2020 (1) TMI 1353 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - discharge of liability arising out of a sale transaction - Section 142 of Negotiable Instruments Act - HELD THAT - Disclosure of the name of the person drawing the cheque is one of the factual allegations which a complaint is required to contain. Otherwise in the absence of any authority of law to investigate the offence under Section 138, there would be no person against whom a Court can proceed. There cannot be a prosecution without an accused. The offence under Section 138 is person specific. Therefore, the Parliament declared under Section 142 that the provisions dealing with taking cognizance contained in the CrPC should give way to the procedure prescribed under Section 142. Hence the opening of non-obstante clause under Section 142. It must also be remembered that Section 142 does not either contemplate a report to the police or authorise the Court taking cognizance to direct the police to investigate into the complaint. Section 138 creates an offence and prescribes punishment. No procedure for the investigation of the offence is contemplated. The prosecution is initiated on the basis of a written complaint made by the payee of a cheque. Obviously such complaints must contain the factual allegations constituting each of the ingredients of the offence under Section 138 - In the present case though the instrument was issued by the Director and Executive Director of the Company, the Company was not arraigned as a party and only the individuals are arraigned as party and the said cheque was issued for non-payment of sale consideration - Admittedly, no statutory notice was issued as against the petitioner and he was implicated by filing a petition under Section 319 of Cr.P.C and the same was ordered on 17.08.2009 without following necessary procedures required under section 138 and 142 of Negotiable Instruments Act. Petition allowed.

Summary

Issues:
1. Impleading of the petitioner as the 3rd accused in a complaint under Section 138 of the Negotiable Instruments Act.
2. Validity of the impleading petition under Section 319 Cr.P.C after a significant delay.
3. Interpretation of Section 138 and 142 of the Negotiable Instruments Act in relation to the prosecution process.
4. Compliance with statutory requirements for initiating prosecution under Section 138.

Issue 1: Impleading of the petitioner as the 3rd accused:
The prosecution filed a complaint under Section 138 of the Negotiable Instruments Act against two accused for dishonoring a cheque. Subsequently, the respondent sought to implead the petitioner as the 3rd accused years later under Section 319 Cr.P.C. The petitioner challenged this impleading, arguing that the trial court allowed it without following proper procedures and without issuing a statutory notice. The petitioner emphasized that the complaint lacked necessary factual allegations against him as an accused, as required under Section 138. The petitioner relied on a Supreme Court judgment highlighting the importance of factual allegations in the complaint to establish the offence under Section 138.

Issue 2: Validity of the impleading petition after a delay:
The petitioner contended that the delay in impleading him as the 3rd accused, after the statutory period had lapsed, rendered the impleading petition unsustainable. The petitioner argued that filing a petition under Section 319 Cr.P.C several years after the initial complaint was improper and against the principles of law. The petitioner emphasized the importance of following the prescribed procedures and timelines for initiating prosecution under Section 138.

Issue 3: Interpretation of Section 138 and 142 of the Negotiable Instruments Act:
The court analyzed the provisions of Section 138 and 142 of the Negotiable Instruments Act in detail. It highlighted that Section 138 creates an offence and prescribes punishment based on specific factual allegations in the complaint. The court emphasized the importance of including all necessary ingredients of the offence under Section 138 in the complaint for the court to take cognizance. The court referred to legal precedents to support the argument that prosecution under Section 138 is person-specific and requires compliance with statutory procedures.

Issue 4: Compliance with statutory requirements for initiating prosecution:
The court scrutinized the complaint and noted that the petitioner, an Executive Director, was not originally implicated as an accused. The court emphasized that the complaint lacked essential factual allegations against the petitioner and did not follow the necessary procedures under Section 138 and 142 of the Negotiable Instruments Act. Relying on legal precedents and the Supreme Court's interpretation of the prosecution process under Section 138, the court allowed the petition and dismissed the impleading of the petitioner as the 3rd accused.

In conclusion, the High Court of Madras allowed the criminal original petition, emphasizing the importance of adhering to statutory procedures and including necessary factual allegations in complaints under Section 138 of the Negotiable Instruments Act. The court's decision highlighted the significance of following legal principles and timelines in initiating prosecutions to ensure fairness and compliance with the law.