SECTION 102 OF CR.P.C & POWER OF ATTACHMENT OF POLICE

 

Section 102 of Cr.P.C & POWER OF ATTACHMENT OF POLICE

 

The details mechanism and procedure as regards criminal law are embodied in Code of Criminal Procedure. The power of Police and Magistracy are often deliberated and in the event of perceived ambiguity, the same are decided by courts of law. The power of police, as regards attaching the property of accused during investigation as per Section 102 of Cr.P.C is another area of concern and the applicability or misuse of the said power, occasionally, takes centre stage. The endeavour herein is to go through the finer points and circumstances of its applicability, inclusive of safeguards, if any.

Before going further the provision of section 102 may be reproduced as under:

102. Power of police officer to seize certain property.

 

(1)    Any police officer, may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence.

(2)    Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer.

(3)    Every police officer acting under sub- section (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the Court,[or where there is difficulty in securing proper accommodation for the custody of such property,  or where the continued retention of property in police custody  may not be considered necessary for the purpose of investigation], he may give custody thereof to any person on his executing a bond undertaking to produce the property before the Court as and when required and to give effect to the further orders of the Court as to the disposal of the same.]

[Provided that where the property seized under sub section (1) is subject to speedy and natural decay and if the person entitled to the possession of such property is unknown or absent and the value of such property is less than Five Hundred Rupees, it may forthwith be sold by auction under the orders of the Superintendent of Police and the provision of section 457 and 458, shall, as nearly as may be practicable, apply to the net proceeds of the such sale]. 

 

As is evident from above, and as per Section 102 (3) of Cr.P.C, the police after freezing the bank account ought to have sent a seizure report to the concerned Jurisdictional Magistrate without any delay and if no such seizure report was filed by the Police forthwith to the concerned Jurisdictional Magistrate, nor informed the same to the accused, the same shall not be in conformity with the section.

The Apex Court in plethora of judgments held that freezing of bank account pending investigation to follow the mandatory conditions, further, prohibitory order shall be for a very short duration and for a specific period and the bank accounts cannot be freezed endlessly.  In such a circumstances, whether a bank account can be de-freezed to enable accused to continue with banking operations?  This is a moot point.

MADRAS HIGH COURT

ON SECTION 102 Cr.P.C RELATING TO POWER OF ATTACHMENT BY POLICE

The Madras High Court has dealt with the matter in a case captioned as Kiruthika Vs The State & Ors bearing no. Crl.O.P.No.14733 of 2021 where in a petition u/s 482 of Cr.P.C, the prayer was made to defreeze the account at Axis Bank Limited.

FACTS OF THE CASE

To put in perspective the above case (Kiruthika), initially, a case was registered in Crime No.11/2021, for the offences under Sections 67, 67A of IT Act, Sections 294(b), 509 of IPC and Section 4 of Indecent Representation of Women Act, 1986. Later on, alteration report was filed and Section 420 of IPC was also included. The confession of the accused lead to recovery of articles and the same was produced before the concerned Magistrate without delay.

In the aforesaid case, it was borne out from record that whereas, the remand report, remand order, bail order, alteration report, letter of the bank and copy of the notice issued under Sections 91 and 102 of Cr.P.C to the respondent bank and the letter of the bank to the police to prove the fact that the respondent police sent a letter to the bank only on 28.06.2021. It was claimed that there was no proof to show whether the report was sent to the Court.

As per prosecution, the petitioner and her husband had allegedly collected a fund of Rs.2.89 Crores from Salem District, created two email IDs, and created two Youtube channels and made live streaming PUBG gaming videos with obscene commentary and filthy language against women and teenage subscribers of the said Youtube Channels got offended on the comments, which were made with an intention to insult and indecently represent women in social media. The accused received donations through Gpay, Paytm, there are about 2842 victims in this case. On 22.06.2021, notice under Sections 160 and 91 of Cr.P.C. was sent to Google India Private Limited and Legal Department requesting to delete the offending videos. The IP details for these Youtube Channels furnished by the Google authorities. The IP address provided by the accused Youtube Channels were accessed by the petitioner using her ACT Broadband connection at her residence in Chennai and using her JIO Mobile Network and uploaded 700 videos in Youtube channel and 33 other videos. They allegedly earned a sum of Rs.35,62,060.58 illegally between 23.01.2020 to 31.05.2021 from Google Company, USA. The said money was deposited in Axis  Bank A/c. No. which is in the name of the petitioner. Both the accused collected funds of Rs.2,89,59,405/- from hundreds of their Youtube followers on false promise of helping poor and needy people whose livelihood are affected and the money was received in Kotak Mahindra Bank A/c between the period 01.01.2020 to June 2021. Bulk of the amount was allegedly retained fraudulently, misused for their personal needs and the money was spent lavishly. The accused bought two luxury cars, Audi A6 worth Rs.13 lakhs, Audi R8 worth Rs.47 Lakhs, gold jewels worth Rs.30 from GRT and silver articles worth Rs.26.85 Lakhs from Tanishq Jewellery.

In this case, the fact reveals that investigation was completed in the meanwhile and  charge sheet filed and the case was taken on file in C.C.No.2946 of 2021 by the learned XI Metropolitan Magistrate, Saidapet, Chennai. The letter addressed to the Bank Manager, Axis Bank was intimated to the Court at the time of remanding the petitioner on 16.06.2021 complied with the mandatory condition under Section 102 Cr.P.C. Further, out of 2842 victims across India, 25 victims could be contacted, their statements were recorded and filed in the final report. Now in the bank account of the petitioner, Rs.1,01,32,874.22/- was available, which is disputed. It is held that the ownership of the said money cannot be decided without recording of evidence, only on completion of trial proceedings, the genuineness or otherwise can be decided.

