2006 (7) TMI 739 - HC - Indian Laws

Summary

Issues:
Acquittal under Section 138 of the Negotiable Instruments Act based on the complaint being time-barred.

Analysis:
The appeal challenged the acquittal order by the Judicial Magistrate, 1st Class, Faridabad, regarding the dishonoring of a cheque dated 23.3.1994. The key issues revolved around the sufficiency of the notice given to the respondent and the impact of the respondent's assurance to honor the cheque upon re-presentation.

The complainant, Haryana State Small Industries and Export Corporation, dealt with the supply of iron and steel to small scale industries, including the respondent. The respondent purchased material for Rs. 29,66,721 on 27.2.1994, issuing a post-dated cheque for Rs. 20,21,521 dated 23.3.1994. The cheque was dishonored on 23.3.1994 due to insufficient funds, leading to subsequent dishonors despite assurances from the respondent.

The Trial Court dismissed the complaint as time-barred, focusing on the date of the notice issued by the complainant on 7.4.1994. However, the High Court analyzed the legal requirements under Section 138 of the Negotiable Instruments Act, emphasizing the need for a valid notice to trigger the cause of action for filing a complaint. The Court highlighted the significance of the respondent's assurance to re-present the cheque on 19.4.1994 as creating a fresh cause of action for the complainant.

Referring to a similar case, the High Court emphasized that the receipt of the notice is crucial to establishing the cause of action, and failure to receive the notice by the respondent does not give rise to a cause of action for the complainant. The respondent's contradictory stance regarding the receipt of the notice and the subsequent actions taken further supported the Court's decision to set aside the Trial Court's findings.

In conclusion, the High Court intervened in the Trial Court's decision, emphasizing that the complaint should not have been dismissed based solely on the issue of limitation. The case was remitted back to the Trial Court for further proceedings in accordance with the law, with a directive to expedite the disposal of the case within a specified timeframe.