M/S. METERS AND INSTRUMENTS PRIVATE LIMITED & ANR.versusKANCHAN MEHTA

                             [2017] JO S.C.R. 66


A      M/S. METERS AND INSTRUMENTS PRIVATE LIMITED &
                            ANR.
                                      v.
                            KANCHAN MEHTA
B                    (Criminal Appeal No. 1731 of 2017)
                             OCTOBER 5, 2017
     [ADARSH KUMAR GOEL AND UDAY UMESH LALIT, JJ.]
          Negotiable Instruments Act, 1881:
c           ss. 138, 147 - Compounding" the offence under s. 138 on
    payment of cheque amount and in alternative for exemption from
  ·personal appearance - Permissibility - Question is how the
    proceedings for offence under s. 138 can be regulated where accused
  . is willing to deposit the cheque amount - Held: Where the cheque
D amount with interest and cost as assessed by the Court is paid by a
    specified date, the Court is entitled to close the proceedings in
    exercise of its powers under s.143 of the Act read with s.258 Cr.P.C.
    - The normal rule for trial of cases under Chapter XV/l of the Act
    is to follow the .rnmmary procedure and the summons trial procedure
    can be followed where sentence exceeding one year may be
E   necessary     taking into account the fact that compensation under
    s.357(3) Cr.P.C. with sentence of less than one year will not be
    adequate, having regard to the amount of cheque, conduct of the
    accused and other circumstances - !11 every summon:1-, issued to the
    accused, it may be indicated that if the accused deposits the specified
    amount, which should be assessed by the Court having regard to
F
    the cheque amount and interest/cost, by a specified date, the accused
    need not appear unless required and proceedings may be closed
    subject to any valid objection of the complainant.
         s. 138 - Object of legislation - Held: The object of introduCing
  s. 138 and other provisions of Chapter XVII in the Act in the year
G 1988 was to enhance the acceptability of cheques in the settlement
  of liabilities - The drawer of cheque is made liable to prosecution
  011 dishonour of cheque with safeguards to prevent harassment of
  honest drawers - The object of the provision is both punitive as
  well as compensatory - The intention of the provision is to ensure
H that the complainant received the amount of cheque by way of
                                      66
   MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                      67
               ANR. v. KANCHAN MEHTA

compensation - Though proceedings under s.138 could not be            A
treated as civil suits for recovery, the scheme of the provision,
providing for punishment with imprisonment or with fine which could
extend to twice the amount of the cheque or to the both, makes the
intention of law clear - The complainant could be given not only
the cheque amount but double the amount so as to cover interest
                                                                      B
and costs.
        s.138 - Affidavit evidence - Reliability of - Held: Since
evidence of the co111plaint can be given 011 affidavit, subject to the
Court swnmoning tlze person giving affidavit and examining hi111
and the bank'.~ slip being pri111a facie evidence of the dishonor of
cheque, it is unnecessary for the Magistrate to record any further
                                                                       c
preliminary evidence - Such affidavit evidence can be read as
evidence at all stages of trial or other proceedings - The manner of
examination of the person giving 4fidavit can be as per s.264
C1: P. C. - The scheme is to follow summary procedure except' where
exercise of power under second proviso to s.143 becomes nec:essary, D
where sentence of one year may have to be awarded and
compensation under s.357( 3) is considered inadequate, having
regard to the amount of the cheque, the financial capacit); and the
conduct of the accused or any other circumstances.
       Criminal law: Compounding of offence .,... Held: Though E
compounding requires consent of both the ,parties~ even in absence
of such consent, the Court, in the interests of justice, on being
satisfied that the complainant has been duly co111penrnted, can in ·
its discretion close the proceedings and discbarge tl_ie accused.
      Code of Cri111inal Procedure, 1973:                             F
       s.357(/)(b) - Scope of, in case of cheque dishonour cases -
Held: s.357( l)(b) provides for payment of compensation for the
loss caused by the offence out of the ji'ne - Where fine is not imposed,
compensation can be awarded under s.357(3) to the person who
suffered loss - Sentence in default can also be imposed - The object 0
of the provision is not merelv penal but to make the accused honour
the negotiable instruments - In view of the above scheme, the accused
could make an application for compounding at the first or second
hearing in which case the Court ought to allow the same - lf such ·
application is made later, the accused was required to pay higher
amount towards cost etc. - Even if the payment of the cheque amount, H '•
68            SUPREME COURT REPORTS                     [:?017] IO S.C.R.


A    in term5 of proviso (b) to s.138 of the Act was not made, the Court
     could permit such payment being made immediately after receiving
     notice/summons of the court - Since. the concept of compounding
     involves consent of the complainant, compounding could not be
     permitted merely by unilateral payment, without the consent of both
     the parties - Negotiable Instruments Act.
B
           s.258 - Applicability in case. of cheque dishonour cases -
     Held: Principle of s.258 apply - The Court can close the proceedings
     and disclwrge the accused on satisfaction that the cheque amount
     with assessed costs and interest is paid and if there is no reason to
     proceed with the punitive aspect.
c
           Negotiable Instruments (Amendment and Miscellaneous
     Provisions) Act, 2002: Purpose of amendment statute - Held: The
     Amendment Act, 2002 was brought in, inter-alia. to simplifv the
     procedure to deal with matters such as service of summons by Speed
     Post/Courier, summary trial and making the offence compoundable.
D
         Practice and Procedure: Use of modem technology -
  Paperless courts - Online filing - If complaint with affidavits and
  documents can be filed online, process issued online and accused
  pays the specified amount online, it may obviate the need for personal
  appearance of the complainant or the accused - Only if the accused
E contests, need for appearance of parties may arise which may be
  through counsel and wherever viable, video conferencing can be
  used - Personal appearances can be dispensed with on suitable
  self operating conditions - High Courts to consider and lay down
  category of cases where proceedings or part thereof can be
p conducted online by designated courts or otherwise.
           Disposing of the appeals, the Court
         HELD: 1. The court has to balance the rights of the
  complainant and the accused and also to enhance access to
  justice. Basic object of the law is to enhance credibility of the
G cheque transactions by providing speedy remedy to the
  complainant without intending to punish the drawer of the cheque
  whose conduct is reasonable or where compensation to the
  complainant meets the ends of justice. Appropriate order can be
  passed by the Court in exercise of its inherent power under
H Section 143 of the Act which is different from compounding by
  MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                      69
              ANR. v. KANCHAN MEHTA

