Section 138 NI Act complaint quashed for exceeding limitation period despite service on company directors

The Delhi HC quashed a criminal complaint filed under Section 138 NI Act for being time-barred. The court held that service of demand notice on the accused company on 11.03.2022 constituted effective service on its directors as well under Section 141 NI Act. The complaint filed on 28.04.2022 exceeded the limitation period prescribed under Section 142(b) without any application for condonation of delay. The complainant's subsequent explanation about filing and withdrawing an earlier complaint in Gurugram court was not available when cognizance was taken on 02.08.2022, making it inadmissible for limitation purposes. The HC set aside the trial court's order taking cognizance and allowed the petition.

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Issues Involved:

1. Commencement of limitation period for filing the complaint.
2. Exclusion of time spent in pursuing the first complaint filed before the Gurugram court.
3. Effective service of demand notice on the accused company and its directors.
4. Filing of the complaint beyond the period of limitation without seeking condonation of delay.

Issue-wise Detailed Analysis:

1. Commencement of Limitation Period for Filing the Complaint:

The key issue was determining when the limitation period for filing the complaint commenced. The court examined whether the service of the demand notice via email on 11.03.2022 to the accused company, which was the drawer of the cheque, constituted effective service on its directors. The court concluded that service of the demand notice on the company is considered effective service on its directors, as the company acts through its directors. The court referenced the Supreme Court decision in Krishna Texport and Capital Markets Ltd v. Ila. A. Agarwal, which stated that notice to the company suffices for those in charge of its affairs. Consequently, the limitation period began on 27.03.2022, after the 15-day period for making the payment expired on 26.03.2022. The complaint was required to be filed by 27.04.2022, but it was filed on 28.04.2022, making it one day late.

2. Exclusion of Time Spent in Pursuing the First Complaint Filed Before the Gurugram Court:

The complainant argued that the time spent pursuing the complaint in the Gurugram court should be excluded from the limitation period. However, the court rejected this argument, citing the Supreme Court decision in Subodh S. Salaskar v. Jayprakash M. Shah, which held that the Limitation Act does not apply to proceedings under the Negotiable Instruments Act (NI Act). Therefore, the time spent on the Gurugram complaint could not be excluded from the limitation period for filing the complaint in Delhi.

3. Effective Service of Demand Notice on the Accused Company and Its Directors:

The court addressed whether the service of the demand notice via email on the accused company and its directors was effective. It was undisputed that the notice was served on the company and one director on 11.03.2022, and the court determined that this service was sufficient for all directors, as per Section 141 of the NI Act. The court emphasized that there is no requirement to serve each director separately, aligning with the Supreme Court's interpretation that notice to the company suffices for its directors.

4. Filing of the Complaint Beyond the Period of Limitation Without Seeking Condonation of Delay:

The court noted that the complaint was filed beyond the limitation period without any application for condonation of delay. The complainant did not offer any explanation for the delay or seek its condonation, which is necessary under the proviso to Section 142(b) of the NI Act. The court emphasized that the strict timelines stipulated in the NI Act require that any delay in filing a complaint must be accompanied by an application for condonation, providing sufficient cause to the court's satisfaction. The absence of such an application rendered the complaint not maintainable.

In conclusion, the court quashed the criminal complaint and set aside the order taking cognizance, as the complaint was filed beyond the limitation period without seeking condonation of delay. The petition was disposed of accordingly.

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