                                           LAW

In Teesta Atul Setalvad vs. State of Gujarat reported in (2018) 2 SCC 372 it is held by hon’ble Supreme Court that the power of Investigating Officer, investigating any offence can issue prohibitory orders in respect of the bank accounts in exercise of power under Section 102 Cr.P.C cannot be questioned, if the two (2)  pre-conditions for applicability of Section 102(1) Cr.P.C. are complied with. The pre-conditions are:

(i)          it must be a property,

(ii)        secondly, in respect of the said property, there must be suspicion of commission of any offence.

On the facts above submitted, it is clear that the amount lying in the bank account is a case property.

The case in Crime No.11 of 2021 was registered on 14.06.2021, the petitioner was arrested on 15.06.2021 and on 16.06.2021, the petitioner was produced for remand. After her arrest, the petitioner disclosed the business module, bank transactions and other particulars. The petitioner was the Admin for the two Youtube Channels, The transcript of the Youtube channels produced, the particulars of payment received from the Google Company, the particulars of donations received from the subscribers in the account in Kotak Mahindra Bank and the statement of account produced. From the statement of account, it is seen that around Rs.2,89,59,405/- was transferred to the account of the petitioner in Axis Bank A/c. but now only Rs.1,01,32,874.22/- was available. The letter dated 15.06.2021 sent by the Senior Manager & Operations Head of concerned branch Axis Bank, Chennai was produced to the concerned Magistrate during the remand of the petitioner, as are evident from the Court seal and Magistrate Initial dated 16.06.2021. The aforesaid letter was sent along with Statement of Account for A/c. for the period from 01.01.2020 to 31.12.2020 and 01.01.2021 to 14.06.2021 and other relevant documents.

The Apex Court in the case of Teesta Atul Setalvad [supra], held that Section 102 Cr.P.C. does not contemplate issuance of any notice to the account holder, for the purpose of investigation, no notice to the suspect can be expected under law. Section 102 Cr.P.C. is an important step towards investigation, in view of settled legal position, the accused cannot have any say in the investigation and notice to the suspect is out of question. The intention of the investigating agency is not required to be revealed to suspect at that crucial stage, else message of alert would be received by the suspect creating huge room for manipulation or destruction of evidence. The intention of the investigating agency is not required to be revealed to suspect at that crucial stage, else message of alert would be received by the suspect creating huge room for manipulation or destruction of evidence.

It is held in the case that the seizure/freezing of the account and its intimation was sent to the Jurisdictional Magistrate immediately on 16.06.2021 during the remand of the petitioner, hence, the mandatory provision under Section 102(3) Cr.P.C. is complied with. Now, investigation stands completed and from the list of witnesses, it is seen that various documents clearly state that they used to play PUBG game videos through the Youtube channel of the accused, they admit of making donations, for helping the poor people during Covid 19 situation. Further, it is seen that from the amount received as donation from their subscribers, less than Rs.2 Lakhs was paid as donation by the accused and with regard to the balance amount, the accused are to give reasons. Though, it is claimed by the prosecution that 2842 victims across India were cheated and victimized but only 25 victims could be accessed by the prosecution. The petition (Supra) is therefore dismissed by Madras High Court. It was however further directed that as regards the freezing of account of the accused, the prohibitory orders cannot be kept in force endlessly. As the investigation is completed and charge sheet is  filed, it is open to the petitioner to apply for de-freezing the bank account, if they give satisfactory explanations to the concerned Magistrate, to show that freezing of account in its entirety is no more necessary for the purpose of investigation as provided under Section 102(3) Cr.P.C. Thereafter, it is for the concerned Court to consider the plea of the accused in accordance with law, after hearing the petitioner and the respondent police on the facts and circumstances of the case and thereafter, to pass appropriate orders.

CONCLUSION

Though, the power u/s 102 of Cr.P.C is quite an extra-ordinary power, available to the police so that such power could be exercised by police in extra-ordinary situation. It is clearly held in the above cited cases that there is no mandate to notify the accused about attachment of the case property during investigation. In fact, if the same is to be done, the very purpose of effective investigation shall suffer. Therefore, no such rights could be claimed by the accused. Though, during remand of accused, the Magistrate should be apprised of the attachment. It is however, made clear by the court that the attachment and issue of attachment after filing of charge sheet should not be allowed, endlessly, and if cogent reasons could be shown by the accused, then, the concerned courts of Magistrate may pass appropriate order of de-freezing the account and as such issues are held to the domain of trial court, therefore, the high court shall be loath in passing orders u/s 482 of Cr.P.C, unless, there are likelihood of miscarriage of justice and such orders are necessary with a view to secure abuse of process of courts.

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                              Anil K Khaware

                              Founder & Senior Associate

                              Societylawandjustice.com

 

SECTION 138 NI ACT: IF COMPLAINTS BASED ON SETTLEMENT CAN BE QUASHED?

 

SECTION 138 NI Act: If COMPLAINTS BASED ON settlement CAN BE QUASHED?

The provisions relating to bouncing of cheques have travelled quite a distance since the year 1988, when the provision of Section 138 of Negotiable Instruments Act (In short “NI Act”) was inserted in the said NI Act. This was done with a view to give fillip to transactions by cheque and also to infuse confidence in such transactions. The provisions have undergone various changes/amendments by virtue of several subsequent amendments. The present article, however, shall revolve around a new vista i.e whether the terms of settlement envisaging settlement and cheques issued pursuant to subsequent settlement and complaint u/s 138 of NI Act, based shall be maintainable, if the cheques are also dishonoured. This is to be seen, particularly, in the backdrop of ongoing earlier complaints based on dishonor of cheques, which is also continuing and settlement is executed during the pendency of earlier complaints. What will be the fate of earlier complaints? What will be the fate of settlement during the pendency of the earlier complaints? The another dimension of it is as to whether the claim under the subsequent settlement, provisioning for more payment by way of compensation shall tantamount to consideration or not? Whether both sets of complaints u/s 138 of NI act could continue and shall remain maintainable or the subsequent complaints shall only be maintainable and the earlier complaint shall no longer be maintainable.  Conversely, whether, the earlier complaint shall be only maintainable?

