Judge’s power to put questions or order production (IPC)

The Judge may, in order to discover or to obtain proper proof of relevant facts, ask
any question he pleases, in any form, at any time, of any witness, or of the parties
about any fact relevant of irrelevant; and may order the production of any document
or thing; and neither the parties nor their agents shall be entitled to make any
objection to any such question or order, nor, without the leave of the Court, to cross-
examine any witness upon any answer give in reply to any such question:
Provided that the judgment must be based upon facts declared by this Act to be
relevant, and duly proved.
Provided also that this section shall not authorize any Judge to compel any witness to
answer any question or to produce any document which such witness would be
entitled to refuse to answer or produce under sections 121 to 131, both inclusive , if
the question were asked or the document were called for by the adverse party; nor
shall the Judge ask any question which it would be improper for any other person to
ask under section 148 or 149; nor shall he dispense with primary evidence of any
document, except in the cases herein before excepted.

294.No formal proof of certain documents. (Cr.PC)

(1) Where any document is filed before any Court by the prosecution or the accused,
the particulars of every such document shall be included in a list and the prosecution
or the accused, as the case may be, or the pleader for the prosecution or the accused,
if any, shall be called upon to admit or deny the genuineness of each such document.

(2) The list of documents shall be in such form as may be prescribed by the State
Government.
(3) Where the genuineness of any document is not disputed, such document may be
read in evidence in any inquiry, trial or other proceeding under this Code without
proof of the signature of the person to whom it purports to be signed:
Provided that the Court may, in its discretion, require such signature to be proved.

296. Evidence of formal character on affidavit (Cr.PC)

(1) The evidence of any person whose evidence is of a formal character may be given
by affidavit and may, subject to all just exceptions, be read in evidence in any inquiry,
trial or other proceeding under this Code.
(2) The Court may, if it thinks fit, and shall, on the application of the prosecution or
the accused, summon and examine any such person as to the facts contained in his
affidavit.

315. Accused person to be competent witness. (Cr.PC)

(1) Any person accused of an offence before a Criminal Court shall be a competent
witness for the defence and may give evidence on oath in disproof of the charges
made against him or any person charged together with him at the same trial:
Provided that-(a) he shall not be called as a witness except on his own request in
writing;(b) his failure to give evidence shall not be made the subject of any
 comment by any of the parties or the Court or give rise to any presumption
against himself or any person charged together with him at the same trial.
(2) Any person against whom proceedings are instituted in any Criminal Court under
section 98, or section 107, or section 108, or section 109, or section 110, or under
Chapter IX or under Part B, Part C or Part D of Chapter X, may offer himself as a
witness in such proceedings: Provided that in proceedings under section 108,
section 109 or section 110, the failure of such person to give evidence shall not
be made the subject or any comment by any of the parties or the Court or give
rise to any presumption against him or any other person proceeded against
together with him at the same inquiry.

316. No influence to be used to induce disclosure. (Cr.PC)

Except as provided in sections 306 and 307, no influence, by means of any promise
or threat or otherwise, shall be used to an accused person to induce him to disclose or
withhold any matter within his knowledge.
The High Court had before it a large number of writ petitions and applications under
section 482 of the Code of Criminal Procedure. Most of those petitions were filed on
behalf of the accused but a few were also at the instance of the complainants. On the
basis of the grievances made and reliefs prayed for in those petitions the High Court
framed the following two questions as arising for its consideration:
" (A) Whether sub-section (2) of section 145 of the Negotiable Instruments Act, 1881,
confers an unfettered right on the complainant and the accused to apply to the court
seeking direction to give oral examination-in-chief of a person giving evidence on
affidavit, even in respect of the facts stated therein and that if such a right is
exercised, whether the court is obliged to examine such a person in spite of the
mandate of section 145(1) of the Act?
(B) Whether the provisions of section 145 of the Act, as amended by the Negotiable
Instruments (Amendment and Miscellaneous Provisions) Act, 2002, are applicable to
the complaints under section 138 of the Act pending on the date on which the
amendment came into force? In other words, do the amended provisions of section
145(1) and (2) of the Act operate retrospectively?

The High Court held that the person (complainant or his witness) giving evidence on
affidavit may be summoned by the court for putting questions as envisaged under
section 165 of the Evidence Act. He would also be summoned on an application made
by the accused but the right of the accused is limited to cross-examination of the
witness. In terms of section 145(2) the accused can undoubtedly cross- examine a
person whose evidence is given on affidavit but the accused cannot insist that the
witness, on coming to court, should first depose in examination-in-chief even in
respect of matters which are already stated by him on affidavit. The High Court
further explained that for the prosecution the occasion to summon any of its witnesses
who have given their evidence on affidavit may arise in two ways. The prosecution
may summon a person who has given his evidence on affidavit and has been cross-
examined for "re-examination". This right of the prosecution, the High Court
observed, was not in dispute before it. The prosecution may also have to summon a
witness whose evidence is given on affidavit in case objection is raised by the
defence regarding the validity and/or sufficiency of proof of some document(s)
submitted along with the affidavit. In that event the witness may be summoned to
appear before the court to cure the defect and to have the document(s) properly
proved by following the correct legal mode.

