Appeal
Appeal against common judgment of High court
2. These appeals have been preferred by the appellant against the common judgment dated 12.06.2024 passed by the High Court of Judicature at Madras in Crl. O.P. Nos.929, 931 and 1034 of 2024 in Crl. A. SR. Nos.1282, 1300 and 1321 of 2024.
Core issue: Whether appeal would be maintainable against an order of acquittal in section 138 N.I Act cases?
2.1 The central issue arising for adjudication in the instant appeals is, whether an appeal would be maintainable under the proviso to Section 372 of the Code of Criminal Procedure, 1973 (for short, “CrPC”) against an order of acquittal passed in a case instituted upon a private complaint under Section 138 of the Negotiable Instruments Act, 1881 (for short, “the Act”), by treating the complainant in such a proceeding as a victim within the meaning ascribed to the term under Section 2(wa) of the CrPC.
Factual Background
3. Briefly stated, the facts of the case according to the appellant are as under:
Appellant (complainant) and Respondent (accused) are firms: 3.1 The appellant herein is the complainant being a registered partnership firm engaged in the business of finance. The appellant had extended financial assistance to the respondents over a period of time. It is the case of the appellant that respondent No.1 was the principal borrower and in order to avail further credit, he obtained additional loans through respondent Nos.2 and 3, who acted at his behest. Respondent No.1 is stated to be carrying on a catering business under the name and style of “R.R. Caterers”.
Appellant disbursed loans to respondent in several occasions: 3.2 Respondent No.1 had on earlier occasions availed several loans from the appellant. As on 27.04.2015, an outstanding sum of Rs. 16,00,000/- stood due from him. Seeking further financial accommodation, respondent No.1 along with his spouse entered into a sale agreement dated 15.05.2015 with one Mr. S. Babu, an employee of the appellant. Pursuant thereto, a further sum of Rs. 20,00,000/- was sanctioned to him carrying interest at 18% per annum.
3.3 Thereafter, on 13.05.2016, respondent No.2 availed a loan of Rs. 15,00,000/- from the appellant at an interest of 20% per annum, repayable in twelve equal monthly instalments of Rs. 1,25,000/-. Respondent No.2 made partial repayments through cash deposits dated 09.06.2016, 30.09.2016, and 15.07.2017. Subsequently, on 30.11.2016, respondent No.3 availed a loan of Rs. 12,00,000/- from the appellant, carrying interest at the rate of 24% per annum. The loan was repayable over a period of twelve months with EMIs fixed at Rs. 1,00,000/- each.
3.4 Thereafter, on 31.05.2017, respondent No.1 availed a further loan facility from the appellant to the tune of Rs. 21,00,000/-, carrying interest at 24% per annum. The interest component, amounting to Rs. 2,94,000/-, was deducted upfront, and the net sum of Rs. 18,06,000/- was disbursed to respondent No.1. The loan was repayable over a period of seven months in equated monthly instalments of Rs. 3,00,000/- each.
3.5 A few months later, on 17.07.2017, respondent No.1 secured an additional loan from the appellant in a sum of Rs. 15,00,000/-, with interest agreed at 22.5% per annum. From the sanctioned amount, Rs. 1,42,500/- was appropriated towards interest and the net principal of Rs. 13,57,500/- was determined. On the specific request of respondent No.1, one EMI of Rs. 3,00,000/- pertaining to the earlier loan was deducted and the effective disbursal was Rs. 10,57,500/-. The loan was structured to be repaid in five monthly instalments of Rs. 3,00,000/- each.
3.6 Subsequently, on 11.09.2017, respondent No.1 once again sought financial assistance and was sanctioned a further sum of Rs. 25,00,000/- carrying interest at the rate of 18% per annum. After deducting interest to an extent of Rs. 3,75,000/-, the net amount available stood at Rs. 21,25,000/-. At the instance of respondent No.1, two EMIs of Rs. 3,00,000/- each relating to earlier borrowings were adjusted and a final amount of Rs.15,25,000/- was disbursed. The loan tenure was fixed at ten months with equated monthly instalments of Rs. 2,50,000/-.