The hon’ble Supreme Court has settled the dust fully and finally. The issues arising out of the above situation are thus clearly answered in a recent judgment captioned as M/s Gimpex Private Limited Vs Manoj Goel Criminal Appeal No. 1068 of 2021 (Arising out of SLP (Criminal) No. 6564 of 2019).

Before delving in further, it may be apt to refer to the essential ingredients of section 138 of Negotiable Instruments as is held by the hon’ble Supreme Court in K Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 The Supreme Court had observed:

“14. The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence:

(i)         The drawing of a cheque by person on an account maintained by him with the banker for the payment of any amount of money to another from that account;

(ii)        The cheque being drawn for the discharge in whole or in part of any debt or other liability;

(iii)      Presentation of the cheque to the bank;

(iv)       The return of the cheque by the drawee bank as unpaid either because 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;

(v)        A statutory notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and

(vi)       The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.

 

It may be noted that the primary purpose of Section 138 of the NI Act is to ensure compensation to the complainant, the NI Act also allows for parties to enter into a compromise, both during the pendency of the complaint and even after the conviction of the accused.

The decision of the Supreme Court in Meters and Instruments (P) Ltd. v. Kanchan Mehta (2018) 1 SCC 560 is worth reference as that summarises the objective of allowing compounding of an offence under Section 138 of the NI Act:

“18.2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court.”

In Damodar S. Prabhu Vs Sayed Babalal (2010) 5 SCC 663 the Supreme Court had emphasised that the compensatory aspect of the remedy under Section 138 of the NI Act must be preferred and has encouraged litigants to resolve disputes amicably.

The Supreme Court observed:

 

“4. It may be noted that when the offence was inserted in the statute in 1988, it carried the provision for imprisonment up to one year, which was revised to two years following the amendment to the Act in 2002. It is quite evident that the legislative intent was to provide a strong criminal remedy in order to deter the worryingly high incidence of dishonour of cheques. While the possibility of imprisonment up to two years provides a remedy of a punitive nature, the provision for imposing a “fine which may extend to twice the amount of the cheque” serves a compensatory purpose. What must be remembered is that the dishonour of a cheque can be best described as a regulatory offence that has been created to serve the public interest in ensuring the reliability of these instruments. The impact of this offence is usually confined to the private parties involved in commercial transactions.”

 

The Supreme Court has also noted that the introduction of a criminal remedy has given rise to a worrying trend where cases under Section 138 of the NI Act are disproportionately burdening the criminal justice system. The Supreme Court has observed:

 

“5. Invariably, the provision of a strong criminal remedy has encouraged the institution of a large number of cases that are relatable to the offence contemplated by Section 138 of the Act. So much so, that at present a disproportionately large number of cases involving the dishonour of cheques is choking our criminal justice system, especially at the level of Magistrates’ Courts. As per the 213^th  Report of the Law Commission of India, more than 38 lakh cheque bouncing cases were pending before various courts in the country as of October 2008. This is putting an unprecedented strain on our judicial system.”

 

The provision u/s 138 of the NI Act, has thus encouraged the parties to settle the dispute resulting in ultimate closure of the case rather than continuing with a protracted litigation before the court. This is beneficial to the parties to the lis , as speedy recovery  of money is ensured and in compromise there are chances of mitigating the aspect of extent of compensation. The prospect of protracted litigation is also avoided. The likelihood of probable conviction and sentence or payment of a fine could also be avoided. The judicial system may also be relieved from some pendency of such complaint. In Damodar S. Prabhu (Supra) the Supreme Court has observed has observed;

“18. It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. There is also some support for the apprehensions raised by the learned Attorney General that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. The problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute…”.

Though, section 147 of NI act stipulates the compounding of offence, but the same is not as comprehensive as  Section 320 CrPC. For instance, Section 147 of the Negotiable Instruments Act does not provide any clear guidance as to at what stage compounding could be done. It is also not provided if the compounding can be done at the instance of the complainant or with the leave of the court. The net result therefore is  that in the absence of statutory guidance parties opts to compounding only as a method of last resort, rather than at the stage when the Magistrates take cognizance of the complaints. No doubt, the same may also be due to the reason that  the accused persons may be willing to take the chance of progressing through the various stages of litigation and then choose the route of settlement only when no other route remains. It may be prudent on the part of the accused, but this is akin to affording opportunity to cause delay. The judgment rendered in Damodar S Prabhu (Supra) has stipulated greater amount of compensation in case of delay in compounding, but the situation has not vastly altered, yet.

 

It was realized that the pendency of court proceedings under Section 138 of the NI Act and the multiplicity of complaints in which a cause of action arising from one transaction is litigated has dampened the ease of doing business in India, impacted business sentiments and hindered investments from investors. In this backdrop, it was felt that the issue deserved attention and the Ministry of Finance in June 2020, had solicited comments as regards decriminalisation of minor offences, including Section 138 of the NI Act, to improve the business sentiment in the country.

The Supreme Court has thus dealt with the issue of pendency of parallel proceedings for complaints under Section 138 of the NI Act. The question that whether once the settlement has been entered into, the complainant can be allowed to pursue the original complaint under Section 138 of the NI Act?

