CREF FINANCE LTD.versusSHREE SHANTHI HOMES PVT. LTD. AND ANR.

                          CREF FINANCE LTD.                                     A
                                     V.

           SHREE SHANTHI HOMES PVT. LTD. AND ANR.

                            AUGUST 23, 2005

                 [B.P. SINGH AND S.H. KAPADIA, JJ.]
                                                                                B

     Code of Criminal Procedure, 1973 :

      Cognizance of offei:ce-When taken of-Held : Once the Court is
satisfied that the complaint discloses the commission of an offence and there   C
is no reason to reject the compliant at that stage, and proceeds further,
cognizance of the offence must be considered to have been taken.

    Cognizance of offence and Issuance ofprocess-Distinction between-
Explained
                                                                                D
     Respondent No. 2, Managing Director of respondent No. I company
issued 4 cheques in favour of the appellant on behalf of respondent No.
I. These cheques were dishonoured. Appellant field compliant before
Magistrate who issued the process against the respondents finding that
there was ground to proceed for offence under Section 138 of Negotiable         E
Instruments Act, 1881.

     Respondent sought quashing of the proceedings before the High
Court under Section 482 CrPC on the ground that Magistrate issued
summons without taking cognizance of offence. High Court remitted the           F
matter back to the Magistrate holding that the taking of cognizance is a
condition precedent, hence magistrate erred in issuing the summons.
Hence the present appeal.

     Allowing the appeal, the Court
                                                                                G
     HELD : I. The cognizance is taken of the offence and not of the
offender. Once the Court on perusal of the complaint is satisfied _that the
complaint discloses the commission of an offence and there is no reason
to reject the complaint at that stage, and proceeds further in the matter,
it must be held to have taken cognizance of the offence. One should not         H
                                    873
    874                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A   confuse taking of cognizance with issuance of process. Cognizance is taken
    at the initial stage when the Magistrate peruses the complaint with a view
    to ascertain whether the commission of any offence is disclosed. The
    issuance of process is at a later stage when after considering the material
    placed before it, the Court decides to proceed against the offenders against
B   whom a prima facie case is made out. In the facts and circumstances of
    this case, the High Court erred in holding that the Magistrate had not
    taken cognizance, and that being a condition precedent, issuance of process
    was illegal. [877-F-G-H; 878-D]

         Ajit Kumar Palit v. State of West Bengal, [1963) Supp. 1 SCR 953,
C   referred to.

        CRIMINAL APPELLATE JURISDICTION                    Criminal Appeal No.
    1063 of 2005.

D        From the Judgment and Order dated 21.9.2004 of the Kamataka High
    Court in Crl. P. No. 4469 of 2002.

        Ashok H. Desai, L.K. Bhushan, G.L. Vishwanathan, Ms. Jasleen Oberio,
    and Ms. Shiraz Contractor Patodia for the Appellant.

E         N.P. Midha, Pankaj Kumar and N. Ganpathy for the Respondents.

          The Judgment of the Court was delivered by

          Special· Leave granted.

F        This appeal is directed against the judgment and order dt. 21st September,
    2004 of the High Court of Kamataka at Bangalore in Criminal Petition No.
    4469/2002. The appellant is the complainant, and he is aggrieved by the order
    passed by the High Court whereby the High Court remitted the matter to the
    Magistrate on a finding that the Magistrate had issued process against the
G   respondents without taking cognizance of the offence, and since taking of
    cognizance was a condition precedent, the issuance of process was bad. The
    correctness of this order is challenged before us.

          It is not in dispute that four cheques were issued by respondent No.2,
H the Managing Director of the respondent No. I Company for the total amount
   CREF FINANCE LTD. v. SHREE SHANTHI HOMES PVT. LTD.                     875

of rupees five crores. The payments were made by respondent No. 2 on behalf       A
of the respondent No. I company of which he was a Director. The cheques
were dishonoured since the respondent No. 2 stopped payment of those
cheques. The appellant filed a complaint before the 14th Additional Chief
Metropolitan Magistrate, Bangalore who on 19.4.2000, the date of filing of
the complaint itself, directed the matter to be put up on 01.06.2000. The         B
rubber seal order put on the complaint itself reads as follows :-

