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2022 (11) TMI 489 - HC - Indian LawsDishonor of Cheque - proper service of legal notice or not - offence punishable under Section 138 of the N.I.Act - HELD THAT - Plainly reading the definition of 'holder in due course', it is crystal clear that holder in due course means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque, if payable to bearer - there are no hesitation to hold that Dr. K.P.Saji Kumar, who is admittedly the Managing Director of the firm, can only do physical possession and actions on behalf of the firm and he is the person entitled to possess or bear anything for and on behalf of the firm. Uniformity and consistency in deciding similar cases by different Courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of Courts of justice. No doubt, Section 138 of the NI Act permits imposition of fine twice the cheque amount. The revision petitioner in all these revision petitions is directed to appear before the trial court to undergo the sentence and to pay the fine within seven days from today. On failure to do so, the trial court is directed to execute the sentence without fail - revision petition dismissed.
Issues Involved:
1. Validity of legal notice under Section 138(b) of the N.I. Act. 2. Imposition of fine exceeding the cheque amount. Detailed Analysis: 1. Validity of Legal Notice: The revision petitioner argued that the legal notices were not properly issued as they were sent by Dr. K.P. Saji Kumar in his individual capacity rather than on behalf of the firm, 'M/s. Valiery Vaidyasala'. According to Section 138(b) of the N.I. Act, the cause of action for prosecution arises only when the payee or holder in due course issues a demand notice within thirty days of cheque dishonour. The petitioner cited the case of Jayakumar v. Devi Vilasom Kettuthengu Sangham & Another, where the prosecution was invalidated because the complainant was neither the payee nor the holder in due course. However, the court found that the cheques were issued in the name of 'M/s. Valiery Vaidyasala' and the complaints were filed by the firm represented by Dr. K.P. Saji Kumar. The court referenced the decision in M. Rajagopal and others v. K.S. Imam Ali, which emphasized that the liability must be clearly disclosed in the negotiable instrument. Despite this, the court held that Dr. K.P. Saji Kumar, as the Managing Director, had the right to issue notices and possess the cheques on behalf of the firm. The notices, though not explicitly stating he represented the firm, were deemed sufficient as the accused had due knowledge of the party to whom the liability was owed. Therefore, the first contention by the revision petitioner was not sustained. 2. Imposition of Fine Exceeding the Cheque Amount: The petitioner challenged the fines imposed by the trial court, arguing they exceeded the cheque amounts. The court referred to the Supreme Court's decision in R. Vijayan v. Baby and Another, which allows for fines up to twice the cheque amount, considering the reasonable quantum of loss including interest. The fines imposed were within statutory limits: Rs.2,00,000 for a cheque amount of Rs.1,41,110 in C.C.No.2181/2015, Rs.1,25,000 for Rs.83,760 in C.C.No.2182/2015, and Rs.3,00,000 for Rs.2,11,390 in C.C.No.2183/2015. The appellate court had confirmed these fines, modifying the substantive sentence to one day till rising of the court and adjusting the default sentence to two months. Conclusion: The court dismissed the revision petitions, confirming both the conviction and the sentences, including the fines, as they were within statutory limits. The revision petitioner was directed to appear before the trial court within seven days to undergo the sentence and pay the fines, failing which the trial court was instructed to execute the sentence. The registry was ordered to forward a copy of this judgment to the concerned courts for compliance.
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