Respondent issued cheque and got dishonoured: 3.7 In partial discharge of his liability, respondent No.2 issued a cheque bearing No.145325 dated 29.10.2018 for a sum of Rs. 6,25,000/- in favour of the appellant. However, upon presentation of the said cheque on 30.10.2018, it was dishonoured with the endorsement “Funds Insufficient”. Similarly, respondent No.3 issued a cheque bearing no. 491078 dated 24.10.2018 for an amount of Rs. 10,00,000/- and when the same was presented on 30.10.2018, it was returned unpaid on 31.10.2018 for identical reasons.
Case was filed after due compliance of s. 138 N.I Act: 3.8 Thereafter, the appellant issued separate statutory notices dated 12.11.2018 under Section 138 of the Act, calling upon respondent Nos.2 and 3 to honour the respective amounts. Upon their failure to comply, the appellant instituted criminal complaints before the Fast Track Court at Alandur, which came to be registered as C.C. No. 417 of 2018 and C.C. No. 418 of 2018 respectively.
3.9 In discharge of his liability, respondent No.1 issued three cheques bearing nos. 000150, 000191, and 000192, all dated 28.03.2019, in favour of the appellant. The said cheques were presented for encashment on 21.06.2019 but were returned dishonoured on 24.06.2019 with the endorsement “Funds Insufficient”. Consequently, a statutory demand notice dated 08.07.2019 was issued by the appellant to respondent No.1 under Section 138 of the Act. Upon his failure to make good the payment, the appellant instituted a criminal complaint before the Fast Track Court at Alandur which was registered as C.C. No. 285 of 2019.
J.M acquitted the respondent: 3.11 By separate judgments dated 07.11.2023, the learned Judicial Magistrate acquitted respondent Nos.1 to 3 for the offence punishable under Section 138 of the Act in terms of Section 255(1) of the CrPC. The acquittal was premised on the finding that the appellant had failed to discharge the burden of proving the existence of a legally enforceable debt or liability and further, respondent Nos.1 to 3 succeeded in rebutting the statutory presumption available to the complainant under Section 139 of the said Act.
Appellants sought for special leave to file appeal: 3.12 Being aggrieved by the judgments dated 07.11.2023, the appellant preferred petitions before the High Court seeking special leave to appeal under Section 378(4) of the CrPC in Criminal Appeal SR Nos.1282, 1300 and 1321 of 2024 by assailing the judgments rendered in C.C. Nos. 417 of 2018, 418 of 2018 and 285 of 2019, dated 07.11.2023.
Hon’ble Madras High Court dismissed the special leave: 3.13 By the common impugned order dated 12.06.2024, the High Court dismissed the petitions filed by the appellant seeking leave to appeal. The High Court observed that the grant of leave under Section 378(4) of the CrPC is not a mere formality but a substantive safeguard designed to protect the rights of persons who, having been acquitted of criminal charges, ought not to be subjected to further protracted litigation. It was further held that the grant of leave is contingent upon the petitioner before the Appellate Court to establish a prima facie case that warrants interference. Referring to the present case, the High Court held that the appellant could not demonstrate that the conclusions arrived at by the learned Magistrate are so perverse or manifestly erroneous as to result in a miscarriage of justice. In the absence of such compelling grounds, the High Court declined to exercise its discretionary jurisdiction to grant leave to appeal. It is in these circumstances that the appellant has approached this Court by way of the present appeal assailing the legality and correctness of the impugned order of the High Court dated 12.06.2024.
Analysis
5. In Mallikarjun Kodagali (dead) represented through Legal representative vs. State of Karnataka, (2019) 2 SCC 752 (“Mallikarjun Kodagali”), there is a reference to four reports that have dealt with the rights of victims of crime and the remedies available to them. The same may be briefly discussed as under:
i. The first report is the 154th Report of the Law Commission of India of August, 1996. The said Report touched upon, inter alia, compensation to be paid to the victim of crime, their rehabilitation, etc.
ii. In March 2003, Justice Malimath Committee submitted its report on ‘Reforms of Criminal Justice System’. Paragraph 2.21 in the Chapter on Adversarial Rights under the subheading of ‘Victims Right to Appeal’, states as under:
“2.21. The victim or his representative who is a party to the trial should have a right to prefer an appeal against any adverse order passed by the trial court. In such an appeal he could challenge the acquittal, or conviction for a lesser offence or inadequacy of sentence, or in regard to compensation payable to the victim. The appellate court should have the same powers as the trial court in regard to assessment of evidence and awarding of sentence.”
