2020 (5) TMI 314 - HC - Indian Laws

Dishonor of Cheque - non-bailable warrant - offence u/s 138 of NI Act - validity of order of summon - HELD THAT - A dishonour would constitute an offence only if the cheque is returned by the bank unpaid either because the amount of money standing to the credit of the drawer s account is insufficient to honour the cheque or that the amount exceeds the amount arranged to be paid from that account by an agreement with that bank. Now for an offence under Section 138 NI Act it is essential that the cheque must have been issued in discharge of legal debt or liability by accused on an account maintained by him with a bank and on presentation of such cheque for encashment within its period of validity the cheque must have been returned unpaid. The payee of the cheque must have issued legal notice of demand within 30 days from the receipt of the information by him from the bank regarding such dishonor and where the drawer of the cheque fails to make the payment within 15 days of the receipt of the aforesaid legal demand notice cause of action under Section 138 NI Act arises. It is not disputed that neither in the complaint nor in the statement of the complainant recorded under Section 200 Cr.P.C. is it mentioned as to on which dates he has demanded for refund of his money from the applicant on which date he had presented the alleged cheques in the bank for encashment - The complainant has also not disclosed the date on which he had sent the legal notice to the applicant through his advocate and the date of service of notice. The complainant has also disclosed the date i.e. 3rd July 2014 on which the dishonoured cheques along with return memo showing insufficient balance amount in the account of the applicant has been received. Thus it is not clear that one of main ingredient i.e. date of service of notice from which the date the cause of action arises i.e. date of bank return memo as per the provisions of Section 138 N.I. Act is completely missing in the present case - As per Section 138 read with Section 142 N.I. Act the period of complaint being filed from the date of service of notice i.e. within one month is also not complied in the present case. In the impugned summoning order also the concerned Magistrate has only recorded the date on which the alleged cheques were dishonoured i.e. 3rd July 2014 and the date of legal notice i.e. 14th July 2014 which was sent to the applicant but he has not recorded the date on which the legal notice has been served from which the date the cause of action would arise - In view of the provisions of Sections 138 read with Section 142 N.I. Act the main ingredients are not complied with by the complainant while filing such immature complaint which is liable to be quashed. Application allowed.

Summary

Issues Involved:
1. Validity of the summoning order dated 16th September 2014.
2. Validity of the non-bailable warrant issued on 21st March 2015.
3. Compliance with Section 138 of the Negotiable Instruments Act, 1881.
4. Premature filing of the complaint before the expiry of the statutory period.

Issue-wise Detailed Analysis:

1. Validity of the Summoning Order Dated 16th September 2014:
The applicant challenged the summoning order on the grounds that the court below did not record statements of witnesses except for the complainant, which is per se illegal. The applicant contended that the complaint did not mention any legal notice given or received, which is a necessary ingredient under Section 138 of the N.I. Act. The court noted that the complaint and the statement of the complainant were silent about the factum of sending a legal notice and the failure on the part of the applicant to repay the amount. The impugned order only recorded the dates of cheque dishonour and the legal notice but failed to mention the date of service of the notice, which is crucial for establishing cause of action.

2. Validity of the Non-bailable Warrant Issued on 21st March 2015:
The non-bailable warrant was issued because the applicant failed to appear before the court. However, the applicant argued that the entire proceedings were void due to the absence of essential ingredients in the complaint, including the date of service of the legal notice. The court found merit in the applicant's argument that the complaint was premature and lacked necessary details, making the issuance of the non-bailable warrant questionable.

3. Compliance with Section 138 of the Negotiable Instruments Act, 1881:
Section 138 requires that the payee or holder in due course of the cheque makes a demand for payment by giving a legal notice in writing within 30 days of receiving information from the bank regarding the return of the cheque as unpaid. The drawer must fail to make the payment within 15 days of receiving the notice for the offence to be constituted. The court observed that the complaint did not mention the date of service of the legal notice, which is a critical component for establishing the cause of action under Section 138. The absence of this detail rendered the complaint non-compliant with the statutory requirements.

4. Premature Filing of the Complaint Before the Expiry of the Statutory Period:
The applicant argued that the complaint was filed prematurely on 13th August 2014, before the expiry of the 15-day period from the date of receipt of the legal notice. The court agreed, citing precedents from the Supreme Court, including *Jugesh Sehgal Vs. Shamsher Singh Gogi*, *Yogendra Pratap Singh Vs. Savitri Pandey & Another*, and *N. Harihara Krishnan Vs. J. Thomas*, which established that a complaint filed before the expiry of the statutory period is non-maintainable. The court concluded that the complaint was filed prematurely, making the proceedings invalid.

Conclusion:
The court quashed the entire proceedings of Complaint Case No. 1546 of 2014 under Section 138 of the N.I. Act, allowing the complainant the liberty to file a fresh complaint in accordance with the law. The application was allowed with no order as to costs.