FACTS OF THE PRESENT CASE:

The hon’ble Supreme Court has dealt with the issues of settlement and pursuant thereto filing of criminal complaints u/s 138 of NI Act based on dishonoured cheques issued pursuant to settlement. In M/s Gimpex Private Limited(Supra) pursuant to High Seal sale Agreement (HSSA), initially, 18 cheques dated 8 August 2012 of a total value of Rs. 9 crores were issued by Anchal Cement Ltd (ACL) M/s Gimpex Private Limited. The cheques were dishonoured on the premise that the payment had been stopped by the drawer or, as the case may be, for insufficiency of funds that led to the issuance of legal notices under Section 138 of the NI Act and the institution of the first criminal complaint before the Metropolitan Magistrate. It was at that stage that a director of ACL was arrested by the Central Crime Branch in connection with Crime No. 21/2013 which was registered for offences under Sections 409 and 506(1) of the Indian Penal Code. The complaints u/s 138 of NI act was also initiated.

In this backdrop, the deed of compromise was entered into. The deed of compromise envisages that:

 

(i) A demand draft of Rs. 3 Crores was handed over to the complainant on 11^th March 2013;

(ii) On receipt of the amount of Rs.3 crores, the complainant would not object to the bail application filed by M G;

(iii) Apart from the amount of Rs. 3 crores, the balance of Rs. 7 crores would be paid within three months in three equal monthly installments each of Rs.2,33,33,333/- commencing from 11 April 2013 and ending on 11 June 2013;

(iv) The amount of Rs. 2.33 crores would be divided equally between SG,MG and ACL, who would issue cheques in favour of the complainant in compliance of the settlement;

(v) Towards discharge of the liability, post-dated cheques dated  had been handed over; and

(vi) Any default in complying with the conditions set out in the compromise deed would entitle the complainant to file a fresh criminal complaint under the NI Act against the drawer of the cheques and to proceed against the other directors; and

(vii) Upon the payment of the entire settlement amount of Rs. 10 crores, all criminal complaints, suits, arbitration proceedings and Section 138 proceedings would be withdrawn.

 

The settlement was acted upon as well and after receipt of an amount of Rs.3 crores, in pursuance of the compromise deed, MG was granted bail by the competent court. Though, the balance due and payable under the deed of compromise had admittedly not been paid and the second set of cheques were dishonoured. ACL proceeded to institute a suit before the Madras High Court to challenge the deed of compromise. While the suit is pending, the interim application stands dismissed. In this backdrop, there are two sets of criminal complaints under Section 138 of the NI Act based on the dishonour of the first set of cheques and the second set respectively i.e after execution of deed of compromise.

 

The question before the Supreme Court was whether parallel prosecutions arising from a single transaction under Section 138 of the NI Act can be sustained. In this case, a set of cheques were dishonoured, leading to filing of the first complaint under Section 138 of the NI Act. The parties thereafter entered into a deed of compromise to settle the matter. While the first complaint was pending, the cheques issued pursuant to the compromise deed were dishonoured leading to the second complaint under Section 138 of the NI Act. Both proceedings were pending simultaneously and it is for this Court to decide whether the complainant can be allowed to pursue both the cases or whether one of them must be quashed and the consequences resulting from such quashing.

In the present case, the first set of cheques which were issued allegedly towards discharge of the liability under the HSSA were dishonoured. A deed of compromise was entered into thereafter, but it was partially implemented by the payment of an amount of Rs. 3 crores by demand draft to the complainant. Upon the receipt of an amount of Rs. 3 crores, Gimpex Private Limited was to grant its no objection to the plea of bail of MG and MG undertook to pay the balance of Rs. 7 crores within three months in installments. The second set of cheques issued pursuant to the deed of compromise were also dishonoured.

ANALYSIS

It was held that allowing prosecution under both sets of complaints would be contrary to the purpose of the enactment. It is further held that it is the compensatory aspect of the remedy that should be given priority as opposed to the punitive aspect. The complainant in such cases is primarily concerned with the recovery of money, the conviction of the accused serves little purpose. In fact, the threat of jail acts as a stick to ensure payment of money. The Supreme Court in R. Vijayan v. Baby  (2012) 1 SCC 260 has  emphasised that punishment of the offender is of a secondary concern for the complainant in the following terms:

 

“17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation Under Section 357(1)(b) of the Code. Though a complaint Under Section 138 of the Act is in regard to criminal liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged Under Section 138 of the Act, a civil suit is seldom filed to recover the amount of the cheque. This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque. Under Section 357(1)(b) of the Code and the provision for compounding the offences Under Section 138 of the Act most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary.”

 

It is held that when a party enters into a compromise agreement with other it may be for a multitude of reasons – higher compensation, faster recovery of money, uncertainty of trial and strength of the complaint, among others. A complainant enters into a settlement with open eyes and undertakes the risk of the accused failing to honour the cheques issued pursuant to the settlement, based on certain benefits that the settlement agreement postulates. Once parties have voluntarily entered into such an agreement and agree to abide by the consequences of non-compliance of the settlement agreement, they cannot be allowed to reverse the effects of the agreement by pursuing both the original complaint and the subsequent complaint arising from such non-compliance. The settlement agreement subsumes the original complaint. Non-compliance of the terms of the settlement agreement or dishonour of cheques issued subsequent to it, would then give rise to a fresh cause of action attracting liability under Section 138 of the NI Act and other complaints.