There is also discussion on other rights of victims under the Chapter titled, ‘Justice to Victims’. In paragraph 6.(14)(v), Justice Malimath Committee made the following recommendations:
“6. (14)(v) The victim shall have a right to prefer an appeal against any adverse order passed by the court acquitting the accused, convicting for a lesser offence, imposing inadequate sentence, or granting inadequate compensation. Such appeal shall lie to the court to which an appeal ordinarily lies against the order of conviction of such court.”
iii. In July 2007, a Report of the Committee on the Draft National Policy on Criminal Justice was submitted which is also known as ‘Professor Madhava Menon Committee Report’. Observations with regard to providing victim-oriented criminal justice and a balance between the constitutional rights of an accused and victim of crime have been discussed. One of the suggestions made is that the victim must be impleaded in the trial proceedings so that such a party would have right to file an appeal against an adverse order, particularly an order of acquittal.
iv. In the 221st Report of the Law Commission of India submitted in April, 2009, it has been noted that as the law then stood, an aggrieved person could not file an appeal against an order of acquittal. However, a revision petition could be filed. Noting that the powers of a revisional court are limited and the process involved is cumbersome, a recommendation was made by the Law Commission that as against an order of acquittal passed by a Magistrate, a victim should be entitled to file an appeal before the revisional court. Similarly, in complaint cases, the appeal should be provided to the Sessions Court instead of the High Court. However, it was suggested that the aggrieved person or complainant should have the right to prefer an appeal with the leave of the appellate court.
v. It was further recommended that Section 378 of the CrPC requires an amendment with a view to enable filing of appeals in complaint cases also in the Sessions Court, of course, subject to the grant of special leave by it. Limited scope of powers of a revisional court under Section 401 of the CrPC was taken note of and it was suggested that there is a need to amend the CrPC.
5.1 Taking note of the aforesaid reports an amendment was brought to Section 372 of the CrPC with effect from 31.12.2009 by adding a proviso thereto.
5.2 The decisions of the Full Benches of the High Courts in the matter of interpretation of the proviso to Section 372 of the CrPC are highlighted by this Court in the case of Mallikarjun Kodagali. There are also Division Bench decisions of the High Courts taking different views.
Mallikarjun Kodagali:
5.3 This Court in Mallikarjun Kodagali, speaking through Lokur, J. referred to the Declaration of the Basic Principles of Justice for Victims of Crime and Abuse of Power adopted by the General Assembly of the United Nations in the 96th Plenary Session on 29.11.1985. It was observed in paragraphs 74, 75 & 76 as under:
“74. Putting the Declaration to practice, it is quite obvious that the victim of an offence is entitled to a variety of rights. Access to mechanisms of justice and redress through formal procedures as provided for in national legislation, must include the right to file an appeal against an order of acquittal in a case such as the one that we are presently concerned with. Considered in this light, there is no doubt that the proviso to Section 372 CrPC must be given life, to benefit the victim of an offence.
75. Under the circumstances, on the basis of the plain language of the law and also as interpreted by several High Courts and in addition the resolution of the General Assembly of the United Nations, it is quite clear to us that a victim as defined in Section 2(wa) CrPC would be entitled to file an appeal before the Court to which an appeal ordinarily lies against the order of conviction. …
76. … The language of the proviso to Section 372 CrPC is quite clear, particularly when it is contrasted with the language of Section 378(4) CrPC. The text of this provision is quite clear and it is confined to an order of acquittal passed in a case instituted upon a complaint. The word “complaint” has been defined in Section 2(d) CrPC and refers to any allegation made orally or in writing to a Magistrate. This has nothing to do with the lodging or the registration of an FIR, and therefore it is not at all necessary to consider the effect of a victim being the complainant as far as the proviso to Section 372 CrPC is concerned.”
Consequently, the appeals in the said case were allowed and the judgment and order of the High Court was set aside and the matter was remanded to the High Court to hear and decide the appeal against the judgment and order of acquittal once again.
5.4 In the said judgment, Deepak Gupta, J. was in complete agreement with Lokur, J. on the fact that victims must be permitted to access justice because it is sometimes found that the investigating and prosecuting agency do not follow up cases with zeal which is required and therefore proviso to Section 372 of the CrPC must be given a meaning which is realistic, liberal, progressive and beneficial to the victim of the offences. However, Deepak Gupta, J. was of the opinion that one cannot ignore the rights of the accused and the procedure prescribed by law. Hence, he disagreed with Lokur, J.’s view that a victim can file an appeal in the High Court without seeking leave to appeal in terms of Section 378(3) of the CrPC.
