2024 (4) TMI 556 - HC - Indian Laws

Dishonour of Cheque - issuance of statutory notice to proper person or not - acquittal of respondent No. 2 - not giving findings by the trial court will affect the outcome of the case or not. HELD THAT - In this case, admittedly the cheques are issued on a Bank account maintained by the Company with the Federal Bank. It was not a Bank Account in the name of Respondent No. 2. He has signed as a Director of Respondent No. 1. The issue in Aneeta Hada s case is slightly different. It is on the point of necessity of joining Company when the cheques are drawn on an account maintained by the Company. The Company has to be joined - In this case, Company is joined as an Accused along with the signatory who is its Director. The issue is different. The issue is about issuance of a notice to proper person. The proviso (b) contemplates issuance of a notice to a drawer. In this case, cheques are drawn by Respondent No. 2 as a Director of Respondent No. 1 and that too on an account standing in Bank s record in the name of Respondent No. 1. It is not in dispute that notice is not issued to the Company and Respondent No. 2 as Director of Respondent No. 1. There is a liability in between the complainant and Accused No. 1. But he has not issued the cheques in his personal capacity on an account maintained by him in his person but he has chosen to draw the cheques on a Bank account maintained by his Company. The complainant has failed to issue notice to Company and Respondent No. 1 as Director. The provisions of clause (b) of Section 138 are mandatory. When the consequences of a particular Act are deterrent, the provisions have to be followed and interpreted strictly. The complainant has failed to adhere to the provisions of the proviso (b) of Section 138 of the NI Act. So even though I have given finding in favour of the complainant on the other aspect, the contention of learned Advocate Shri Khanchandani cannot be accepted. Respondent No. 2 is a Director in Respondent No. 1 Company but law recognizes both these entities as separate. The judgment of acquittal need no interference - appeal dismissed.

Summary

Issues Involved:

a. Whether the statutory notice was issued to the proper person?
b. Whether the trial court erred in acquitting Respondent No. 2?
c. Whether 'not giving findings by the trial court' will affect the outcome of the case?

Summary:

a. Whether the statutory notice was issued to the proper person?

The court found that the statutory notice was not issued to the proper person. The cheques were drawn by Respondent No. 2 as a Director of Respondent No. 1 (the Company) on an account maintained by the Company. The notice was not issued to the Company and Respondent No. 2 as its Director, which is mandatory under clause (b) of Section 138 of the Negotiable Instruments Act. The complainant failed to adhere to this provision, leading the court to conclude that the statutory notice was not properly issued.

b. Whether the trial court erred in acquitting Respondent No. 2?

The trial court acquitted Respondent No. 2 based on several reasons, including the complainant's failure to file Income-Tax returns, improvements in the averments between the complaint and the notice, defects in the notice, and the failure to prove the existence of a legally enforceable debt against Respondent No. 2. The appellate court found that the trial court overlooked basic terminologies and failed to perform its duty of giving findings on all relevant points. However, the appellate court also noted a basic flaw in the requirement of issuance of notice to the drawer, which could not be corrected in appellate jurisdiction.

c. Whether 'not giving findings by the trial court' will affect the outcome of the case?

The appellate court acknowledged that the trial court did not give findings on certain issues, such as the receipt of notice and the filing of the complaint in time. Despite this, the appellate court found that the complainant failed to issue the statutory notice to the proper person, which is a mandatory requirement under Section 138 of the Negotiable Instruments Act. This failure was crucial and led to the dismissal of the appeal.

Conclusion:

The appeal was dismissed due to the complainant's failure to issue the statutory notice to the proper person, as required by clause (b) of Section 138 of the Negotiable Instruments Act. The court upheld the trial court's judgment of acquittal for Respondent No. 2.