The Supreme Court has held that once the ingredients of Section 138 of NI Act are fulfilled, a distinct offence arises in respect of the dishonour of the cheques in question. It cannot be concluded in the course of the hearing of a petition under Section 482 of the Cr.PC that the second set of cheques issued in pursuance of the deed of compromise cannot be construed as being towards the discharge of a liability. The question as to whether the liability exists or not is clearly a matter of trial. The order of quashing the complaint based on cheques issued pursuant to subsequent settlement was set aside. It is further held by Supreme Court that even if a suit is pending before the High Court challenging the validity of the compromise deed shall not furnish any cogent basis to quash the proceedings under Section 138 of NI Act.

In HMT Watches Ltd. v. M.A. Abida (2015) 11 SCC 776 the Supreme Court has held:

 

“10. […] Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the disputed questions of fact in a petition under Section 482 of the Code of Criminal Procedure, to come to a conclusion that the offence is not made out. The High Court has erred in law in going into the factual aspects of the matter which were not admitted between the parties.”

In Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd (2016) 10 SCC 458 the Supreme Court has held:

 

“16. As is clear from the above observations of this Court, it is well settled that while dealing with a quashing petition, the court has ordinarily to proceed on the basis of averments in the complaint. The defence of the accused cannot be considered at this stage. The court considering the prayer for quashing does not adjudicate upon a disputed question of fact.”

 

CONCLUSION

The aforesaid discussion, based on the judgment rendered by hon’ble Supreme Court, clearly postulates that the complaints u/s 138 of NI Act based on compromise shall be maintainable. The fact that both the parties have agreed to adhere to the terms of settlement and if the agreement is otherwise in order, the issue of lack of consideration shall not pass muster. The earlier complaint based on the cheques issued before and during the pendency whereof, if the settlement is arrived at shall be of no consequence. It is so, as the second set of cheques are issued after settlement and relating to the same transactions, thus, the earlier cause of action shall be subsumed in the later cause of action based on settlement. It is of significance that the earlier complaints being part of same transaction and still further the same having been replaced by a terms of settlement and cheques issued thereunder and dishonoured, the first complaint therefore shall not be maintainable. However, the second complaint even if includes compensation as well, as agreed by both parties, the same shall be deemed to be with due consideration and the second complaint shall be perfectly maintainable. The Three (3) judge bench of hon’ble Supreme Court has settled the matter in M/s Gimpex Private Limited (Supra) and the ambiguity is set at rest. The judgment in Gimpex (Supra) is passed upon quashing of subsequent complaint based on a settlement by Madras High Court and it is held by hon’ble Supreme Court that earlier complaint arising out of the same transaction, after settlement, stands subsumed in it and the cause arising out of the settlement shall only be subsisting and the prior complaint/s shall be of no consequence.

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Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com   

 

POCSO ACT: FINAL WORDS ON “SKIN TO SKIN CONTACT”

 

POCSO ACT: FINAL WORDS ON “SKIN TO SKIN CONTACT”

The Protection of Children from Sexual Offence Act, 2012 (POCSO) has been enacted to protect the children from the offences of sexual assault, sexual harassment and pornography and provide for establishment of special courts for trial of such offences and for the matters connected therewith or incidental thereto. Since the sexual offences against children were not adequately addressed to by the existing laws and a large number of such offences were neither specifically provided for nor were they adequately penalized. The POCSO Act was therefore enacted with a view to provide a comprehensive law to protect the children from the offences of sexual assault, sexual harassment and pornography and to provide for establishment of Special Courts for trial of such offences and for matters connected therewith and incidental thereto.

HISTORICAL PERSPECTIVE

Pertinently, the Article 15 of the Constitution empowers the State to make special provisions for children. The Convention on the Rights of the Child, adopted by the General Assembly of the United Nations, as acceded to by the Government of India in 1992, prescribes a set of standards to be followed by all the State parties in securing the best interest of the child. The POCSO Act kept in view the Convention on the Rights of Child when the POCSO Bill was introduced and it was intended to enforce the rights of all children to safety, security and protection from sexual abuse and exploitation, and also intended to define explicitly the offences against children countered through commensurate penalties as an effective deterrence.

The Law Commission's 146^th  Report (1993), 156^th Report (1997) and 172^nd Report (2000) dealt with some of these and associated issues. The 172^nd Report recommended changes to the definition of rape, expanding its scope, and also incorporating the expanded definition of sexual assault.

The ratification of the UN Convention on the Rights of Children, 1992 by India entailing requirement to the nation states to adopt suitable legislation to combat coercion of children in sexual activity, exploitative use of children and children's exploitation for pornography and that formed the background of enacting POCSO. The Statement of Objects and Reasons for POCSO, cites the UN Convention, and further states that:

"The data collected by the National Crime Records Bureau shows that there has been increase in cases of sexual offences against children. This is corroborated by the "study on child abuse: India 2007" conducted by the Ministry of Women and Child Department. Moreover, sexual offences against children are not adequately addressed by the extent laws. A large number of such offences are neither specifically provided for nor are they adequately penalized. The interests of the child, both as a victim as well as a witness, need to be protected”.

It is felt that offences against children need to be defined explicitly and countered through commensurate penalties as an effective deterrence. A self-contained comprehensive legislation was felt necessary inter alia to provide for protection of children from the sexual offences and pornography with due regard for safeguarding the interest and well-being of the child at every stage of the Judicial process, incorporating child friendly procedures for reporting, recording of evidence, investigation and trial of offences and provision for establishment of Special Courts for speedy trial of such offences.