5.5 The only difference of opinion was with regard to whether the victim is required to seek leave of the High Court even in an appeal filed in the High Court. While dealing with this issue, it was observed by Deepak Gupta, J. that prior to the insertion of the proviso to Section 372 of the CrPC, the victim had no right to file an appeal unless he was also a complainant. This was because the State would represent the victim of the crime. Therefore, the question, whether the victim, while filing an appeal against the acquittal of an accused under proviso to Section 372 of the CrPC in the High Court, is required to obtain leave under Section 378(3) of the CrPC was answered in the affirmative. In this regard, reference was made to sub-section (4) of Section 378 which deals with an appeal filed by the complainant. In case the order of acquittal is passed in a case instituted upon a complaint, in such a case, an appeal has to be filed in the High Court. Such an appeal cannot be entertained unless the High Court grants special leave to appeal from the order of acquittal. Sub-section (5) provides the limitation period for filing the petition for grant of special leave to appeal in terms of sub-section (4). Sub-section (6) lays down that 17 in case the application for special leave to appeal filed by a complainant under sub-section (4) is refused, then, no appeal from that order of acquittal shall lie under sub-section (1) or under subsection (2). Thus, in a complaint case, complainant can file an appeal only by seeking special leave to appeal in case the appeal lay before the High Court.
5.6 Dealing with the concept of leave to appeal, especially when the appeals are filed in the High Court, it was observed by Deepak Gupta, J. that the presumption of innocence of every accused is fortified and strengthened when the said accused is acquitted by the trial court. Therefore, the High Court, at the initial stage of deciding whether the leave is to be granted or not, can go into the merits of the case and only if there are arguable points involved, would the High Court grant leave to appeal. This preliminary stage is provided to prevent meritless appeals being filed before the High Court and to ensure that innocent persons are not drawn to the High Court at the appellate stage.
Analysis of the Relevant Provisions of CrPC
6. Section 2 is the definition clause under which relevant definitions are extracted as under:
“ …………………… “
Scope and object of appeal
6.1 Chapter XXIX of the CrPC deals with appeals. The said Chapter delineates the statutory framework governing appeals. Section 372 unequivocally declares that no appeal shall lie from any judgment or order of a criminal court except as provided for by the CrPC itself or by any other law for the time being in force. In fact, Section 372 of the CrPC speaks of an embargo on the filing of an appeal from any judgment or order of a criminal court except as provided for by the CrPC or by any other law for the time being in force. Section 372 is couched in a negative language and it states that no appeal shall lie from any judgment or order of a criminal court except as provided for by the CrPC or by any other law for the time being in force. Section 372 is a preface to the chapter on appeals which in substance states that appeal can be filed only in accordance with what has been stated in the provisions to follow Section 372. The proviso was introduced to Section 372 by the Code of Criminal Procedure (Amendment) Act, 2008 (Act 5 of 2009), which came into effect from 31.12.2009. By virtue of this amendment, a limited right of appeal has been conferred upon the victim of an offence. On a reading of the proviso to Section 372, it is apparent that a victim shall have a right to prefer an appeal against: (i) any order passed by the court acquitting the accused or (ii) convicting for a lesser offence or (iii) imposing inadequate compensation. Such appeal shall lie to the court to which an appeal ordinarily lies against the order of conviction of such court. In fact, with effect from 31.12.2009 when clause (wa) to Section 2 was inserted to the definition of victim, proviso to Section 24 was also added which provides that the Court may permit the victim to engage an advocate of his choice to assist the prosecution under the said sub-section.
6.1.1 Further, with effect from 31.12.2009, Section 357A and Section 357B were inserted to the CrPC in the form of victim compensation scheme for providing compensation to the victim or his dependants who have suffered loss or injury as a result of the crime and who require rehabilitation. The compensation payable by the State Government under Section 357A is in addition to the payment of fine to the victim of offences under Section 326A, Section 376AB, Section376D, Section 376DA and Section 376DB of the Indian Penal Code. Also, Section 357C states that all hospitals, public or private, whether run by the Central Government, the State Government, local bodies or any other person, shall immediately, provide the first-aid or medical treatment, free of cost, to the victims of any offence covered under the aforesaid Sections.
