2022 (11) TMI 1068 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - complaint was barred by time limitation or not - time limitation for second SCN when the first SCN was itself time barred - whether the Courts below erred in dismissing the complaint without exercising jurisdiction under Section 142(1)(b)? - HELD THAT - The Trial Court instead of appreciating the facts of the complaint to ascertain as to whether sufficient cause for not making a complaint within the prescribed period has been shown by the complainant or not dismissed the complaint holding that the second legal notice cannot be considered and the complaint is barred by time when limitation is counted from the date of the first legal notice. The said reasoning has been upheld by the revisional Court as well. In the considered opinion of this Court though filing of separate application seeking condonation of delay may be desirable but is not mandatory when the complaint itself offers explanation for delay. If from pleadings raised in the complaint itself, the Court could find that there is sufficient cause shown by the complainant explaining the delay, the Trial Court ought to have exercised its jurisdiction to condone such delay. It will be apt to refer to law laid down by Apex Court in BIRENDRA PRASAD SAH VERSUS THE STATE OF BIHAR AND ORS. 2019 (5) TMI 1912 - SUPREME COURT wherein in somewhat similar circumstances, the Supreme Court held that the High Court has merely adverted to the presumption that the first notice would be deemed to have been served if it was dispatched in the ordinary course. Even if that presumption applies, we are of the view that sufficient cause was shown by the appellant for condoning the delay in instituting the complaint taking the basis of the complaint as the issuance of the first legal notice dated 31 December 2015. This Court has no hesitation in holding that even if first demand notice dated 15th of May, 2012 is taken to be the trigger point giving rise to cause of action and the complaint is held to be barred by time, the explanation given in the complaint itself constitutes sufficient cause for condoning the delay in instituting the complaint and the Courts below fell in error in dismissing the complaint. The questions framed in Para 9 ibid are thus answered accordingly. Trite it is that object underlying Section 138 of the Act is to promote and inculcate faith in the efficacy of banking system and to create an atmosphere of faith and reliance by discouraging people from dishonouring their commitments which are implicit when they pay their dues through cheques - As per settled principle of law while interpreting statutory provision the Court must adopt an approach that effectuates the object of the legislation and not the one which defeats or frustrates the same. Petition allowed.

Summary

Issues Involved:
1. Whether the courts below are right in holding that the complaint was barred by time?
2. In case the complaint was barred by time, whether the Courts below erred in dismissing the complaint without exercising jurisdiction under Section 142(1)(b) of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Whether the courts below are right in holding that the complaint was barred by time?

The complainant filed a petition under Section 482 Cr.P.C. seeking quashing of the order dated 1st August 2012 by Judicial Magistrate 1st Class, Gurgaon, and the subsequent order dated 28th September 2012 by the Sessions Judge, Gurgaon. The complaint under Section 138 of the Negotiable Instruments Act, 1881 was dismissed on the grounds that it was barred by limitation. The courts below held that the cause of action arose from the first legal notice dated 15th May 2012, and the complaint should have been filed by 30th June 2012. The second notice dated 2nd June 2012 was not considered valid as no document was provided to prove the first notice was unclaimed. The courts cited precedents, including the Supreme Court's decision in Sadanandan Bhadran Vs. Madhavan Sunil Kumar, which held that a fresh cause of action does not arise on every subsequent dishonor of the cheque.

2. In case the complaint was barred by time, whether the Courts below erred in dismissing the complaint without exercising jurisdiction under Section 142(1)(b) of the Negotiable Instruments Act.

The complainant argued that the courts below erred in dismissing the complaint without considering the provisions of Section 142(1)(b) of the Act, which allows the court to take cognizance of a complaint after the prescribed period if sufficient cause is shown. The complainant cited the case of Vishwanath Ghosh vs. Ramesh Chandra Sindhi, where the Madhya Pradesh High Court took a broader view of the provisions. The High Court noted that the trial court should have considered whether the complaint itself provided sufficient cause for the delay. The Supreme Court in Birendra Prasad Sah vs. State of Bihar and Anr. held that if the complaint offers an explanation for the delay, the court should exercise its jurisdiction to condone such delay.

Conclusion:

The High Court concluded that the courts below were incorrect in dismissing the complaint solely based on the first legal notice without considering the explanation provided in the complaint. The court emphasized that the object of Section 138 of the Act is to promote faith in the banking system and discourage dishonoring commitments. The High Court set aside the orders dated 1st August 2012 and 28th September 2012, directing the parties to appear before the trial court on 16th November 2022 and instructed the trial court to decide the case expeditiously within nine months.