Excelsior Correspondent
Srinagar, Jan 30: High Court today quashed the complaints along with cognizance order issued by the trial court in cheque bounce case.
Justice Javed Iqbal Wani while quashing multiple complaints filed under Section 138 of the Negotiable Instruments Act as also the orders passed by the trial court in these complaints cited failure to adhere to mandatory conditions laid down in the Act.
The court has ruled that Section 138 of the Act being penal in nature, indisputably, warrants strict construction, hence making compliance with its provisions essential before initiating prosecution against the accused-defaulter.
“… nothing contained in the main provision would apply unless the conditions specified in the Act, thereof are complied with, suggesting thus, the clauses (a), (b) and (c) of the proviso therefore, lay down conditions precedent for applicability of the main provision of Section 138 of the Act and further that the provisions of Section 138 of the Act being penal in nature, indisputably, warrants strict construction,” he said.
Pertinently the provisions of the NI Act provides that the cheque must be presented before the bank within six months of issuance, the payee must issue a demand notice within 30 days of receiving dishonor information of cheque and the drawer must fail to make payment within 15 days of receiving the notice, thereafter the complaint can be filed against the accused-defaulter for not making the payment.
The complaints were filed by respondent-complainant after five cheques issued by the petitioner-defaulter were dishonored due to the closure of the petitioner’s bank account. The respondent-complainant alleged that the cheques were issued in repayment of a loan advanced to him by the complainant. However, the cheques were returned unpaid with the remark “account closed.”
Subsequently, the respondent-complainant issued a demand notice with regard to payment via registered post and the failure on part of the defaulter to make payment within the statutory 15-day period, the respondent initiated criminal complaints before the trial court. The petitioner-defaulter sought quashing of the complaints as also the orders passed by the trial court, on the ground that the demand notice was sent beyond the 30-day period prescribed under Section 138(b) of the Act, rendering the complaints legally unsustainable.
After considering the rival contentions Justice Wani meticulously examined Section 138 of the Act and its proviso clauses, emphasizing that the three conditions as contained in the proviso to Section 138 are prerequisites for prosecution. Since clause (b) mandates that the payee must issue a demand notice within 30 days of receiving information about cheque dishonor failure to adhere to this timeline bars the complainant from invoking Section 138.
The court concluded that since the demand notice was issued after more than 30 days from the dishonor memo date, the complaints were legally untenable. “In view of the aforesaid position obtained in the matter, the impugned complaints could not have been entertained by the trial court or else proceeded with against the accused-petitioner herein. The trial court, however, having done so has grossly erred”, the court recorded.