The main legal point established in the judgment is the applicability of Section 138 and 141 of the Negotiable Instruments Act to the case, along with the requirement of making a demand for the amount covered by the bounced cheques in the notice of demand.

A.K. Sikri, J.

M/s. Rajrani Exports Pvt. Ltd. has filed complaint under Section 138 of the Negotiable Instruments Act (in short the NI Act) against four persons. Accused Nos. 1 and 2 are two companies, namely, M/s. Maikaal Boire India Ltd. and MI s. Maikaal Fibres Ltd. Accused No.3 Sh. Mrigendra Jalan is shown as the Managing Director of M/s. Maikaal Fibres Ltd. and Sh. Shyam Sunder Kejriwal (accused No.4) is described as the Director of M/s. Maikaal Fibres Ltd. As per the averments made in the complaint, the two companies, namely, accused Nos. 1 and 2 are group companies of M/s. Maikaal Group of Companies. Both the companies are having their factory I manufacturing units as well as registered office at Village Bheel Gaon, Tehsil Kesarwad, District Khargone, MP and also having several common Directors. Accused No.3 is Director in both the companies. It is alleged that accused Nos. 3 and 4 approached the complainant through one common person in the month of October, 2002 and held several meetings with the complainant company. They approached MI s. Maikaal Fibres Ltd. (accused No.1) with magnified financial credentials and allured the complainant to provide some finance to their cotton yarn export business on the pretext that the accused No.2 was having in hand a huge order for cotton yarn to be exported •to M/s. Remie AC, Switzerland. On their representation, the complainant financed a sum of Rs. 50 lakh to M/s. Maikaa1 Fibres Ltd. (accused No.2) as a short-term loan against fl Letter of Credit (in short the LoC). This LoC was transferred in the name of the complainant as a collateral security, which was opened by M/s. Remie AG, Switzerland in favour of accused No.2. To ensure repayment of loan, the accused Nos. 3 and 4 also issued and handed over four cheques, all dated 30.11.2002 for Rs. 12.5 lakh each from Current AI c No. 283 maintained with Bank of India, Ballygunge, Kolkata Branch. At the time of handing over the cheques they also stated that the complainant may deposit these cheques one by one, although they were bearing the same date. This was agreed on the request of accused No.1 to make the repayment convenient. The LoC, which was transferred in faovur of the complainant, was got encashed and the complainant adjusted the amount of loan and returned the excess amount to accused No.2. Thereafter, on 15.1.2003 accused No.2 again approached through its authorised representative Sh. Arun Garodia and requested for further loan. Memorandum of Understanding dated 15.1.2003 was executed between the complainant and the accused No.1 on the same terms and conditions on which the complainant had provided finance to the accused as mentioned above. Accused No.2 stood as guarantor for repayment of loan and the complainant gave loan of Rs. 25lakh to accused No.1 against the LoC vide cheque No. 236659 dated 17.1.2003. However, the accused Nos. 1 and 3 failed to transfer the letter of credit in favour of the complainant and, therefore, in terms of the said Memorandum of Understanding, the complainant did not provide further finance. In May 2003, it demanded repayment of its amount financed to accused No.1, who failed to return the payment. In these circumstances, the complainant called upon accused No.2, which was guarantor, to make the payment. Accused No.2 requested the complainant to present the cheques which it had given. These cheques were accordingly presented on the assurance of the accused No. 2 but were returned unpaid along with the memo dated 29.5.2003 with the remarks "funds insufficient." The demand notice dated 3.7.2003 was accordingly served upon the accused Nos. 1 to 3 calling upon them to pay the said amount of Rs. 25 lakh. However, needful was not done which forced the complainant to file complaint under Section 138 of the NI Act. It may also be mentioned that in this complaint it is further averred that the complaint is within limitation as per the averments made in para 18, which reads as under:

"18. That the