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2022 (10) TMI 729 - HC - Indian LawsDishonor of Cheque - Period of limitation for giving notice of demand - cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881 was declined and the complaint was held to be not maintainable - HELD THAT - For an offence under Section 138 of the said Act, one of the essential requirements, as per Clause (b) of proviso to Section 138 is that payee/holder in due course of the dishonoured cheque should have made a demand for the payment of the said amount of money (cheque amount) by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. Admittedly, in the present case, the return of the cheque was vide memo dated 17.03.2020 and as such, the notice was required to be given within 30 days of 17.03.2020. Further, the notice was issued only on 20.10.2020. The order was for the benefit of the complainants, who had to institute the complaints. There was no embargo from instituting the complaints in case no such benefit of exclusion of limitation period was sought on behalf of the complainant, in case the proceedings were initiated within the period prescribed under proviso of Section 138 of the NI Act - A gross injustice shall be incurred to the complainant/petitioner in case he is denied to exclude the period during 17.03.2020 till 20.10.2020 for the purpose of issuing of notice from the date of return memo i.e. 17.03.2020 till the date of issuance of notice i.e. 20.10.2020. The order passed by the learned Trial Court declining to take cognizance in the proceedings initiated before Trial Court under Section 138 of the Negotiable Instruments Act appears to be erroneous - appeal allowed.
Issues Involved:
1. Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 was maintainable despite the delay in sending the legal notice due to the COVID-19 pandemic. 2. Whether the period of limitation for sending the legal notice can be extended based on the Supreme Court's orders during the COVID-19 pandemic. 3. Interpretation of the Supreme Court's orders in Suo Motu Writ Petition (Civil) No(s).3/2020 in relation to the limitation period under Section 138 of the Negotiable Instruments Act. 4. Applicability of the Supreme Court's judgment in Sagufa Ahmed & Ors. Vs. Upper Assam Plywood Products Pvt. Ltd. & Ors. to the present case. Issue-wise Detailed Analysis: 1. Maintainability of Complaint under Section 138 of the Negotiable Instruments Act: The appellant challenged the order dated 25.02.2021 by the learned MM, which declined to take cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881, and held the complaint as not maintainable. The appellant argued that the delay in sending the legal notice was due to the COVID-19 pandemic and prevailing lockdown, which should be considered for extending the limitation period. 2. Extension of Limitation Period for Sending Legal Notice: The appellant referred to the Supreme Court's orders in Suo Motu Writ Petition (Civil) No(s).3/2020, which extended the period of limitation for legal proceedings due to the COVID-19 pandemic. The Supreme Court's orders dated 23.03.2020, 08.03.2021, and 10.01.2022 extended the limitation period from 15.03.2020 till further orders. The appellant argued that this extension should apply to the period for sending the legal notice under Section 138 of the Negotiable Instruments Act. 3. Interpretation of Supreme Court's Orders in Suo Motu Writ Petition (Civil) No(s).3/2020: The Supreme Court's orders extended the period of limitation for various legal proceedings, including the periods prescribed under provisos (b) and (c) of Section 138 of the Negotiable Instruments Act. The appellant contended that the period from 15.03.2020 to 14.03.2021 should be excluded when computing the limitation period for sending the legal notice. The learned MM, however, declined to extend the limitation period, stating that the court does not have the power to condone the delay in sending the legal demand notice as per proviso (b) of Section 138 of the N.I. Act. 4. Applicability of Supreme Court's Judgment in Sagufa Ahmed & Ors. Vs. Upper Assam Plywood Products Pvt. Ltd. & Ors.: The learned MM relied on the Supreme Court's judgment in Sagufa Ahmed & Ors. Vs. Upper Assam Plywood Products Pvt. Ltd. & Ors., which held that the extension of the period of limitation due to the COVID-19 pandemic did not apply to the period up to which the delay can be condoned. The appellant argued that this judgment was not applicable to the present case, as it dealt with a different context and limitation period under the Companies Act. Conclusion: The High Court observed that the Supreme Court's orders in Suo Motu Writ Petition (Civil) No(s).3/2020 were intended to benefit litigants facing difficulties due to the COVID-19 pandemic. The period from 15.03.2020 to 14.03.2021 should be excluded when computing the limitation period for sending the legal notice under Section 138 of the Negotiable Instruments Act. The High Court found that the learned MM's reliance on the Sagufa Ahmed judgment was misplaced, as the context and legal provisions were different. The High Court allowed the appeal, set aside the learned MM's order, and directed the trial court to compute the period of limitation after excluding the period from 17.03.2020 to 20.10.2020 and proceed in accordance with the law. Judgment: The appeal is allowed, and the order passed by the learned Trial Court refusing to take cognizance is set aside. The learned Trial Court is directed to compute the period of limitation after excluding the period as per the cheque return memo dated 17.03.2020 till 20.10.2020 and to proceed in accordance with the law. A copy of the judgment is to be forwarded to the learned Trial Court and circulated to the Subordinate Courts for information.
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