What is noteworthy to notice that the Indian Penal Code (IPC) at one stage was sought to be amended; through the introduction of a Bill in 2012. However, the said bill could not see the light of the day, and instead, the amendments were made, through an Ordinance which was later replaced by a Parliamentary Act. These amendments prescribed the enhanced punishment for certain offences (including Section 354). A new set of offences are also introduced into the IPC, such as:

Section 354 A:

sexual harassment, which is an offence involving unwelcome sexual advances or physical contact, demand or request for sexual favours, forceful exhibition of pornography to women or making sexually coloured remarks;

Section 354 B:

assault or use of criminal force to woman with intent to disrobe, or abets the doing of such act; voyeurism

Section 354 C:

Relating to the act of a man watching or capturing the image of a woman engaged in private activities (e.g. undressing), when the woman presumes she is assured of privacy and does not expect anyone to be watching;

Section 354D:

Stalking, which means following a woman and making or attempting to make contact (either physically or through electronic media) for personal interaction, despite a clear disinterest being displayed by the woman.

The backdrop of the present write up is the interpretation of Section 7, 8 and other provisions of POCSO Act 2012 while the Nagpur Bench of Bombay High Court has held that unless there is “skin to skin contact” POCSO Act shall have no applicability. High Court, while specifically accepting the consistent versions of the victim and her mother i.e. informant about the accused having taken the victim to his house, having pressed the breast of the victim, having attempted to remove her salwar and pressing her mouth, had committed gross error in holding that the act of pressing of breast of the child aged 12 years, in absence of any specific details as to whether the top was removed or whether he inserted his hands inside the top and pressed her breast, would not fall in the definition of sexual assault, and would fall within the definition of offence under Section 354 of the IPC. The High Court had further erred in holding that there was no offence since there was no direct physical contact i.e. "skin to skin" with sexual intent.

The interpretation of Section 7 at the instance of the High Court on the premise of the principle of "ejusdem generis" is also thoroughly misconceived. The word ejusdem generis has Latin origin mean "of the same kind," It is used to interpret loosely written statutes. It may be noted that the principle of "ejusdem generis" should be applied only as an aid to the construction of the statute. It should not be applied where it would defeat the very legislative intent.

The observations/findings made by the High Court, have caused furor, all over the country and the Attorney General for India has raised the plea against the judgment of high court, the National Commission for Women and the State of Maharashtra also files the appeals before this Court. The accused has also filed the appeal challenging his conviction for the offences under Section 354 and 342 of the IPC. The bunch of appeal was therefore considered by the hon’ble Supreme Court and a common judgment is passed, thereby setting aside the judgment of high court whereby the high court had held that no offence was made under POCSO Act.  

The Attorney General for India expressed grave concern about the manner in which the provisions contained in the POCSO Act were interpreted by the High Court, vehemently submitted that such interpretation would lead to devastating effect in the society at large. According to him, the High Court could not have acquitted the accused-Satish misinterpreting the provisions contained in Section 7 on the ground that there was no direct physical contact i.e. skin to skin contact made by the accused with the victim. It was submitted by him that the act by the accused clearly fell within the meaning of Section 7 punishable with Section 8 of the POCSO Act.

The POCSO Act and interpretation of its provisions has drawn much attention recently, more particularly whether “skin to skin contact” is a sine qua non for attracting provision of POCSO. The Nagpur bench judgment of Bombay High Court was much debated and the matter had reached before hon’ble Supreme Court. The Supreme Court has thus settled the issue in bunch of appeals/ and cross appeals captioned as under:

(1)    Attorney General for India Vs. Satish and Another [Criminal Appeal No. 1410 of 2021 @ Special Leave Petition (Crl) No. 925 of 2021]

(2)    National Commission for Women Vs. State of Maharashtra and Anr. [Criminal Appeal No. 1411 of 2021 @ Special Leave Petition (Crl) No. 1339 of 2021]

(3)    State of Maharashtra Vs. Satish [Criminal Appeal No. 1412 of 2021 @ Special Leave Petition (Crl) No. 1159 of 2021]

(4)    State of Maharashtra Vs. Libnus [Criminal Appeal No. 1413 of 2021 @ Special Leave Petition (Crl) No. 5071 of 2021] 

(5)    Satish Vs. State of Maharashtra, [Criminal Appeal No. 1414 of 2021 @ Special Leave Petition (Crl) No. 7472 of 2021].

PROVISIONS OF POCSO ACT & ITS INTERPRETATION

As per the definition of 'sexual assault' a 'physical contact with sexual intent without penetration' is essential ingredient for the offence. The definition starts with the words - "whoever with sexual intent touches the vagina, penis, anus or breast of the child or makes the child touch the vagina, penis, anus or breast of such person or any other person or does any other act with 'sexual intent.'

In other words, whoever, with sexual intent touches the vagina, penis, anus or breast of the child or makes the child touch the vagina, penis, anus or breast of such person or any other person, would be committing an offence of "sexual assault". Similarly, whoever does any other act with sexual intent which involves physical contact without penetration, would also be committing the offence of "sexual assault" under Section 7 of the POCSO Act. The prosecution was not required to prove a "skin to skin" contact for the purpose of proving the charge of sexual assault under Section 7 of the Act.

Section 7 pertaining to "sexual assault" reads as under:

"7. Whoever, with sexual intent touches the vagina, penis, anus or breast of the child or makes the child touch the vagina, penis, anus or breast of such person or any other person, or does any other act with sexual intent which involves physical contact without penetration is said to commit sexual assault”.

Section 8 providing for the punishment for sexual assault, reads as under :

"8 - Whoever, commits sexual assault, shall be punished with imprisonment of either description for a term which shall not be less than three years but which may extend to five years, and shall also be liable to fine.

Section 9 of the Act enumerates as to what is said to commit aggravated sexual assault. Clause (m) of the said provision being relevant is reproduced as under: 9(m)- whoever commits sexual assault on a child below twelve years;

Section 10 for providing Punishment for aggravated sexual assault -

"10- whoever, commits aggravated sexual assault shall be punished with imprisonment of either description for a term which shall not be less than five years but which may extend to seven years, and shall also be liable to fine".

