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2007 Supreme(Mad) 3835
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K. MOHAN RAM
P. Lingappan
Versus
R. Palanisamy
Crl. O.P. No.31796 of 2007 and M.P. No.1 of 2007
Decided On : 28-11-2007
For the Petitioner:A.K. Kumaraswamy, Advocate. For the Respondent:I.C. Vasudevan, Advocate.
The necessity of a valid notice for the cause of action to arise under Section 138 of the Negotiable Instruments Act.
Headnote:
Negotiable Instruments Act - Notice - Section 138 r/w Sections 141 & 142 - 138, 141, 142
Fact of the Case:
The respondent filed a Complaint under Section 138 r/w Sections 141 & 142 of the Negotiable Instruments Act against the petitioner, a partner in a partnership firm, for a cheque issued by the firm that was returned unpaid. The petitioner filed a Quash Petition to quash further proceedings, claiming no valid notice was served on them.
Finding of the Court:
The court considered the service of notice and the subsequent rejoinder, citing precedents to establish the necessity of a valid notice for the cause of action to arise. The court found that the notice sent to the wrong person and the subsequent rejoinder did not cure the defect, leading to the acceptance of the Criminal Original Petition and quashing of further proceedings.
Issues: Validity of notice, service of notice, sufficiency of rejoinder, and the effect on the cause of action.
Ratio Decidendi: The court relied on precedents to establish that a valid notice is essential for the cause of action to arise under Section 138 of the Negotiable Instruments Act. The court emphasized the importance of serving the correct notice within the stipulated time.
Final Decision: The Criminal Original Petition succeeded, and further proceedings were quashed.
1. The brief facts that are necessary for the disposal of the above criminal Original Petition are set out below:
The respondent herein filed a Complaint for the alleged offence under Section 138 r/w Sections 141 & 142 of the Negotiable Instruments Act against M/s. Rathanam & Rathanam Tannery, a partnership firm, its partner Mr. S.P. Venkatachalam and another partner, the petitioner herein. The Complaint was taken on file as C.C. No.317 of 2006 and the same is pending the file of the Judicial Magistrate, Perundurai and the petitioner is arrayed as 3rd accused therein. The petitioner has filed the above Quash Petition to quash further proceedings in C.C. No.317 of 2006.
2. The case of the petitioner is that the cheque issued by the first accused-Firm was returned unpaid on 23.06.2006 with an endorsement ‘Account Closed and the intimation from the bank was received on 26. 2006. The respondent herein has issued a legal notice dated 7. 2006 to the following address:
"P. Loganathan,
Partner: Rathanam & Rathanam, S/o Porappanna Gounder,
11-Powar House Road,
Erode - 1."
The said legal notice was returned with a postal endorsement "No such person"; thereafter, the respondent has issued a rejoinder on 37. 2006 to the petitioner and the same was returned on 8. 2006 with an endorsement "intimation"; neither any reply was given by the accused nor the amount covered by the cheque was paid and hence a Complaint has been filed.
3. The contention of the petitioner is that there is no valid notice as far as the petitioner in concerned and as such no cause of action has arisen for filing Complaint against the petitioner and hence the further proceedings are liable to be quashed.
4. I have heard Mr. ARK. Kumaraswamy, learned counsel appearing for the petitioner and Mr. I.C. Vasudevan, learned counsel appearing for the respondent.
5. Mr. A. K. Kumaraswamy, learned counsel appearing for the petitioner submitted that admittedly a notice dated 7. 2006 was sent to one P. Loganathan described as partner of M/s. Rathanam & Rathnam and the same had been returned. Thereafter, after the period of limitation was over, the respondent had sent a rejoinder on 37. 2006 to the petitioner and the said rejoinder had been returned with an endorsement "intimation". According to the learned counsel unless and until the notice of demand is actually served on the petitioner and after receipt of such notice if the petitioner had defaulted in complying with the demand within the stipulated time of 15 days then only the cause of action for filing a case against the petitioner would arise and the rejoinder sent by the respondent will not cure the defect in the notice dated 07.07.2006.
6. In support of the above said contentions, the learned counsel appearing for the petitioner relied upon the following decisions, viz.:
(i)B. Raman & 2 others Vs. M/s. Shasun Chemicals and Drugs Ltd., 2006 (4) CTC 529: 2006 (2) LW (Crl) 775 (DB).
.(ii) Poppys Spinning Mills (P) Ltd Vs. C. Visalakshi & another, 2005 (l) CTC 677: 2006
.(2) LW (Crl.) 603.
7. In the decision reported in B. Raman & 2 others Vs. M/s. Shasun and Drigs Ltd., 2006 (4) CTC 529: 2006 (2) LW (Crl.) 775 (DB) in paragraphs 25 & 27 it is observed as follows:
"25 ………… So, these Sections would provide that when there are directors, who are responsible for the conduct of the business of the Company, and when there are other officers, with whose consent the offence has been committed, the complainant shall make averments to the said effect. In that context, the complainant has to start the process, of getting back the cheque amount from those persons, who represent the Company, in order to avoid the filing of the Complaint against them. In the said process, he has to necessarily make a demand from those persons, who are part and parcel of the drawer. Only when that process fails, the cause of action, as envisaged in Section 138, would arise against them, to enable the complainant to approach the Court, within
