2022 (4) TMI 470 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - legally enforceable debt or not - proceedings were initiated on 12th day from the service of notice - HELD THAT - This Court is of the considered opinion that the period of fifteen days as prescribed under Section 138(c) of Act of 1881 is a window available to the drawer of Negotiable Instrument to enable him to satisfy the legally enforceable debt and to avoid criminal proceedings - The Legislature was conscious when 15 days time was given as mandatory period under Section 138(c) to ensure that the drawer gets a fair deal in the shape of opportunity to satisfy the legally enforceable debt in case he desires to. It is noted that normally in criminal law notice is not mandatory but in the Negotiable Instruments Act a special provision has been made with mandatory impact so that the drawer can avoid criminal proceedings against him by making payment of the legally enforceable debt. The Negotiable Instruments Act is akin to civil law in many aspects but criminal culpability has been carved out only to ensure proper credence to the instrument. In the present case, the fact admitted are that the notice was served on 10.02.2010 and the proceedings were launched on 22.02.2010, which is 12th day of sending notice, instead of after completion of 15 days that would have happened on 25.02.2010 and, thus, the opportunity envisaged by the Legislature for the drawer on the completion of 15 days was cut short paving way for derailment of the 138 proceedings - the impugned order has taken note of the fact that the proceedings were initiated on 12th day i.e. 22.02.2010 from the service of notice and before the expiry of the mandatory period as provided under section 138(c) and, thus, has rightly held that no cause of action accrued to appellant while dismissing the proceedings. Appeal dismissed.

Summary

Issues:
- Interpretation of Section 138 of Negotiable Instruments Act, 1881 regarding the mandatory 15-day period for payment before initiating criminal proceedings.

Analysis:
The case involved a complaint under Section 138 of the Negotiable Instruments Act, 1881, where the appellant/complainant alleged that the respondent-accused failed to repay a loan taken from the complainant's firm, resulting in a dishonored cheque. The trial court acquitted the accused-respondent, citing non-compliance with the mandatory 15-day period for payment before initiating proceedings. The appellant argued that the 15-day period is not mandatory and emphasized that the intention of the drawer should be considered. Additionally, the appellant referred to judgments by the Supreme Court and the Allahabad High Court to support their argument that the 15-day period is not a strict requirement and should not defeat the legislative intent behind the Act.

The appellant contended that the notice was refused by the respondent, indicating a clear intention not to make payment, thus obviating the need to wait for the full 15-day period. The court, after considering the arguments and precedents cited, observed that the 15-day period under Section 138(c) of the Act provides a window for the drawer to settle the debt and avoid criminal proceedings. It noted that while notice is not mandatory in criminal law, the Act mandates it to provide the drawer with an opportunity to avoid criminal liability. The court highlighted the importance of Section 138(c) as emphasized in the Supreme Court's judgment.

The court distinguished the facts of a previous Allahabad High Court judgment, stating that in the present case, the appellant prematurely initiated proceedings before the completion of the 15-day period, thus cutting short the opportunity for the drawer to settle the debt. Consequently, the court upheld the trial court's decision, ruling that no cause of action accrued to the appellant due to the premature initiation of proceedings. Ultimately, the court dismissed the criminal leave to appeal, finding no grounds for interference based on the observations made during the case analysis.