2015 (7) TMI 1415 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - discharge of a liability to the society - whether the complainant/Society has locus standi to file the complaint under Section 138 read with Section 142 or the Nl Act on dishonour of a cheque, which was issued to the Secretary in his name, allegedly in discharge of a liability to the Society? HELD THAT - Going by the complaint, obviously, it is seen that the complainant is Devi Vilasam Kettuthengu Sangham and the Sangham is represented by its Secretary Sri. Karunakaran Nair. But going by Ext. P1 cheque, it is seen that the payee is one Karunakaran Nair. The case of the complainant is that, towards the price of coconuts purchased from the complainant/Society, ₹ 16,000/- was due to the complainant/Society and in discharge of the said liability, the said cheque was issued. Therefore, the liability under the cheque was towards Devi Vilasom Kettuthengu Sangham and not towards Karunakaran Nair. But Ext. P1 cheque is seen issued in favour of Karunakaran Nair. It means that though, Karunakaran Nair represents the Society as the Secretary of the Society, the complainant is the Society. Going by Section 138 of the Nl Act, the statutory language is that where any cheque drawn by a person on the account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or liability, is returned by the bank unpaid due to want of sufficient funds, he shall be deemed to have committed an offence and shall be punished accordingly - According to Section 142 of the Nl Act, notwithstanding anything contained in the Code of Criminal Procedure, 1973, no Court shall take cognizance of any offence punishable under Section 138 of the Nl Act except upon a complaint, in writing, made by the payee or as the case may be, the holder in due course of the cheque. Thus, the payee or the holder in due course alone has the locus standi to file a complaint under Section 142 of the Nl Act. It is true that Karunakaran Nair could have filed a complaint alleging that in discharge of the liability towards the Society, the cheque was issued in his favour as the Secretary of the Society, since the cheque which was issued in discharge of any other liability also would come under the penal consequences referred to under Section 138 of the Nl Act. But, here there is no such case - The Courts below miserably failed to consider the right or locus standi of the complainant in its correct perspective in view of Sections 138 and 142 of the NI Act. The conviction and sentence imposed on the revision petitioner on a complaint which was not maintainable is unsustainable under law - the impugned judgment passed by the Trial Court and confirmed by the Appellate Court would stand set aside and the petitioner is acquitted of the offence under Section 138 of the Nl Act - the impugned judgment passed by the Trial Court and confirmed by the Appellate Court would stand set aside and the petitioner is acquitted of the offence under Section 138 of the Nl Act. This revision petition is allowed.

Summary

Issues:
1. Locus standi of the complainant/Society to file a complaint under Section 138 of the Negotiable Instruments Act.

Analysis:

Issue 1: Locus standi of the complainant/Society to file a complaint under Section 138 of the Negotiable Instruments Act

The case involved a complaint under Section 138 of the Negotiable Instruments Act, where the accused issued a cheque that was dishonored. The primary contention was whether the complainant/Society had the locus standi to file the complaint, as the cheque was issued in favor of an individual representing the Society, not the Society itself. The defense argued that only the payee or the holder in due course can file such a complaint, and since the complainant was neither, the complaint was not maintainable. The Court examined the statutory provisions under Sections 138, 142, and 138(b) of the Act, which clearly specify that only the payee or holder in due course can file a complaint for dishonor of a cheque.

The Court noted that while the complainant was represented by an individual, the cheque was issued in favor of that individual, not the Society. The statutory provisions emphasized that the right to file a complaint under Section 138 is reserved for the payee or holder in due course of the dishonored cheque. As the complainant was neither the payee nor the holder in due course, the Court concluded that the complaint by the Society was not maintainable. The Trial Court should have dismissed the complaint at the outset due to lack of locus standi. The failure of the lower courts to consider this aspect led to an unsustainable conviction and sentence for the accused.

In light of the above analysis, the High Court allowed the revision petition, set aside the conviction and sentence imposed on the accused, and acquitted the accused of the offense under Section 138 of the Negotiable Instruments Act.

This judgment highlights the importance of the legal concept of locus standi in filing complaints under the Negotiable Instruments Act and reinforces the statutory provisions governing such actions.

This detailed analysis provides a comprehensive understanding of the judgment, focusing on the issue of locus standi in filing complaints under the Negotiable Instruments Act.