consent of parties. Thus, Section 258 Cr.P.C. which enables          A
proceedings to be stopped in a summons case, even though
strictly speaking is not applicable to complaint cases, since the
provisions of the Cr.P.C. are applicable "so far as may be", the
principle of the said provision is applicable to a complaint case
covered by Section 143 of the Act which contemplates applicability   B
of summary trial provisions, as far as possible, i.e. with such
deviation as may be necessary for speedy trial in the context.
[Para 11] [78-G; 79-A-C]         .
      Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004) 2
      SCC 235 : [2003] 5 Suppl. SCR 835; Vinay Devanna
      Nayak v. Ryot Sewa Sahakari Bank Ltd.(2008) 2 SCC              c
      305 : [2007] 12 SCR 1134 ; Rangappa v. Sri Mohan
      (2010) 11 SCC 441 : [2010] 6 SCR 507; R. Vijayan v.
      Baby (2012) 1 SCC 260 : [2012] 14 SCR 712; Lafarge
      Aggregates & Concrete India (P) Ltd. v. Sukarsh Azad
      (2014) 13 SCC 779 : [2013] (11) SCR 74; Madhva                 D
      Pradesh State Legal Services Authority v. Prateek Jain
      and A111: (2014) 10 SCC 690 : [2014] 7 SCR 743;
      Rajneesh Aggarwal v. Amit J. Bhalla (2001) 1 SCC 631 :
      [2001] 1 SCR 54; Mandvi Cooperative Bank Ltd. v.
      Nimesh B. Thakore (2010) 3 SCC 83 : [2010]
      1 SCR 219 - referred to                                        E

       2. The sentence prescribed under Section 138 of the Act
is upto two years or with fine which may extend to twice the
amount or with both. The power under Section 357(3) Cr.P.C. to
direct payment of compensation is in addition to the said
prescribed sentence, if sentence of fine is not imposed. The         F
amount of compensation can be fixed having regard to the extent
of loss suffered by the action of the accused as assessed by the
Court. The direction to pay compensation can be enforced by
default sentence under Section 64 IPC and by recovery procedure
prescribed under Section 431 Cr.P.C. [Para 12] [79-D-E]              G
      3. The trials under Chapter XVII of the Act are expected
normally to be summary trial. Once the complaint is filed which
is accompanied by the dishonored chec1ue and the bank's slip
and the affiJavit, the Court ought to issue suriunons. The service
of summons can be by post/e-mail/courier and ought to be properly    H
70           SUPREME COURT REPORTS                    [2017] 10 S.C.R.


A    monitored. The summons ought to indicate that the accused could
     make specified payment by deposit in a particular account before
     the specified date and inform the court and the complainant by e-
     mail. If the accused is required to appear, his statement ought to
     be recorded forthwith and the case fixed for defence evidence,
     unless complainant's witnesses are recalled for examination.
B
     [Para 16] [82-B-D]
           Bhaskar Industries Ltd. v. Bhiwani Denim & Apparels
           Ltd. (2001) 7 sec 401 : r20011 2 Suppl. SCR 219 -
           relied on

c       4. Use of modern technology needs to be considered not
  only for paperless courts but also to reduce overcrowding of
  courts. There appears to be need to consider categories of cases
  which can be partly or entirely concluded "online" without
  physical presence of the parties by simplifying procedures where
  seriously disputed questions are not required to be adjudicated.
D Traffic challans may perhaps be one such category. Atleast some
  number of Section 138 cases can be decided online. If complaint
  with affidavits and documents can be filed online, process issued
  oulinc and accused pays the specified amount online, it may
  obviate the need for personal appearance of the complainant or
E the accused. Only if the accused contests, need for appearance
  of parties may arise which may be through counsel and wherever
  viable, video conferencing can be used. Personal appearances
  can be dispensed with on suitable self operating conditions. This
  is a matter to be considered by the High Courts and wherever
  viable, appropriate directions can be issued. [Para 17] [82-F-H;
F 83-A]

