Fayaz Ahmad Kishtwari vs Ghulam Hassan Bhat

Mansoor Ahmad Mir, J.—The petitioner has invoked the jurisdiction of this Court in terms of the mandate of Section 561-A of Cr.P.C.

seeking quashment of the proceedings and the order dated 22nd June, 2004 passed by the 1st Class Judicial Magistrate, Chadoora in the

complaint titled Ghulam Hassan Bhat v. Fayaz Ahmad Kishtwari u/s 138 of Negotiable Instruments Act.

It appears that respondent, Ghulam Hassan Bhat, filed a complaint under Sections 138 of the Negotiable Instruments Act before the First Class

Judicial Magistrate, Chadoora against the accused, petitioner herein, on 18th March, 2003. The Magistrate took the cognizance and issued the

process against the accused for the commission of offence punishable u/s 138 of the Negotiable Instruments Act.

It appears that the petitioner/accused appeared before the said court and raised a plea that complaint is not maintainable. The learned

Magistrate, after hearing the learned Counsel for the complainant and the accused, 'held that the complaint has been presented after the prescribed

period of limitation but in terms of mandate of proviso to Section 142(b) of Negotiable Instrument Act the Court can condone the delay and

accordingly, held that complaint is maintainable. This petition is directed against the said order i.e. order dated 22nd June, 2004 passed by First

Class Judicial Magistrate, Chadoora in the said complaint which shall be hereinafter referred to as the impugned order. The petitioner has also

prayed that the entire proceedings be quashed.

Heard. Mr. Tasaduq, learned Counsel for the petitioner, argued that in terms of the averments contained in the complaint, it is alleged that

accused has issued a cheque bearing No. 0069842 dated 20th November, 2001 for an amount of Rs. one lakh and the cheque was dishonoured

due to insufficiency of funds. It is also alleged that the complainant has issued a demand notice dated 10th January, 2003. The complainant was

under legal obligation to issue notice of demand within 30 days from the date of receiving the information regarding the return of the cheque as

unpaid. The complainant has not issued the notice within time. Thus, the complaint is not maintainable in terms of Section 138 read with Section

142 of Negotiable Instruments Act.

Mr. Tasaduq, learned Counsel for the petitioner, further argued that proviso to Sub-section (b) to Section 142 of the Negotiable Instruments

Act can be pressed into service when cause of action accrues. If after accruing of cause action, the complainant fails to file the complaint within the

time frame then he can pray for condonation of delay. The proviso to Section 142(b) nowhere mandates that when the complainant receives

information about dishonour of the cheque then the 30 days period provided for making a demand notice can be extended and delay in making the

said notice can be condoned.

Mr. Thakur, learned Counsel for the respondent, argued that the delay can be condoned.

Considered.

The core question involved in this petition is whether the delay which has crept in serving demand notice in terms of Sub-section (b) to Section 138

of the Negotiable Instruments Act can be condoned?

It is useful to reproduce proviso to Section 138 of Negotiable Instrument Act, herein:

Provided that nothing contained in this section shall apply unless-

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity,

whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by

giving a notice, in writing, to the drawer of the cheque, within [thirty] days of the receipt of information by him from the bank regarding the return of

the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due

course of the cheque, within fifteen days of the receipt of the said notice.

The complainant is under legal obligation to issue a demand notice within thirty days after the information is received by him from the bank

regarding the return of the cheque as unpaid. Thereafter, if the drawer fails to make the payment within fifteen days from the date of issuance of the

said notice, the cause of action accrues to the complainant to file the complaint.

In order to file a complaint u/s 138 of the Negotiable Instruments Act, the cause of action for making complaint does not accrue with the

issuance of cheque or immediately when the cheque is returned as unpaid. In order to file a complaint three ingredients must co-exist;-

(1) The cheque must have been presented within the period of six months from the date it is drawn or within the period of its validity whichever

earlier;

(2) The payee has to make a demand notice within thirty days from the date he receives the information that cheque has been returned unpaid; and

(3) The drawer of the cheque has failed to make payment of the amount within fifteen days after the receipt of the notice of demand.

The cause of action will be complete when the payee fails to make payment within fifteen days from the date of receipt of demand notice in

terms of proviso (b) to Section 138 of Negotiable Instruments Act. The period of limitation for presenting the complaint starts to run from the date

when the cause of action will be complete as discussed hereinabove.

The complaint is to be lodged within the period prescribed u/s 142 of the Negotiable Instruments Act., which reads as under:

142(b) such complaint is made within one month of the date on which the cause of action arises under Clause (e) of the proviso to Section 138:

[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he

had sufficient cause for not making a complaint within such period;]

While going through this provision, the complaint is to be made within one month from the date when cause of action accrues in terms of the

proviso to Sub-clause (b) of Section 142 of the Negotiable Instruments Act. The Court can condone the delay in filing a complaint. However, this

proviso nowhere prescribes that court can condone the delay in making the demand notice.

