N.P. Mathi Lingan vs The State Of West Bengal & Anr

For the petitioner : Mr. Sourav Chatterjee, ld. Sr. Adv.

: Mr. Sumanta Ganguly : Mr. Shiv Ratan Kakrania : Mr. Karanjeet Sharma : Mr. N. Das

For the OP No. 2 : Mr. Satadru Lahiri : Mr. Soumyajyoti Nandy : Mr. Gyan Prakash : Mr. Jyotirmoy Talukder

Judgment on : 03/09/2025

Rai Chattopadhyay, J. :-

1) The petitioner is the accused person in criminal proceeding No. CS

0025782 of 2015, filed before the Chief Metropolitan Magistrate,

Kolkata which is now pending before the Metropolitan Magistrate 14th

Court at Kolkata. The petitioner by filing the instant case under

Section 482 of the Code of Criminal Procedure, 1973, has sought for

quashing of the said criminal proceeding being No. CS 0025782 of Page 2 of 38

2015 and all orders of the Magistrate passed in connection with the

said case.

2) The authorized representative of the opposite party no. 2/complaint

company has filed the complaint before the Magistrate on May 21,

2015. The petitioner is the accused person No. 7 and Company

Secretary of the complainant company and said to have been looking

after the day to day business affairs of the company. He is said to

have been in control and management thereof. After careful perusal of

the written complaint lodged by the opposite party No. 2 before the

Magistrate it appears that a hypothecation loan agreement was

entered into between the complainant company and the accused No. 1

company, of which the accused No. 7 that is the present petitioner

has been employed as a Company Secretary. At the time of entering

into the said hypothecation loan agreement, the accused persons had

opted for ECS Mandate and accordingly issued standing instructions

to its banker being MICR No. 600072002 to debit sums of Rs.

48,33,630/- and Rs. 44,09,000/- respectively from its bank account

No. 11/06020100005067, towards payment of the Equated Monthly

Installment (EMI), in respect of repayment of loan pursuant to the

hypothecation loan agreement as mentioned above. Such EMIs

through ECS Mandate were to be deposited/credited in the bank

account of the complainant company. Therefore, after procuring the

loan amount pursuant to the hypothecation loan agreement and to Page 3 of 38

discharge the burden of legally enforceable liability to repay the same,

the accused persons had initiated payment of EMI in favour of the

complainant company through the ECS mode.

3) Allegedly, the electronic transfer of fund in favour of the complainant

company was dishonored. The Complainant says to have received

information regarding dishonor of electronic fund transfer, vide debit

memo dated March 5, 2015. [Being Transaction Nos. 102 319 6413

and 103 292 5358]. The alleged dishonor with regard to transfer and

credit of fund in favour of the complainant company happened on

January 22, 2015 and February 23, 2015 respectively due to

"Insufficient Fund", as remarked. Such alleged dishonor of fund

transfer in favour of the complainant company was followed by a

demand notice dated March 26, 2015, which has been admittedly

posted on April 6, 2015.

4) Allegedly also, in spite of service of the demand notice and receipt

thereof by the accused persons, they have failed to make the payment

of the amount of EMIs which were earlier dishonoured. Hence, the

complaint was lodged under Section 25 of the Payment And

Settlement Systems Act, 2007.

Page 4 of 38

5) The Chief Metropolitan Magistrate, Kolkata has taken cognizance of

offence and transfer the record for trial and disposal to the

Metropolitan Magistrate, 14th Court at Kolkata. Hence, being

aggrieved, the petitioner has come up with the instant case to seek

relief that the entire criminal proceeding against him may be quashed.

6) The petitioner accused person No. 7 has been represented by Mr.

Sourav Chatterjee, learned Senior Counsel. Mr. Satadru Lahiri has

appeared for the opposite party No. 2/complainant company.

7) Respective arguments on behalf of the petitioner as well as the

opposite party No. 2 may be summarized in the following manner:-

8) The petitioner's case:

8.1. Illegal taking of cognizance:

 The order taking cognizance by the Chief Metropolitan

Magistrate is alleged to be a "pre-typed cyclostyle

order-sheet" with handwritten blanks, indicating a lack

of application of judicial mind.

 This is argued to be a violation of the principle that taking

cognizance requires a "great exercise of judicial mind"

and cannot be a mechanical process.

Page 5 of 38

 The brief cites a previous High Court decision (Pradip

Churiwala & Anr. Vs. Dilip Kumar Nemani) supporting

this argument.

 It also highlights a violation of Rule 183 of the Calcutta

High Court Criminal (Subordinate Courts) Rules, 1985,

which mandates that orders requiring judicial

discretion and final orders be recorded by the

Magistrate in their own hand or typed by them.

 This violation is further supported by citing two other

High Court decisions (Sharmistha Chowdhury and

Another Vs. State of West Bengal and Others, and

Mainak Das Vs. State of West Bengal and Another) that

followed the same principle.

8.2. Illegal summoning order due to non-application of Section 202 of

the Code of Criminal Procedure:

 The summoning order was issued without resorting to the

mandatory provisions of Section 202 of the Code of

Criminal Procedure.

