L. Manoharan, J.
1. This matter has come up before us as per order of reference by a learned single judge (Thomas J.).
2. This criminal miscellaneous case is by the accused in S. T. No. 305 of 1993 on the file on the Chief Judicial Magistrate, Thrissur, to quash annexure 'D' complaint filed by the second respondent under Section 138 of the Negotiable Instruments Act, 1881, as amended by Act 66 of 1988 (for short 'the Act'). The petitioner alleges that the said complaint does not contain allegations regarding the ingredients constituting the offence punishable under Section 138 of the Act. According to the petitioner, since annexure 'D' complaint does not contain an allegation to the effect that the cheque issued by the petitioner was returned by the bank unpaid as the amount of money standing to the credit of the petitioner is insufficient to honour the cheque, the complaint cannot be entertained and no cognizance could have been taken on the basis of the said complaint. The petitioner issued a cheque for an amount of Rs. 30,750 in favour of the second respondent ; but by annexure 'A' letter the petitioner informed the manager, South Indian Bank Ltd., Eriyad branch, that the payment as per the cheque has to be stopped for the reasons stated therein. When the cheque was presented, the same was returned with the endorsement 'payment stopped'. According to the second respondent, he issued a notice to the petitioner as required under Clause (b) of the proviso to Section 138 of the Act and since payment was not made in response to the said notice within the time stipulated, annexure 'D' complaint was filed.
3. According to the second respondent, the question as to the insufficiency of funds to the credit of the petitioner for honouring the cheque is a matter for evidence and not a matter for allegation as Section 138 of the Act does not insist that such an allegation is necessary.
4. When the matter came up before a learned single judge, the petitioner relied on three decisions of this court in support of his contention that such an allegation is necessary for entertaining a complaint under Section 138 of the Act. The decisions relied on were Bhageerathy v. V. Beena [1992] 2 KLT 31 ; [1993] 76 Comp Cas 684 rendered by Pareed Pillay J., S. Ashok v. Vasudevan Moosad [1993] 1 KLT 671; [1995], 82 Comp Cas 665 rendered by one of us (Manoharan J.) and M. O. H. Iqbal v. M. Uthaman [1993] 2 KLT 237; [1995] 82 Comp Cas 726 rendered by Thomas J. But the second respondent in support of the aforesaid contention relied on the decision in T. P. Pappachan v. P. O. Joy [1993] 1 KLT 13 ; [1994] 79 Comp Cas 488 by Sankaran Nair J. The learned single judge (Thomas J.) in the order of reference stated : 'The last mentioned decision, no doubt, runs counter to the other three decisions on this aspect. I do not think it proper to follow the decisions rendered by single judges in the other three decisions, though that may form the majority apparently, since one learned single judge had taken a contrary view. This apparent conflict must be resolved for which it is only proper that the question is referred to a Bench.'
5. All dishonour of cheques are not made punishable under Section 138 of the Act. Only the dishonour of the cheque on account of the circumstance mentioned in Section 138 of the Act is made punishable under the said section, and the condition stipulated in Section 138 of the Act is, the cheque 'is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.' Therefore, unless the said condition is satisfied, the offence under Section 138 of the Act would not be made out.
6. In the matter of taking cognizance on receiving a complaint, Section 190(1)(a) of the Code of Criminal Procedure, 1973 (for short, 'the Code'), enjoins that any Magistrate of the First Class and any Magistrate of the Second Class specifically empowered in this behalf under Sub-section (2) of Section 190 of the Code, can take cognizance upon receiving a complaint of facts which constitute such offence. Section 142 of the Act enjoins the conditions for taking cognizance of the offence punishable under Section 138 of the Act. Section 142 of the Act reads :
'142. Cognizance of offences.-Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
(a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque ;
(b) such complaint is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 ;
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the First Class shall try any offence punishable under Section 138.' (emphasis* supplied).