                         "Presented on 19/4/2000
                         Cognizance taken .......... .
                         Register & put up on 1/6/2000
                         Sd .......... "
                                                                                  c
       This has been signed by the 14th Additional Chief Judicial Magistrate.
The order-sheet of the court of that date records that cognizance was taken
against the accused persons in the presence of the complainant whose
statement was to be recorded on 1.6.2000. It appears that the order sheet is      D
not signed by the Magistrate himself, though the rubber seal order is signed
by him. On 29.7.2000, the Magistrate proceeded to record the statement of
the complainant and thereafter by order dated July 31, 2000, issued process
against the respondents finding that there was ground to proceed against the
accused for the offence under Section 138 of the Negotiable Instruments Act,      E
1881.

     After about four years, the respondents moved an application before the
High Court under Section 482 of the Code of Criminal Procedure for quashing
the proceeding. The said petition has been disposed of by a brief order, the
relevant portion of which reads as follows :-
                                                                                  F

        "On presentation of the complaint before the Magistrate, the Magistrate
        neither endorsed on the complaint by applying his mind to proceed
        with the complaint by taking cognizance nor in the order sheet
        produced. It is mandatory that the word taking cognizance necessarily     G
        requires application of mind by perusing the complaint and taking
        of cognizance precedes recording of sworn statement in respect of
         P.C.R. like this. The Magistrate did not take cognizance before
         proceeding to sworn statement and after recording the sworn statement
         going through the documents he has formed an opinion that it is a        H
    876                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A            case to proceed against the petitioners· and accordingly issued
             summons. The same has been assailed in this petition on various
             grounds. Since taking of cognizance is a condition precedent as
             noted above, without entering into the merits of the case on various
             grounds raised by the petitioners in this petition, it would be
B            appropriate to quash the order of issuance of summons and to remit
             back the matter to the Magistrate to proceed from the stage of taking
             cognizance in accordance with law and it is left open to the parties
             to raise all the contentions before the Magistrate at the appropriate
             stage."

c         Learned counsel for the appellant submitted before us that the ·order
    passed by the High Court is clearly unsustainable both on Jaw as also in the
    facts of this case. He brought to our notice the photocopy of the original
    complaint filed in the Court which bears the rubber stamp order to the effect
    that the complaint was presented on 19.4.2000, cognizance was taken, the
D   case was ordered to be registered and to be put up on 01.06.2000. It is not
    disputed before us that this order is signed by the learned Magistrate on
    19.4.2000 itself. He, therefore, submitted that the High Court was clearly in
    error in coming to the conclusion that the Magistrate had not taken cognizance
    before proceeding further in the matter.
E
          Secondly, he submits that in any event, once the Magistrate peruses the
    complaint and proceeds to take further steps which he is required to take in
    law, he should be deemed to have taken cognizance even if not so expressly
    recorded because that is not necessary. The fact that he did not reject the
    application on any of the grounds on which such an application could be
F
    rejected, and chose to proceed further in the matter, itself amounts to taking
    cognizance of the offence. The High Court was clearly wrong in holding that
    the Magistrate had proceeded in the matter without taking cognizance.

          Learned counsel appearing on behalf of the respondents submitted that
G   it may be that the Magistrate need not in express words record the fact that
    he has taken cognizance, but the record must show that he had applied his
    mind to the contents of the complaint before proceeding further in the matter.
    He supported the view of the High Court and submitted that even if it be held
    that cognizance was taken, this Court must hold that cognizance was taken
H    improperly, without application of mind.
   CREF FINANCE LTD. v. SHREE SHANTHI HOMES PVT. LTD.                      877

      In Ajit Kumar Pa/it v. State of West Bengal, [1963] Supp. I SCR 953,         A
this Court observed :-

              "The word "cognizance" has no esoteric or mystic significance
        in criminal law or procedure. It merely means-become aware of and
        when used with reference to a Court or Judge, to take notice of            B
        judicially. It was stated in Gopal Marwari v. Emperor, AIR (1943)
        Pat. 245 by the learned Judges of the Patna High Court in a passage
        quoted with approval by this Court in R.R. Chari v. State of Uttar
        Pradesh, [ 1951 J SCR 312, 320 that the word, ·cognizance' was used
         in the Code to indicate the point when the Magistrate or Judge takes
        judicial ~otice of an offence and that it was a word of indefinite         c
         import, and is not perhaps always used in exactly the same sense.
        As observed in Emperor v. Sourindra Mohan Chuckerbutty, [1910]
        !LR 37 Cal.412, 416, "taking cognizance does r.ot involve any
         formal action; or indeed action of any kind, but occurs as soon as
         a Magistrate, as such, applies his mind to the suspected commission       D
         of an offence." Where the statute prescribes the materials on which
         alone the judicial mind shall operate before any step is taken,
         obviously the statutory requirement must be fulfilled."