 This is particularly relevant because all accused persons,

including the petitioner, are residents of places outside

the State of West Bengal.

 The brief cites Supreme Court decisions (In Re:

Expeditious Trial of Cases under section 138 of N.I. Page 6 of 38

Act, and Sheetal Amit Patil vs. State of West Bengal)

emphasizing that an inquiry under Section 202 is

mandatory when the accused resides outside the

court's jurisdiction.

 The argument is that the Trial Court failed to conduct this

mandatory inquiry to determine if there were sufficient

grounds to issue process.

 The petitioner relied on the decision of this court in

Sheetal Amit Patil v. State of West Bengal [2021 SCC

OnLine Cal 1693] regarding compliance of section 202

of the Code of Criminal Procedure where, it held that

since the accused resides outside the jurisdiction of

the Court, an enquiry under Section 202 CrPC was

mandatory before issuing process. The Court has held

that the Trial Court has failed to conduct such an

enquiry and thereby has visited the order of issuance

of process and subsequent proceedings. Accordingly,

the impugned orders were set aside and the matter

was remanded to the Trial Court to proceed afresh

from the stage of enquiry under Section 202 CrPC.

8.3. Argument which may be explanatory in nature and is actually

beyond the complaint itself, would not be maintainable:

 The petitioner submitted that the opposite party cannot

put forth explanatory arguments that are absent from Page 7 of 38

the complaint, as doing so would amount to an

impermissible amendment or embellishment of the

complaint. It is a settled principle that a criminal

complaint cannot be amended held in the decision of the

apex court in S.R. Sukumar v. S. Sunaad Raghuram

[(2015) 9 SCC 609].

 The court held that an amendment to a criminal

complaint may be permitted if it only cures a formal

infirmity without causing prejudice to the other side,

even though the Code contains no express provision for

such amendment. However, where the amendment goes

beyond a curable defect or is likely to prejudice the

accused, the court cannot allow it.

8.4. On merits: statutory demand notice issued beyond the period of

30 days:

 The proceedings are based on Section 25 of the Payment

and Settlement Systems Act, which applies the

provisions of Chapter XVII of the Negotiable

Instruments Act.

 This means the statutory period for issuing a demand

notice is 30 days.

Page 8 of 38

 The Petition of Complaint itself states that the demand

notice was posted on 6.4.2015, which is beyond the

statutory period.

 The brief argues that the opposite party's attempt to

exclude holidays (Doljatra and Holi) to bring the notice

within the period is a "misconceived and erroneous"

computation.

 Even if holidays were excluded, the calculation still shows

the notice was issued beyond the 30-day limit.

 There is no provision for condonation of delay in issuing

such a demand notice, making the proceedings liable

to be quashed.

 The brief also argues that the opposite party's attempt to

explain the dates is an impermissible amendment of

the complaint.

8.5. Lack of basic facts constituting an offence:

 The complaint is argued to be devoid of the basic facts

necessary to constitute an offense under Section 25 of

the Payment and Settlement Systems Act.

 This is because the statutory requirements, specifically

the timely issuance of the demand notice, were not

met.

Page 9 of 38  The petitioner has relied on J Th Zwart v. Indrani

Mukherjee reported in 1989 SCC OnLine Cal 289

which held that for a Magistrate to take cognizance

under Section 190(1)(a) CrPC, the complaint must not

only allege commission of an offence but also disclose

the basic facts constituting the offence. While

evidential or detailed particulars are unnecessary, the

complaint must state the essential primary facts

forming the basis of the allegation.

8.6. Allegations of the petitioner being vicariously liable is irrelevant:

8.6.1. The argument that the petitioner is vicariously liable as

Company Secretary is deemed insignificant because the basic

statutory requirements for invoking penal provisions were not

met by the opposite party.

9. The following judgments have been relied on by Mr. Sourav Chatterjee,

learned Senior advocate for the petitioner -

i) Kamlesh Kumar Vs. State of Bihar and Anr. reported

in (2014) 2 SCC 424

ii) Anita Malhotra Vs. Apparel Export Promotion

Council and Anr. reported in (2012) 1 SCC 520 Page 10 of 38

10. Argument by the Opposite Party:

10.1. The order of the Magistrate taking cognisance is absolutely in

consonance with the settled proposition of law and the petitioner

has not suffered any prejudice. Hence no interference is called

for.

 The order taking cognizance is in accordance with

settled legal propositions and has not caused prejudice

to the petitioner, therefore, no interference is

warranted.

 The contention that the order was recorded on a pre-

typed cyclostyle sheet filled by hand is contrary to the

evidence on record.

 The order was passed under dictation by the Learned

Chief Metropolitan Magistrate and signed by him,

which complies with the relevant rules.

 The Magistrate acted within the parameters of Section

190 of the Code of Criminal Procedure and did not act

mechanically or delegate judicial discretion.

 The judgments relied upon by the petitioner are

factually distinguishable and not applicable to the

present case.

 Irregularities in taking cognizance, if any, are covered

under Section 460(e) of the Code of Criminal

Procedure, which deals with irregularities that do not

vitiate proceedings.

Page 11 of 38

 The petitioner has not demonstrated any extreme

prejudice suffered due to alleged irregularities.