        5. Offence under Section 138 of the Act is primarily a civil
  wrong. Burden of proof is on accused in view of presumption
  under Section 139 but the standard of such proof is
  "preponderance of probabilities". The same has to be normally
G tried summarily as per provisions of summary trial under the
  Cr.P.C. but with such variation as may be appropriate to
  proceedings under Chapter XVII of the Act. Thus read, principle
  of Section 258 Cr.P.C. will apply and the Court can close the
  proceedings and discharge the accused on satisfaction that the
H cheque amount with assessed costs and interest is paid and if
  MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                        71
                  ANR. v. KANCHAN MEHTA

there is no reason to proceed with the punitive aspect. ii) The        A
object of the provision being primarily compensatory, punitive
element be.ing mainly with the object of enforcing the
compensatory element, compounding at the initial stage has to
be encouraged but is not debarred at later stage subject to
appropriate compensation as may be found acceptable to the
                                                                       B
parties or the Court. iii) Though compounding requires consent
of both parties, even in absrnce of such consent, the Court, in
the interests of justice, on being satisfied that the complainant
has been duly compensated, can in its discretion close the
proceedings and discharge the accused. (iv) Procedure for trial
of cases under Chapter XVII of the Act has normally to be              C
summary. The discretion of the Magistrate under second proviso
to Section 143, to hold that it was undesirable to try the case
summarily as sentence of more than one year may have to be
passed, is to be exercised after considering the further fact that
apart from the sentence of imprisonment, the Court has                 D
jurisdiction under Section 357(3) Cr.P.C. to award suitable
compensation with default sentence under Section 64 IPC and
with further powers of recovery under Section 431 Cr.P.C. With
this approach, prison sentence of more than one year may not be
required in all cases. (v) Since evidence of the complaint can be
given on affidavit, subject to the Court summoning the person          E
giving affidavit and examining him and the bank's slip being prima
facie evidence of the dishonor of cheque, it is unnecessary for
the Magistrate to record any further preliminary evidence. Such
affidavit evidence can be read as evidence at all stages of trial or
other proceedings. The manner- of examination of the person
                                                                       F
giving affidavit can be as per Section ·264 Cr.P.C. The scheme is
to follow summary procedure except where exercise of power
under second proviso to Section 143 becomes necessary, where
sentence of one year may have to be awarded and compensation
under Section 357(3) is considered inadec1uate, having regard to
the amount of the cheque, the financial capacity and the conduct       G
of the accused or any other circumstances. [Para 18] [83-B-H;
84-A-D]
       6 •. Where the cheque amount with interest and cost as
assessed by the Court is paid by a specified date, the Court is
entitled to close the proceedings in exercise of its powers under      H
72          SUPREME COURT REPORTS                   [2017] 10 S.C.R.


A Section 143 of the Act read with Section 258 Cr.P.C. The normal
  rule for trial of cases under Chapter XVII of the Act is to follow
  the summary procedure and summons trial procedure can be
  followed where sentence exceeding one year may be necessary
  taking into account the fact that compensation under Section
  357(3) Cr.P.C. with sentence of less than one year will not be
B
  adequate, having regard to the amount of cheque, conduct of the
  accused and other circumstances. [Para 191 [84-E-F]
        7. In every complaint under Section 138 of the Act, it may
  be desirable that the complainant gives his bank account number
  and if possible e-mail ID of the accused. If e-mail ID is available
c with the Bank where the accused has an account, such Bank, on
  being required, should furnish such e-mail ID to the payee of the
  cheque. In every summons, issued to the accused, it may be
  indicated that if the accused deposits the specified amount, which
  should be assessed by the Court having regard to the cheque
D amount and interest/cost, by a specified date, the accused need
  not appear unless required and proceedings may be closed subject
  to any valid objection of the complainant. If the accused complies
  with such summons and informs the Court and the complainant
  by e-mail, the Court can ascertain the objection, if any, of the
  complainant and close the proceedings unless it becomes
E
  necessary to proceed with the case. In such a situation, the
  accused's presence can be required, unless the presence is
  otherwise exempted subject to such conditions as may be
  considered appropriate. The accused, who wants to contest the
  case, must be required to disclose specific defence for such
F contest. It is open to the Court to ask specific questions to the
  accused at that stage. In case the trial is to proceed, it will be
  open to the Court to explore the possibility of settlement. It will
  also be open to the Court to consider the provisions of plea
  bargaining. Subject to this, the trial can be on day to clay basis
  and endeavour must be to conclude it within six months. The
G guilty must be punished at the earliest as per law and the one
  who obeys the law need not be held up in proceedings for long
  unnecessarily. It will be open to the High Courts to consider
  and lay down category of cases where proceedings or part thereof
  can be conducted online by designated courts or otherwise. The
H High Courts may also consider issuing any further updated
  MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                 73
              ANR. v. KANCHAN MEHTA

directions for dealing with Section 13S cases in the light of   A
judgments of this Court. [Paras 20, 21] [S4-G-H; S5-A-D]
     Hussain v. Union of India (2017) 5 SCC 702 - relied
     on
     Damodar S. Prabhu v. Saved Baba/al H. (2010) 5 SCC
     663 : [2010] 5 SCR 67S; JTK Industries Ltd. v. Amarlal     B
     vs. Jumani (2012) 3 SCC 255; J. V. Baharuni and Am:
     etc. v. State of Gujarat and Anr etc. (2014) 10 SCC
     494:[ 2014] 10 SCR 1061; Subramanium Sethuraman
     v. State of Maharashtra (2004) 13 SCC 324; Hari
     Kishan v. Sukhbir Singh (19SS) 4 SCC 551 : [19SS]
     (2) Suppl. SCR 571; Suganthi Suresh Kumar v.
                                                                c
     Jagdeeslum (2002) 2 SCC 420 : [2002] 1 SCR 269;
     K.A. Abbas H.S.A. v. Sabu Joseph (2010) 6 SCC 230 :
     [2010] (6) SCR S22; R. Mohan v. A.K. Vijaya Kumar
     (2012) S SCC 721 : [2012] 7 SCR 1; Kumaran v. State
     of Kuala (2017) 7 SCC 471; Indian Bank Association         D
     and Ors. v. Union of India and Ors. (2014) 5 SCC 590 :
     [2014] 5 SCR 3S6; KSL and Industries Ltd. v. Manna/al
     Kh.andelwal 2005 Cri LJ 1201 (Born); Indo
     International Ltd. v. State of Maharashtra 2006 Cri LJ
     20S : (2005) 44 Civil CC (Born); Harishchandra Bivani
                                                                E
     v. Stock Holding Corporation of India Ltd. (2006) 4
     Mah LJ 3Sl; Magma Leasing Ltd. v. State ofWB. (2007)
     3 CIIN 574; Rajesh Agarwal vs. State ILR (2010) 6
     Del 610; TGN Kumar v. State of Kenda (2011) 2 SCC
     772 : [2011] 1 SCR 436 - referred to
                     Case Law Reference                         F
[2010] 5 SCR 67S                referred ·to         Para4
c2012) 3 sec 255                  referred to       Para4
[2003] 5 Suppl. SCR S35           referred to       Para 7
[2007] 12 SCR 1134                referred to       Para 7
                                                                G
[2010) 6 SCR 507                  referred to       Para 7
[2012] 14 SCR 712                 referred to       Para 7
[2013] 11 SCR 74                  referred to       Para 7
[2014) 7 SCR 743                  referred to       Paras
[2001] 1 SCR 54                   referred to       Paras       H
74              SUPREME COURT REPORTS                       [2017] IO S.C.R.