7. Thus, it is clear that cognizance can be taken only upon a complaint by the payee, or, as the case may be, by the holder in due course. And, as per Clause (c), no court inferior to that of the Metropolitan Magistrate or a Judicial Magistrate of the First Class can try any offence punishable under Section 138 of the Act. Since the provisions in the Code in this regard are applicable subject to what is enjoined in Section 142 of the Act in deciding as to what should be alleged in a complaint for taking cognizance, Clause (a) of Section 190(1) of the Code is relevant to the extent the same is not inconsistent with Section 142 of the Act. So understood it is unambiguously clear that the complaint should contain allegations of the ingredients of the offence. In this connection, it is necessary to refer to the decision of the Supreme Court in State of Haryana v. Bhajan Lal, AIR 1992 SC 604. In paragraph 108, the Supreme Court states the categories of cases by way of illustration where a complaint or a charge can be quashed in exercise of the jurisdiction under Section 482 of the Code. Of these, the first is '(1) where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused ...' The Supreme Court in the decision in Chand Dhawan v. Jawahar Lal, AIR 1992 SC 1379, also held (p. 1382) :
'The High Court can exercise its inherent jurisdiction of quashing a criminal proceeding only when the allegations made in the complaint do not constitute an offence or the exercise of the power is necessary either to prevent the abuse of the process of the court or otherwise to secure the ends of justice. No inflexible guidelines or rigid formula can be set out and it depends upon the facts and circumstances of each case wherein such power should be exercised.'
8. In Bhageerathy's case [1992] 2 KLT 31 ; [1993] 76 Comp Cas 684 Pareed Pillay J. dealt with a case where the cheque was returned with the endorsement 'payment stopped by the drawer'. There was no allegation to the effect that since the amount of money standing to the credit of the drawer was insufficient to honour the cheque, the same was returned unpaid. The learned single judge quashed the complaint as the ingredient of the offence punishable under Section 138 of the Act was not alleged. In S. Ashok's case [1993] 1 KLT 671 ; [1995] 82 Comp Cas 665, one of us (Manoharan J.), with reference to annexure 5 in that case which was the complaint under Section 138 of the Act, held (at page 670) :
'As noticed, to constitute the offence under Section 138 of the Act, one of the ingredients is that, there was no sufficient fund in the account of the drawer to honour the cheque. That being the position, since annexure 5 complaint does not contain an allegation to the said effect and since the allegations therein are not capable of bringing out a contention to the said effect even by necessary implication, annexure 5 is liable to be quashed.'
9. In M. O. H. Iqbal's case [1993] 2 KLT 237 ; [1995] 82 Comp Cas 726, Thomas J. also took the same view. Paragraph 1 of the said decision would show that there was an allegation to the effect that the cheque was dishonoured as the drawer did not have the necessary amount in his account. In the matter of considering whether there is an allegation of the ingredients in the complaint, the learned judge observed (at page 730) :
'A meticulous scrutiny of the complaint may not be warranted at the initial stage to ascertain whether all the elements of the offence have been expressly categorised therein. It is enough that a pragmatic assessment is made after perusing the complaint to decide whether the complaint discloses the offence under Section 138 of the Act.'
10. The learned judge, in paragraph 8 of the decision, said (at page 729) :
'I have no doubt that when there is no case for the complainant that dishonour of the cheque was either because of insufficiency of amount in his account or that the amount covered by the cheque exceeded the amount arranged to be paid from that account, then no offence is made out and the complaint which is bereft of such basic allegation is liable to be dismissed.'
11. As noticed, in S. Ashok's case [1993] 1 KLT 671 ; [1995] 82 Comp Cas 665 also, it is held that the complaint should contain allegations as to the ingredients of the offence at least by necessary implication. In T. P. Pappachan's case [1993] 1 KLT 13 ; [1994] 79 Comp Cas 488 Sankaran Nair J. observed (at page 489 of 79 Comp Cas) :
'Insufficiency of funds is a matter of evidence. Allegations do not always do service for evidence, and lack of allegations does not always indicate lack of evidence. The entire case of the prosecution need not verbatim enter the complaint, warp and woof.'
12. It is true, allegations cannot take the place of evidence, and lack of allegations need not ipso facto mean that there is lack of evidence. As noticed for taking cognizance, the facts constituting the offence must be alleged, only on such allegation and consequent taking cognizance the question of adducing evidence would arise. The decision in T. P. Pappachan's case [1993] 1 KLT 13 ; [1994] 79 Comp Cas 488 does not show that there was no allegation as to the ingredients of the offence in the complaint dealt with in that case. In paragraph 11 of S. Ashok's case [1993] 1 KLT 671 ; [1995] 82 Comp Cas 665, it was observed (at page 670 of 82 Comp Cas) :
'In Crl. M. C. No. 901 of 1992 also this court followed the decision in Bhageerathy's case [1992] 2 KLT 31 ; [1993] 76 Comp Cas 684, In understanding the decision in T. P. Pappachan's case [1993] 1 KLT 13 ; [1994] 79 Comp Cas 488 the decision in Crl. M. C. No. 901 of 1992 has to be kept in view.'
