2021 (6) TMI 298 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - validity of demand notice - complainant/respondent in the complaint did not mention as to when the demand notice issued against the petitioner was served upon him - HELD THAT - Section 138 is a penal provision that prescribes imprisonment upto two years and fine upto twice the cheque amount. It must, therefore, be interpreted strictly, for it is one of the accepted rules of interpretation that in a penal statute, the Courts would hesitate to ascribe a meaning, broader than what the phrase would ordinarily bear. Section 138 is in two parts. The enacting part of the provision makes it abundantly clear that what constitutes an offence punishable with imprisonment and/or fine is the dishonour of a cheque for insufficiency of funds etc. in the account maintained by the drawer with a bank for discharge of a debt or other liability whether in full or part. The demand notice sent through registered post on 16.03.2016 in ordinary course of business would be deemed/presumed to have been served upon the petitioner on the said date itself in view of the fact that there is no denial thereto the same by the petitioner either before the trial court or this court. The 15 days time stipulated under the Act thus, would be deemed to have commenced with effect from 16.03.2016 and ended on 30.03.2016. The complaint indisputably has been filed on 31.03.2016 upon failure of the petitioner to make payment of the said amount to the complainant within 15 days after receipt of the notice and thus, after the expiry of the period of 15 days the complaint is competent and maintainable as also the proceedings initiated thereupon by the trial court. Petition dismissed.

Summary

Issues Involved:
1. Quashment of Complaint under Section 138 of Negotiable Instruments Act.
2. Validity of the trial court's cognizance and proceedings.
3. Service and timing of demand notice.
4. Legality of subsequent orders including issuance of non-bailable warrants and property attachment.

Issue-wise Detailed Analysis:

1. Quashment of Complaint under Section 138 of Negotiable Instruments Act:
The petitioner sought the quashment of the complaint filed under Section 138 of the Negotiable Instruments Act, alleging that the complaint was false and baseless. The complainant/respondent claimed that the petitioner had issued two cheques totaling ?23,46,000, which were dishonored due to insufficient funds. The petitioner argued that the complaint was filed prematurely and without proper application of mind by the trial court.

2. Validity of the Trial Court's Cognizance and Proceedings:
The petitioner contended that the trial court's satisfaction recorded and cognizance taken under Section 204 Cr.P.C. was patently farce and without application of mind. The petitioner argued that there was no material on record to show that the demand notice was served upon him and that the complaint was filed before the expiry of 15 days from the date of dispatch of the notice. The court, however, found that the petitioner did not deny receiving the demand notice and had participated in the proceedings, even referring to a compromise, suggesting no objection to the maintainability of the complaint.

3. Service and Timing of Demand Notice:
The petitioner challenged the service of the demand notice, arguing that there was no mention of when it was served. The court referred to Section 138 and Section 142 of the Act, emphasizing that the offence under Section 138 is complete with the dishonor of the cheque but taking cognizance is forbidden until the complainant has the cause of action in terms of clause (c) of the proviso read with Section 142. The court presumed that the demand notice sent through registered post on 16-03-2016 was served on the same date, as there was no denial by the petitioner. Therefore, the 15-day period ended on 30-03-2016, and the complaint filed on 31-03-2016 was deemed competent and maintainable.

4. Legality of Subsequent Orders Including Issuance of Non-Bailable Warrants and Property Attachment:
The petitioner also challenged various orders passed by the trial court, including the issuance of non-bailable warrants and property attachment. The court found that these orders were validly passed and conducted by the trial court. The petitioner's argument that the trial court abused the process of law was rejected.

Conclusion:
The court dismissed the petition, holding that the complaint under Section 138 was not premature, the demand notice was presumed to be served, and the subsequent orders by the trial court were valid. The court relied on the judgment of the Apex Court in "C.C. Alavi Haji vs. Palapetty Muhammed & Anr." to support its findings on the presumption of service of notice and the maintainability of the complaint.