A    [2010] 1 SCR 219            relied on       Para 9
     [2014] 10 SCR 1061          referred to     Para 10
     (2004) 13 sec 324           referred to     Para 11
     [1988] (2) Suppl. SCR 571   referred to     Para 12
     [2002] 1 SCR 269            referred to     Para 12
B    [2010] 6 SCR 822            referred to     Para 12
     [2012] 7 SCR 1              referred to     Para 12
     [2014] 5 SCR 386            referred to     Para 13
     [2011] 1 SCR 436            referred to    Para 14
     [2001] 2 Suppl. SCR 219     relied on      Para 15
c
     (2017) 5 SCC 702            relied on      Para 17
           CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
     No. 1731 of2017
        From the Judgment and Order dated 21.04.2017 of the High Court
D of Punjab and Haryana at Chandigarh in Criminal No. M-13631 of2017
     (0 & M).
                                     WITH
          Cr!. A. Nos. 1732 and 1733 of 2017
          K. V. Viswanathan, Sr. Adv. (AC), Rishi Malhotra, Ravi Raghunath,
E    Dhananjay Ray, Siddhant Buxy, Jaishree Viswanathan, Rakesh Kumar,
     Gaurav Manhotia, Anurag, Mrs. B. Sunita Rao, Akshat Goel, LiaqatAli,
     Dushyant Tiwari, Advs. with him for the appearing parties.
          The Judgment of the Court was delivered by
            ADARSH KUMAR GOEL, J. I. Leave granted. These
F    appeals have been preferred against the order dated 21" April, 2017 of
     the High Court of Punjab and Haryana at Chandigarh.in CRLM
     Nos.13631, 13628 and 13630of20l 7. The High Court rejected the prayer
     of the appellants for compounding the offence under Section 138 of the
     Negotiable Instruments Act, 1881 (the Act) on payment of the cheque
     amount and in the alternative for exemption from personal appearance.
G
            2. When the matters came up for hearing before this Court earlier,
     notice was issued to consider the question "as to how proceedings for
     an offence under Section 138 of the Act can be regulated where the
     accused is willing to deposit the cheque amount. Whether in such a
     case, the proceedings can be closed or exemption granted from personal
H
      MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                            75
      ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.]

 appearance or any other order can be passed." The Court also appointed        A
 Mr. K.V. Viswanathan, learned senior counsel to assist the Court as
 amicus and Mr. Rishi Malhotra, learned counsel to assist the amicus.
 Accordingly, learned amicus has made his submissions and also filed
 written submissions duly assisted by S/Shri Rishi Malhotra, Ravi
 Raghunath, Dhananjay Ray and Sidhant Buxy, advocates. We place on             B
 record our appreciation for the services rendered by learned amicus and
 his team.
         3. Few Facts: The Respondent Kanchan Mehta filed complaint
  dated 15'h July, 2016 alleging that the appellants were to pay a monthly
  amount to her under an agreement. Chequ.e dated 31" March, 2016 was
. given for Rs.29,319/- in discharge of legal liability but the same was
  returned unpaid for want of sufficient funds. In spite of service of legal
  notice, the amount having not been paid, the appellants committed the
  offence under Section 138 of the Act. The Magistrate vide order dated
  24'h Aug11st, 2016, after cansidering the complaint and the preliminary
  evidence, summoned the appellants. The Magistrate in the order dated         D
  91hNovember, 2016 observed that the case could not be tried summarily
  as sentence of more than one year may have to be passed and be tried
  as summons case. Notice of accusation dated 91h November, 2016 was
  served under Section 251, Cr.P.C.
        4. Appellant No.2, who is the Director of appellant No. I, made a      E
 statement that he was ready to make the payment of the cheque amount.
 However, the complainant declined to accept the demand draft. The
 case was adjourned for evidence: The appellants filed an application
 under Section 147 of the Act on l2 1h January, 2017 relying upon the
 judgment of this Court in Damodar S. P~abhu versus Sayed Babalal
 H. 1 The application was dismissed in view of the judgment of this Court      F
 in JIK Industries Ltd. versus Amarlal versus Jumani2 which required
 consent of the complainant for compounding. The High Court did not
 find any ground to interfere with the order of the Magistrate. Facts of
 other two cases are identical. Hence these appeals.
       5. We have heard learned counsel for the parties and learned            G
 amicus who has been duly and ably assisted by S/Shri Rishi Malhotra,
 Ravi Raghunath, Dhananjay Ray and Sidhant Buxy, advocates. We
 proceed to consider the question.
  1
   c2010) 5 sec 663
 ' (2012) 3 sec 255                                                            H
76              SUPREME COURT REPORTS                             [2017] 10 S.C.R.