13. The order in Crl. M. C. No. 901 of 1992 was also by Sankaran Nair J. With reference to the ingredients of the offence under Section 138 of the Act, the learned judge, in paragraph 3 of the order in Crl. M. C. No. 901 of 1992 observed :
'On the face of the complaint and without anything more these two grounds are not made out and cannot be made out. A learned judge of this court has held in Bhageerathy v. V. Beena [1992] 2 KLT 31 ; [1993] 76 Comp Cas 684 that in such a situation a complaint will not lie. I am bound by the decision and I see no reason to differ from the view expressed by the learned judge.'
14. With due regard to the fact that T. P. Pappachan's case [1993] 1 KLT 13 ; [1994] 79 Comp Cas 488 does not reveal that the complaint therein did not contain allegation as to the ingredients of the offence, the said decision cannot be treated to hold that the complaint need not contain allegation regarding ingredients of the offence under Section 138 of the Act. This is particularly so, in view of the decision in Crl. M. C. No. 901 of 1992.
15. Annexure B complaint does not contain an allegation to the effect that the cheque was dishonoured due to insufficiency of fund in the account of the petitioner. The allegations therein are not capable of bringing out such a contention even by necessary implication. Therefore, annexure D complaint and the proceedings thereunder are liable to be quashed. But learned counsel for the second respondent made reliance on the decision in Thomas Varghese v. P. Jerome [1992] 1 KLT 812 ; [1993] 76 Comp Cas 380 to contend that irrespective of the endorsement by the bank, the complaint is maintainable. It will be noticed that the said decision did not deal with the question as to the necessity of allegations regarding the ingredients of the offence. The question dealt with was whether the endorsement by the bank is decisive in deciding whether the offence under Section 138 of the Act is made out. The Division Bench observed (at page 385 of 76 Comp Cas) ;
'The offence under the section cannot depend on the endorsement made by the banker while returning the cheque, irrespective of the endorsement made by the banker, if it is established that in fact the cheque was returned unpaid either because the amount of the money standing to the credit of the account of the drawer is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, the offence will be established.'
16. Paragraph 2 of the judgment would show that the complaint therein contained an allegation to the effect that the accused had no fund in the bank. This decision also was considered in S. Ashok's case [1993] 1 KLT 671 ; [1995] 82 Comp Cas 665. Thus, the said decision cannot support the stand of the second respondent with respect to the necessity of allegation as to the ingredients of the offence. It was then contended that since the bank would not reveal as to the deposit of its customer, it was not possible for the petitioner to make such an allegation ; the argument cannot be accepted for the simple reason that annexure D complaint is filed alleging that the accused/petitioner has committed an offence punishable under Section 138 of the Act. When such an allegation is made by the petitioner, he is bound to state the ingredients of the offence. Evidence is adduced in support of the charge or the complaint, as the case may be. If the complaint suffers from the defect in not alleging the necessary ingredients of the offence, the same has to be quashed under Section 482 of the Code. The law is correctly laid down in the decisions in Bhageerathy's case [1992] 2 KLT 31; [1993] 76 Comp Cas 684 (Ker), S. Ashok's case [1993] 1 KLT 671 ; [1995] 82 Comp Cas 665 and M. O. H. Iqbal's case [1993] 2 KLT 237 ; [1995] 82 Comp Cas 726.
17. As noticed, annexure D complaint since does not contain the allegation of the ingredients of the offence under Section 138 of the Act, the complaint is liable to be quashed.
18. In the result, the petition is allowed and annexure D complaint and the proceedings thereunder are quashed.
Mohammed, J.
19. I have had the benefit of reading the order of my learned brother in the above criminal miscellaneous case. While respectfully concurring with the conclusions of the learned brother, I prefer to record my own reasons in that behalf.
20. The order of reference relates to the maintainability of a complaint filed against the petitioner before the Chief Judicial Magistrate's Court, Thrissur, for an offence under Section 138 of the Negotiable Instruments Act (for short 'the Act'). The question that requires to be decided in the reference is whether in the absence of an allegation that the cheque was returned for want of sufficient amount in the account or that the amount exceeded the limit arranged for, the complaint is liable to be dismissed in view of the decisions of this court in Bhageerathy v. V. Beena [1992] 2 KLT 31; [1993] 76 Comp Cas 684--Pareed Pillay J., S. Ashok v. Vasudevan Moosad [1993] 1 KLT 671 ; [1995] 82 Comp Cas 665-Manoharan J, and M. O. H. Iqbal v. M. Uthaman [1993] 2 KLT 237; [1995] 82 Comp Cas 726--Thomas J. The reference order also points out, the decision in T. P. Pappachan v. P. O. Joy [1993] 1 KLT 13 ; [1994] 79 Comp Cas 488-Sankaran Nair J. 'runs counter to the other three decisions' of this court referred to hereinbefore. All the decisions of this court on this question are sufficiently explained and dealt with by my learned brother and, therefore, I find it unnecessary to deal with them once again here.
