Failure to Serve Demand Notice Renders Complaint Unmaintainable

The Court held that the complaint under Section 138 of the NI Act was not maintainable as the mandatory demand notice was not served on the company. Despite arguments regarding the timeliness of the complaint and the specificity of allegations against a petitioner, the primary issue of non-service of the demand notice to the company rendered the complaint non-maintainable. Consequently, all related proceedings were set aside, and the petitions were allowed.

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Issues Involved:
1. Legal Notice not served upon the Company
2. The Complaint is time-barred
3. No specific averment or role attributed to petitioner Smt. Kusum Tanwar in the Complaint

Summary:

I. Legal Notice not served upon the Company

The petitioners contended that the complaint under Section 138 of the NI Act is not maintainable as no demand notice was served upon the company, M/s HG Retail Solutions Pvt. Ltd., which is a mandatory prerequisite. They relied on the judgment in Himanshu v. B. Shivamurthy AIR 2019 SC 3052, where the Supreme Court held that in the absence of a notice of demand being served on the company, the complaint could not proceed. The respondent argued that the notice was served on the directors at the company's address, which should suffice. The Court held that the statutory requirement of serving a demand notice on the drawer of the cheque, i.e., the company, was not fulfilled, rendering the complaint non-maintainable.

II. The Complaint is time-barred

The petitioners argued that the complaint was filed beyond the prescribed period of limitation, asserting that the notice should be deemed served on 04.10.2014 when it was refused, not on 07.10.2014 as claimed by the respondent. They cited C.C. Alavi Haji Vs. Palapetty Muhammed and Ors. (2007) 6 SCC 555, which held that refusal of a notice constitutes deemed service. The respondent maintained that the notice was delivered on 07.10.2014, making the complaint filed on 21.11.2014 within the limitation period. The Court did not delve into this issue due to the primary finding on the non-service of the demand notice to the company.

III. No specific averment or role attributed to petitioner Smt. Kusum Tanwar in the Complaint

The petitioners contended that no specific role was attributed to Smt. Kusum Tanwar in the complaint, merely reproducing statutory language without detailing her involvement. They relied on Sunita Palita & Ors. v. M/s Panchami Stone Quarry (AIR 2022 SC 3548), where proceedings against a non-executive director were quashed in the absence of specific allegations. The respondent argued that the complaint included specific averments about the directors' responsibilities. The Court did not address this issue due to the primary finding on the non-service of the demand notice to the company.

Findings & Analysis

The Court emphasized the mandatory nature of serving a demand notice to the drawer of the cheque, i.e., the company, as per Section 138 of the NI Act. It cited Himanshu v. B. Shivamurthy and Pawan Kumar Goel vs. State of UP & Anr., 2022 SCC Online SC 1598, reiterating that without serving a demand notice to the company, the complaint is not maintainable. Consequently, the complaint under Section 138 NI Act was deemed non-maintainable due to the absence of a demand notice served on the company. The entire proceedings, including the summoning order dated 23.02.2015 and the order of the Ld. ASJ-5, South East, Saket Courts, New Delhi dated 01.04.2021, were set aside, and the petitions were allowed.

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