A          6. The object of introducing Section 138 and other provisions of
     Chapter XVII in the Act in the year l 988J was to enhance the
     acceptability of cheques in the settlement of liabilities. The drawer of
     cheque is made liable to prosecution on dishonour of cheque with
     safeguards to prevent harassment of honest drawers. The Negotiable
     Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to
B
     amend the Act was brought in, inter-alia, to simplify the procedure to
     deal with such matters. The amendment includes provision for service
     of summons by Speed Post/Courier, summary trial and making the offence
     compoundable.
          7. This Court has noted that the object of the statute was to
c facilitate smooth functioning of business transactions. The provision is
  necessary as in many transactions cheques were issued merely as a
  device to defraud the creditors. Dishonour of cheque causes incalculable
  loss, injury and inconvenience to the payee and credibility of business
  transactions suffers a setback4 • At the same time, it was also noted that
D nature of offence under Section 138 primarily related to a civil wrong
  and the 2002 amendment specifically made it compoundable5 • The
  offence was also described as 'regulatory offence'. The burden of
  proof was on the accused in view of presumption under Section 139 and
  the standard of proof was of "preponderance of probabilities"6• The
  object of the provision was described as both punitive as well as
E compensatory. The intention of the provision was to ensure that the
  complainant received the amount of cheque by way of compensation.
  Though proceedings under Section 138 could not be treated as civil suits
  for recovery, the scheme of the provision, providing for punishment with
  imprisonment or with fine which could extend to twice the amount of the
F cheque   or to the both, made the intention oflaw clear. The complainant
  could be given not only the cheque amount but double the amount so as
  to cover interest and costs. Section 357(l)(b) of the Cr. P.C. provides
  for payment of compensation for the loss caused by the offence out of
  the fine 7 • Where fine is not imposed, compensation can be awarded
  under Section 357(3) Cr.P.C. to the person who suffered loss. Sentence
G in default can also be imposed. The object of the provision is not merely
     3
       Vide the Banking, Public Financial Institutions and Negotiable Instruments Laws
       (Amendment) Act, 1988
     4
       Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004) 2 SCC 235
     ' Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd.(2008) 2 SCC 305
     6
       Rangappa v. Sri Mohan (2010) 11SCC441
H    7
       R. Vijayan v. Baby (2012) I SCC 260
   MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                                      77
   ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.]

penal but to make the accused honour the negotiable instruments 8 •                   A
        8. In view of the above scheme, this Court held that the accused
could make an application for compounding at the first or second hearing
in which case the Court ought to allow the same. If such application is
made later, the accused was required to pay higher amount towards
cost etc 9 • This Court has also laid down that even ifthe payment of the B
cheque amount, in terms of proviso (b) to Section 138 of the Act was not
made, the Court could permit such payment being made immediately
after receiving notice/summons of the court 10• The guidelines in Damodar
(Supra) have been held to be flexible as may be necessary in a given
situation 11 • Since the concept of compounding involves consent of the
complainant, this Court held that compounding could not be permitted C
merely by unilateral payment, without the consent of both the parties 12 •
       9. While the object of the provision v.:as to lend credibility to cheque
transactions, the effect was that it put enormous burden on the courts'
dockets. The Law Commission in its 213' 11 Report, submitted on 24'h
November, 2008 noted that out of total pendency of 1.8 crores cases in D
the country (at that time), 38 lakh cases (about 20% of total pendency)
related to Section 138 of the Act. This Court dealt with the issue of
interpretation of2002 amendment which was incorporated for simplified
and speedy trials. It was held that the said provision laid down a special
code to do away with all stages and processes in regular criminal trial 13 • E
This Court held that once evidence was given on affidavit, the extent
and nature of examination of such witness was to be determined by the
Court. The object of Section 145(2) was simpler and swifter trial
procedure. Only requirement is that the evidence must be admissible
and relevant. The affidavit could also prove documents 14 • The scheme
of Sections 143 to 147 of the Act was a departure from provisions of F
Cr.P.C. and the Evidence Act and complaints could be tried in a summary
manner except where the Magistrate feels that sentence of more than
one year may have to be passed. Even in· such cases, the procedure to
be followed may not be exactly the same as in Cr.P.C. The expression
'Lafarge Aggregates & Concrete India (P) Ltd. v. Sukarsh Azad (2014) 13 SCC 779 G
' Damodar S. Prabhu (supra)
 10
    c2006) 6 sec 456, c2001) 6 sec 555
 " Para 23 in Madhya Pradesh State Legal Services Authority versus Prateek Jain and
    Anr. (2014) 10 SCC 690
 12 RajneeshAggarwal v. Amit J. Bhalla (2001) I SCC 631
13 Mandvi Cooperative Bank Ltd. v. Ni mesh B. Thakore(2010) 3 SCC 83. paras 25, 26
 14 Para 41, ibid                                                                     H
78              SUPREME COURT REPORTS                       [2017] JO S.C.R.