6.2 While Section 374 of the CrPC deals with appeals from convictions with which we are not concerned in this case, what is of relevance is Section 378 which deals with appeal in case of acquittal. The remedy of an appeal against an acquittal is couched in certain conditions which are evident on a reading of subsections (4) and (5) of Section 378 of the CrPC vis-à-vis an appeal that could be filed by a complainant. However, the Parliament in its wisdom amended Section 372 of the CrPC by adding a proviso thereto by virtue of the Code of Criminal Procedure (Amendment) Act 2008 (5 of 2009), (with effect from 31.12.2009). It is hence necessary to unravel the definition of victim in clause (wa) of Section 2 of the CrPC which was also introduced along with proviso to Section 372 of the CrPC. A victim is defined to mean a person who has suffered any loss or injury caused by reason of the act or omission for which the accused person has been charged and the expression victim includes his or her guardian or legal heir;
Injury: 6.3 The expression injury, as defined in Section 44 of the Indian Penal Code, 1860 includes:
“Any harm whatever illegally caused to any person, in body, mind, reputation or property.”
6.3.1 Similarly, Black’s Law Dictionary defines injury to include property damage, bodily harm, or violation of a legal right.
Victim: 6.3.2 Additionally, the United Nations General Assembly’s Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power (1985) provides a broad and inclusive definition of victim. According to Article 1 of the Declaration:
“Victim means persons who, individually or collectively, have suffered harm through acts or omissions which involve physical or mental injury, emotional distress, economic loss or substantial impairment of their fundamental rights.”
6.3.3 Further, Article 2 extends the definition of victim to include immediate family members, dependents, or those who have intervened to assist a victim in crisis.
Victim explained
6.4 On a reading of the definition of ‘victim’, it is clear that the said expression is initially exhaustive and thereafter inclusive. The expression ‘victim’ means a person who has suffered any loss or injury. The loss or injury could be either physical, mental, a financial loss or injury. The expression injury could also be construed as a legal injury in a wider sense and not just a physical or a mental injury. The loss or injury must be caused by reason of an act or omission for which the accused person has been charged. Thus, it can be both by a positive act or negatively by an omission which is at the instance of the accused and for which such accused has been charged. Further, the expression ‘victim’ also includes his/her guardian or legal heir in the case of demise of the victim.
6.5 Thus, the expression ‘victim’ has been couched in a broad manner so as to include a person who has suffered any loss or injury. The expressions ‘loss’ or ‘injury’ themselves are of a very broad import which expressions also enlarge the scope of the expression ‘victim’. Further, the expression ‘victim’ includes not only the person who has suffered any loss or injury caused by reason of any act or omission for which the accused person has been charged but also includes his or her guardian or legal heir which means that the definition of victim is inclusive in nature.
6.6 Having regard to the insertion of the proviso to Section 372 of the CrPC, we find that in the case of a victim who seeks to file an appeal, he or she could proceed under the proviso to Section 372 of the CrPC in the circumstances mentioned therein and need not prefer an appeal by invoking Section 378(4) of the CrPC which is in respect of appeals to be filed by a complainant. It may be that the complainant is a victim in certain cases and therefore, the victim has the right to file an appeal under the proviso to Section 372 of the CrPC and need not proceed under Section 378(4) of the CrPC. However, if the complainant is not a victim and intends to file an appeal, in such a case a complainant would have to proceed under Section 378 of the CrPC which circumscribes the right to file an appeal by virtue of the conditions which are stipulated under the said Section.
Victimology and etymology of the word ‘victim’ explained
6.6.1 The word ‘victim’ is derived from the latin word “victima” and originally contained the concept of sacrifice. In more contemporary times, the term ‘victim’ has been expanded to imply a victim of war, an accident, a scam, etc. As a scientific concept, according to Criminologist B. Mendelsohn (1976), a victim may be viewed as containing four fundamental criteria which are as follows:
• The nature of the determinant that causes the suffering. The suffering may be physical, psychological, or both depending on the type of injurious act.
• The social character of the suffering. This suffering originates in the victim’s and others’ reaction to the event.
• The nature of the social factor. The social implications of the injurious act can have a greater impact, sometimes, than the physical or psychological impact.
• The origin of the inferiority complex. This term, suggested by Mendelsohn, manifests itself as a feeling of submission that may be followed by a feeling of revolt. The victim generally attributes his injury to the culpability of another person.
