2014 (8) TMI 608 - SC - Companies Law

Dishonour of Cheque - proceedings initiated by the appellant under Section 138 of the Negotiable Instruments Act, 1881 - Bar of limitation - Validity of handwritten note (Notice) sent by the appellant - Held that - handwritten note dated 27th April, 2012 and found that it was issued within the mandatory period of thirty days of dishonour of cheques and contained (a) the subject amount of ₹ 60,00,000/- given by the appellant as loan to the respondent under promissory notes; (b) the details of Cheque numbers and dates of issue with amounts and particulars of Bank; (c) Returning of Cheques by the banker dishonouring them on the ground of Stop Payment by the respondent; (d) a demand for immediate repayment of the amount; and (d) a caution to the respondent that in case of failure on the part of respondent, the appellant would initiate legal proceedings. Thus, in our opinion, the handwritten note dated 27th April, 2012 fulfilled the mandatory requirements under clause (b) of proviso to Section 138 and could be said to be a valid notice in the light of this Court s Judgment in Central Bank of India Anr. (1999 (10) TMI 718 - Supreme Court of India). It is no doubt true that at the time of filing the complaint, the Magistrate has to take cognizance of the complaint when it is within limitation and in case of delay in filing the complaint, the complaint has to come up with the application seeking condonation of delay. But, the peculiar fact of the present case is that in the complaint, the complainant had only averred that he has sent the legal notice dated 24th May, 2012 but not mentioned about the handwritten note dated 27th April, 2012. Basing on the said averment, the learned Trial Judge was satisfied that the complaint is within the prescribed period of limitation. Hence, in this case, raising the plea of limitation and Court exercising the discretion to condone the delay did not arise at all. In the peculiar facts and circumstances of the case, while keeping in mind the legislative intent and the specific plea of the appellant raised in the grounds for the Special Leave Petition that he should have been allowed to move an application for condonation of delay before the Trial Court as the respondent has not suffered any prejudice by reason of 25 days delay, we strongly feel that the appellant should not have been deprived of the remedy provided by the Legislature. In fact, the remedy so provided was to enable a genuine litigant to pursue his case against a defaulter by overcoming the technical difficulty of limitation. Hence, the High Court has committed an error by not considering the issue of limitation on merits. High Court ought to have remanded the matter to the Trial Court for deciding the issue of limitation - Following decision of Rakesh Kumar Jain Vs. State (Through CBI) (2000 (8) TMI 1097 - SUPREME COURT), MSR LEATHERS Versus S PALANIAPPAN ANR 2012 (10) TMI 232 - SUPREME COURT and Subodh S. Salaskar Vs. Jayprakash M. Shah 2008 (8) TMI 795 - SUPREME COURT OF INDIA - criminal proceedings restored to Trial Court - Decided in favour of appellant.

Summary

Issues Involved:
1. Whether the handwritten note sent by the appellant on 27th April, 2012 could be treated as 'notice' within the meaning of Section 138 of the Negotiable Instruments Act.
2. If there was any delay in filing the Complaint, whether such delay could have been condoned by the High Court.
3. Whether the High Court was right in quashing the criminal proceedings on the ground of limitation or should have remanded the matter back to the Trial Court for deciding the issue of limitation.

Issue-wise Detailed Analysis:

1. Whether the handwritten note sent by the appellant on 27th April, 2012 could be treated as 'notice' within the meaning of Section 138 of the Negotiable Instruments Act:
The Supreme Court examined whether the handwritten note dated 27th April, 2012 fulfilled the mandatory requirements under clause (b) of the proviso to Section 138 of the Negotiable Instruments Act. The Court noted that the handwritten note contained the necessary details such as the amount of Rs. 60,00,000, cheque numbers, dates of issue, particulars of the bank, and a demand for immediate repayment. It also cautioned the respondent about initiating legal proceedings in case of failure to pay. Based on this, the Court concluded that the handwritten note fulfilled the mandatory requirements and could be treated as a valid 'notice' under Section 138 of the Act. Therefore, the High Court did not err in considering the handwritten note as 'notice'.

2. If there was any delay in filing the Complaint, whether such delay could have been condoned by the High Court:
The Supreme Court highlighted that the proviso to Section 142(b) of the Act, inserted by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, provides the Court with the discretion to condone the delay if the complainant satisfies the Court with sufficient cause. The Court emphasized the legislative intent behind this proviso was to overcome the technicality of the limitation period and to enable genuine litigants to pursue their cases against defaulters. The Court noted that the appellant should have been allowed to move an application for condonation of delay, as the respondent had not suffered any prejudice due to the 25 days delay. Thus, the High Court committed an error by not considering the issue of limitation on merits.

3. Whether the High Court was right in quashing the criminal proceedings on the ground of limitation or should have remanded the matter back to the Trial Court for deciding the issue of limitation:
The Supreme Court observed that the High Court should not have quashed the criminal proceedings merely on the ground of limitation, especially when the issue of limitation was raised for the first time before the High Court. Instead, the High Court should have remanded the matter back to the Trial Court to decide the issue of limitation. The Court noted that the Trial Court had initially taken cognizance of the complaint based on the appellant's averment that the legal notice dated 24th May, 2012, was issued within the prescribed period of limitation. Therefore, the Supreme Court set aside the impugned judgment of the High Court and restored the criminal proceedings before the Trial Court, allowing the appellant to file an application for condonation of delay.

Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's judgment quashing the criminal proceedings, and restored the criminal proceedings before the Trial Court. The appellant was permitted to file an application for condonation of delay, which the Trial Court shall consider on its own merits. The Court emphasized that this decision was made based on the peculiar facts and circumstances of the case and should not be taken as a general legal proposition.