A    ''as far as possible" in Section 143 leaves sufficient flexibility for the
     Magistrate so as not to affect the quick flow of the trial process. The
     trial has to proceed on day to day basis with endeavour to conclude the
     same within six months. Affidavit of the complainant can be read as
     evidence. Bank's slip or memo of cheque dishonour can give rise to the
     presumption of dishonour of the cheque, unless and until that fact was
B
     disproved.
         10. Again, this Court considered the matter in J. V. Baharu11i
  a11d Anr. etc. versus State of Gujarat and Anr etc. 15 and observed
  that the procedure prescribed for cases under Section 138 of the Act
  was flexible and applicability of Sl"ction 326(3) of the Cr.P.C. in not
c acting on the evidence already recorded in a summary trial did not strictly
  apply to the scheme of Section 143 of the Act 16 • This Court observed
  that the procedure being followed by the Mng!strates was not
  commensurate with the summary trial provisions and a successor
  Magistrate ought not to mechanically order de novo trial. This Court
D observed that the Court should make endeavour to expedite hearing of
  cases in a time bound manner. The Magistrate should make attempts to
  encourage compounding of offence at an early stage of litigation. The
  compensatory aspect of remedy should be given priority over the punitive
  aspect 17 •
E         11. While it is true that in Subrama11ium Sethurama11 versus
  State of Maharashtra 18 this Court observed that once the plea of the
  accused is recordeu under Section 252 of the Cr.P.C., the procedure
  contemplated under Chapter XX of the Cr.P.C. has to be followed to
  take the trial to its logical conclusion, the said judgment was rendered as
  per statutory provisions prior to 2002 amendment. The statutory scheme
F post 2002 amendment as considered in Ma11dvi Cooperative Bank and
  J. V. Baharuni (supra) has brought about a changt: in law and it needs
  to be recognised. After 2002 amendment, Section 143 of the Act confers
  implied power on the Magistrate to discharge the accused if the
  complainant is compensated io the satisfaction of the Court, where the
G accused tenders the cheque amount with interest and reasonable cost of
  litigation as assessed by the Court. Such an interpretation was consistent
  with the intention of legislature. The court has to balance the rights of
     " (2014) 10 sec 494
     16
        Para 43 of J.V. Baharuni (2014) 10 SCC 494
     17
        Para 60 of J.V. Baharuni (2014) 10 SCC 494
H    " (2004)13 sec 324
  MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                                        79
  ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.]

the complainant and the accused and also to enhance access to justice.                 A
Basic object of the law is to enhance credibility of the cheque transactions
by providing speedy remedy to the complainant without intending to punish
the drawer of the cheque whose conduct is reasonable or ·Where
, ,1mpensation to the complainant meets the ends of justice. Appropriate
order can be passed by the Court in exercise of its inherent power under               B
Section 143 of the Act which is different from compounding by consent
of parties. Thus, Section 258 Cr.P.C. which enables proceedings to be
stopped in a summons case, even though strictly speaking is not applicable
to complaint cases, since the provisions of the Cr.P.C. are applicable "so
far as may be", the principle of the said provision is applicable to a
complaint case covered by Section 143 of the Act which contemplates                    C
applicability of summary trial provisions, as far as possible, i.e. with such
deviation as may be necessary for speedy trial in the context.
        12. The sentence prescribed under Section 138 of the Act is upto
two years or with fine which may extend to twice the amount or with
both. What needs to be noted is the fact that power under Section                      D
357(3) Cr.P.C. to direct payment of comP.ensation is in addition to the
said prescribed sentence, if sentence of fine is not imposed. The amount
of compensation can be fixed having regard to the extent ofloss suffered
by the action of the accused as assessed by the Court. The direction to
pay compensation can be enforced by default sentence under Section
64 IPC and by recovery procedure prescribed under Section 431                          E
Cr.P.C. 19
        13. This Court in Indian Bank Association and Ors. versus
 Union of India and Ors. 20 approved the directions of the Bombay High
Court, Calcutta High Court and Delhi High Court in KSL and Industries
Ltd. v. Manna/al Khandelwal21, Indo International Ltd. versus                          F
State of Maharashtra 22, Harishchandra Biyani versus Stock Holding
Corporation of India Ltd. 23 , Magma Leasing Ltd. versus State of
 W.B. 24 and Rajesh Agarwal versus State 25 laying down simpler
" Hari Kishan v. Sukhbir Singh (1988) 4 SCC 551; Suganthi Suresh Kumar v. Jagdeeshan
   (2002) 2 SCC 420; K.A. Abbas H.S.A. v. Sabu Joseph (2010) 6 SCC 230; R. Mohan
   v. A.K. Vijaya Kumar (2012) 8 SCC 721; and Kumaran v. State of Kerala (2017) 7      G
   sec 411
'" (2014) 5 sec 590
21 2005 Cri LJ 1201 (Born)

" 2006 Cri LJ 208: (2005) 44 Civil CC (Born)
" (2006) 4 Mah LJ 381
" (2007) 3 CHN 574
" !LR (2010) 6 Del 610                                                                 H
80          SUPREME COURT REPORTS                       [2017] 10 S.C.R.