Victimology thus is a social-structural way of viewing crime and the law and the criminal and the victim. Insofar as the injury is concerned apart from there being short time and long time physical injuries, there could also be economic or financial loss which are also injuries within the meaning and definition of victim under clause (wa) of Section 2 of the CrPC.
‘Charge’ does not explained in Cr.P.C
6.7.1 Besides the omnibus meaning, the CrPC does not define what a charge is. However, judicial pronouncements tell us that a charge is actually a precise formulation of the specific accusation made against a person who is entitled to know its nature at the earliest stage. The charge is against a person in respect of an act committed or omitted in violation of penal law forbidding or commanding it. In other words, a charge is an accusation made against a person in respect of offence alleged to have been committed by him, vide Esher Singh vs. State A.P., (2004) 11 SCC 585. In Birichh Bhuian vs. State of Bihar, AIR 1963 SC 1120, this Court observed that a charge is not a mere abstraction but a concrete accusation against a person in respect of an offence and that joinder of charges is permitted under certain circumstances, whether joinder is against one person or different persons.
6.7.2 In Advanced Law Lexicon by P Ramanatha Aiyar, 6th Edition, Volume I, a charge is defined to mean an expression as applied to a crime, sometimes used in a limited sense, intending the accusation of a crime which precedes a formal trial; to mean a person charged with an accusation of a crime. In a fuller and more accurate sense, the expression charge includes the responsibility for the crime. As a formal complaint, a charge signifies an accusation, made in a legal manner of legal conduct, either of omission or commission by the person charged. A person charged with a crime means something more than being suspected or accused of a crime by popular opinion or rumour and implies that the offence has been alleged against the accused parties according to the forms of law. The purpose of a charge is to tell an accused person as precisely and consciously as possible of the matter with which he is charged with. Thus, the expression charge includes the element of offence and also reference to the person who is alleged to have committed the offence.
Charge as per section 138 N.I Act
7.1 In the context of the present case, a person who fails to satisfy his legal liability to honour a cheque owing to insufficiency of funds, or other reasons concerning his bank account is deemed to have committed an offence under Section 138 of the Act and therefore is charged as an accused for such an offence and can be punished by imprisonment for a term which may extend to two years or a fine which may extend to twice the amount of the cheque or both.
Accused explained
7.2 The expression ‘accused’ is not defined under the CrPC but it denotes different meanings according to the context in which it is deployed. It, inter alia, means, a person against whom there is an accusation, or a person on trial, and so on. The expression ‘accused’ being used in different context would remind us of what has been cited by this Court in Directorate of Enforcement vs. Deepak Mahajan, (1994) 3 SCC 440 wherein Chapter IV of the book titled The Loom of Language by Frederick Bodmer has been cited in the following words:
“Words are not passive agents meaning the same thing and carrying the same value at all times and in all contexts. They do not come in standard shapes and sizes like coins from the mint, nor do they go forth with a decree to all the world that they shall mean only so much, no more and no less. Through its own particular personality, each word has a penumbra of meaning which no draftsman can entirely cut away. It refuses to be used as a mathematical symbol.”
The expression ‘accused of any offence’ would include within its ambit only a person against whom formal accusation relating to commission of offence has been levelled which in the normal course may result in his prosecution.
Procedure to try Cheque Dishonour cases
7.3 When is an accused charged of an offence under Section 138 of the Act would be relevant. It would be pertinent to refer to Section 200 of CrPC as a proceeding under Section 138 of the Act is commenced not on the basis of a police report but on the basis of a complaint filed under Section 200 of the CrPC. The expression ‘complaint’ is defined under Section 2(d) of the CrPC to mean an allegation made orally or in writing to a Magistrate with a view to his taking action under the CrPC, that some person, whether known or unknown, has committed an offence but does not include a police report.
7.4 When a complaint is filed under Section 200 of the CrPC, a Magistrate taking cognizance of an offence on such complaint examines upon oath the complainant and the witnesses present, if any, and the substance of such examination is reduced to writing which is required to be signed by the complainant and the witnesses and also the Magistrate. Section 202 of the CrPC states that any Magistrate, on receipt of a complaint of an offence of which he is authorized to take cognizance or which has been made over to him under Section 192, may, if he thinks fit, postpone the issue of process, and either inquire into the case himself or direct an investigation for the purpose of deciding whether or not there is sufficient ground for proceeding. However, no such direction for investigation shall be made where the complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath under Section 200 of the CrPC.