      In the instant case, the appellant had filed a detailed complaint before
the Magistrate. The record shows that the Magistrate took cognizance and           E
fixed the matter for recording of statement of the complainant on O1.06.2000.
Even if we assume, though that is not the case, that the words "cognizance
taken" were not to be found in the order recorded by him on that date, in our
view that would make no difference. The cognizance is taken of the offence
and not of the offender and, therefore, once the Court on perusal of the           F
complaint is satisfied that the complaint discloses the commission of an
offence and there is no reason to reject the complaint at that stage, and
proceeds further in the matter, it must be held to have taken cognizance of
the offence. One should not confuse taking of cognizance with issuance of
process. Cognizance is taken at the initial stage when the Magistrate peruses
the complaint with a view to ascertain whether the commission of any offence       G
is disclosed. The issuance of process is at a later stage when after considering
the material placed before it, the Court decides t0 proceed against the
offenders against whom a prima facie case is made out. It is possible that a
complaint may be filed against several persons, but the Magistrate may choose
to issue process only against some of the accused. It may also be that after       H
    878                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A   taking cognizance and examining the complainant on oath, the Court may
    come to the conclusion that no case is made out for issuance of process and
    it may reject the complaint. It may also be that having considered the
    complaint, the Court may consider it appropriate to send the complaint to
    police for investigation under Section 156(3) of the Code of Criminal
B   Procedure. We can conceive of many other situations in which a M:igistrate
    may not take cognizance at all, for instance, a case where he finds that the
    complaint is not made by the person who in law can lodge the complaint, or
    that the complaint is riot entertainable by that Court, or that cognizance of
    the offence alleged to have been committed cannot be taken without the
C   sanction of the competent authority etc. etc. These are cases where the
    Magistrate will refuse to take cognizance and return the complaint to the
    complainant. But if he does not do so and proceeds to examine the
    complainant and such other evidence as the complainant may produce before
    him then, it should be held to have taken cognizance of the offence and
    proceeded with the inquiry. We are, therefore, of the opinion that in the facts
D   and circumstances of this case, the High Court erred in holding that the
    Magistrate had not taken cognizance, and that being a condition precedent,
    issuance of process was illegal.

          Counsel for the respondents submitted that the cognizance even iftaken
E   was improperly taken because the Magistrate had not applied his mind to the
    facts of the case. According to him, there was no case made out for issuance
    of process. He submitted that the debtor was the company itself and the
    respondent No.2 had issued the cheques on behalf of the Company. He had
    subsequently stoppe-d payment of those cheques. He, therefore, submitted that
    the liability not being the personal liability of respondent No.2, he could not
F
    be prosecuted, and the Magistrate had erroneously issued process against him.
    we· find no merit in the submission. At this stage, we do not wish to express
    any considered opinion on the argument advanced by him, but we are satisfied
    that so far as taking of cognizauce is concerned, in the facts and circumstances
    of this case, it has been taken properly after application of mind. The
G   Magistrate issued process only after considering the material placed before
    him. We, therefore, flnd that the judgment and order of the High Court is
    unsustainable and must be set aside. This appeal is accordingly allowed and
    the impugned judgment and order of the High Court is set aside. The trial
    court will now proceed with the complaint in accordance with law from the'
H   stage at which the respondents took the matter to the High Court.
   CREF FINANCE LTD. v. SHREE SHANTHI HOMES PVT. LTD.                   879

     Since the matter is already considerably delayed, it must be disposed of   A
with promptitude. Counsel for the parties are present in Court and in their
presence, we direct the parties to appear before the trial court on 19.9.2005
on which date the Court will give further directions.

       This appeal is allowed.
                                                                                B
D.G.                                                        Appeal allowed.