Section 11 pertains to "sexual harassment" - A person said to commit sexual harassment upon a child when such person with sexual intent -

"(i) - utters any word or makes any sound, or makes any gesture or exhibits any object or part of body with the intention that such word or sound shall be heard, or such gesture or object or part of body shall be seen by the child; or

(ii) makes a child exhibit his body or any part of his body so as it is seen by such person or any other person;

(iii) to (vi)......

Explanation - Any question which involves "sexual intent" shall be a question of fact.

Section 12 for providing punishment for sexual harassment

"12 - whoever, commits sexual harassment upon a child shall be punished with imprisonment of either description for a term which may extend to three years and shall also liable to fine."

 Sections 29 and 30 pertaining to the statutory presumptions read as under:

"29 -When a person is prosecuted for committing or abetting or attempting to commit any offence under Section 3, 5, 7 and Section 9 of this Act, the Special Court shall presume, that such person has committed or abetted or attempted to commit the offence, as the case may be, unless the contrary is proved."

"30 - (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the Special Court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

(2) For the purposes of this section, a fact is said to be proved only when the Special Court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability".

Explanation - In this section, "culpable mental state" includes intention, motive, knowledge of a fact and the belief in, or reason to believe, a fact.                            

The main controversy centers around the interpretation of Section 7 of the POCSO Act. It is trite saying that while interpreting a statute, the courts should strive to ascertain the intention of the Legislature enacting it, and it is the duty of the Courts to accept an interpretation or construction which promotes the object of the legislation and prevents its possible abuse. As observed by the Supreme Court in the case of J.P. Bansal vs. State of Rajasthan & Anr, reported in AIR (2003) SC 1405, a statute is an edict of the legislature. The elementary principle of interpreting or construing a statute is to gather the meaning or sententia legis, To amplify it further, Sententia legis  means that the essence of the law lies in the spirit, and not in its letter, the letters are just the way to express the intentions of the law makers. The words are the external manifestation of intention that it involves. It has been observed therein that :

"12. Interpretation postulates the search for the true meaning of the words used in the statute as a medium of expression to communicate a particular thought. The task is not easy as the "language" is often misunderstood even in ordinary conversation or correspondence.

The tragedy is that although in the matter of correspondence or conversation the person who has spoken the words or used the language can be approached for clarification, the legislature cannot be approached as the legislature, after enacting a law or Act, becomes functus officio so far as that particular Act is concerned and it cannot itself interpret it. No doubt, the legislature retains the power to amend or repeal the law so made and can also declare its meaning, but that can be done only by making another law or statute after undertaking the whole process of law-making.

Where, therefore, the "language" is clear, the intention of the legislature is to be gathered from the language used. What is to be borne in mind is as to what has been said in the statute as also what has not been said.

In the case of Balaram Kumawat Vs. Union of India & Ors. reported in (2003) 7 SCC 628, the Supreme Court while elaborately discussing the basic rules of interpretation observed as under:

" Contextual reading is a well-known proposition of interpretation of statute. The clauses of a statute should be construed with reference to the context vis-à-vis the other provisions so as to make a consistent enactment of the whole statute relating to the subject-matter. The rule of "ex visceribus actus" should be resorted to in a situation of this nature.

In State of W.B. Vs Union of India (AIR at p. 1265, para 68), the learned Chief Justice stated the law thus:

"The Court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law, and the setting in which the clause to be interpreted occurs."

The said principle has been reiterated in R.S. Raghunath v. State of Karnataka [(1992) 1 SCC 335 : 1992 SCC (L&S) 286 : (1992) 19 ATC 507 : AIR 1992 SC 81] (AIR at p. 89).

Furthermore, even in relation to a penal statute any narrow and pedantic, literal and lexical construction may not always be given effect to. The law would have to be interpreted having regard to the subject matter of the offence and the object of the law it seeks to achieve. The purpose of the law is not to allow the offender to extricate itself from their act and taking recourse to mosaic of law to their advantage. Criminal law as per criminal jurisprudence has to be construed strictly.

The contentions of accused & RULE OF LENITY

On behalf of the accused it was contended that the phrases 'sexual intent', 'touches' and 'physical contact' have not been defined in the POCSO Act, however the explanation to Section 11 states that any question which involves 'sexual intent' shall be a question of fact. The accused had put reliance on the decision of the Bombay High Court in case of Bandu Vithalrao Borwar v/s State of Maharashtra, in Criminal Appeal No. 50 of 2016, decided on 17.10.2016, and contended that the expression "sexual intent" cannot be confined to any predetermined format or structure and that unlike POCSO Act, the IPC offence under section 354 uses the terms 'assault' and 'criminal force'. The accused further contended that Rule of Lenity shall be applicable.

As per the settled legal position, if the specific words used in the section exhaust a class, it has to be construed that the legislative intent was to use the general word beyond the class denoted by the specific words. So far as Section 7 of the POCSO Act is concerned, the first part thereof exhausts a class of act of sexual assault using specific words, and the other part uses the general act beyond the class denoted by the specific words.

Invoking the Rule of Lenity, that this rule of statutory construction requires a court to resolve statutory ambiguity in a criminal statute in favour of the accused or to strictly construe the statute against the State. In this regard, he has relied upon the decisions of the United States Supreme Court in the case of "The United States vs. Wilt Berger 4; Connally v. General Construction Co.5 and in case of United States vs. Kozminski .

The accused in the case had invoked Rule of Lenity.

