2017 (9) TMI 1 - SC - Indian Laws

Section 138 complaint filed beyond limitation period cannot be condoned without sufficient cause shown

N. Harihara Krishnan Versus J. Thomas

The SC held that a complaint under Section 138 of the Negotiable Instruments Act filed beyond the prescribed limitation period cannot be condoned without ... dishonor of cheque - Offence under Section 138 - sufficient cause for not filing the complaint against DAKSHIN within the period prescribed - Condonation of delay - sufficient cause of delay - cause of action for prosecution - Held that:- Parliament declared under Section 142 that the provisions dealing with taking cognizance contained in the CrPC should give way to the procedure prescribed under Section 142. Hence the opening of non-obstante clause under Section 142. It must also be remembered that Section 142 does not either contemplate a report to the police or authorise the Court taking cognizance to direct the police to investigate into the complaint. The question whether the respondent had sufficient cause for not filing the complaint against DAKSHIN within the period prescribed under THE ACT is not examined by either of the courts below. As rightly pointed out, the application, which is the subject matter of the instant appeal purportedly filed invoking Section 319 CrPC, is only a device by which the respondent seeks to initiate prosecution against DAKSHIN beyond the period of limitation stipulated under the Act. No doubt Section 142 authorises the Court to condone the delay in appropriate cases. We find no reason to condone the delay. The justification advanced by the respondent that it is during the course of the trial, the respondent realized that the cheque in question was drawn on the account of DAKSHIN is a manifestly false statement. On the face of the cheque, it is clear that it was drawn on account of DAKSHIN. Admittedly the respondent issued a notice contemplated under clause (b) of the proviso to Section 138 to DAKSHIN. The fact is recorded by the High Court. The relevant portion is already extracted in para 16. Issues Involved:1. Validity of the complaint under Sections 138 and 142 of the Negotiable Instruments Act, 1881.2. Application of Section 319 of the Code of Criminal Procedure, 1973 to implead a third party.3. Timeliness and limitation period for filing a complaint under Section 138 of the Negotiable Instruments Act.4. Vicarious liability of the signatory of the cheque when the drawer is a company.5. Condonation of delay in filing the complaint.Detailed Analysis:1. Validity of the Complaint under Sections 138 and 142 of the Negotiable Instruments Act, 1881:The respondent filed a complaint under Sections 138 and 142 of the Negotiable Instruments Act, alleging that a cheque for Rs. 39 lakhs issued by the appellant was dishonored. The appellant argued that the cheque was drawn on the account of DAKSHIN, a company, and not in his personal capacity. The Court noted that the cheque was indeed drawn on the account of DAKSHIN and signed by the appellant in his capacity as a Director. According to the law declared in Aneeta Hada v. Godfather Travels & Tours Private Limited, prosecution against the appellant could not be maintained without prosecuting DAKSHIN.2. Application of Section 319 of the Code of Criminal Procedure, 1973 to Implead a Third Party:The respondent filed an application under Section 319 CrPC to implead DAKSHIN as an accused. The trial court allowed this application, and the High Court upheld it. However, the Supreme Court found this approach flawed, stating that the prosecution against DAKSHIN was initiated beyond the permissible time limit. The Court emphasized that Section 319 CrPC could not be used to circumvent the statutory limitations prescribed under the Negotiable Instruments Act.3. Timeliness and Limitation Period for Filing a Complaint under Section 138 of the Negotiable Instruments Act:Section 142(1)(a) of the Negotiable Instruments Act requires that a complaint be made within one month from the date on which the cause of action arises. The application to implead DAKSHIN was filed three years after the cheque was dishonored, making it time-barred. The Supreme Court noted that the respondent failed to provide a valid explanation for the delay, and both the trial court and the High Court erred in allowing the application without considering the statutory timelines.4. Vicarious Liability of the Signatory of the Cheque When the Drawer is a Company:The Court reiterated that under Section 138, the offence is committed by the drawer of the cheque. As per Section 141, if the drawer is a company, both the company and the person in charge of the company at the time of the offence are liable. The Court held that the appellant, being a signatory in his capacity as Director, could only be vicariously liable if the company (DAKSHIN) was also prosecuted. Since DAKSHIN was not initially prosecuted, the complaint against the appellant alone was not maintainable.5. Condonation of Delay in Filing the Complaint:The respondent argued that the delay should be condoned as they only realized during the trial that the cheque was drawn on DAKSHIN's account. The Supreme Court found this justification to be manifestly false, noting that the respondent had issued a notice to DAKSHIN as required under Section 138(b). The Court concluded that there was no sufficient cause for condoning the delay and criticized the lower courts for not addressing this issue properly.Conclusion:The Supreme Court set aside the judgments of the lower courts, finding that the complaint against the appellant was not maintainable without prosecuting DAKSHIN. The Court emphasized the importance of adhering to the statutory timelines under the Negotiable Instruments Act and clarified the application of vicarious liability in cases involving company directors. The appeal was allowed, and costs were quantified at Rs. 1,00,000.