21. The facts of the case can be stated briefly thus : In the course of business dealings in relation to the printing of a journal published on behalf of the Kerala Government Officers Association, the petitioner who is the managing editor of the said journal, issued a cheque dated April 20, 1993, for an amount of Rs. 30,750 to the second respondent. Soon after the issue of the cheque, it came to the notice of the petitioner that the second respondent had engaged in malpractice and fraud in the business dealings. In that situation, he issued a letter on April 15, 1993, evidenced by annexure A requesting the manager of the bank to stop payment of the amount covered by the aforesaid cheque on the ground that there was breach of contract. While so, the second respondent presented the cheque for encashment. However, the cheque was returned in view of the 'stop payment order' issued by the petitioner. Consequently, the second respondent issued a notice dated May 3, 1993, to the petitioner as required under Section 138(b) of the Act. Annexure B is a copy of the said notice. The petitioner, thereafter, sent a reply notice dated May 22, 1993, evidenced by annexure C denying his liability to pay the amount, as there was breach of contract and fraud in the business dealings. Shortly thereafter, the second respondent filed annexure D complaint on May 24, 1993, before the Chief Judicial Magistrate, Thrissur, against the petitioner under Section 190(1A) of the Code of Criminal Procedure (for short 'the Code'), alleging commission of the offence under Section 138 of the Act. In the meanwhile, the petitioner has filed a complaint under Section 200 of the Code against the second respondent before the Additional Judicial Magistrate of First Class, Irinjalakuda, alleging commission of the offences under sections 383, 406, 467, 468, etc., of the Indian Penal Code, which is stated to be under investigation.
22. There cannot be any dispute in this case that the cheque was returned by the bank to the second respondent by reason of the 'stop payment order' issued by the petitioner. It cannot also be disputed that in annexure D complaint there is no express allegation that the cheque was dishonoured due to 'insufficiency of funds' standing to the credit of the petitioner. In view of this factual situation, the question that requires to be decided is whether annexure D complaint is maintainable under Section 138 of the Act and whether the Chief Judicial Magistrate has power to take cognizance of the offence alleged in the complaint under Section 142 of the Act.
23. Chapter XVII which contains Sections 138 - 142 was incorporated in the Act by an amendment introduced as per Section 4 of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988. By this Chapter what is intended by the Legislature is to create a new 'offence' punishable with imprisonment for a term which may extend to one year or with fine which may extend to twice the amount of the cheque or with both. What is the offence so created It is this : Where any cheque drawn by a person for the discharge of any liability is returned by the bank unpaid for the reason of insufficiency of the amount of money standing to the credit of the account on which the cheque was drawn or for the reason that it exceeds the arrangements made by the drawer of the cheque with the bankers for that account, such person shall be deemed to have committed an offence. This offence is created by a legislative fiction contained in Section 138 in view of the deeming provision. Before the present amendment, the position was that when a banker does not pay the amount on presentation of a cheque, the dishonour takes place and the holder thereof acquires at once a right of recourse against the drawer by virtue of the provisions contained in Section 92 of the Act. When the right of recourse is accrued, the holder or payee of the cheque can sue the drawer or endorser for the recovery of the amount. The existence of this civil remedy did not exclude a trial by a criminal court for offences like cheating, misappropriation, theft, etc., under the provisions of the Indian Penal Code.
24. Now, a legal right has been created in favour of the payee or holder in due course to prosecute the drawer for non-performance of his correlative duty to honour the cheque. But every dishonour of cheque does not create a legal right enforceable under Section 138. There is no indication in the Act as amended that as a result of the accrual of this right the remedy both civil and criminal available against the defaulting drawer under the Act before the amendment is obliterated in any manner. The fresh legal right will accrue only in two eventualities. (1) Insufficiency of amount in the account, and (2) The amount exceeded the limit arranged with the bank. Therefore, the enforce ability of this legal right to prosecute the defaulting drawer totally depends on the presence of one of the two eventualities. It is a pre-essential requisite for enforcement of this right inasmuch as the provisions in the Act do not totally preclude the enforcement of right of recourse in any other manner. That means in order to attract the provisions of Section 138, the presence of the aforesaid eventualities shall be specially pleaded while seeking to enforce the said right.
