Director acquitted in cheque bounce case as complainant failed to issue statutory notice under Section 138 proviso

The Bombay HC dismissed an appeal in a dishonour of cheque case under Section 138 of the Negotiable Instruments Act. The accused director was acquitted because the complainant failed to issue statutory notice to the proper person. The cheques were drawn on the company's bank account, not the director's personal account, making the company the drawer. The court held that notice must be issued to both the company and the director in his capacity as company director, as required by proviso (b) of Section 138. Since the complainant failed to comply with this mandatory provision, the acquittal was upheld despite other aspects favoring the complainant.

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Issues Involved:

a. Whether the statutory notice was issued to the proper personRs.
b. Whether the trial court erred in acquitting Respondent No. 2Rs.
c. Whether 'not giving findings by the trial court' will affect the outcome of the caseRs.

Summary:

a. Whether the statutory notice was issued to the proper personRs.

The court found that the statutory notice was not issued to the proper person. The cheques were drawn by Respondent No. 2 as a Director of Respondent No. 1 (the Company) on an account maintained by the Company. The notice was not issued to the Company and Respondent No. 2 as its Director, which is mandatory under clause (b) of Section 138 of the Negotiable Instruments Act. The complainant failed to adhere to this provision, leading the court to conclude that the statutory notice was not properly issued.

b. Whether the trial court erred in acquitting Respondent No. 2Rs.

The trial court acquitted Respondent No. 2 based on several reasons, including the complainant's failure to file Income-Tax returns, improvements in the averments between the complaint and the notice, defects in the notice, and the failure to prove the existence of a legally enforceable debt against Respondent No. 2. The appellate court found that the trial court overlooked basic terminologies and failed to perform its duty of giving findings on all relevant points. However, the appellate court also noted a basic flaw in the requirement of issuance of notice to the drawer, which could not be corrected in appellate jurisdiction.

c. Whether 'not giving findings by the trial court' will affect the outcome of the caseRs.

The appellate court acknowledged that the trial court did not give findings on certain issues, such as the receipt of notice and the filing of the complaint in time. Despite this, the appellate court found that the complainant failed to issue the statutory notice to the proper person, which is a mandatory requirement under Section 138 of the Negotiable Instruments Act. This failure was crucial and led to the dismissal of the appeal.

Conclusion:

The appeal was dismissed due to the complainant's failure to issue the statutory notice to the proper person, as required by clause (b) of Section 138 of the Negotiable Instruments Act. The court upheld the trial court's judgment of acquittal for Respondent No. 2.

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