The High Court then considered the claim of the accused that any evidence in
defence, like the complainant's evidence, may also be given on affidavit. It upheld the
claim observing as follows:
"....Merely because, section 145(1) does not expressly permit the accused to do so,
does not mean that the Magistrate cannot allow the accused to give his evidence on
affidavit by applying the same analogy unless there is just and reasonable ground to
refuse such permission. There is no express bar on the accused to give evidence on
affidavit either in the Act or in the Code.........I find no justified reason to refuse
permission to the accused to give his evidence on affidavit subject to the provisions
contained in sections 315 and 316 of the Code.”
Coming then to the question (B), the High Court had no difficulty in holding that the
provisions of sub-sections (1) and (2) of section 145 were not substantive but only
procedural in nature and, therefore, those provisions would be applicable to the cases
pending on the date they came into force.

The provisions have also been made that to constitute the said offence-
(a) such cheque should have been presented to the bank within a period of six months
of the date of its drawal or within the period of its validity, whichever is earlier; and
(b) the payee or holder in due course of such cheque should have made a demand for
the payment of the said amount of money by giving a notice, in writing, to the drawer
of the cheque within fifteen days of the receipt of the information by him from the
bank regarding the return of the cheque unpaid; and
(c) the drawer of such cheque should have failed to make the payment of the said
amount of money to the payee or the holder in due course of the cheque within fifteen
days of the receipt of the said notice.
In order to ensure that genuine and honest bank customers are not harassed or put to
inconvenience, sufficient safeguards have also been provided in the proposed new
Chapter. Such safeguards are-
(a) that no court shall take cognizance of such offence except on a complaint, in
writing, made by the payee or the holder in due course of the cheque;
(b) that such complaint is made within one month of the date on which the cause of
action arises; and
(c) that no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate
or a Judicial Magistrate of the first class shall try any such offence.”

The provisions have also been made that to constitute the said offence-
(a) such cheque should have been presented to the bank within a period of six months
of the date of its drawal or within the period of its validity, whichever is earlier; and
(b) the payee or holder in due course of such cheque should have made a demand for
the payment of the said amount of money by giving a notice, in writing, to the drawer
of the cheque within fifteen days of the receipt of the information by him from the
bank regarding the return of the cheque unpaid; and
(c) the drawer of such cheque should have failed to make the payment of the said
amount of money to the payee or the holder in due course of the cheque within fifteen
days of the receipt of the said notice.
It has also been provided that it shall be presumed, unless the contrary is proved, that
the holder of such cheque received the cheque in the discharge of a liability. Defences
which may or may not be allowed in any prosecution for such offence have also been
provided to make the provisions effective. Usual provision relating to offences by
companies has also been included in the said new Chapter. In order to ensure that
genuine and honest bank customers are not harassed or put to inconvenience,
sufficient safeguards have also been provided in the proposed new Chapter. Such
safeguards are-
(a) that no court shall take cognizance of such offence except on a complaint, in
writing, made by the payee or the holder in due course of the cheque;
(b) that such complaint is made within one month of the date on which the cause of
action arises; and
(c) that no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate
or a Judicial Magistrate of the first class shall try any such offence.”

Neither section 296(2) of the Code nor the decision in Naib Din has any relevance or
application to the trial concerning a dishonoured cheque under sections 143 to 146 of
the Act. The decision in Naib Din was rendered in a totally different context and the
issue before the court was not, whether on being summoned on the application made
by the accused, the person giving evidence on affidavit must begin his deposition
with examination-in-chief. The appellants are reading into the passage from the
decision in Naib Din something that was not said by the court. Moreover, the crucial
difference between section 296(2) of the Code and section 145(2) of the Act is that
the former deals with the evidence of a formal nature whereas under the latter
provision, all evidences including substantive evidence may be given on affidavit.
Section 296 is part of the elaborate procedure of a regular trial under the Code while
the whole object of section 145(2) of the Act is to design a much simpler and swifter
trial procedure departing from the elaborate and time consuming trial procedure of
the Code. Hence, notwithstanding the apparent verbal similarity between section
145(2) of the Act and section 296(2) of the Code, it would be completely wrong to
interpret the true scope and meaning of the one in the light of the other. Neither the
legislative history of 296(2) nor any decision on that section can persuade us to hold
that under section 145(2) of the Act, on being summoned at the instance of the
accused the complainant or any of his witnesses should be first made to depose in
examination-in-chief before cross-examination. The documents produced along with
the affidavit(s) are not proved automatically and unless the accused admits those
documents under section 294 of the Code of Criminal Procedure the documents must
be proved by oral testimony. We find no substance in this submission either and we
see no reason why the affidavits should not also contain the formal proof of the
enclosed documents. In case, however, the accused raises any objections with regard
to the validity or sufficiency of proof of the documents submitted along with the
affidavit and if the objections are sustained by the court it is always open to the
prosecution to have the concerned witness summoned and get the lacuna in the proof
of the documents corrected.

The High Court has held that subject to the provisions of sections 315 and 316 of the
Code of Criminal Procedure the accused can also give his evidence on affidavit. The
High Court was fully conscious that section 145(1) does not provide for the accused
to give his evidence, like the complainant, on affidavit. But the High Court argued
that there was no express bar in law against the accused giving his evidence on
affidavit and more importantly providing a similar right to the accused would be in
furtherance of the legislative intent to make the trial process swifter. In paragraph 29
of the judgment, the High Court observed as follows:
"It is true that section 145(1) confers a right on the complainant to give evidence on
affidavit. It does not speak of similar right being conferred on the accused. The
Legislature in their wisdom may not have thought it proper to incorporate a word
`accused' with the word `complainant' in sub-section (1) of section 145 in view of the
immunity conferred on the accused from being compelled to be a witness against
himself under Article 20(3) of the Constitution of India...."