 The objective of Section 465 of the CrPC is to prevent

delays, and even if an order taking cognizance is

irregular, it does not vitiate proceedings.

 The argument that the order was passed in a

mechanical way, as seen in cited cases, is not

applicable here as the Magistrate applied judicial mind

and the order was dictated.

 The petitioner has not demonstrated a "failure of

justice" due to any irregularity, and therefore, the

proceedings are not vitiated.

10.2. Allegation of non-compliance of the mandate of section 202 of the

Code of Criminal Procedure 1973 is unfounded and baseless.

There is no such violation of law and the Magistrate has duly

issued process against the petitioner on the basis of sufficiency of

available materials against him in the complaint.

 The core argument presented is that the Learned

Magistrate did not fail to comply with Section 202 of

the Code of Criminal Procedure, 1973, when issuing

process against the petitioner. That the Magistrate

illegally issued summons without following the

mandatory provisions of Section 202 of the CrPC. This

was based on the fact that the petitioner and other Page 12 of 38

accused resided outside West Bengal, as indicated in

the complaint's cause title.

 The Magistrate received the case record on transfer

and the complainant filed a complaint under Section

25 of the Payment and Settlement Systems Act, 2007,

read with Chapter XVII of the NI Act.

 An affidavit was filed, as examination of the

complainant under Section 200 CrPC.

 Crucially, no other witness was examined.

 The Magistrate conducted an enquiry under Section

202 CrPC, and the document states there is a

"presumption in favour of the complainant."

 After perusing the complaint, affidavit, and

documents, the Magistrate found sufficient grounds to

proceed against the accused persons.

 Summons were ordered to be issued via registered

post with acknowledgement due, at the complainant's

cost and risk.

 The document asserts that the Magistrate's order

demonstrates an enquiry as mandated by Section 202

CrPC was undertaken, involving conducting a

preliminary enquiry under Section 202 CrPC; perusing

and appreciating the materials on record, including

documents, for a limited enquiry as envisaged by

Section 202 CrPC; applying judicial mind to the merits Page 13 of 38

of the case and recording judicial satisfaction of a

prima facie case against the accused.

 A Supreme Court decision has been cited In Re:

Expeditious Trial of Cases under section 138 N.I.

Act reported in (2021) 16 SCC 116 which allows for:

o Taking evidence of witnesses on affidavit for

Section 202 enquiry.

o Restricting the enquiry to the examination

of documents without insisting on witness

examination in suitable cases.

o The scope of enquiry under Section 202 can

be restricted to the perusal of documents

without recording examination of witnesses.

o The Magistrate's actions are deemed to be

in line with this Supreme Court guidance,

particularly regarding the limited scope of

enquiry in such cases.

 Distinguishing the case of the petitioner's reliance:

o A judgment cited by the petitioner (Sheetal

Amit Patil & Anr. Versus State of West

Bengal) is distinguished. In that case, the

Magistrate issued process without any

enquiry under Section 202 CrPC, even

though the accused were outside the

territorial jurisdiction. In contrast, in the Page 14 of 38

present case, an enquiry under Section 202

CrPC was conducted in the manner

prescribed by the Supreme Court.

 The Learned Magistrate's order is not flawed for alleged

non-compliance with Section 202 CrPC.

 The Magistrate's satisfaction regarding the commission

of the offence by the petitioner is sufficient to satisfy the

mandate of Section 204 CrPC.

 The law does not require detailed reasons for issuing

process; a finding of sufficient ground is enough.

 The interpretation of Sections 202 and 204 CrPC, in

light of the cited Supreme Court judgments, does not

warrant interference with the Magistrate's order.

The legislative intent of Section 202 CrPC (preventing

malicious prosecution) is balanced against the nature of

the offense and the petitioner's role.

The scope of enquiry under Section 202 is limited, and

the Magistrate's order cannot be faulted on that basis.

10.3. Allegations of violation of the mandate of section 25(1)(c) of the

Payment and Settlement Systems Act, 2007 is misconceived and

erroneous. The complaint has disclosed all the ingredients of the

offence alleged and no interference as to the criminal proceeding

initiated is warranted. That the averments as to the culpability of

the petitioner as made in the FIR is sufficient for sending him for Page 15 of 38

trial for the vicarious liability of him as the Company Secretary of

the accused company. That, the petitioner/accuse person has

made endeavour to give limited interpretation to the penal

provision as above of the Act of 2007, which is not permissible in

the eye of law.

 The alleged non-compliance/violation of Section

25(1)(C) of the Payment and Settlement Systems Act,

2007 is erroneous and inapplicable.

 The Petitioner's complaint discloses all the ingredients

of the complained offenses.

 No interference with the proceeding is called for.

 The Petitioner's contention that the notice issued

under Section 25 of the Act is beyond the prescribed

period is incorrect.

 The electronic fund transfer was dishonored with a

remark "insufficient fund" on specific dates.

 The complainant received intimation of the dishonor

via debit memo.

 A demand notice was issued after the dishonor.

 The argument that the notice was issued beyond the

period of limitation is not supported by the facts.

