2019 (3) TMI 1018 - HC - Indian Laws

Dishonor of Cheque - Section 138 of Negotiable Instrument Act - conviction order set aside on the ground that the complaint was not filed immediately after the first notice of default was given to the respondent - Held that - A complainant is entitled to file a complaint under section 138 Negotiable Instruments Act, based on a second or successive default in payment of the cheque amount, even though he had not initiated prosecution based on the first default, provided that the requirements stipulated in the proviso to Section 138 are satisfied for the second or successive default based on which the prosecution is now launched. The impugned order is set aside. Sequitur to the same is that the appeal filed by the respondent before the Appellate Court shall stand restored - matter is remitted to the Appellate Court for reconsideration of the appeal on merits.

Summary

Issues:
Impugned judgment setting aside conviction under Section 138 Negotiable Instrument Act due to delay in filing complaint after first notice of default.

Analysis:
The petitioner challenged a judgment setting aside the conviction under Section 138 of the Negotiable Instrument Act due to delay in filing the complaint after the first notice of default. The petitioner had filed a complaint stating that a cheque issued by the respondent had bounced due to insufficient funds. The Trial Court convicted the respondent and imposed a fine. However, the Appellate Court set aside the conviction on the grounds that the complaint was not filed immediately after the first notice of default was given to the respondent.

The Appellate Court noted that the complaint was filed after the cheque was dishonored for the second time and the second notice of default was issued. The court held the complaint to be time-barred as it was not filed immediately after the first dishonor and service of the first notice of demand. The petitioner relied on a judgment of the Supreme Court which stated that a prosecution based on a second or successive default in payment of the cheque amount is permissible, even if no prosecution was initiated based on the first default.

Based on the Supreme Court's ruling, the High Court held that the impugned order dismissing the complaint solely on the ground of limitation from the first notice of default was not sustainable. The court clarified that a complainant is entitled to file a complaint based on a second or successive default in payment of the cheque amount, even if no action was taken on the first default, as long as the requirements stipulated in the proviso to Section 138 are met for the subsequent default.

Consequently, the High Court set aside the impugned order and remitted the matter back to the Appellate Court for reconsideration on merits. The court emphasized that it did not pass any judgment on the merits of the defense of the respondent or the claim of the petitioner. The parties were directed to appear before the Appellate Court for further proceedings as per the given schedule. The petition was disposed of accordingly, with an order issued under the signatures of the Court Master.