A procedure for disposal of cases under Section 138 of the Act. This
  Court directed as follows:
          "23. Many of the directions given by the various High Courts,
          in our view, are worthy of e1nulation by the criminal courts
          all over the country dealing with cases under Section 138
B         of the Negotiable Instruments Act, for which the following
          directi<ins are being given:
          23.J. The Metropolita/l Magistrate/Judicial Magistrate (MM!
          JM), on the day when the complaint under Section 138 of
          the Act is presented, shall scrutinise the complaint and, if
c         the complaillt is accompanied by the affida11it, and the
          affidavit alld the documents, if an); are found to be in order,
          take cognizance and direct issliance of summons.
          23.2. The MM/JM should adopt a pragmatic and realistic
          approach while issuing summons. Summons must be properly
D         addressed and sent by post as well as by e-mail address got
          from the complainant. The court, in appropriate cases, may
          take the assistance of the police or the llearby court to ser11e
          notice on the accused. For notice of appearance, a short
          date ,be fixed. If the summons is received back unserved,
          immediate follow-up action be taken.
E
          23.3. The court may indicate in the summons that if the
          accused makes an application for compounding of offences
          at the first hearing of the case and, if such an application is
          made, the court may pass appropriate orders at the earliest.
          23.4. The court should direct the accused, when he appears
F
          to furnish a bail bond, to ensure his appearance during trial
          and ask him to take notice under Section 251 CrPC to enable
          him to enter his plea of defence and fix the case for defence
          evidence, unless an application is made by the accused under
          Section 145(2) for recalling a witness for cross-examination.
G
          23.5. The court concerned must ensure that examination-in-
          ch ief, cross-examination and re-examination of the
          complainant must be conducted within three months of
          assigning the case. The court has option of accepting
          affidavits of the witnesses instead of examining them in the
H         court. The witnesses to the complaint and the accused must
   MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                              81
   ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.]

        be available for cross-examination as and when there is               A
        direction to this effect by the court.
        24. We, therefore, direct all the criminal courts in the country
        dealing with Section 138 cases to follow the abovementioned
        procedures for speedy and expeditious disposal of cases
        falling under Section 138 of the Negotiable Instruments Act.          B
         The writ petition is, accordingly, disposed of. as above."
       14. We may, however, note that this Court held that general
directions ought not to be issued which may deprive the Magistrate to
exercise power under Section 205 Cr.P.C. 26 We need to clarify that the
judgment of this Court is not a bar to issue directions which do not affect   c
the exercise of power under Section 205, to require personal attendance
wherever necessary. Needless to say that the judgment cannot be read
as affecting the power of the High Court under Article 225 of the
Constitution read with Articles 227 and 235 to issue directions to
subordinate courts without affecting the prevailing statutory scheme.
                                                                              D
       15. In Bhaskar Industries Ltd. versus Bhiwani Denim &
Apparels Ltd. 27, this Court considered the issue of hardship caused in
personal attendance by an accused particularly where accused is located
far away from the jurisdiction of the Court where the complaint is filed.
This Court held that even in absence of accused, evidence can be recorded
in presence of counsel under Section 273 Cr.P.C. and Section 317 Cr.P.C.      E
permitted trial to be held in absence of accused. Section 205 Cr.P.C.
specifically enabled the Magistrate to dispense with the personal
appearance. Having regard to the nature of offence under Section 138,
this Court held that the Magistrates ought to consider exercise of the
jurisdiction under Section 205 Cr.P.C. to relieve accused of the hardship     F
without prejudice to the prosecution proceedings. It was observed :
        "15. These are days when prosecutions for the offence under
        Section I 38 are galloping up in criminal courts. Due to the
        increase of inter-State transactions through the facilities of
        the banks it is not uncommon that when prosecutions are G
        instituted in one State the accused might belong to a different
        State, sometimes a far distant State. Not very rarely such
        accused would be ladies also. For prosecution under Section
        138 of the NI Act the trial should be that of summons case.
" TGN Kumar v. State of Kern la (2011) 2 SCC 772
21
   (2001) 1 sec 401                                                           H
82                SUPREME COURT REPORTS                    [20 i /J I 0 S.C.R.


A               When a magistrate feels that insistence of personal
                attendance of the accused in a summons case, in a particular
                situation, would inflict enormous hards/zip and cost to a
                particular accused, it is open to the magistrate to consider
                how he can relieve such an accused of the great hardships,
                without causing prejudice to the prosecution proceedings."
B
          16. It is, thus, clear that the trialS under Chapter XVII of the Act
  are expected normally to be summary trial. Once the complaint is filed
  which is accompanied by the dishonored cheque and the bank's slip and
  the affidavit, the Court ought to issue summons. The service of summons
  can be by post/e-mail/courier and ought to be properly monitored. The
c summons ought to indicate that the accused could make specified payment
  by deposit in a particular account before the specified date and inform
  the court and the complainant by e-mail. In such a situation, he may not
  be required to appear if the court is satisfied that the payment has not
  been duly made and if the complainant has no valid objection. If the
D accused is required to appear, his statement ought tu be recorded forthwith
  and the case fixed for defence evidence, unle's cumplaintant's witnesses
  are recalled for examination.
         17. Having regard to magnitude ofchalkn,:e pused by cases filed
  under Section 138 of the Act, which constitute ahuut 20% of the total
E number    of cases filed in the Courts (as per 2 l 31h Report of the Law
  Commission) and earlier directions of this Court in this regard, it appears
  to be necessary that the situation is reviewed by the High Courts and
  updated directions are issued. Interactions, action plans and monitoring
  are continuing steps mandated by Articles 39A and 21 of the Constitution
  to achieve the goal of access to justice28 • Use of modern technology
F needs to be considered not only for paperless courts but also to reduce
  overcrowding of courts. There appears to be need to consider categories
  of cases which can be partly or entirely concluded ..online" without
  physical presence of the parties by simplifying procedures where seriously
  disputed questions are not required to be adjudicated. Traffic challans
G may perhaps be one such category. Atleast some number of Section 138
  cases can be decided on line. If complaint with affidavits and documents
  can be filed online, process issued on! ine and accused pays the specified
  amount online, it may obviate the need for personal appearance of the
  complainant or the accused. Only if the accused contests, need for