 The Petitioner's reliance on certain judgments is

factually distinguishable and not applicable.

 The Petitioner's post as Company Secretary does not

automatically make them statutorily liable. Page 16 of 38

 The Petitioner's argument regarding vicarious liability

is insufficient to warrant quashing the proceedings.

10.4. The contention of the petitioner, regarding absence of personal

knowledge of the authorised representative of the complainant

company, who has lodged the complaint before the Magistrate,

about the transaction as alleged in the complaint, is contrary to

record and cannot be considered as a ground for quashing of the

instant proceeding.

 Absence of personal knowledge by the complainant's

authorized representative is not a valid ground for

quashing proceedings.

 This is a question of fact to be determined during trial,

not at a pre-mature stage of quashing.

 A detailed fact-finding inquiry into the representative's

knowledge is not permissible at this stage.

 The law allows for averments to be gathered from

circumstances and how they are conveyed, not just

explicit statements.

 The drafting skills of the person filing the complaint do

not negate a substantive right.

 The key is whether the pleading conveys that the

person filing is authorized and claims knowledge. Page 17 of 38

 Specific assertion of knowledge by a power-of-attorney

holder does not require a particular manner of

statement.

 It is sufficient to demonstrate that the complaint is filed

in the name of the payee, and if a different person

prosecutes, they are authorized and have knowledge.

 An authorized employee can represent a company

complainant.

 Such averments and prima facie material are enough

for a Magistrate to take cognizance.

 A company complainant's situation should be viewed

from a different standpoint.

 The complaint, supporting affidavit, and affidavit in lieu

of oral statement indicate that the company's

authorized representative had personal knowledge of

the transaction.

 This demonstrates that an authorized person, who

witnessed the transaction and had knowledge,

instituted the complaint on behalf of the company.

 This satisfies the requirements of Section 142 of the

Negotiable Instruments Act, 1881.

 Any dispute regarding authorization or the

complainant's knowledge should be raised and

established during the trial.

Page 18 of 38

 Entertaining a petition to quash cognizance on these

grounds would be unjustified.

10.5. Also, that the contention of the complainant during argument

had the effect of improvement of its case, than what has been

narrated in the complaint itself, and by this way had the effect of

amendment of the complaint itself, which substantially

prejudices the petitioner, is only illusory, misconceived and

remains unsubstantiated. The Complainant advanced a

clarificatory argument, substantiated by unimpeachable

information, to refute the petitioner's misinterpretation of the

complaint.

 The petition of complaint contains the basic facts

necessary to constitute an offense under Section 25 of

the Payment and Settlement Systems Act, 2007. The

minute details claimed by the Petitioner as mandatory

are disputed questions of fact to be adjudicated during

trial.

 The petition of complaint is not incongruous and all

prior requirements for initiating a prosecution under

Section 25 of the Payment and Settlement Systems Act

have been lawfully and/or timely adhered to.

 No new circumstances were introduced; rather,

minute details necessary for trial were presented to

rebut the Petitioner's erroneous inference. This Page 19 of 38

contention is substantiated by government records of

which judicial notice can be taken.

 The 5th and 6th of March 2015 were holidays due to

'Doljatra' and 'Holi', as notified in the official gazette.

Therefore, the Complainant could not have received

information of dishonor prior to March 7th, 2015. This

is a fact of which judicial notice can be taken.

 The contention that the prosecution is not

maintainable due to a default in sending a mandatory

demand notice within the stipulated period has been

dislodged by the Complainant's clarification.

 Circumventing the Complainant to refute the

Petitioner's contention and present government

records for judicial notice is against the principles of

natural justice and the opportunity of hearing.

 Substantial justice should prevail over technical

issues, as technicalities intended by the Petitioner

would frustrate the legislative object.

 Conditions in the statute defining an offense should be

interpreted in light of the statute's object to avoid

frustration. Therefore, the argument of amendment to

the complaint should not be considered, and

clarificatory arguments are permissible and cannot be

ignored on the touchstone of prejudice.

Page 20 of 38

 The petition of complaint discloses necessary details of

the offense for prima-facie satisfaction, and thus, no

case for interference has been made out.

 Quashing a legitimate proceeding based on disputed

facts or incomplete issues is legally invalid. It stifles a

legitimate prosecution and causes prejudice and

miscarriage of justice.

 The issue of prejudice is based on an improbable

interpretation of the date of knowledge/receipt of

information of dishonor and has no basis. Prejudice is

a substantial question of fact to be demonstrated

during trial.

 The judgments cited by the Petitioner are

distinguishable:

 In Sr Sukumar versus S. Sunaad Raghuram, the

Supreme Court allowed amendment to prevent

multiplicity of proceedings. In the present case, the

Complainant provided clarification, not new facts, to

rebut arguments and prevent premature termination

of proceedings. This clarification is not an amendment

and is permissible.

 The reference to J.T.H Zwart & Ors. versus Indrani

Mukherjee is misplaced. In that case, the complaint

lacked basic ingredients of the offense. In the present

case, all basic ingredients of the offense under Section Page 21 of 38

25 of the Payment and Settlement Systems Act are

averred. Factual details intended by the Petitioner

need not be incorporated in the complaint.

