April 15, 2021

Applicability of Section 202 Criminal Procedure Code, 1973 (“CrPC”) (Re: further inquiry) to the Negotiable Instruments Act, 1881 (“NI Act”) cases has been a matter of great divergence, as various High Courts in the country have given differing views. Pertinently, it is one of the contributory factors in delay of disposal of NI Act cases at the magistracy level.

On careful perusal of rulings on this subject, two views emerge:

        First View – Section 202 CrPC has limited application to NI Act cases. (See: Bansilal S. Kabra Case[1]; Rajesh Chalke v. State of Maharashtra[2]{vide implied application}; Vinod vs. SBI Global Factors Ltd.[3]; Mesh Trans Gears Private Limited Case[4]; Rajul Ketan Raj Case[5]; Girish Dharmchand Chordiya Case[6]; Kunal Rajesh Kothari Case[7]; and Mohit Dwivedi vs. Jagajog & Ors. Case[8])

        Second View – Section 202 CrPC has mandatory application to NI Act cases. (See: Nilu Chopra & Anr. vs. Bharti[9]; K.T. Joseph vs. State of Kerala[10]; S.C. Mathur (Capt.) & Anr. vs. Elektronik Lab & Ors[11]; Netcore Solutions Pvt. Ltd. vs. Pincale Teleservices Pvt. Ltd.[12] and Parth Bhadresh Mehta & Ors.[13])

Pertinently, Kerela High Court[14] (Ernakulum Bench) in ‘K.S. Joseph vs. Philips Carbon Black Ltd. refused to interfere on issue of cognizance being bad and asked thePetitioner/Accused to raise the same before Magistrate Court concerned. The matter reached the Hon’ble Supreme Court of India, wherein, Apex Court did not divulge into the requirement of enquiry under Section 202 CrPC to NI Act, instead left this question of law open at Para-10[15], and left it to be determined by the Magistrate. Pending matter has reached Hon’ble Supreme Court of India on the issue of applicability, if any, of Section 202 CrPC to NI Act, which is pending adjudication currently before the Apex Court.

In view of the aforesaid conflict, the following suggestions can be considered in the interregnum with respect to the applicability of Section 202 CrPC to NI Act, cases, which read as under:-

i. Application of mind must be made by Magistrate Court at stage of Sections 200/202/203 CrPC, while taking cognizance and issuing process under Section 204 CrPC to meet the test of sufficient ground for proceeding in the light of check-list provided for attraction of deemed offence as per proviso (a, b & c) to Section 138 r/w 142(1)(a),(b) r/w presumptions under NI Act.

ii. The Magistrate must be cognizant of the twin requirements & challenge at threshold-of giving a bona fide Complainant a fuller and more exhaustive opportunity to substantiate his genuine grievance and of showing the door to a vexatious Complainant trying to abuse the criminal process.

iii. Ordinarily, process can be issued under Section 204 CrPC at the end of enquiry under Section 200 CrPC i.e. after recording the sworn statement of Complainant and his witnesses, if any, present if the requisite satisfaction that there is sufficient ground for proceeding can be entertained by Magistrate on the materials available.

iv. Such enquiry may be conducted by Magistrate himself or he may direct an investigation to be conducted by a police officer or any other person.

v. Magistrate, in case of person residing outside his jurisdiction, must ordinarily come to a conclusion whether there is sufficient ground to proceed against such Accused, only after conducting an enquiry under Section 202 CrPC. Such enquiry may be conducted by Magistrate himself or he may direct an investigation to be conducted by a police officer or any other person.

vi. Notwithstanding, fact that requirement of (v) is introduced by a specific amendment substituting the permissive “may” by the command of “shall”, non-compliance does not vitiate cognizance taken and consequent issue of process as the purpose of such an enquiry under Sections 200 & 202 CrPC is only to decide whether or not there is sufficient ground for proceeding.

vii. Section 202 CrPC as amended applies to prosecutions under Section 138 NI Act also in light of Section 4(2) CrPC, and in absence of any specific contra provision in Section 138 NI Act.

