Delhi High Court: In NI Act cases metropolitan magistrate’s powers can’t be usurped by parties with malafide intentions

Delhi High Court: In NI Act cases metropolitan magistrate’s powers can’t be usurped by parties with malafide intentions

Holds the Parliament enacted the statute with the aim of expediting trial in such matters

The Delhi High Court has said that in many Negotiable Instruments Act, 1881, cases, the petitioners, with malafide intentions, and to prolong the litigation, raise false and frivolous pleas. They consider the high court as their only option to do so.

The bench comprising Justice Rajnish Bhatnagar added that instead of following due procedure of law under the Act and the CrPC, even petitioners with genuine defence followed the same approach by misreading the provisions.

The judge held, "On this, the court is made to step into the shoes of the metropolitan magistrate and examine their defence first and exonerate them."

He added, "The high court cannot usurp the powers of the metropolitan magistrate and entertain a plea of the accused, as to why he should not be tried under Section 138 of the Negotiable Instruments Act. This plea is to be raised by the accused before the magistrate under Section 251 of the Cr.PC and under Section 263(g) of the Cr.PC.”

The judge dismissed a plea challenging the proceedings and summoning the order issued against the directors of Sure Waves MediaTech Private Limited in a case under Section 138 of the NI Act.

The bench further remarked that the Act provided sufficient opportunity to a person who issued the cheque. It said that once a cheque was dishonored, the person was given an opportunity to pay the cheque amount by the issuance of a notice and even after that if he did not pay, he was bound to face criminal trial and consequences.

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

The bench maintained, "Once the complainant has brought forward his case by giving his affidavit about the issuance of the cheque, the dishonor of the cheque, and issuance of the demand notice, etc., he can be cross-examined only after making an application before the court as to on what point he wants to cross-examine the witness(es). Then only the court shall recall the witness by recording the reasons."

It further said that Sections 143 and 145 of the NI Act were enacted by the Parliament of India with the aim of expediting trials in such cases.

The court further stated, "The provisions of summary trial enable the respondent to lead the 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, can enter his plea on the very first day of his appearance. Thereafter, he can 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.”

The judge further said that if the accused appeared after being served the summons, the metropolitan magistrate would have to ask him to furnish the bail bond. This was to ensure his appearance during the trial and to take notice under Section 251 CrPC and enter his plea of defence and fix the case for defence evidence. This would happen unless an application was made by the accused under Section 145(2) of the Act for recalling a witness for cross-examination on the plea of defence.

The court observed, "If there is an application u/s 145(2) of NI Act for recalling a witness of the 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 the complainant. Once the summoning orders in the cases have been issued, it is the obligation of the accused to take notice under Section 251 of Cr. PC., if not already done, 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 the metropolitan magistrate."

Explaining the situation on the plea that the petitioner-directors were only nominees and non-executive directors of the accused company at the relevant time, the court after perusing Form No. MGT-7 said that the same did not show anywhere that the petitioners were non-executive directors.

Thus, while upholding the order of the trial court, the bench stated, "Furthermore, the petitioners have been categorically mentioned as 'Directors of 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."