.

SHORT NOTE

MADRAS HIGH COURT

K. Mohan Ram, J.

P. Lingappan—Petitioner

versus

R. Palanisamy—Respondent

Crl. OP No. 31796 of 2007 and M.P. No. 1 of 2007

Decided on 28.11.2007

Negotiable Instruments Act, 1881—Sections 138 and 141—Dishonour of cheque issued by firm—Prosecution of firm and its two partners—Petition to quash proceedings against petitioner partner—Legal notice on 7.7.2006 was issued but in a wrong name instead of to petitioner—There was no valid notice as far petitioner was concerned—Rejoinder was sent by correcting the name on 31.7.2006 and being after stipulated period it could not cure the defect—Incorrect name of partner in notice could not be considered to be insignificant mistake—Notice sent to firm and other partner were not actually served but it could be taken as deemed service on them—Such deemed service could not be taken against petitioner—Proceedings against petitioner were liable to be quashed.

Held: As laid down in the decision in B. Raman & 2 others v. M/s. Shasun Chemicals and Drugs Ltd., 2006 (2) LW (Crl.) 775 (DB), the starting of the process of service of notice on the person who represents the Firm, the drawer of the cheque and only if in spite of the demand of the cheque amount through service of notice the amount covered by the cheque is not paid within the stipulated time, the cause of action for filing the Complaint would arise. The purpose of issuing a notice to the Firm as well as the Partners of the Firm is to put them on notice that they have to pay the amount covered by the cheque in question within the stipulated time of 15 days from the date of receipt of the notice as otherwise they are liable to be proceeded under Section 138 of the Negotiable Instruments Act. Only on their failure to pay the amount covered by the cheque, within the period of 15 days, the cause of action arise and not before that. Therefore, the service of notice is a must. Such notice should be sent within the time stipulated by the Act. In this case, the notice of intimation from the bank about the return of the cheque was received by the complainant/respondent herein on 24.6.2006 and the legal notice was issued on 7.7.2006 i.e. within the stipulated time but unfortunately legal notice was sent to a wrong person instead of to the petitioner herein who is a Partner of the first accused-Firm and as such there was no valid notice as far as the petitioner is concerned and subsequent sending of rejoinder dated 31.7.2006 i.e. after the stipulated period cannot cure the defect. In the considered view of this Court since the very name of the Partner of the first accused-Firm has been incorrectly stated, such a mistake cannot be considered to be an insignificant mistake which can be cured. Similarly this cannot be considered to be a typographical error.(Para 14)

It is pertinent to point out that admittedly the notice sent to the Firm and other Partners namely A1 and A2 were not actually served on them. But in view of the postal endorsement contained in the returned cover namely “intimation” it can be taken as deemed service on A1 and A2 until the contrary is proved by them. But such deemed service cannot be deemed to be a valid notice as far as the petitioner (A3) is concerned. If there had been actual service of notice on the Firm it could be held that notice to the Firm will amount to notice to the Partners and vice versa.(Para 17)

Result: Petition allowed.

Cases Referred:

1.B. Raman and 2 Ors. v. M/s. Shasun Chemicals and Drugs Ltd., 2006 (2) LW (Crl.) 775 (DB).(Para 6)

2.Poppys Spinning Mills (P) Ltd. v. C. Visalakshi and Anr., 2006 (2) LW (Crl.) 603.(Para 6)

3.Sri Meenakshi Saw Mill v. M/s. Cauvery Timber Company Pvt. Ltd., 2004 (2) LW (Crl.) 560.(Para 9).

4.Girish Chandra Pandey v. Kanhaiyalal Chandak and Anr., 1998 (2) BC 686.(Para 11)

Counsel for the Parties:

For the Petitioner: Mr. A.K. Kumaraswamy, Advocate

For the Respondent: Mr. I.C. Vasudevan, Advocate

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