viii. Ordinarily in a prosecution under Section 138 NI Act, if a proper complaint is filed supported by necessary documents and a proper Affidavit is filed under Section 145 NI Act, it may not be necessary for Magistrate to proceed to hold enquiry under Section 202 CrPC, as requisite satisfaction can be entertained at end of Enquiry under Section 200 CrPC itself.

ix. But in a case where there is possibility of dispute regarding territorial jurisdiction or dispute regarding complicity alleged with the help of Section 141 NI Act, it will be proper, necessary & advisable for the Magistrate to hold Enquiry under Section 202 CrPC, if requisite satisfaction is not induced by the materials placed before it, ibid.

x. Even in such enquiry under Section 202 CrPC in a prosecution under Section 138 NI Act, it is not invariably necessary to examine Complainant and his witnesses personally on oath. They can be directed to file Affidavit or Additional Affidavit under Section 145 NI Act on the specific aspects where materials are found necessary or the Court entertains doubts. Section 145, ibid, shall apply to the stage of Enquiry under Section 202 CrPC also. Courts must be specifically cognizant of need for expedition in prosecution under Section 138 NI Act.

xi. In a case where requisite satisfaction under Section 204 CrPC can be entertained convincingly by the materials available on record, the non-compliance with Section 202 CrPC does not ipso-facto vitiate cognizance taken or process issued. Section 202 CrPC does not contemplate or mandate a ritualistic enquiry merely to satisfy the letter of the procedural/adjectival law even after requisite satisfaction under Sections 203/204 CrPC is convincingly entertained by the Court. In this sense, requirement introduced by Amendment is only directory and not mandatory, though all Courts are certainly expected to follow that stipulation.

As can be seen from the above, application of Section 202 CrPC to NI Act from the policy lens with only ‘need based’ (limited/ directory interpretation) application, will go long way in removal of scuttle & delays at the Magisterial level.

Lastly, this issue of extent of applicability of Section 202 CrPC to NI Act, ibid, is also being considered, inter-alia, by the Hon’ble Supreme Court of India in a Constitution Bench case titled as “Makwana Mangaldas Tulsidas vs. The State of Gujarat & Anr., [SLP (Crl.) No.5464 / 2016, now converted into Suo Moto W.P. (Crl.) No. 02 of 2020], which is pending consideration at the moment.

***

Views are personal of the author.

Rajat Mathur [B.Com (H) SRCC, DU; LLB, Law Faculty, DU]  is a practicing lawyer in Delhi. Despite gaining experience in Civil and Tax Law, he has worked extensively on the criminal side and has represented bureaucrats and Government servants in matters related to the ‘Coal Block Allocation Scam case’. At 33 years of age, in 2019 Mr. Mathur got the controversial acquittal of former Coal Secretary, Mr. H. C. Gupta, a decorated IAS office (now retired) in the high-profile case.

In writing this article, Mr Mathur was assisted by Srish Kumar Mishra (Campus Law Centre, Law Faculty, DU), a practicing advocate.


 [1] Reported in 2010 ALL MR (Cri) 3168

 [2] Reported in 2011 (1) MHLJ 244 (FB)

 [3] Reported in 2011 (4) MHLJ 282

 [4] Reported 2013 (6) KARLJ 592

 [5] Reported in 2016 (5) MHLJ 58

 [6] Reported in 2018 (3) BOMCR (CRI) 473

 [7] (2018) 2 DCR 560

 [8] Reported in (2019) 2 NEJ 684

 [9] Reported in (2009) 10 SCC 184

 [10] Reported in (2009) 15 SCC 199

 [11] Reported in 2010 (8) LJ Soft 103

 [12] Reported in 2013 ALL MR (Cri) 1377

 [13] Reported in 2019 (5) MHLJ 771

 [14] Reported in 2012 SCC Online Ker 20411

 [15] Reported in (2016) 11 SCC 105 (Paras 1 & 10)

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