2015 (7) TMI 1379 - HC - Indian Laws

Dishonor of Cheque - maintainability of petition in the absence of notice under Section 138 of the Negotiable Instruments Act to the petitioner - HELD THAT - Making of a demand by giving a notice is sina-qua-non and it is only thereafter that the complainant can be maintained, that too after it is proved that the notice of such demand was served or deemed to have been served upon the sendee. Offences by the company has been separately dealt with under Section 141 of the Act , which essentially means that the offences committed by the company is different from the once which have been committed by its employees. In such situation the company is deemed to be the principal offender and the remaining persons are made offenders by virtue of legal fiction created by the legislature as per the Section, hence the actual offence should have been committed by the company. If that was so, then the notice as mandatorily required under Section 138 ought to have been served upon the company, but in the instant case undisputedly the notice has been served only upon its incharge and authorized signatory Sh. Vijay Kumar. The learned trial Magistrate has failed to take into consideration this distinction, which vitiate the entire proceedings as the Company can only be tried, in case there is a notice served upon it, that too after satisfying the provisions of Section 141(1) of the Act, but the Company in no event can be prosecuted in absence of a legal and valid notice to this effect as envisaged under the Act - the proceedings initiated by the learned Magistrate on the basis of complaint case under NIA Act is quashed for want of legal and valid notice. Petition allowed.

Summary

Issues Involved:
Validity of summoning order under Section 482 of the Code of Criminal Procedure read with Article 227 of the Constitution of India in a case related to Section 138 of the Negotiable Instruments Act.

Analysis:

Issue 1: Notice Requirement under Section 138 of the Negotiable Instruments Act
The petitioner challenged the summoning order, contending that no notice as mandatorily required under Section 138 of the Negotiable Instruments Act had been served upon them. The key question was whether the complaint could be maintained in the absence of such notice.

Analysis: The court highlighted that Section 138 of the Act aims to penalize individuals issuing cheques without intending to honor them. The provision requires a notice to be given to the drawer of the cheque within a specific timeframe. The court emphasized the importance of the notice requirement for maintaining a complaint under the Act.

Issue 2: Distinction between Natural and Juridical Persons
The respondent argued that notice had been issued to an individual who was the incharge and authorized signatory of the petitioner, implying compliance with the Act. The petitioner contended that notice to a natural person does not automatically serve as notice to a juridical person, such as a company.

Analysis: The court clarified that offenses by a company are distinct from those committed by its employees under Section 141 of the Act. For a company to be prosecuted, a legal and valid notice must be served upon it, not just its employees. In this case, the notice was served only on the individual, not the company, which was a crucial procedural error.

Conclusion:
The court concluded that the learned Magistrate failed to consider the distinction between offenses committed by a company and its employees, leading to a procedural flaw in the proceedings. As the company could only be tried upon proper notice under Section 141(1) of the Act, the absence of a legal and valid notice to the company rendered the proceedings invalid. Consequently, the petition was upheld, and the proceedings initiated by the Magistrate were quashed due to the lack of a legal and valid notice as required by the Act.