1999 (3) TMI 620 - SC - Companies Law

Summary

Issues Involved:
The issues involved in the judgment are the validity of the notice sent under Section 138 of the Negotiable Instruments Act, the authority of the High Court to quash a complaint under Section 482 of the Criminal Procedure Code, and the proper addressee of the notice in cases of dishonoured cheques.

Validity of Notice under Section 138:
The appellant filed a complaint under Section 138 of the Negotiable Instruments Act after six cheques issued in their favor were dishonored by the respondent. The High Court quashed the complaint on the basis that the notice was addressed to A. Chinnaswami, the Managing Director of the company, and not to the company itself. However, the Supreme Court held that the notice addressed to the signatory of the dishonored cheques was valid under Section 138, and the High Court erred in quashing the complaint on this ground.

Authority of High Court to Quash Complaint:
The respondent had moved an application before the Magistrate to recall the process issued against them, which was unsuccessful. Subsequently, a petition under Section 482 of the Criminal Procedure Code was filed in the High Court. The High Court quashed the complaint based on the reasoning that the notice was not properly addressed. The Supreme Court disagreed with this decision, stating that the High Court had erred in allowing the petition under Section 482 and in quashing the complaint, as the notice was validly issued to the signatory of the dishonored cheques.

Proper Addressee of Notice:
The High Court concluded that the notice under Section 138 was sent to A. Chinnaswami at his office address, but this did not constitute notice to the company itself. However, the Supreme Court clarified that since the proceedings were initiated against A. Chinnaswami, the Managing Director who signed the dishonored cheques, the notice addressed to him was appropriate. The Supreme Court set aside the High Court's order and directed the Judicial Magistrate to proceed with the case in accordance with the law.