Cognizance on Affidavit under Section 138 NI Act vs Section 200 CrPC

The Foundation: What Section 200 CrPC Requires

Ordinarily, when a Magistrate takes cognizance of an offence upon a complaint, Section 200 of the Code requires him to examine the complainant and the witnesses present upon oath. The substance of such examination must be reduced to writing and signed by the complainant and the witnesses. This examination is not merely a formality — it is the judicial act by which the Magistrate satisfies himself that there exists a prima facie case warranting the issue of process. The Supreme Court in Devarapalli Lakshminarayana Reddy v V. Narayana Reddy (AIR 1976 SC 1672) settled that "broadly speaking, when on receiving a complaint, the Magistrate applies his mind for the purposes of proceeding under Section 200 and the succeeding sections in Chapter XV of the Code, he is said to have taken cognizance of the offence." The act of taking cognizance is therefore intimately connected to the procedure contemplated under Section 200.

The Transformative Intervention: Section 145 of the NI Act

The picture changed significantly when Parliament introduced Section 145 through the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. Section 145(1) states, with a non-obstante clause overriding anything contained in the Code of Criminal Procedure: "the evidence of the complainant may be given by him on affidavit and may, subject to all just exceptions, be read in evidence in any inquiry, trial or other proceeding." The legislative intent behind this provision was expressly stated in the Statement of Objects and Reasons — Section 145 was "introduced in order to prescribe procedure for dispensing with preliminary evidence of the complainant." The purpose was to enable speedy disposal of what had become a flood of Section 138 cases clogging Magistrates' courts.

Before the 2002 amendment, the Kerala High Court in Harihara Iyer v State of Kerala (2000 1 KLT 100 DB) had held that examination of the complainant under Section 200 was mandatory and could not be dispensed with. However, as the Kerala High Court itself acknowledged in Vasudevan v State of Kerala, after Section 145 was introduced, the Harihara Iyer decision had no further application.

The Authoritative Ruling: AC Narayanan v State of Maharashtra

The Supreme Court, in a Three-Judge Bench decision in AC Narayanan v State of Maharashtra (AIR 2014 SC 630), laid down the position with authority and clarity. The court held that in the light of Section 145 of the NI Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the NI Act. The Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the court, nor to examine the complainant or his witnesses upon oath, merely for the purpose of taking the decision whether or not to issue process. The relevant passage from the judgment is instructive: the court declared that the Magistrate may, if he thinks fit, and only where the affidavit does not satisfy him, call upon the complainant to be examined — but this is a matter of discretion, not an inescapable mandate.

This position was also reinforced in Mandvi Cooperative Bank Ltd v Nimesh B. Thakore (2010 3 SCC 83), where the Supreme Court explained that Section 145 "with its non-obstante clause, makes it possible for the evidence of the complainant to be taken in the absence of the accused" and that the affidavit may be read in evidence subject to all just exceptions. However, the court made equally clear that once evidence is given on affidavit under Section 145(1), the accused is entitled under Section 145(2) to apply to the court to summon and examine the deponent for cross-examination — and upon such application being made, the court is under an obligation to allow it; discretion in the matter exists only where no application is made.

The Effect of the Non-Obstante Clause in Section 145

Several High Courts initially took divergent positions. The Bombay High Court, in Maharaja Developers v Udaysingh Pratapsinghrao Bhonsle (2007 Cr LJ 2207), had held that the non-obstante clause in Section 145 did not override Section 200 and that examination of the complainant before issuance of process remained mandatory. The Orissa High Court in Susanta Kumar Moharana v Ramesh Kumar Bhatta had expressed the view that recording of the statement under Section 200 was not dispensed with, only the mode had changed. These divergent views were finally resolved by the Supreme Court in AC Narayanan, which expressly overruled the Bombay High Court decisions taking the contrary position, holding that the Magistrate is not bound to follow the examination procedure under Section 200 of CrPC and may proceed entirely on the basis of the affidavit filed along with the complaint.

Cognizance on Affidavit: Settled Position

The settled position, therefore, is:

The Magistrate may take cognizance and issue process under Section 138 of the NI Act solely on the basis of the affidavit filed by the complainant in support of the complaint, without separately recording the statement of the complainant under Section 200 CrPC.
The affidavit must be comprehensive, disclosing all the essential facts satisfying the ingredients of Section 138 — the issuance of the cheque, its dishonour, the statutory demand notice, and the drawer's failure to pay within the stipulated time.
The Magistrate retains the discretion to call the complainant for oral examination if, after perusing the complaint, the documents, and the affidavit, he is of the view that examination is still necessary.
Once the affidavit evidence is tendered, the accused has the right to apply for cross-examination under Section 145(2), and upon such application, the court is bound to summon the deponent.
The complainant is not required to be examined twice — once at the pre-summoning stage and once again after the accused is summoned. The affidavit filed along with the complaint is itself sufficient to be read as evidence at both stages.

The same principle was affirmed in Indra Kumar Patodia v Reliance Industries Ltd (AIR 2013 SC 426), where the Supreme Court reiterated that the proceedings envisaged by Section 200 of the Code qualify as an "inquiry" within the meaning of Section 2(g) of the CrPC, and therefore Section 145 squarely applies to permit the taking of evidence on affidavit at that stage. As the court in Amita Gas Service v Raman Gupta held — where cognizance was taken only on the basis of a sworn affidavit of the complainant — such cognizance was held to be proper and valid in law.

The Deeper Rationale

What undergirds this position is a recognition that the object of Chapter XVII of the NI Act is the speedy remediation of dishonoured cheques. Sections 143 to 147 were inserted as a package to ensure that these cases move expeditiously. Requiring a formal oral examination under Section 200 in every case, when the complaint is accompanied by a detailed affidavit containing all relevant facts, would only defeat this purpose. The sworn statement of the complainant, even when not tested by cross-examination at that stage, remains "evidence" within the meaning of Section 3 of the Indian Evidence Act — for it is a statement which the court permits to be made before it in relation to matters of fact under inquiry. The accused suffers no prejudice, since he retains the right to cross-examine by invoking Section 145(2). This is the careful balance that Parliament sought to strike, and which the Supreme Court has affirmed.