7.5 Chapter XXI of the CrPC deals with summary trials. The said chapter has to be read in conjunction with Section 143 of the Act which states that all offences under Chapter XVII of the Act, including an offence under Section 138 (dishonour of cheque for insufficiency, etc., of funds in the account) shall be tried by a Judicial Magistrate of First Class or by a Metropolitan Magistrate and the provisions of Sections 262 to 265 of the CrPC (both inclusive), shall, as far as may be, apply to such trials. Thus, for an offence committed under Section 138 of the Act, the trial is as per Section 143 of the said Act read with Chapter XXI of the CrPC. The fact that under Section 138 of the Act, a deeming fiction has been introduced, wherein a person who comes within the scope and ambit of the section is a person who is deemed to have committed an offence and could be punished with both imprisonment as well as with fine, would mean that such a person is an accused and is charged for the said offence and tried under Chapter XXI of the CrPC by way of a summary trial.
Procedure to file appeal by victim
7.6 As already noted, the Act does not have a provision for filing of an appeal. The Act is a special enactment. In the circumstances, the CrPC, which is general in nature would have to be resorted to. The proviso to Section 372 of the CrPC considers the right of filing of an appeal from the point of view of a victim, which expression not only includes an injured victim but even the legal representatives of a deceased victim. The inclusion of the proviso to Section 372 of the CrPC has to be read in the context of the definition of victim in clause (wa) of Section 2 of the CrPC. The expression ‘victim’ as defined under the said provision, includes not only the person who has suffered any loss or injury caused by the reason of the act or omission for which the accused person has been charged but the said expression also includes his or her guardian or legal heir.
Complainants in cheque cases are victim they may file appeal against acquittal under section 372 Cr.P.C itself without seeking special leave under section 378(4) Cr.P.C
7.7 In the context of offences under the Act, particularly under Section 138 of the said Act, the complainant is clearly the aggrieved party who has suffered economic loss and injury due to the default in payment by the accused owing to the dishonour of the cheque which is deemed to be an offence under that provision. In such circumstances, it would be just, reasonable and in consonance with the spirit of the CrPC to hold that the complainant under the Act also qualifies as a victim within the meaning of Section 2(wa) of the CrPC. Consequently, such a complainant ought to be extended the benefit of the proviso to Section 372, thereby enabling him to maintain an appeal against an order of acquittal in his own right without having to seek special leave under Section 378(4) of the CrPC.
7.8 In the case of an offence alleged against an accused under Section 138 of the Act, we are of the view that the complainant is indeed the victim owing to the alleged dishonour of a cheque. In the circumstances, the complainant can proceed as per the proviso to Section 372 of the CrPC and he may exercise such an option and he need not then elect to proceed under Section 378 of the CrPC.
Victim may appeal against acquittal or lesser offence or imposing an inadequate compensation
7.9 In this context, we wish to state that the proviso to Section 372 does not make a distinction between an accused who is charged of an offence under the penal law or a person who is deemed to have committed an offence under Section 138 of the Act. Symmetrical to a victim of an offence, a victim of a deemed offence under Section 138 of the Act also has the right to prefer an appeal against any order passed by the court acquitting the accused or convicting for a lesser offence or imposing an inadequate compensation. When viewed from the perspective of an offence under any penal law or a deemed offence under Section 138 of the Act, the right to file an appeal is not circumscribed by any condition as such, so long as the appeal can be premised in accordance with proviso to Section 372 which is the right to file an appeal by a victim, provided the circumstances which enable such a victim to file an appeal are met. The complainant under Section 138 is the victim who must also have the right to prefer an appeal under the said provision. Merely because the proceeding under Section 138 of the Act commences with the filing of a complaint under Section 200 of the CrPC by a complainant, he does not cease to be a victim inasmuch as it is only a victim of a dishonour of cheque who can file a complaint. Thus, under Section 138 of the Act both the complainant as well as the victim are one and the same person.
