2020 (8) TMI 911 - HC - Indian Laws

Dishonor of Cheque - existence of debt or liability or not - rebuttal of presumptions - complaint was filed after the period of 15 days - Condonation of delay in filing complaint - HELD THAT - The notice herein has not been issued to the drawer of these two cheques within the mandatory period of fifteen days of the receipt of information on 07.03.1997 by the complainant from the bank regarding the return of the cheque as unpaid and as such the notice is defective in respect of the said two cheques as it is not in accordance with the provision of Section 138(b) of the N.I. Act. Reliance placed upon the photo copy of the reply given by the Advocate of the accused in response to his letter dated 15.04.1997 which proved the service of the said notice - admissibility of evidences - HELD THAT - It is this document which has been filed and relied upon by the complainant in support of his due service of notice. It is seen from the said copy of the letter that the alleged notice dated 15.04.1997 gave a notice to pay the cheque amount within seven days from the receipt of letter dated 15.04.1997. And the said statement has not been denied by the complainant. From the copy of the letter that has been relied upon, this court finds that the demand to pay the said amount within seven days is in clear violation of the provision of Section 138(c) of the N.I. Act 1881. The power of the court to condone the delay, on a prayer under Section 142 (1) (b) is in respect of filing of a complaint under Section 138 of the N.I. Act and not in respect of issuance of notice under Section 138 of the N.I. Act. The present case has been filed on 14.05.1997 and thus with in the period of limitation. The complainant has also admitted that the mother of the accused has filed a suit against the complaint s elder brother Nirmal Guchait and the said suit is still pending. This shows that there is on going dispute between the parties. The present case is under Section 138 of the N.I. Act, wherein the mandatory requirement in a case under this provision, is the notice, which initiates the total process and is the base/foundation of such a case. The notice in this case has to be complete in all respect as required under the said Section. Any defect in the said notice including its service and contents and requirements is vital in a case of this nature. In the present case, the findings of the Trial Court that the notice in this case is insufficient, vague and illegal is found to be correct and this Court also finds that the notice in this case is not in accordance with law being in violation of the provisions under Section 138(b) and (c) of the N.I. Act and hence the judgment under appeal needs no interference. The appeal against acquittal stands dismissed.

Summary

Issues Involved:
1. Validity of the notice under Section 138 of the Negotiable Instrument Act.
2. Service of notice within the statutory period.
3. Compliance with the mandatory requirements of Section 138(b) and (c) of the Negotiable Instrument Act.
4. Evidence supporting the complainant's claim.
5. Defense's argument of no debt or liability.

Issue-wise Detailed Analysis:

1. Validity of the notice under Section 138 of the Negotiable Instrument Act:
The complainant sent a notice to the accused demanding payment for dishonoured cheques. However, the Trial Court found the notice insufficient, vague, and illegal. The notice did not comply with the statutory requirements of Section 138(b) and (c) of the N.I. Act, as it demanded payment within seven days instead of the mandatory fifteen days. The court upheld this finding, deeming the notice defective and not in accordance with the law.

2. Service of notice within the statutory period:
The complainant sent the notice on 15.04.1997, but the cheques were dishonoured on different dates (07.03.1997 and 08.04.1997). The notice for the cheques dishonoured on 07.03.1997 was not within the statutory period, making it invalid. For the cheques dishonoured on 08.04.1997, although the notice was within the statutory period, it still failed to meet the requirement of giving at least fifteen days for payment.

3. Compliance with the mandatory requirements of Section 138(b) and (c) of the Negotiable Instrument Act:
Section 138(b) requires the payee to demand payment within thirty days of receiving information about the dishonoured cheque. Section 138(c) mandates that the drawer must be given fifteen days to make the payment. The notice in question failed to comply with these requirements, as it demanded payment within seven days, violating the statutory provisions.

4. Evidence supporting the complainant's claim:
The complainant provided evidence, including the cheques and return memos from the bank, proving the dishonour of cheques. However, the Trial Court noted that the complainant did not provide sufficient documentation to support the claim of a business transaction worth Rs. Sixty Lakhs. The complainant's reliance on a photocopy of the reply from the accused's advocate was insufficient to prove proper service of notice.

5. Defense's argument of no debt or liability:
The accused argued that the cheques were issued for purchasing potatoes and that the complainant was appointed as an agent. The accused claimed that the complainant misused the cheques without purchasing potatoes, leading to a stop payment request to the bank. The defense also argued that no notice was served before filing the complaint. The Trial Court found the defense credible and acquitted the accused, as the complainant failed to prove the debt or liability and the notice was defective.

Conclusion:
The High Court upheld the Trial Court's judgment, finding the notice insufficient, vague, and illegal, and not in compliance with Sections 138(b) and (c) of the N.I. Act. The appeal against acquittal was dismissed, and the lower court's records were sent back for information and necessary action. The judgment emphasized the importance of a valid and properly served notice as the foundation of a case under Section 138 of the N.I. Act.