 The Learned Magistrate rightly recorded subjective

satisfaction regarding the existence of facts

constituting the offense at the stage of taking

cognizance. A rare case warranting immediate

inference by the Court has not been demonstrated.

Allowing a proceeding to continue is the norm, and

quashing it at a nascent stage is an exception

permissible only in exceptional circumstances, which

are not present here.

11. The following judgments have been relied on by Mr. Satadru Lahiri,

learned advocate for the opposite party No. 2/complainant company -

i) K.K. Ahuja Vs. V.K. Vora and Anr. reported in (2009) 10 SCC 48

ii) In Re: Expeditious Trial of Cases under Section 138 of N.I. Act, 1881 reported in (2021) 16 SCC 116

iii) Econ Antri Limited Vs. Rom Industries Limited and Anr. reported in (2014) 11 SCC 769

iv) Munoth Investments Ltd. Vs. Puttukola Properties Ltd. and Anr. reported in (2001) 6 SCC 582 Page 22 of 38

v) Rayapati Power Generation Pvt. Ltd. and Anr. Vs. Indian Renewable Energy Agency Ltd. (Ireda) reported in 2022 SCC OnLine Del 295

vi) S.P. Mani and Mohan Dairy Vs. Dr. Snehalatha Elangovan reported in 2022 SCC OnLine SC 1238

vii) Malwa Cotton and Spinning Mills Limited Vs. Virsa Singh Sidhu and Others reported in (2008) 17 SCC 147

12. As regards the order of the Magistrate taking cognizance of offence and

its legality and validity, this Court, even being fully conscious with the

directions of the Court in the pronouncements as relied on by the

petitioner/accused person No.7, finds that the said disputed order of

the Magistrate does not appear only to be a cyclostyle and made

mechanically, without application of mind. The Magistrate has

endorsed by signing that the order has been dictated by him. In respect

of a Court burdened with thousands of case dockets at the relevant

point of time, it cannot be concluded that an intentional latches or

violation of Rules has been committed by the Magistrate, in this regard.

This Court is of considered opinion that for the only reason of the order

of the Magistrate being typed out, would not be a clear implication of

the fact of him not having applied mind before taking cognizance of

offence. That it is not a sustainable proposition. On the contrary it is

found that the Magistrate having endorsed that the order has been

dictated by him, has taken cognizance of offence in accordance with Page 23 of 38

the settled legal principles. Allegation of non-application of mind by the

Magistrate while taking cognizance of offence is thus not sustainable.

In this regard the Court is constrained to hold further that in the case

of Sharmistha Chowdhury (supra), the Court's verdict came against

the factual finding therein regarding the practice of recording orders by

different hands particularly with assistance of police personnel

attached to the Court of the Magistrate. Evidently, the factual

background on the basis of which the petitioner intends to raise the

point of legality in the process of taking cognizance of offence by the

Magistrate in this case, is dissimilar with that in the case of

Sharmistha Chowdhury (supra). Hence, in the instant case the said

or other judgments on similar proposition do not have any manner of

application.

13. With reference to a Full Bench decision of the Apex Court in

Re:Expeditious Trial of Cases under section 138 of the N.I.Act

(supra), Mr. Sourav Chatterjee, learned Senior Counsel for the

petitioner has argued that due to the reason of non-compliance of the

mandatory provision under section 202 of the Code of Criminal

Procedure by the Magistrate, the instant complaint case before the

same is not eligible to be proceeded with and only liable to be

dismissed. The following portion thereof has been relied on:

"24.2. Inquiry shall be conducted on receipt of complaints under Section 138 of the Act to arrive at sufficient grounds to proceed against the accused, when such accused resides beyond the territorial jurisdiction of the court." Page 24 of 38

In this regard he also mentions and relies on a judgment of this

Court in Sheetal Amit Patil (supra).

14. The contrary argument advanced by Mr. Satadru Lahiri on behalf of

the opposite party is that it would be improper to say that the

Magistrate has not done any enquiry in this case as provided under

section 202 of the Code of Criminal Procedure. Rather an affidavit

having been filed in Court consequent upon the complaint and that

being duly considered by the Magistrate, would go on demonstrating

that an enquiry as envisaged under section 202 of the CrPC has been

conducted and such statutory mandate has been duly fulfilled.

15. So far as the mandatory nature of the provision as envisaged under

section 202 of the CrPC is concerned, the same is now well settled and

there can be no dilemma as regards the same. The proposition of law

that an enquiry by the Magistrate or the designated person would be

mandatory, in case a complaint is filed alleging against the

complainant/s residing outside jurisdiction of the said Court of the

Magistrate, is thus not in dispute in this case. Also is admitted the fact

as transpires from the complaint itself that all the accused persons

including the present petitioner, domicile outside the territorial

jurisdiction of the Magistrate. After introduction of the amendments in

the Code of Criminal Procedure vide the Amendment Act 2005, with

effect from June 23, 2006, which has introduced section 202 in the Page 25 of 38

Code as a mandatory provision, compliance thereof has become

imperative on the backdrop of the conditions as prescribed therein. The

law has emphasized that prior to issuing process against an accused

whose place of residence is outside the territorial jurisdiction of his

Court, the Magistrate must either conduct an enquiry himself or direct

an investigation to ensure that the complaint has a sufficient basis,

primarily to prevent harassment through false complaint. The Supreme

Court in case of Vijay Dhanuka vs Najima Mumtaj (reported at

[(2014)14 SCC 638] has held as follows:

"11. Section 202 of the Code, inter alia, contemplates postponement of the issue of the process "in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction" and thereafter to either inquire into the case by himself or direct an investigation to be made by a police officer or by such other person as he thinks fit. In the face of it, what needs our determination is as to whether in a case where the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction, inquiry is mandatory or not.

