2010 (10) TMI 1229 - HC - Indian Laws

Summary

Issues Involved:
1. Service of statutory notice u/s 138(b) of the Negotiable Instruments Act.
2. Validity of prosecution without individual statutory notice to the petitioner.

Summary:

Issue 1: Service of statutory notice u/s 138(b) of the Negotiable Instruments Act

The petitioner contended that the learned Magistrate should not have taken cognizance of the complaints due to the absence of service of statutory notice u/s 138(b) of the Negotiable Instruments Act. The petitioner argued that there was no averment in the complaints indicating that individual statutory notice was sent to him demanding payment for the dishonoured cheques.

The court referenced several decisions to support the necessity of serving statutory notice to the petitioner. In (2006) II M.L.J. 134, it was established that no prosecution under Section 138 of the Negotiable Instruments Act can be launched without the issuance of statutory notice. Similarly, in (2001) M.L.J. 519, it was held that the presumption of guilt arises only when a notice is served under Section 138(b) of the Act, and in the absence of such notice, there cannot be a cause of action against the directors.

The court also considered the decision in (2006) 2 MLJ 990, where it was concluded that statutory notice to every person, including the director, who is sought to be prosecuted, is mandatory.

Issue 2: Validity of prosecution without individual statutory notice to the petitioner

The respondent argued that notice sent to the company should be considered as notice to the petitioner, who was the Chairman-cum-Managing Director of the company. The respondent relied on the decision in (2007) 3 SCC (Cri) 236, which suggested that if the petitioner did not make the payment within 15 days of receiving the summons from the court, he could not contend that there was no proper service of notice.

However, the court found that the facts of the case did not align with the decision cited by the respondent. The court emphasized that in the complaints, it was not stated that the statutory notice was sent to the petitioner. Therefore, the question of complying with the demand within 15 days from the date of receipt of the summons from the court did not arise.

The court concluded that the contention that notice to the company amounts to notice to the petitioner could not be accepted. The court referred to multiple judgments, including (2006) II M.L.J. 134 and (2001) M.L.J. 519, which affirmed that individual statutory notice to the petitioner is mandatory.

As a result, the court quashed all further proceedings in C.C. Nos. 6360 and 6358 of 1997 on the file of the XIII Metropolitan Magistrate, Chennai, against the petitioner. The proceedings against the other accused were allowed to continue. The Criminal Original Petitions were allowed, and the connected Crl.M.Ps were closed.