2016 (12) TMI 1916 - HC - Indian Laws

Dishonour of Cheque - application for condonation of delay - complaint filed under Section 138 of the Negotiable Instruments Act (NI Act) was within the prescribed period of limitation as per Section 142(1)(b) of the NI Act or not - registration of complaint without deciding the condonation application - violation of principles of natural justice - HELD THAT - Section 138, Negotiable Instruments Act would deal with bad cheques. Section 142, Negotiable Instruments Act would deal with taking of cognizance of the offence. Section 142(1)(b), Negotiable Instruments Act would specify the time limit within which a complaint is required to be filed for the offence under section 138, Negotiable Instruments Act. Under section 142(1)(b), Negotiable Instruments Act a complaint is required to be filed within one month from the date of which the cause of action has arisen as per clause (c) of the proviso to section 138, Negotiable Instruments Act. Admittedly, in the case on hand, the learned JMFC has registered the complaint without deciding the condonation application. Under the circumstances, a valuable right has accrued to the petitioner to defend his case on the ground of delay. The provisions of section 142(1)(b), Negotiable Instruments Act will have to be read in tandem with section 142(1)(a), Negotiable Instruments Act which starts with a non obstante clause that no Court shall take cognizance of any offence punishable under section 138, Negotiable Instruments Act except upon a complaint in writing made by the payee or as the case may be the holder in due course of the cheque. Section 142(1)(b) specifies that such complaint shall be made within one month of the date on which cause of action arises under clause (c) of the proviso to section 138, Negotiable Instruments Act. When there is a delay in filing the complaint, it is mandatory for the complainant to file an application for condonation of delay. When such application is filed, a notice will have to be issued to the accused before the order is passed either allowing the condonation application or declining the same. Reliance placed decision rendered by the Karnataka High Court in the case of Sajjan Kumar Jhunjhunwala v. M/s. Eastern Roadways Pvt. Ltd., 2006 (7) TMI 747 - KARNATAKA HIGH COURT . In that case, the complaint under section 138, Negotiable Instruments Act was filed with a condonation application seeking condonation of delay of only three days. The learned JMFC allowed the condonation application without hearing the accused. It is held that it was mandatory for the learned JMFC to provide an opportunity to the accused to argue on the merits of the condonation application. Thereupon, the Karnataka High Court quashed the proceedings against the accused and directed the trial Court to decide the condonation application affording an opportunity to the accused to oppose the same. Conclusion - i) When there is a delay in filing the complaint, it is mandatory for the complainant to file an application for condonation of delay. ii) The learned JMFC has registered the complaint without deciding the condonation application. His said act is certainly contrary to the principles of natural justice and provisions to sub-clause (b) of clause (1) of section 142, Negotiable Instruments Act. The petition is partly allowed and the order of registration of complaint and the framing of charge under section 138, Negotiable Instruments Act against the petitioner are quashed. The matter stands remitted to the learned JMFC with directions to adjudicate the condonation application with a speaking and reasoned order after hearing the parties thereon.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are:

• Whether the complaint filed under Section 138 of the Negotiable Instruments Act (NI Act) was within the prescribed period of limitation as per Section 142(1)(b) of the NI Act.
• Whether the Judicial Magistrate First Class (JMFC) erred in registering the complaint and framing charges without deciding the application for condonation of delay.
• Whether the petitioner was entitled to be heard on the condonation application before the complaint was registered.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Limitation Period under Section 142(1)(b) of the NI Act

• Relevant Legal Framework and Precedents: Section 142(1)(b) of the NI Act mandates that a complaint for an offense under Section 138 must be filed within one month from the date the cause of action arises. The proviso allows for condonation of delay if sufficient cause is shown.
• Court's Interpretation and Reasoning: The court noted that the complaint was filed with a condonation application, suggesting awareness of potential delay. However, the complaint appeared to be within the limitation period based on the dates provided.
• Key Evidence and Findings: The complaint was filed on 30-9-2011, following the last demand notice dated 6-9-2011, returned on 14-9-2011. This sequence suggested compliance with the limitation period.
• Application of Law to Facts: The court found that the complaint was within the statutory period, rendering the condonation application unnecessary.
• Treatment of Competing Arguments: The petitioner argued that the complaint was time-barred based on earlier unserved notices, while the respondent contended that the last notice was crucial for limitation purposes.
• Conclusions: The court concluded that the complaint was filed within the limitation period, negating the need for condonation.

Issue 2: Error in Registering Complaint Without Deciding Condonation Application

• Relevant Legal Framework and Precedents: The court referenced the Karnataka High Court decision in Sajjan Kumar Jhunjhunwala, emphasizing the necessity of deciding condonation applications before complaint registration.
• Court's Interpretation and Reasoning: The court held that the JMFC erred by not adjudicating the condonation application, violating principles of natural justice.
• Key Evidence and Findings: The JMFC registered the complaint and framed charges without addressing the condonation application.
• Application of Law to Facts: The court determined that the JMFC's actions were contrary to procedural requirements and natural justice.
• Treatment of Competing Arguments: The respondent conceded the procedural error but argued it was not obligatory to hear the petitioner first.
• Conclusions: The court concluded that the JMFC should have decided the condonation application before proceeding with the complaint.

Issue 3: Right to be Heard on Condonation Application

• Relevant Legal Framework and Precedents: The court emphasized the importance of hearing the accused on condonation applications, citing principles of natural justice and relevant case law.
• Court's Interpretation and Reasoning: The court reasoned that the petitioner had a right to contest the condonation application, which was not afforded by the JMFC.
• Key Evidence and Findings: The JMFC proceeded with the complaint without providing the petitioner an opportunity to oppose the condonation application.
• Application of Law to Facts: The court applied principles of natural justice, finding the JMFC's actions procedurally flawed.
• Treatment of Competing Arguments: The respondent's concession supported the court's reasoning on the necessity of hearing the petitioner.
• Conclusions: The court concluded that the petitioner was entitled to a hearing on the condonation application.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The learned JMFC has registered the complaint without deciding the condonation application. His said act is certainly contrary to the principles of natural justice and provisions to sub-clause (b) of clause (1) of section 142, Negotiable Instruments Act."
• Core Principles Established: The necessity of deciding condonation applications before complaint registration and the right of the accused to be heard on such applications were reaffirmed.
• Final Determinations on Each Issue: The court quashed the registration of the complaint and the framing of charges, remitting the matter to the JMFC to decide the condonation application after hearing both parties.