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IN THE HIGH COURT OF DELHI AT NEW DELHI
Manoj Kumar Ohri, J.
Ansh Chugh - Appellant
Versus
Pradeep Gupta - Respondent
Criminal Miscellaneous Case No. 2973 of 2018; Criminal Miscellaneous Appeal No. 10513 of 2018
Decided On : 03-02-2020
N.I. Act - Dishonour of Cheque - Section 138 - Section 35A of the Banking Regulations Act, 1949, RBI notification NO.(RBI/2011-12)/251 - Shri Ishar Alloys Steel Ltd. v. Jayaswals NECO Ltd., (2001) 3 SCC 609 - MSR Leathers v. S.Palaniappan & Anr.,2012 SCCOnLineSC 791
Fact of the Case:
The petitioner sought to quash a complaint case and summoning order for an offence under Section 138 N.I. Act, relating to the dishonour of a cheque. The petitioner claimed the cheque was presented beyond its validity period and was stolen.
Finding of the Court:
The court quashed the summoning order, citing the non-presentation of the cheque within its validity period as absolving the petitioner of criminal liability under Section 138 N.I. Act.
Issues: Validity of the cheque, application of mind by the Magistrate at the stage of summoning, and the interpretation of Section 138 N.I. Act.
Ratio Decidendi: The non-presentation of the cheque within its validity period absolves the drawer of criminal liability under Section 138 N.I. Act. The Magistrate must apply his mind to the facts and evidence before summoning the accused.
Final Decision: The summoning order was quashed, and the complaint case was dismissed.
Certainly. Based on the provided legal document, the key points are as follows:
The non-presentation of a cheque within its validity period, which is generally three months from the date of the cheque or the period specified by applicable regulations, absolves the drawer of criminal liability under Section 138 of the Negotiable Instruments (N.I.) Act (!) .
The validity of a cheque is a crucial factor in initiating proceedings under Section 138 N.I. Act. If the cheque is presented after its validity period, the complaint or case may be dismissed (!) (!) .
The application of the law requires that the Magistrate must apply his mind to the facts and evidence at the stage of issuing a summons. The Magistrate's role is not merely ministerial but involves careful scrutiny of whether a prima facie case exists (!) .
Presentation of the cheque after the expiry of its validity period or beyond the stipulated time frame (which has been reduced from six months to three months by RBI notification) is a significant legal consideration that can lead to the quashing of proceedings (!) (!) .
The issue of whether a cheque was stolen or lost and whether a missing report was filed is relevant but does not override the fundamental requirement of timely presentation. If a cheque is presented beyond its validity, the proceedings may be invalidated regardless of other circumstances (!) (!) .
The court emphasized that the validity of the cheque goes to the root of the proceedings under the N.I. Act, and proceedings cannot be maintained if the cheque was not valid at the time of presentation (!) .
The court highlighted that issues related to the validity of the cheque should be considered at the appropriate stage, such as during the framing of charges or trial, rather than at the stage of issuing a summons. However, if the cheque was invalid at the outset, the proceedings may be quashed (!) .
The court clarified that the summons should reflect that the Magistrate has applied proper judicial scrutiny and has not acted mechanically. Failure to do so can justify quashing the proceedings (!) .
In the specific case, the court found that the cheque was presented after its validity period and that the proceedings against the petitioner were not sustainable. Consequently, the summoning order was quashed, and the complaint was dismissed (!) .
The judgment underscores the importance of timely presentation of cheques and proper judicial application of mind in proceedings under the N.I. Act to prevent unwarranted criminal cases.
JUDGMENT
Manoj Kumar Ohri, J. - The present proceedings are directed for quashing of Complaint Case No.8777/2017 and against order dated 12.07.2017 vide which the petitioner was summoned for the offence punishable under Section 138 N.I. Act.
2. Learned counsel for the petitioner submitted that the present case relates to dishonour of cheque bearing No.436505 dated 02.01.2017 for Rs.1,25,00,000/- drawn on State Bank of India, Saket, New Delhi.
3. He submitted that the aforesaid cheque was presented for encashment by the respondent on 17.04.2017, which was beyond the period of its validity. He has referred to the RBI notification NO.(RBI/2011-12)/251 dated 04.11.2011 whereby in exercise of power conferred under Section 35A of the Banking Regulations Act, 1949, the Reserve Bank directed that with effect from April, 1, 2012, Banks should not make payments of cheque/drafts/pay orders/banker''s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument.
4. Learned counsel for the petitioner contended that even otherwise the aforesaid cheque was stolen and missing report was filed by the petitioner on 10.10.2016 for loss of the cheque in question along with other cheque leaflets.
5. Learned counsel for the respondent, on the other hand, has sought dismissal of the present petition on the ground that so far only summoning order has been issued against the petitioner and objection, if any, ought to be taken before the Trial Court at the time of framing of notice. He has placed reliance on Rajeev Ranjan Sinha V Sushil Kumar Saxena and Ors., (2014) 4 Crimes(HC) 417 (Del), Jitender Singh v Sanjay Kumar, (2016) 2 JCC 78 [NI]. In addition, he has also referred to Thomas Varghese v P. Jerome, (1992) CriLJ 3080 and A.V Murthy v B.S Nagabasavanna, (2002) AIR SC 985 .
6. It is trite law that at the stage of summoning, the Magistrate does not act like a post office. The application of mind, as required even at the stage of cognizance/issuance of process came before the Supreme Court in Pepsi Foods Ltd. & Ors. v. Special Judicial Magistrate & Ors., (1998) 5 SCC 749 , held as under:-
"28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused".
7. Admittedly, the cheque was presented to the drawee bank after the period of expiry of its validity of three months, which is to be calculated from the date mentioned on the cheque. The Clause (a) of Proviso to Section 138 of N.I. Act stipulates that Section 138 shall not be applicable unless the cheque is presented to the bank within a period of six months (the period has been reduced from 6 months to 3 months vide the aforementioned RBI notification dated 04.11.2011) from the date on which it is drawn or within the period of its validity, whichever is earlier.
8. In Shri Ishar Alloys Steel Ltd. v. Jayaswals NECO Ltd., (2001) 3 SCC 609 , the Supreme Court held that non-presentation of the cheque to the dr
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