2014 (9) TMI 1129 - SC - Indian Laws

Cognizance of an offence punishable under Section 138 of NI Act - Can cognizance of an offence punishable under Section 138 of the Negotiable Instruments Act 1881 be taken on the basis of a complaint filed before the expiry of the period of 15 days stipulated in the notice required to be served upon the drawer of the cheque in terms of Section 138 (c) of the Act aforementioned? - can the complainant be permitted to present the complaint again notwithstanding the fact that the period of one month stipulated under Section 142 (b) for the filing of such a complaint has expired? - Held that - Section 142 of the NI Act prescribes the mode and so also the time within which a complaint for an offence under Section 138 of the NI Act can be filed. A complaint made under Section 138 by the payee or the holder in due course of the cheque has to be in writing and needs to be made within one month from the date on which the cause of action has arisen under clause (c) of the proviso to Section 138. The period of one month under Section 142(b) begins from the date on which the cause of action has arisen under clause (c) of the proviso to Section 138. However, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within the prescribed period of one month, a complaint may be taken by the Court after the prescribed period. Now, since our answer to question (i) is in the negative, we observe that the payee or the holder in due course of the cheque may file a fresh complaint within one month from the date of decision in the criminal case and, in that event, delay in filing the complaint will be treated as having been condoned under the proviso to clause (b) of Section 142 of the NI Act. This direction shall be deemed to be applicable to all such pending cases where the complaint does not proceed further in view of our answer to question (i). As we have already held that a complaint filed before the expiry of 15 days from the date of receipt of notice issued under clause (c) of the proviso to Section 138 is not maintainable, the complainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the Court of sufficient cause.

Issues Involved:
1. Whether cognizance of an offence under Section 138 of the Negotiable Instruments Act, 1881 can be taken based on a complaint filed before the expiry of the 15-day period stipulated in the notice served to the drawer of the cheque.
2. If the answer to the first question is negative, whether the complainant can present the complaint again after the expiry of the one-month period stipulated under Section 142(b) for filing such a complaint.

Detailed Analysis:

Issue 1: Cognizance of Offence under Section 138 Before Expiry of 15-Day Period
The Court examined whether a complaint filed before the expiry of the 15-day period stipulated in the notice under Section 138(c) of the NI Act is valid. The Court referred to various High Court judgments and two Supreme Court decisions, Narsingh Das Tapadia v. Goverdhan Das Partani and Sarav Investment & Financial Consultancy Private Limited v. Llyods Register of Shipping Indian Office Staff Provident Fund. The judicial opinion was split, with some High Courts and the Narsingh Das Tapadia case allowing cognizance if the Magistrate took it after the expiry of 15 days, while others, including Sarav Investment & Financial Consultancy, emphasized strict compliance with the 15-day period.

The Court analyzed Sections 138 and 142 of the NI Act, emphasizing that the offence under Section 138 is only complete when the drawer fails to make the payment within 15 days of receiving the notice. Section 142(b) prohibits taking cognizance of an offence under Section 138 unless the complaint is made within one month of the cause of action arising, which includes the 15-day period.

The Court concluded that a complaint filed before the expiry of the 15-day period is not a valid complaint and does not disclose a cause of action. Therefore, no cognizance can be taken based on such a complaint, and the view in Narsingh Das Tapadia was overruled. The Court approved the view in Sarav Investment & Financial Consultancy, holding that a complaint under Section 138 filed before the expiry of the 15-day period is not maintainable.

Issue 2: Re-Presentation of Complaint After Expiry of One-Month Period
The second issue addressed whether the complainant can file the complaint again if the initial complaint was filed prematurely and the one-month period under Section 142(b) has expired. The Court noted that Section 142(b) allows the Court to take cognizance of a complaint filed after the prescribed period if the complainant shows sufficient cause for the delay.

The Court directed that the payee or holder in due course of the cheque may file a fresh complaint within one month from the date of the decision in the criminal case, and the delay in filing the complaint will be treated as condoned under the proviso to Section 142(b). This direction applies to all pending cases where the complaint does not proceed further due to the premature filing.

Conclusion:
The Supreme Court held that:
1. Cognizance of an offence under Section 138 of the NI Act cannot be taken based on a complaint filed before the expiry of the 15-day period stipulated in the notice.
2. The complainant may file a fresh complaint within one month from the date of the decision in the criminal case, and the delay will be treated as condoned under Section 142(b) of the NI Act.

The judgment emphasized strict compliance with the statutory periods under Sections 138 and 142 of the NI Act, ensuring that the drawer of the cheque is given the full 15-day period to make the payment before a complaint can be validly filed.

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