S.138 NI Act Case Cannot Fail For Non-Examination Of Authorised Representative: Calcutta High Court

The Calcutta High Court on 20 May held that a complaint under Section 138 of the Negotiable Instruments Act, 1881 cannot be rejected solely on the ground that the complainant's original authorised representative was not examined, where the court could have exercised powers under Section 311 CrPC to summon the witness and ensure a just decision.

Justice Ajoy Kumar Mukherjee allowed the appeal filed by Shriram Transport Finance Co. Ltd. and set aside the judgment dated 27 August 2021 passed by the Metropolitan Magistrate acquitting the borrower. He held:

“It has been rightly canvassed by learned Counsel appearing for the appellant that even if it was in the mind of the court that earlier authorized representative of the complainant who filed the complaint is a vital witness for reaching to a just decision of the case, what prevented learned Magistrate to invoke his power under 311 of the Code of Criminal Procedure to summon the said person and to compel his attendance before the court to do complete justice. But by no stretch of imagination there can be an order of acquittal on such technical score. In fact court below was not justified in observing that failure of the prosecution to bring the first authorized representative in the witness box is fatal.”

The case arose from a complaint filed by Shriram Transport Finance Co. Ltd. against the borrower under Section 138 of the NI Act. The company alleged that the borrower issued a cheque dated 16 January 2013 for Rs. 1,72,276 towards repayment of dues arising from a vehicle refinance transaction. The cheque was dishonoured on 18 January 2013 due to insufficiency of funds. Despite issuance of a statutory demand notice dated 4 February 2013, the amount remained unpaid.

The Trial Court acquitted the accused on the ground that Sandip Chatterjee, the complainant company's original authorised representative who had filed the complaint and affidavit-in-chief, was not available for cross-examination after leaving the organisation. During the pendency of proceedings, Jayanta Halder was substituted as the authorised representative of the company.

The High Court held that the prosecution case was primarily based on documentary evidence and that the core issue was whether the complainant had established a prima facie case and whether the accused had rebutted the statutory presumption under Section 139 of the NI Act. It held:

“It is undoubtedly true that the entire prosecution case herein is based on documentary evidence, and the offence alleged is punishable under section 138 of the N.I. Act. Accordingly what is required to be adjudicated by the court is whether from the available documents the complainant would have raised prima facie case in his favour and then whether the accused could discharge the burden of presumption envisaged under section 139 of the N.I. Act. Unfortunately the order of acquittal has been recorded by the court below on technical score which runs contrary to the legislative object and purpose for which chapter XVIII of the N.I. Act was introduced.”

The Court further held that substitution of authorised representatives during trial is permissible in law and does not invalidate the prosecution, particularly where the case rests on documentary evidence.

It also observed that the Trial Court erred in treating the non-examination of the original authorised representative as fatal and failed to examine the substantive merits of the documentary record and statutory presumptions involved. It held:

“However having considered aforesaid facts and circumstances of the case and having observed that the court below was not justified in acquitting the accused solely on the ground that first authorized representative of the company was not examined and also considering the ground reality that different persons may represent the company and it is open for the dejure complainant/company to substitute the human face representing dejure entity with leave of the court, the judgment impugned which did not address the other issues involved in the case is not sustainable in the eye of law and therefore, liable to be set aside.”

Accordingly, the High Court set aside the acquittal, expunged the evidence of PW-1 and the statement of the accused under Section 313 CrPC, and directed the Trial Court to conduct a fresh trial from the plea stage, preferably within six months.