8. The right to prefer an appeal is no doubt a statutory right and the right to prefer an appeal by an accused against a conviction is not merely a statutory right but can also be construed to be a fundamental right under Articles 14 and 21 of the Constitution. If that is so, then the right of a victim of an offence to prefer an appeal cannot be equated with the right of the State or the complainant to prefer an appeal. Hence, the statutory rigours for filing of an appeal by the State or by a complainant against an order of acquittal cannot be read into the proviso to Section 372 of the CrPC so as to restrict the right of a victim to file an appeal on the grounds mentioned therein, when none exists.
9. In the circumstances, we find that Section 138 of the Act being in the nature of a penal provision by a deeming fiction against an accused who is said to have committed an offence under the said provision, if acquitted, can be proceeded against by a victim of the said offence, namely, the person who is entitled to the proceeds of a cheque which has been dishonoured, in terms of the proviso to Section 372 of the CrPC, as a victim. As already noted, a victim of an offence could also be a complainant. In such a case, an appeal can be preferred either under the proviso to Section 372 or under Section 378 by such a victim. In the absence of the proviso to Section 372, a victim of an offence could not have filed an appeal as such, unless he was also a complainant, in which event he could maintain an appeal if special leave to appeal had been granted by the High Court and if no such special leave was granted then his appeal would not be maintainable at all. On the other hand, if the victim of an offence, who may or may not be the complainant, proceeds under the proviso to Section 372 of the CrPC, then in our view, such a victim need not seek special leave to appeal from the High Court. In other words, the victim of an offence would have the right to prefer an appeal, inter alia, against an order of acquittal in terms of the proviso to Section 372 without seeking any special leave to appeal from the High Court only on the grounds mentioned therein. A person who is a complainant under Section 200 of the CrPC who complains about the offence committed by a person who is charged as an accused under Section 138 of the Act, thus has the right to prefer an appeal as a victim under the proviso to Section 372 of the CrPC.
Conclusion
Answering core issue: Whether appeal would be maintainable against an order of acquittal in section 138 N.I Act cases? Answered in positive
10. As already noted, the proviso to Section 372 of the CrPC was inserted in the statute book only with effect from 31.12.2009. The object and reason for such insertion must be realised and must be given its full effect to by a court. In view of the aforesaid discussion, we hold that the victim of an offence has the right to prefer an appeal under the proviso to Section 372 of the CrPC, irrespective of whether he is a complainant or not. Even if the victim of an offence is a complainant, he can still proceed under the proviso to Section 372 and need not advert to sub-section (4) of Section 378 of the CrPC.
Order set aside
11. In the result, the impugned common order dated 12.06.2024 in Crl. O.P. Nos.929, 931 and 1034 of 2024 in Crl. A. SR. Nos.1282, 1300 and 1321 of 2024 is set aside. Liberty is reserved to the appellant herein to file the appeal(s) having regard to the proviso to Section 372 of the CrPC within four months from today.
Judgments involved/cited
Mallikarjun Kodagali (dead) represented through Legal representative vs. State of Karnataka, (2019) 2 SCC 752
Directorate of Enforcement vs. Deepak Mahajan, (1994) 3 SCC 440
Esher Singh vs. State A.P., (2004) 11 SCC 585
Birichh Bhuian vs. State of Bihar, AIR 1963 SC 1120.
Acts and Sections involved
Code of Criminal Procedure, 1973 (CrPC)
– Section 2 (definitions)
– Section 24 (Public Prosecutors)
– Section 200 (Examination of complainant)
– Section 202 (Postponement of process and investigation)
– Section 372 (No appeal to lie unless otherwise provided; proviso on victim’s right to appeal)
– Section 374 (Appeal from conviction)
– Section 378 (Appeal in case of acquittal)
– Section 386 (Powers of the Appellate Court)
Negotiable Instruments Act, 1881
– Section 138 (Dishonour of cheque for insufficiency of funds)
– Section 139 (Presumption in favour of holder)
– Section 141 (Offences by companies)
– Section 142 (Cognizance of offences)
– Section 143 (Power of Court to try cases summarily)
– Section 147 (Offences to be compoundable)
Party
M/s. Celestium Financial (Appellant) versus A. Gnanasekaran and others (Respondents)Criminal Appeal Nos. 001868, 001870 – 2025 of 2025 (Arising out of Special Leave Petition (Crl.) Nos.137-139/2025) 2025 INSC 804 April 8, 2025 Hon’ble Mrs. Justice B. V. Nagarathna and Hon’ble Mr. Justice Satish Chandra Sharma.
