2005 Supreme(All) 2510
ALLAHABAD HIGH COURT
M.K.Mittal, J.
Ashok Kumar Agarwal son of Gokul Chandra and Sanjay Agarwal Sri Satish
Versus
State of U.P.
Criminal Misc. Application 14990 of 2005
Decided On : 21 December 2005
Criminal Misc. Application 14990 Of 2005
Swapnil Kumar,
The main legal point established is the strict adherence to the provisions of Section 138 of the Negotiable Instruments Act, particularly the requirement of giving written notice within the stipulated period and the accrual of the right to present a dishonored cheque during its validity.
Headnote:
Cheque Dishonor - Negotiable Instruments Act - Section 138 - Summary: The court discussed the provisions of Section 138 of the Negotiable Instruments Act and emphasized the requirement of giving written notice within 15 days of the receipt of information from the bank regarding the return of the cheque as unpaid. The court highlighted that the right to present a dishonored cheque during its validity accrues on each presentation, and giving a notice under Section 138(b) forfeits this right, creating a cause of action for filing a complaint.
Fact of the Case:
The complainant's cheques were dishonored multiple times, and despite giving a legal notice, the accused did not make the payment. The accused contended that the complaint was barred by time due to oral notification of dishonor after the first instance.
Finding of the Court:
The court found that the complaint was not barred by time as the written notice was given within the stipulated period, and there was no legal defect in the complaint and summoning order.
Issues: The main issue was whether the complaint was barred by time due to oral notification of dishonor after the first instance.
Ratio Decidendi: The court emphasized the requirement of giving written notice within 15 days of the receipt of information from the bank regarding the return of the cheque as unpaid, and clarified the accrual of the right to present a dishonored cheque during its validity.
Final Decision: The application under Section 482 Cr. P. C. was dismissed, and the Chief Judicial Magistrate was directed to expedite the trial of the case within three months.
( 1 ) HEARD Sri Swapnil Kumar, learned counsel for the applicants, learned A. G. A. and perused the record.
( 2 ) BRIEF facts of the case are that the complainant is carrying whole sale business of supply of plastic Granules and the accused had the business of manufacturing of Plastic Pipes and sheets. They purchased Plastic Granules for Rs. 4,1 0,475 and gave a cheque No. NCCH 2119882 dated 29. 7. 1997 for this amount on behalf of the firm. The accused had given the assurance that the cheque would be encased whenever it was presented but it was returned with bank memo dated 31. 7. 1997 with the endorsement "funds insufficient". Thereafter the complainant met the accused and informed about the dishonor of the cheque. The accused asked him to represent the cheque and also assured that it would be encased after the second week of October 1997. The complainant again deposited the Cheque in October 1997 but the same was returned on 23. 10. 1997 with the remark "not arranged for". The cheque was presented third time and it was again returned on 17. 11. 1997. Thereafter the complainant gave a legal notice dated 22. 11. 1997 to the accused asking him to make the payment within 15 days from the receipt of the notice. Notice was sent under registered post as well as under certificate of posting but the accused neither gave any reply nor paid the amount inspire of due service. Thereafter the complaint was filed on 8. 12. 1997. Learned Magistrate vide order dated 20. 3. 1998 directed to summon the accused persons.
( 3 ) LEARNED counsel for the accused applicants has contended that the complaint is barred by time as the cheque was dishonored on 31. 7. 1997 for the first time and the complainant had informed the accused about the dishonor orally. But this contention of the learned counsel for the applicants is not tenable and cannot be accepted.
( 4 ) IN the case of Prem Chand Vijay Kumar v. Yashpal Singh and Anr. III (2005 )BC198 (SC ), 2005 (2 )BLJR1269 , [2005 ]125 Compcas338 (SC ), (2006 )4 Complj413 (SC ), 2005 (2 )CTC823 , (2005 )3 GLR1884 , JT2005 (5 )SC 318 , 2005 (2 )KLT914 (SC ), 2005 (4 )Mhlj100 , (2005 )141 PLR713 , RLW2005 (2 )SC 303 , (2005)4 SCC417 , 2005 (2 )UJ876 (SC ), the Honble Apex Court has held as under:clause (a) of the proviso to Section 138 of N. I. Act does not put any embargo upon the payee to successively present a dishonored cheque during the period of its validity. This apart, in the course of business transactions it is not uncommon for a cheque being presented due to insufficient funds or similar such reasons and being presented again by the payee after some time, on his own volition or at the request of the drawer, in expectation that it would be encased. The primary interest of the payee is to get his money and not prosecution of the drawer, recourse to which, normally, is taken out of compulsion and not choice. On each presentation of the cheque and its dishonor, a fresh right-and not a cause of action-accrues in his favour. He may, therefore, without taking pre-emptor action in exercise of his such right under Clause (b) of section 138, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But once he gives a notice under Clause (b) of Section 138, he forfeits such right as in case of failure of the drawer to pay the money within the stipulated time, he would be liable for offence and the cause of action for filing the complaint will arise. In para 13 of the judgment, it has been held that one of the indispensable factors to form the cause of action envisaged in Section 138 of the Negotiable Instruments Act is contained in clause (b) of the proviso to that section. It involves the making of a demand by giving a notice in writing to the drawer of the cheque "within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid". If no such notice is given within the said peri