H    28
          Hussain vs. Union of India (2017) 5 SCC 702
  MIS. METERS AND lNSTRUMENTS PRIVATE LIMITED &                                   83
  ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.]

appearance of parties may arise which may be through counsel and A
wherever viable, video conferencing can be used. Personal appearances
can be dispensed with on suitable self operating conditions. This is a
matter to be considered by the High Courts and wherever viable,
appropriate directions can be issued.
      18. From the above discussion following aspects emerge:                     B
       i) Offence under Section 138 of the Act is primarily a civil
          wrong. Burden of proof is on accused in view presumption
          under Section 139 but the standard of such proof is
          "preponderance of probabilities". The same has to be normally
          tried summarily as per provisions of summary trial under the            c
          Cr.P.C. but with such variation as may be appropriate to
          proceedings under Chapter XVII of the Act. Thus read,
          principle of Section 258 Cr.P.C. will apply and the Court can
          close the proceedings and discharge the accused on
          satisfaction that the cheque amount with assessed costs and
          interest is paid and if there is no reason to proceed with the          D
          punitive aspect.
       ii) The object of the provision being primarily compensatory,
           punitive element being mainly with the object of enforcing
           the compensatory element, compounding at the initial stage
           has to be encournged but is not debarred at later stage subject        E
           to appropriate compensation as may be found acceptable to
           the parties or the Court.
       iii) Though compounding requires consent of both parties, even
            in absence of such consent, the Court, in the interests of justice,
            on being satisfied that the complainant has been duly                 F
            compensated, can in its discretion close the proceedings and
            discharge the accused.
       iv) Procedure for trial of cases under Chapter XVII of the Act
           has normally to be summary. The discretion of the Magistrate
           under second proviso to Section 143, to hold that it was G
           undesirable to try the case summarily as sentence of more
           than one year may have to be passed, is to be exercised after
           considering the further fact that apart from the sentence of
           imprisonment, the Court has jurisdiction under Section 357(3)
           Cr.P.C. to award suitable compensation with default sentence H
84           SUPREME COURT REPORTS                        [2017) IC 5.C.R.


A              under Section 64 IPC and with further powers of recovery
               under Section 431 Cr.P.C. With this approach, prison sentence
               of more than one year may not be required in all cases.
           v) Since evidence of the complaint can be given on affidavit,
              subject to the Court summoning the person giving affidavit
B             and examining him and the bank's slip being prima facie
              evidence of the dishonor of cheque, it is unnecessary for the
              Magistrate to record any further preliminary evidence. Such
              affidavit evidence can be read as evidence at all stages of
              trial or other proceedings. · The manner of examination of
              the person giving affidavit can be as per Section 264 Cr.P.C.
c             The scheme is to follow summary procedure except where
              exercise of power under second proviso to Section 143
              becomes necessary, where sentence of one year may have
              to be awarded and compensation under Section 357(3) is
              considered inadequate, having regard to the amount of the
D             cheque, the financial capacity and the conduct of the accused
              or any other circumstances.
         19. In view of the above, we hold that where the cheque amount
  with interest and cost as assessed by the Court is paid by a specified
  date, the Court is entitled to close the proceedings in exercise of its
E powers under Section 143 of the Act read with Section 258 Cr.P.C. As
  already observed, normal rule for trial of cases under Chapter XVII of
  the Act is to follow the summary procedure and summons trial procedure
  can be followed where sentence exceeding one year may be necessary
  taking into account the fact that compensation under Section 357(3)
  Cr.P.C. with sentence ofless than one year will not be adequate, having
F regard to the amount of cheque, conduct of the accused and other
  circumstances.
         20. In every complaint under Section 138 of the Act, it may be
  desirable that the complainant gives his bank account number and if
  possible e-mail ID of the accused. If e-mail ID is available with the
G Bank where the accused has an account, such Bank, on being required,
  should furnish such e-mail ID to the payee of the cheque. In every
  summons, issued to the accused, it may be indicated that if the accused
  deposits the specified amount, which should be assessed by the Court
  having regard to the cheque amount and interest/cost, by a specified
H date, the accused need not appear unless required and proceedings may
  MIS. METERS AND INSTRUMENTS PRIVATE LIMITED &                                85
  ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.]

be closed subject to any valid objection of the complainant. If the accused A
complies with such summons and informs the Court and the complainant
by e-mail, the Court can ascertain the objection. if any. of the complainant
and close the proceedings unless it becomes necessary to proceed with
the case. In such a situation, the accused's presence can be required,
unless the presence is otherwise exempted subject to such conditions as B
may be considered appropriate. The accused, who wants to contest the
case, must be required to disclose specific defence for such contest. It
is open to the Court to ask specific questions to the accused at that
stage. In case the trial is to proceed, it will be open to the Court to
explore the possibility of settlement. It will also be open to the Court to
consider the provisions of plea bargaining. Subject to this, the trial can C
be on day to day basis and endeavour must be to conclude it within six
months. The guilty must be punished at the earliest as per law and the
one who obeys the law need not be held up in proceedings for long
unnecessarily.                                                     '

      21. It will be open to the High Courts to consider and lay down D
category of cases where proceedings or part thereof can be conducted
online by designated courts or otherwise. The High Courts may also
consider issuing any further updated directions for dealing with Section
138 cases in the light of judgments of this Court.
       The appeals are disposed of.                                            E
       It will be open to the appellants to move the Trial Court afresh for
any further order in the light of this judgment.


Devika Gujral                                           Appeals disposed of.