Before going further, it may be worthwhile to know about Rule of Lenity. This is a rule requiring that any ambiguities in a criminal statute relating to prohibitions and penalties should be resolved in favor of the accused , when doing so may not be contrary to legislative intent.

The invocation of "Rule of lenity" is inapplicable in the context of the case Attorney General for India Vs. Satish and Another (Supra). The various judgments of the United States Supreme Court in case of Ladner vs. United States, 358 US 169; United States vs. Kozminski, 487 US 931; United States vs. Wiltberger, 18 US 76, relates to "Rule of Lenity" wherein it is required that a court shall have to resolve statutory ambiguity in a criminal statute in favour of the accused, or to strictly construe the statute against the State. This runs contrary to the settled proposition of law that the statutory ambiguity should be invoked as a last resort of interpretation. Where the Legislature has manifested its intention, courts may not manufacture ambiguity in order to defeat that intent. In this regard. In this context supreme court had accepted the contention of National Commission for Women as regards relying upon the precise observations made by the Court of Appeal, California, in case of The People vs. REID II, 246 Cal. App. 4Th, 822 as follows:

"[T]he 'touchstone' of the rule of lenity 'is statutory ambiguity.' [Citation.]" (Bifulco v. United States (1980) 447 U.S. 381, 387, 100 S. Ct. 2247, 65 L.ED.2d 205.) " 'the rule applies only if the court can do no more than guess what the legislative body intended; there must be an egregious ambiguity and uncertainty to justify invoking the rule.' "(People v. Avery (2002) 27 Cal. 4Th 49, 58, 115 Cal. Rptr.2d 403, 38 P.3d 1.) "Where the Legislature has manifested its intention, courts may not manufacture ambiguity in order to defeat that intent." (Bifulco v. United States supra, at p. 387, 100 S. Ct. 2247.) Additionally, "ambiguities are not interpreted in the defendant's favor if such an interpretation would provide an absurd result, or a result inconsistent with apparent legislative intent. (People v. Cruz (1996) 13 Cal. 4Th 764, 783, 55 Cal. Rptr. 2D 117, 919 P. 2d 731.)"

It is submitted by the accused that the expression "sexual intent" cannot be confined to any predetermined format or structure. It is submitted that unlike POCSO Act, the IPC offence under section 354 uses the terms 'assault' and 'criminal force'. However, since 'sexual assault' is defined under the POCSO Act, the definition of the words 'assault' or 'criminal force' contained in IPC cannot be imported into the POCSO Act, though permitted under section 2(2) of the POCSO Act. While fairly conceding that the first part of Section 7 of the POCSO Act, which pertains to the act of touching the private parts of the child, may not require 'skin to skin contact', though, so far as, the second part i.e. " the other act with sexual intent which involves physical contact without penetration" is concerned, 'the skin to skin contact' is required to be proved by the prosecution. Thus, by invoking the Rule of Lenity that this rule of statutory construction requires a court to resolve statutory ambiguity in a criminal statute in favour of the accused or to strictly construe the statute against the State, according to the accused.

ANALYSIS

In both the cases, the main controversy centers around the interpretation of Section 7 of the POCSO Act. It is trite saying that while interpreting a statute, the courts should strive to ascertain the intention of the Legislature enacting it, and it is the duty of the Courts to accept an interpretation or construction which promotes the object of the legislation and prevents its possible abuse.

 

As observed by the Supreme Court in the case of J.P. Bansal vs. State of Rajasthan & Anr (Supra) a statute is an edict of the legislature. The elementary principle of interpreting or construing a statute is to gather the sententia legis, the true intention of the Legislature.

The tragedy is that although in the matter of correspondence or conversation the person who has spoken the words or used the language can be approached for clarification, the legislature cannot be approached as the legislature, after enacting a law or Act, becomes functus officio so far as that particular Act is concerned and it cannot itself interpret it. No doubt, the legislature retains the power to amend or repeal the law so made and can also declare its meaning, but that can be done only by making another law or statute after undertaking the whole process of law-making.

In the aforesaid premises, the judgments and orders dated 19.01.2021 and 15.01.2021 passed by the High Court of Judicature at Bombay, Nagpur Bench, at Nagpur in Criminal Appeal No. 161 of 2020 and Criminal Appeal No. 445 of 2020 respectively are quashed by the hon’ble Supreme Court and the judgments and orders dated 05.02.2020 and 05.10.2020 passed by the Extra Joint Additional Sessions Judge, Nagpur in Special Child Protection Case No. 28 of 2017 and by the Special Court, Gadchiroli in POCSO Case No. 07/2019 are restored.

The accused-Satish is thus convicted for the offences punishable under Section 8 of the POCSO Act and under Sections 342, 354 and 363 of the IPC and further direction was passed to undergo rigorous imprisonment for a period of three years and to pay fine of Rs.500/- and in default thereof to suffer simple imprisonment for a period of one month for the offence under Section 8 of the POCSO Act. As the accused was sentenced for the major offence under Section 8 of the POCSO Act, hence, no separate sentence is imposed upon him for the other offences under the IPC.

Similarly, the accused-Libnus convicted for the offences punishable under Sections 354-A (1)(i) and 448 of the IPC as also for the offences under Sections 8, 12 and 10 read with Section 9 (m) of the POCSO Act. He is also directed to undergo rigorous imprisonment for a period of five years for the offence under Section 10 of the POCSO Act and to pay fine of Rs. 25,000/- (Rupees twenty five thousand only) and in default thereof to suffer simple imprisonment for a period of six months. As the accused is sentenced for the major offence under Section 10 of the POCSO Act, no separate sentence was imposed upon him for the other offences under the IPC and the POCSO Act.

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                                                Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com