By the amendment, the proviso has been incorporated to Sub-clause (b) of Section 142 of the Negotiable Instruments Act. The words

prescribed period"" mean that the time frame is provided for filing the complaint. This proviso only relates to Clause (b) of Section 142 of the

Negotiable Instruments Act. Thus the delay, if any crept in, at any other stage cannot be condoned by invoking proviso to Clause (b) of Section

142 of the Negotiable Instruments Act. This is also made clear by words ""within such period"" used in the proviso. The Sub-clause (b) of Section

142 of Negotiable Instruments Act prescribes one month limitation for filing the complaint from the date the cause of action accrues under Clause

(e) of the proviso to Section 138 of the Negotiable Instruments Act.

Viewed thus, Section 142 provides within which period the complaint is to be presented. The proviso to Sub-section (b) only gives the power

to the Court to condone the delay crept in filing the complaint and not in making a demand notice in terms of Section 138(b). The proviso also

does not extend time for making payment in terms of proviso (e) to Section 138 of Negotiable Instruments Act. My this view is fortified by

judgment of Bombay High Court in case Rakesh Nemkumar Porwal Vs. Narayan Dhondu Joglekar, .

The Calcutta High Court in case Ancon Engineering Co. Pvt. Ltd. and Another Vs. Amitava Goswami, has held as under:

4...It is thus clear that the cause of action for prosecution does not arise by mere presentation of the cheque in bank and by its dishonour.

Whenever any complaint is filed by any person u/s 142 N.I. Act it will have to be seen whether it has been filed within one month of the date on

which the cause of action arose under Clause (e) of the proviso to Section 138.

The Delhi High Court in case S.V. Muthye Vs. State and Another, has held that the demand notice issued beyond period of 15 days is illegal

and such a delay cannot be legally condoned. It is profitable to reproduce para-8 of the said judgment herein:

Sub-section (2) of Section 142 provides that a complaint for the offence u/s 138 has to be made within one month of the date on which cause of

action arises under Clause (e) of the proviso to Section 138. To be noted that aforementioned decisions pertain to condoning the delay in filing the

complaint and not the delay in serving the demand notice under Clause (b) of said Section 138. Serving of notice within 15 days of the receipt of

intimation regarding dishonour of cheque by the payee and failure to make payment within 15 days of receipt of notice issued under Clause (b) of

Section 138 by the drawer are to precede the filing of complaint u/s 138. In the matter of condoning delay in issuing demand notice beyond the

statutory period of 15 days neither Section 473, Cr.P.C. or Section 5 of Limitation Act, 1963 would apply nor such a delay can be legally

condoned. Obviously, based on said notice dated 24th September, 1994, the respondent No. 2 did not have cause of action for launching the

prosecution of petitioner u/s 138. Thus being abuse of process of court the complaint deserves to be quashed u/s 482, Cr.P.C.

The Bombay High Court in case Prashant Vs. S.K. Sarkar, has held that the limitation for filing the complaint u/s 138 of Negotiable

Instruments Act is provided in Section 142 of the Negotiable Instruments Act and the limitation atarts to run from the 16th day from the date of

receipt of notice of demand by drawer in terms of proviso (e) to Section 138 of Negotiable Instruments Act. It is profitable to reproduce para-18

of the said judgment herein:

The cause of action contemplated under the provisions of Clause (e) would accrue immediately on completion of fifteen days in case the

drawer fails to make the payment to the payee and one month limitation for filing complaint under Clause (b) of Section 142 of the Act would

commence from the 16th day. The payee has to file complaint within one month from said date. If the payee fails to file complaint within one month

from the date cause of action has accrued to him then such complaint cannot be entertained by the Court since same would be barred by limitation

as contemplated under provision of Section 142 of the Act. It will be appropriate to consider the facts and circumstances of the present case of the

above referred legal position vis-'-vis the provisions of Sections 138 as well as 142 of the Act.

Applying the test to the instant case, it appears that the complainant has alleged in the complaint that accused had issued cheque on 20th

November, 2001 for Rs. 1 lakh and the said cheque was returned dishonored because of insufficiency of funds and complainant issued notice of

demand on 10th January 2003. It appears that cheque has been presented on 21st December, 2001 before the bank and the same was returned

with the remark 'present again'. Then payee presented the cheque again on 8th January, 2002 and the same was returned with the remark 'present

again' then again the cheque was presented on 19th January, 2002 and the same was returned back unpaid for the reasons 'refer to drawer'. This

means that the cheque was dishonoured on 19th January, 2002 and the complainant was under legal obligation to serve a demand notice upon the

drawer within thirty days from 19th January, 2002. The complainant has chosen to remain in deep slumber till 10th January, 2003 and has issued

demand notice on 10th January, 2003. This means that payee has not issued notice within one month from the date of receiving information in

terms of mandate of Section 138 of the Negotiable Instruments Act.

Viewed thus, it can be safely held that delay in serving demand notice in terms of Clause (b) of Section 138 of the Negotiable Instruments Act,

cannot be condoned.

In the given circumstances, I am of the considered view that cognizance taken, process drawn and impugned order passed on 22nd June,

2004, are abuse of the process of law.

Accordingly, the petition is allowed and the entire proceedings are quashed.

Registry is directed to send down the record.