Delayed cheque dishonour notice u/s138(b) and late filing u/s142(b) led to complaint rejection

A complaint under s.138 NI Act was challenged as non-maintainable due to an unduly delayed statutory notice and limitation. The HC held that issuance of the demand notice nearly seven months after dishonour was contrary to s.138(b); absent a valid notice within 30 days, the statutory cause of action did not arise, rendering the complaint liable to rejection. Independently, the HC held the complaint was time-barred under s.142(b) because it was filed beyond the prescribed period without any application seeking condonation and without any order condoning delay; cognizance in such circumstances is illegal, so the complaint was rejected. The plea that the cheque was a "security" was not a ground to quash, and territorial jurisdiction was upheld. Petition allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the statutory demand notice under Section 138(b) of the Negotiable Instruments Act, 1881 was issued within the prescribed time so as to crystallize a valid cause of action.

(ii) Whether the complaint was filed within limitation under Section 142(b) of the Negotiable Instruments Act, 1881 as extended during the COVID-19 period, and whether cognizance could be taken without an application/order for condonation of delay.

(iii) Whether the court in which the complaint was instituted had territorial jurisdiction under Section 142(2)(a) of the Negotiable Instruments Act, 1881, based on the location of the payee's bank branch where the account is maintained.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Validity of statutory demand notice under Section 138(b) NI Act

Legal framework: The Court examined the requirement under Section 138(b) that a written demand notice must be issued "within thirty days" of receipt of information from the bank regarding dishonour.

Interpretation and reasoning: The dishonour memo was dated 03.05.2021, whereas the demand notice was issued on 30.12.2021, i.e., nearly seven months later. The complaint contained no averment of any subsequent presentation of the cheque that could have renewed the cause of action. On the pleaded facts, the notice was therefore outside the statutory timeline and was treated as invalid for the dishonour in May 2021.

Conclusion: In the absence of a valid notice within the prescribed period, the cause of action under Section 138 did not crystallize on the complaint's own showing; the complaint did not satisfy the statutory pre-condition.

Issue (ii): Limitation for filing the complaint under Section 142(b) NI Act and effect of COVID extension; necessity of condonation

Legal framework: The Court applied Section 142(b), under which a complaint must be filed within one month of the cause of action, and also considered the proviso permitting cognizance beyond time only upon the complainant showing "sufficient cause" and the court condoning delay. The Court also applied the COVID-related extension directions referenced in the judgment, which granted 90 days from 01.03.2022 where limitation expired between 15.03.2020 and 28.02.2022.

Interpretation and reasoning: On the complaint's own dates, service of notice was stated as 31.12.2021; the 15-day period expired on 15.01.2022; and cause of action arose on 16.01.2022. Ordinary limitation would have run till 15.02.2022, which fell within the pandemic-extension bracket. Applying the extension, the complaint could be filed within 90 days from 01.03.2022, i.e., by 29.05.2022. The record reflected physical filing on 24.06.2022, beyond the extended deadline. No application for condonation of delay was filed, and the summoning order took cognizance without recording satisfaction regarding delay or condoning it.

Conclusion: The complaint was time-barred even after applying the extended limitation, and cognizance taken without an application/order condoning delay was held bad in law. This limitation defect was decisive and required rejection/quashing.

Issue (iii): Territorial jurisdiction under Section 142(2)(a) NI Act

Legal framework: The Court examined Section 142(2)(a), which fixes jurisdiction where the cheque is delivered for collection through an account at the branch of the bank where the payee/holder maintains the account.

Interpretation and reasoning: Although it was argued that the cheque was presented at another branch, the complaint stated that the payee's "Home Branch" (where the account is maintained) was located within the relevant district. On that pleaded basis, the Court held that the chosen forum satisfied Section 142(2)(a).

Conclusion: The territorial jurisdiction objection was rejected; however, despite jurisdiction being found proper, the complaint and summoning order were quashed because the proceedings were barred by limitation and did not comply with the statutory timeline requirements.

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