Cheque dishonour demand notices warning of police action after re-presentation upheld as valid; quashing reversed, case restored

The dominant issue was whether the statutory demand notices satisfied clause (b) of the proviso to s.138 of the Negotiable Instruments Act despite stating that, upon re-presentation and dishonour, the payee would inform the police for criminal action. The SC held that cognizance under s.138 can be taken only on a written complaint by the payee under s.142, so police cannot investigate a s.138 offence; however, dishonour may also attract cognizable IPC offences for which police action is permissible. The notices merely preserved that additional option and did not vitiate the statutory demand. Consequently, the notices were valid, the HC's quashing on lack of proper notice was erroneous, and the criminal proceedings were restored.

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Issues:
Validity of notices under Section 138 of the Negotiable Instruments Act.

Analysis:
The case involved two appeals by the complainants against a judgment quashing criminal proceedings pending before the Judicial Magistrate, First Class, Gwalior. The High Court had quashed the proceedings on the ground of improper notice under Section 138 of the Negotiable Instruments Act, 1881. The main issue to be decided was whether there were valid notices as required under Clause (b) of the proviso to Section 138 of the Act.

The relevant portion of the notices clearly stated the intention to represent the cheques and report the matter to the police for initiating criminal action if the cheques were returned unpaid. The notices were sent within fifteen days of receipt of information from the bank regarding the unpaid cheques, meeting the statutory requirement. The demand for payment was explicitly made in the notices, as required under Clause (b) of Section 138.

The High Court had misinterpreted the intention behind the notice, overlooking the clear demand for payment. The appellant-bank had the legal right to re-present the cheques to the bank within the validity period, and the respondents were obligated to arrange payment upon re-presentation. The contention that the intention was to start a police investigation rather than filing a complaint under Section 138 was dismissed, as police investigation under Section 138 is not permissible, but the drawer may face prosecution under other sections of the Indian Penal Code.

The Supreme Court held that the notices were valid and proper, contrary to the High Court's ruling, and directed the court below to proceed with the trial in both complaint petitions. The appeals were allowed by quashing the impugned judgment and order of the High Court, emphasizing the importance of fulfilling the statutory requirements for notices under Section 138 of the Act.

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