High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE M. JEYAPAUL
M/s. Schematic Engineering Company
Versus
M/s.Pure Chemical & Solvents (P) Ltd.
Crl.O.P.No.27888 and 27889 of 2007 and M.P.Nos.1 and 2 of 2007
Decided on : 11-03-2008
Negotiable Instruments Act - Statutory Notice - Section 138
Fact of the Case:
The petitioner, a Proprietrix of a company, issued cheques through an authorized signatory towards a liability. The respondent filed complaints under section 138 of the Negotiable Instruments Act after the cheques were dishonored. The petitioner contended that no statutory notice was issued to her and sought to quash the proceedings.
Finding of the Court:
The court found that the statutory notice was issued to the company and the petitioner was aware of the demand, rejecting the petitioner's plea. Consequently, the petitions seeking quashment were dismissed.
Issues: Whether a proper statutory notice was issued to the petitioner and whether the demand made in continuation of the original statutory notice can be construed as a fresh demand for payment.
Ratio Decidendi: The purpose of giving statutory notice is to protect innocent drawers of cheques. The court interpreted the statutory notice requirement under section 138 of the Negotiable Instruments Act to advance the remedy and suppress the mischief, emphasizing that the proviso is meant to protect honest drawers whose cheques may have been dishonored for the fault of others.
Final Decision: The court dismissed the petitions seeking quashment and the connected Miscellaneous Petitions.
These criminal original petitions are filed seeking to quash the criminal proceedings in C.C.No.2606 of 2007 and C.C.No.2607 of 2007 pending on the file of the learned XIII Metropolitan Magistrate, Egmore, Chennai.
2. Both the petitions are taken up for common disposal as both the parties are one and the same and common issues have arisen in both the matters, though the criminal complaints have been laid in connection with two different cheques.
3. The petitioner in both the Criminal Original Petitions is the first accused in C.C.Nos.2606 and 2607 of 2007 pending on the file of the learned XIII Metropolitan Magistrate, Egmore, Chennai. The respondent in both the matters is the complainant in the respective cases.
4. The allegation found in the complainants filed for an offence punishable under section 138 of the Negotiable Instruments Act is that the petitioner who is the Proprietrix of M/s.Schematic Engineering Company, Ambattur, Chennai, issued cheques through the other accused S.P.Mohan Subramanian, the authorised signatory of M/s.Schematic Engineering Company towards the subsisting liability arisen out of the supply of chemicals and solvents on credit by the respondent, but, the cheques presented for collection returned dishonoured with the endorsement "payment stopped by the drawer". After issuing statutory notice on 3. 2007 and also after giving rejoinder on 13. 2007 to the reply notice given by the petitioner on 13. 2007, the complaints have been launched as against the petitioner and another accused.
5. Though the petitioner has taken many a stand seeking to quash the criminal proceedings, in the additional ground filed before this court, the petitioner has set up a plea that no statutory notice was issued to the petitioner. The complaint has been filed by the respondent after issuing the statutory notice only to the other accused in both the matters. Therefore, the complaints themselves are not maintainable, it is contended.
6. Learned counsel appearing for the petitioner would vehemently submit that inasmuch as no statutory notice was issued to the petitioner, the petitioner cannot be prosecuted for offence under section 138 of the Negotiable Instruments Act. It is his further submission that the rejoinder given by the respondent to the reply notice given by the petitioner is also time barred and therefore, the respondent cannot base his complaint on the rejoinder, which was given beyond the period of limitation prescribed under section 138 of the Negotiable Instruments Act. As the mandatory statutory requirement of issuance of pre-complaint notice was not complied with by the respondent, the petitioner will have to be relieved of the criminal prosecution for the offence under section 138 of the Negotiable Instruments Act, he would further contend.
7. Learned counsel appearing for the respondent would strenuously submit that the statutory notice was issued to S.P.Mohan Subramanian in his capacity as the Proprietor of M/s.Schematic Engineering Company, Ambattur, Chennai, but, his wife, Vidya Mohan issued a reply stating that she was the Proprietrix of M/s.Schematic Engineering Company. In continuation of the statutory notice issued to her husband in his capacity as Proprietor of M/s.Schematic Engineering Company, a demand was made from her also in the rejoinder issued by the respondent. The rejoinder issued by the respondent cannot be considered in isolation. It should be read only in conjunction with the statutory notice issued within the period of limitation prescribed under section 138 of the Negotiable Instruments Act. At any rate, he would submit that the petitioner was put on notice of the dishonour of the cheque, but, quite unfortunately, the petitioner did not make arrangements for honouring her commitment. It is his further submission that unscrupulous defaulter cannot be permitted to take such a hyper-technical defence. Therefore, he would submit that the petition seeking quashment merits no
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