Parties With Malafide Intention Consider High Court As Only Option In NI Act Cases; Can’t Usurp Metropolitan Magistrate’s Powers: Delhi High Court

The Delhi High Court has said that in many NI Act cases, the petitioners, with malafide intention, and to prolong the litigation, raise false and frivolous pleas, and consider the high court as their only option.

"On this, the High Court is made to step into the shoes of the Metropolitan Magistrate and examine their defence first and exonerate them," the court said, adding that even petitioners with genuine defence, instead of following due procedure of law under the NI Act and the CrPC, and further by misreading of the provisions, follow the same approach.

"The High Court cannot usurp the powers of the Metropolitan Magistrate and entertain a plea of accused, as to why he should not be tried under Section 138 of the N.I. Act. This plea, as to why he should not be tried under Section 138 of the N.I. Act is to be raised by the accused before the Court of the Metropolitan Magistrate under Section 251 of the Cr.PC & under Section 263(g) of the Cr.PC," it added.

The observations were made by Justice Rajnish Bhatnagar while dismissing a plea challenging the proceedings and summoning order issued agains the directors of Sure Waves MediaTech Private Limited in a case under Section 138 of the NI Act.

The court remarked that the NI Act provides sufficient opportunity to a person who issues the cheque. It said that once a cheque is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences.

"The offence under Section 138 of the N.I. Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defence and the burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defence, he is still to be considered innocent," said the court. 

The court further said that if an accused has a defence against dishonour of the cheque in question, it is he alone who knows the defence. The responsibility of spelling out this defence to the court and then proving this defence is on the accused, it added.

"Once the complainant has brought forward his case by giving his affidavit about the issuance of cheque, dishonour of cheque, issuance of demand notice etc., he can be cross-examined only if the accused makes an application to the Court as to, on what point he wants to cross examine the witness(es) and then only the Court shall recall the witness by recording reasons thereto," said the bench.

It further said Sections 143 and 145 of the NI Act were enacted by the Parliament with the aim of expediting trial in such cases. "The provisions of summary trial enable the respondent to lead defence evidence by way of affidavits and documents. Thus, an accused who considers that he has a tenable defence and the case against him was not maintainable, he can enter his plea on the very first day of his appearance and file an affidavit in his defence evidence and if he is so advised, he can also file an application for recalling any of the witnesses for cross- examination on the defence taken by him," said the court.

Justice Bhatnagar further said that if the accused appears after service of summons, the Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 CrPC and enter his plea of defence and fix the case for defence evidence, unless an application is made by an accused under Section 145(2) of NI Act for recalling a witness for cross-examination on plea of defence.

"If there is an application u/s 145(2) of N.I. Act for recalling a witness of complainant, the court shall decide the same, otherwise, it shall proceed to take defence evidence on record and allow cross examination of defence witnesses by complainant. Once the summoning orders in all these cases have been issued, it is now the obligation of the accused to take notice under Section 251 of Cr. PC., if not already taken, and enter his/her plea of defence before the concerned Metropolitan Magistrate’s Court and make an application, if they want to recall any witness. If they intend to prove their defence without recalling any complainant witness or any other witnesses, they should do so before the Court of Metropolitan Magistrate," said the court.  

On the plea that the petitioner-directors were only nominee and non-executive directors of the accused company at the relevant time, the court after perusing Form No. MGT-7 said that the same nowhere showed that the petitioners were non-executive directors. 

"Furthermore, the petitioners have been categorically mentioned as 'Directors of M/s Sure Waves MediaTech Private Limited' in the Complaint Case No. 4629/2022 and Complaint Case No. 527/2022 registered under section 138 of the Negotiable Instruments Act, 1881 against the petitioners and whether they were in charge of the conduct of business or involved in the day to day affairs of SMPL is a matter of trial," it added, while upholding the trial court order.

Case Title: Vinod Keni & Ors. vs Technology Development Board

Citation: 2023 LiveLaw (Del) 640

Counsel for the Petitioner: Mr. Aditya Wadhwa and Mr. Shivansh Agarwal, Advocates.

Counsel for the Respondent: Ms. Shagun Bhargava, Advocate.

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