2019 (5) TMI 1753 - HC - Indian Laws

Key Legal Requirements for Dishonored Cheques under Section 138 of Negotiable Instruments Act

The court emphasized the importance of complying with the legal requirements of Section 138 of the Negotiable Instruments Act, 1881 for dishonored ... Dishonor of Cheque - insufficiency of funds - Section 138 of Negotiable Instruments Act, 1881 - petitioner contended that no demand for payment of the amount of the cheque was made by the complainant as per the notice (Annexure-I) sent by him under clause (b) of the proviso to Section 138 of the Act and therefore, the notice is defective and the proceedings initiated against the petitioner pursuant to such notice cannot be sustained. HELD THAT:- Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. The complainant is entitled to take advantage of this statutory presumption. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. At this stage, the Court could not go into the merits and come to a conclusion that there was no existing debt or liability. At the initial stage of the proceedings, the High Court is not justified in entertaining and accepting a plea that there was no debt or liability. In the instant case, the complaint contains averments with regard to all the aspects mentioned in section 138. It has also been found that Annexure-I notice meets the requirement under Clause (b) of the proviso to Section 138 of the Act. Petition dismissed. Issues:1. Interpretation of the legal requirements under Section 138 of the Negotiable Instruments Act, 1881 for dishonored cheques.2. Validity of the demand notice sent by the complainant to the accused.3. Examination of the legal sufficiency of the complaint in a case of dishonored cheque.4. Consideration of the defense raised by the accused in quashing the complaint.Detailed Analysis:1. The judgment revolves around the interpretation of Section 138 of the Negotiable Instruments Act, 1881, focusing on the legal requirements for an offense under this section. It states that the offense is complete upon the dishonor of a cheque due to insufficient funds or exceeding the arrangement with the bank. The proviso to Section 138 mandates a demand for payment within 30 days of receiving notice of dishonor. The court emphasizes that a written demand is a prerequisite for filing a complaint under this section, citing relevant case laws to support this position.2. The validity of the demand notice sent by the complainant is crucial in this case. The court scrutinizes the contents of the notice and determines that it clearly demands the payment of the specified amount within a defined timeframe, meeting the requirements of Section 138. It dismisses the petitioner's argument that the notice was defective, citing the notice's explicit demand for the cheque amount as sufficient compliance with the law.3. The judgment delves into the legal sufficiency of the complaint in a case involving a dishonored cheque. It highlights the essential elements that must be present in such a complaint, including details about the issuance, presentation, and dishonor of the cheque, as well as the demand for payment and subsequent failure to comply. The court stresses that these factual allegations must be present in the complaint to establish the offense under Section 138, emphasizing the importance of meeting all statutory requirements.4. Lastly, the judgment addresses the defense raised by the accused to quash the complaint. It asserts that at the initial stage, the court cannot delve into the merits of the defense or disputed facts. The court clarifies that determining the existence of outstanding liability is a question of fact to be resolved during trial, and the court cannot preempt this process during a petition under Section 482 of the Criminal Procedure Code. The judgment underscores the court's role in considering only the averments in the complaint and refraining from adjudicating on disputed facts at this stage.