25. Every legal right is vested in a person as the owner of the right and it avails against a person upon whom lies the co-relative duty. The content of the right is that the person is bound to an act or omission in favour of the person entitled. The act or omission relates to something and that is the subject-matter of the right. 'Every legal right has a title, that is to say, certain facts or events by reason of which the right has become vested in its owner'. (Salmond on Jurisprudence). Therefore, in every action for enforcement of a legal right by an owner, the facts or events by reason of which the right has become vested in him have to be pleaded and proved. In the absence of these facts or events the act of the court will be a mere nullity. The facts or events must be pleaded in an action for enforcement of the legal right because the court has to decide whether it has jurisdiction to try it conclusively. In the present case, the action is against the defaulting drawer whose act or omission is under challenge. Therefore, all the facts required to decide the act or omission of the defaulting drawer shall be stated. What constitutes the act or omission in the present case is, the default of the drawer in arranging the funds in the bank in order to honour the cheque issued by him. In the absence of allegation to that effect the court cannot assume jurisdiction to try the case.
26. Halsbury's Laws of England, IVth edition, volume 10, page 715, on the subject of 'Jurisdiction of courts' enunciates :
'By 'jurisdiction' is meant the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter or commission under which the court is constituted, and may be extended or restricted by similar means.
If no restriction or limit is imposed the jurisdiction is said to be unlimited. A limitation may be either as to the kind and nature of the actions and matters of which the particular court has cognisance, or as to the area over which the jurisdiction extends, or it may partake of both these characteristics. // the jurisdiction of an inferior court or tribunal, including an arbitrator, depends on the existence of a particular state of facts, the court or tribunal must inquire into the existence of the facts in order to decide whether it has jurisdiction ; but except where the court or Tribunal has been given power to determine conclusively whether the facts exist, the Queen's Bench Divisional Court will inquire into the correctness of its decision by means of proceedings for mandamus, prohibition or certiorari. Where a court takes it upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgment is given,' (italics supplied)
27. The Supreme Court in Rai Brij Raj Krishan v. S. K. Shaw and Bros., AIR 1951 SC 115, has approved the law as stated by Lord Esher M. R. in Queen v. Commissioner for Special Purposes of Income-tax [1888] 21 QB D 313, 319, where it has been held thus (at page 117 of AIR 1951 SC) :
'When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the Legislature has to consider what powers it will give that tribunal or body, It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise. There it is not for them conclusively to decide whether that state of facts exist and if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction.'
28. A Division Bench of this court in Kunheema Umma v. P. Balakrishnan Nair, AIR 1967 Ker 97, observed thus (at page 99) :
'In other words, by jurisdiction is meant the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision. The jurisdiction of a court may be restricted by a variety of circumstances. The question of jurisdiction has to be considered with reference to the value, place and nature of the subject-matter.'
29. In Jaddhu Veeraswami v. Sub-Collector, Narasapur [1975] 1 An WR 337 (AP), the legal position in this regard has been stated by the Andhra Pradesh High Court thus :
'It is well-settled that a Tribunal can investigate into the facts relating to the exercise of its jurisdiction when that jurisdictional fact itself is in dispute. Where a Tribunal is invested with the jurisdiction to determine a particular question, it is competent to determine the existence of the facts collateral to the actual matter which the Tribunal has to try. The power to decide collateral facts is the foundation for the exercise of its jurisdiction.'
30. Section 142 of the Act mandates that no court shall take cognizance of any offence punishable under Section 138 except upon a complaint in writing by the payee or, as the case may be, the holder in due course of the cheque. Unless the complaint discloses the facts which constitute the act or omission of the defaulting drawer, the Magistrate cannot take cognizance of the offence inasmuch as such facts by nature are fundamental concerning the jurisdiction of the court. These facts cannot be gathered by inference or by necessary implication from the allegations contained in the complaint. The facts must be explicitly expressed for jurisdiction cannot be decided on inference or implication.
31. Annexure D complaint does not contain the facts or allegations attracting the provisions contained in Section 138 of the Act. The ingredients of the offence are not prima facie made out. Annexure 'D' complaint is set aside. The criminal miscellaneous case is, therefore, allowed.