12. The words "and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction" were inserted by Section 19 of the Code of Criminal Procedure (Amendment) Act (Central Act 25 of 2005) w.e.f. 23-6- 2006. The aforesaid amendment, in the opinion of the legislature, was essential as false complaints are filed against persons residing at far off places in order to harass them. The note for the amendment reads as follows:

"False complaints are filed against persons residing at far off places simply to harass them. In order to see that innocent persons are not harassed by unscrupulous persons, this clause seeks to amend sub-section (1) of Section 202 to make it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall enquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for finding out whether or not there was Page 26 of 38

sufficient ground for proceeding against the accused."

The use of the expression "shall" prima facie makes the inquiry or the investigation, as the case may be, by the Magistrate mandatory. The word "shall" is ordinarily mandatory but sometimes, taking into account the context or the intention, it can be held to be directory. The use of the word "shall" in all circumstances is not decisive. Bearing in mind the aforesaid principle, when we look to the intention of the legislature, we find that it is aimed to prevent innocent persons from harassment by unscrupulous persons from false complaints. Hence, in our opinion, the use of the expression "shall" and the background and the purpose for which the amendment has been brought, we have no doubt in our mind that inquiry or the investigation, as the case may be, is mandatory before summons are issued against the accused living beyond the territorial jurisdiction of the Magistrate."

Similar view has been taken in the Supreme Court judgments in

Abhjijit Pawar vs Hemanth Madhukar Nimbalkar and Anr

[reported at (2017) 2 SCC 528] and Sunil Todi vs The State of

Gujrat [reported at 2021 SCC Online SC 1174].

16. The purpose of amendment including the insertion of words "and shall,

in a case where the accused is residing at a place beyond the area in

which he exercises his jurisdiction" is to prevent harassment from false

complaints against persons outside the jurisdiction. The Supreme

Court has consistently held that the enquiry is not merely procedural

but a mandatory safeguard to ensure the genuineness of the complaint

before issuing process. An enquiry by the Magistrate under this

provision of law involves examining the materials on record and

application of his mind to the allegations and evidence, ensuring that

there is prima facie case [as per judgment in Pepsi Foods Limited and Page 27 of 38

Another vs Special Judicial Magistrate and Others reported in

1998 SCC (Cri) 1400 para-28]. The failure of the Magistrate to

conduct this mandatory enquiry, especially when the accused resides

outside the jurisdiction, renders the process illegal and liable to be

quashed. The scope of enquiry has been succinctly laid down by the

Supreme Court in Smt Nagawwa vs Veeranna Shivalingappa

Konjalgi and Others reported at AIR 1976 SC 1947, in the following

words:

"the scope of the inquiry under Section 202 of the Code of Criminal Procedure is extremely limited -- limited only to the ascertainment of the truth or falsehood of the allegations made in the complaint-- (i) on the materials placed by the complainant before the court: (ii) for the limited purpose of finding out whether a prima facie csse for issue of process has been made out; and (iii) for deciding the question purely from the point of view of the complainant without at all adverting to any defence that the accused may have. In fact it is well settled that in proceedings under Section 202 the accused has got absolutely no locus standi and is not entitled to be heard on the question whether the process should be issued against him or not."

17. In this regard, it is pertinent to note the order dated August 31, 2015 of

the Magistrate. The petitioner in this case has sought for setting aside

of the said order too and ultimately, if the proceeding is not found to be

maintainable and liable to be quashed, the said order shall also have to

go. Be that as it may, for the limited purpose of examination as to

whether the Magistrate has duly complied with the requirements which

are mandatory under provision of section 202 of the CrPC, the order of

the Magistrate as above be looked into.

Page 28 of 38

18. An in-depth scrutiny of the order of the Magistrate dated August 31,

2015, reveals that he was not oblivious of the requirement of the

mandatory compliance as per provision under section 202 of the Code.

Hence, he records about due consideration by him of perusal of the

complaint, the affidavit submitted and the documents filed by the

complainant. He has recorded further that no witness is examined from

the side of the complainant, excepting filing of the affidavit. Thus, the

Magistrate has come to a conclusion that there is sufficient ground for

proceeding against the accused persons for an offence under section 25

of the Payment and Settlements Act 2007 read with provisions under

Chapter-XVII of the Negotiable Instruments Act. The question remains

as to whether the same amounts to due compliance by the Magistrate

with the mandates under section 202 of the Code or not. As discussed

earlier, pursuant to the judicial pronouncements of the Apex Court,

one can find that scope of enquiry under section 202 of the Code is

limited - only to ascertainment of the truth or falsehood of the

allegations made in the complaint, on the basis of the materials placed

by the complainant before the Court and from the complainant's point

of view only. The order as above reveals that the Magistrate has

considered the complaint, the documents as well as the affidavit, which

were available before him. For the limited purpose of an enquiry to be

held under provision of section 202 of the Code, that too from the point

of view of the complainant only, such consideration by the Magistrate

and his finding on the basis of the same, appears to be just and proper.

There is no serious dispute as to the fact that the Magistrate has Page 29 of 38

recorded wrongly in his order regarding examination of available

materials before it, before issuance of process. Therefore, the Court is

of considered opinion that the Magistrate has done appropriately by

conducting an enquiry as to the existence of prima facie case against

the petitioners, on the basis of materials available before him, at a pre-

summon stage and by issuance of process there for. So far as

compliance of the mandatory provision under section 202 of the Code

of Criminal Procedure by the Magistrate is concerned, no sufficient

material is available for interference by this Court. Therefore, to that

extent, the petitioner's challenge is negated.

19. The discussions as above take us forward from the points agitated

regarding procedural latches, to the merits of the case. The allegations

are levelled against the petitioner under section 25 of the Payment and

Settlement Systems Act, 2007, in his capacity as the company

secretary of the accused No.1 company. To take the discussion further

forward, it is necessary to look into the said legal provision, to find

whether the ingredients thereof are prima facie present in the

complaint and more particularly against the petitioner in his capacity

of being such an employee of the accused company, to be vicariously

liable for the offence allegedly committed by the same.

20. Section 25 of the Payment and Settlement Systems Act, 2007 is as

follows:

Page 30 of 38

"25. Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account.--

(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both: Provided that nothing contained in this section shall apply unless--

(a) the electronic funds transfer was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability;

(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;

(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and

(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice.

(2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability. Page 31 of 38

(3) It shall not be a defence in a prosecution for an offence under sub-section (1) that the person, who initiated the electronic funds transfer through an instruction, authorisation, order or agreement, did not have reason to believe at the time of such instruction, authorisation, order or agreement that the credit of his account is insufficient to effect the electronic funds transfer.

(4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.

(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit.

Explanation.--For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability, as the case may be."

21. Therefore, Section 25 of the Payment and Settlement Systems Act,

2007, criminalizes the dishonour of an electronic funds transfer. It

primarily involves the dishonour of electronic funds transfer initiated

through a payment system, coupled with the liability of the person

responsible for initiating or facilitating such transfer, and the failure to

comply with statutory obligations related to the dishonour. Necessary

ingredients of the offence may be catagorised in the following manner: Page 32 of 38

 Initiation of electronic funds transfer: The transfer must have

been initiated through a recognized payment system, such as

electronic transfer, ECS, or TReDS, as seen in the context of the

documents.

 Dishonour of the transfer: The transfer must have failed to be

credited or settled, i.e., the bank or payment system did not

honor the transfer, which could be due to insufficient funds,

technical issues, or other reasons.

 Notice of dishonour: The payer or the bank must have issued or

received a notice of dishonour. The compliance with statutory

procedures for such notices is of utmost importance. Section

25(1)(c) is worth noting in this regard. A demand for payment of

the said amount of money is to be raised by the beneficiary in

case of alleged dishonour of transfer. The demand should be

made by giving a notice in writing within thirty days of the

receipt of information by him, from the bank concerned,

regarding the dishonour of the electronic funds transfer.

 Failure to make payment: The person responsible must have

failed to make the payment after receiving notice of dishonour,

leading to criminal liability.

22. The issues which arise for consideration are therefore (i) Whether the

demand notice issued is in compliance with the provisions under the Page 33 of 38

statute or not; (ii) Whether a prima facie case of vicarious liability is

made out against the petitioners or not.

23. With reference to the written complaint, Mr. Sourav Chatterjee, learned

Senior advocate for the petitioner has submitted that from the

averments therein, deviation from the mandatory statutory time limit

for a notice is apparent. He further has submitted that the 30 days'

notice period being a sine qua non for a complaint under the provisions

of the Payment And Settlement Systems Act, 2007, that being

mandatory and evidently having not been complied with in the instant

case, the criminal proceeding initiated against his client is liable to be

vitiated.

24. According to the written complaint, the intimation of the dishonoured

Electronic Funds Transfer came to the knowledge of the complainant

vide an intimation being transaction bearing Nos. 1023196413 and

1032925358, vide debit memo dated March 5, 2015 issued by the

clearing agent of the complainant company. A demand notice is said to

have been posted on April 6, 2015 though being marked as dated

March 26, 2015. The complainant has stated in the written complaint

that the notice as above, which was sent to the accused No. 1 that is

the company on its correct address the acknowledgment due card or

the unserved enveloped has never returned back. According to the

petitioner, the demand notice being issued/posted on April 6, 2015, is Page 34 of 38

evidently beyond a period of 30 days from the date of knowledge of the

complainant.

25. On behalf of the complainant, Mr. Satadru Lahiri, learned advocate has

submitted that the petitioner's contention regarding issuance of notice

under provision of Section 25 of the Act of 2007, being not within the

purview of the statutory prescription, is only incorrect. Mr. Lahiri has

argued that the two national holidays intervened during the period and

excluding those, the notice served by the complainant, can be found to

be within the prescribed period. However, according to the petitioner,

the complainant's attempt to exclude holidays (Doljatra and Holi) to

bring the notice within the prescribed period is only misconceived and

erroneous computation. Mr. Sourav Chatterjee for the petitioner has

suggested that even if the holidays are excluded a proper calculation

would show the notice to have been issued beyond the 30 days limit.

He has also argued that there is no provision for condonation of delay

in issuing demand notice. Hence the entire proceedings are liable to be

quashed, he says.

26. Having considered the averment made in the written complaint and the

relevant dates as mentioned therein, it appears that, vide a debit memo

dated March 5, 2015, the complainant has come to know about

dishonor of Electronic Funds Transfer. Therefore, in accordance with

the law, a period of 30 days starting from March 5, 2015 would be the

legally acceptable period for service of notice demanding payment of Page 35 of 38

money by the complainant to the petitioner if at all, as per law.

Admittedly, though the demand notice is dated March 26, 2015, the

same was posted one day after the period of 30 days was over that is,

on April 6, 2015. Hence, the same is beyond the period prescribed

statutorily, for service of a notice by the complainant. The argument of

the holidays having intervened in between resulting into such delay is

not acceptable for two reasons; firstly, that in case of an Electronic

Fund Transfer information which is received virtually for which the

holidays in between, if any, bear no relevance; secondly, there is no

justifiable explanation or at least anything advanced on behalf of the

complainant as to why a demand notice dated March 26, 2015 should

be posted on April 6, 2015. In that case the date of posting of the letter

is only to be taken consideration.

27. For the reasons as stated above, the Court is constrained to find that

the mandatory statutory provision under Section 25 of the Act of 2007

regarding compulsory service of notice by the complainant within a

period of 30 days from the date of knowledge is not fulfilled in the

instant case. In such circumstances, the Court is further constrained

to find that the Magistrate has not taken into consideration this aspect

of the matter while taking cognizance of the offence and passing further

orders in the case. As the Court is required to consider if the

ingredients of offence as alleged against the petitioner are prima facie

available in the written complaint or not, which are discussed above,

the Court is further constrained to find that the necessary ingredient of Page 36 of 38

compulsory service of notice within the statutory time limit is not

complied with by the complainant, in the instant case.

28. Thereafter, comes the question if the prima facie ingredients are

available against the petitioner to invoke vicarious liability of him for

the alleged offence committed by the company in which he has been in

employment as a company secretary. For that the complainant has to

plead that at the relevant point of time the accused petitioner has been

at the helm of the day to day affairs and policies of the company and

was responsible for the decision which tantamounts to an offence as

alleged. After thorough scrutiny of the complaint itself, the Court is

constrained to find that excepting the name of the petitioner having

been mentioned as one of the accused persons in the said complaint,

his involvement or any role in commission of the alleged offence or

regarding his day to day involvement in the affairs of the accused

company has not been expressed therein, except that the accused

company is being managed and controlled by the other accused

persons Nos. 2 to 7 (No. 7 being the present petitioner).

29. The Court is constrained to find that in accordance with the settled

principles of law, bare mention of the fact that the petitioner was liable

for management and control of the accused company without any

specification as regards his role therein, would not suffice for him to be

incorporated as an accused person and sent for trial. It does not mean

that there should have been an exhaustive description as to how the Page 37 of 38

petitioner has worked for the company but prima facie material

elaborating his role in commission of the offence would have been

imperative for the petitioner to be impleaded as an accused person in

the written complaint.

30. Therefore, the Court is unable to find any ingredient of offence against

the petitioner in his capacity as an employee of the accused company

and his being liable vicariously for the offence, if any, committed by the

said accused company. Unfortunately, this aspect has also been

overlooked by the Magistrate while taking cognizance of the offence

alleged against the present petitioner in the case.

31. The reasons as discussed above, renders the criminal proceeding being

No. CS/0025782/2015 now pending before the Metropolitan

Magistrate, 14th Court, Kolkata under Section 25 of the Payment and

Settlement Systems Act, 2007 liable to be quashed. Hence, the instant

application under Section 482 of the Code of Criminal Procedure, 1973

should succeed.

32. Hence, CRR 2292 of 2016 is allowed with the following direction:-

 Proceeding in the criminal case No. CS/0025782/2015 now

pending before the Metropolitan Magistrate, 14th Court, Kolkata

under Section 25 of the Payment and Settlement Systems Act,

2007 is quashed and set aside, against the accused person No.

7 therein, that is the present petitioner.

Page 38 of 38

 Orders passed by the Metropolitan Magistrate, 14th Court,

Kolkata in CS 0025782 of 2015, as regards the present

petitioner are set aside.

33. Urgent certified copies of the judgment, if applied for, be supplied to

the parties upon compliance with all requisite formalities.

(Rai Chattopadhyay, J.)