Mere Filing Of Cheque Dishonour Complaint A Day Before Expiry Of 15-Day Period Not Fatal When Cognizance Taken After Statutory Period: J&K&L High Court

The Court held that the provisions of Section 138 are required to be interpreted in a pragmatic and meaningful way so that the ultimate object of the legislation is achieved. The Court dismissed two petitions seeking quashing of complaints under the Negotiable Instruments Act.

The Court was hearing two petitions filed under Section 482 of the Code of Criminal Procedure, seeking quashing of complaints pending before the Judicial Magistrate 1st Class (Sub-Registrar), Srinagar. The petitioner, a property dealer, challenged the maintainability of the complaints on the grounds that the cheques were presented on different dates, a composite demand notice was issued for all three cheques, the statutory notice for one cheque was not issued within the prescribed period, and the complaints were instituted prematurely before expiry of the statutory period of fifteen days from receipt of demand notices.

The petitions were heard by Justice Yash Paul Bourney, who observed,

“The provisions of Section 138 of Negotiable Instruments Act, 1881 are aimed at addressing the financial indiscipline in the day-to-day business transactions which are required to be interpreted in a pragmatic and meaningful way so that ultimate object of the legislation is achieved.”

Background

The case set up by the respondents was that the petitioner approached them and offered to sell a plot of land situated at Nagrota, Udhampur. Since one of their relatives already owned a house in the vicinity, both respondents agreed to purchase the plot in equal proportion for a total sale consideration of Rs. 83.00 lakhs.

In furtherance of the proposed transaction, respondent Basharat Khan paid an amount of Rs. 12.00 lakhs in cash, whereas respondent Mohsin Khan paid an amount of Rs. 16.00 lakhs. However, after some time, the respondents came to know that a dispute existed with respect to the land and a civil suit was pending. Consequently, the transaction was cancelled, and the petitioner undertook to refund the amounts received as advance.

Towards repayment, the petitioner issued three cheques in favour of each respondent. The respondents claimed that the petitioner transferred an amount of Rs. 2.00 lakhs to respondent Basharat Khan through RTGS and assured him that the remaining amount would be transferred within a few days. Similarly, the petitioner transferred certain amounts to respondent Mohsin Khan through UPI and RTGS.

The record revealed that the first cheque was returned unpaid on 08.06.2022, whereas the remaining two cheques were returned unpaid on 04.07.2022. Thereafter, a composite demand notice in respect of all three cheques was issued on 07.07.2022. The petitioner did not respond to the notice.

The tracking reports indicated that the notices were delivered on 15.07.2022. The complaints came to be presented before the learned Chief Judicial Magistrate, Srinagar on 29.07.2022, which were assigned to the learned Judicial Magistrate 1st Class, who took cognizance and issued process against the petitioner on 30.07.2022.

The petitioner contended that the complaints were premature, having been instituted on the fifteenth day, whereas the petitioner was entitled to the statutory period of fifteen days from the date of receipt of the demand notice for making payment.

It was further contended that a part of the amounts covered by the cheques had already been paid through RTGS and Google Pay, and the entire amounts represented by the cheques were not outstanding. It was also argued that the procedure contemplated under Section 202 Cr.P.C. was not followed.

Per contra, the respondents contended that the petitions were an afterthought intended to prolong the proceedings. It was submitted that the amounts transferred through RTGS and Google Pay were actually paid towards repayment of the balance amounts owed by the petitioner to the respondents and not towards discharge of the liabilities represented by the cheques in question.

Court's Observation

The Court observed that the respondents had specifically stated the amounts advanced by them towards part payment of the sale consideration and had furnished details of the amounts sought to be paid through cheques and the amounts transferred through Google Pay and RTGS.

The Court noted that the petitioner had not placed any material on record to substantiate his contention that the amounts transferred through Google Pay and RTGS were paid towards part payment of the amounts covered by the cheques. The petitioner neither responded to the demand notices nor raised any such plea before the Trial Court. The Court held, “In these circumstances, the plea now sought to be raised is apparently to be an afterthought, advanced.”

Regarding the contention that the complaints were instituted before expiry of the statutory period of fifteen days, the Court perused the tracking reports which revealed that the demand notices were delivered on 15.07.2022, and the petitioner was required to make payment within fifteen days, i.e., by 30.07.2022.

The complaints were presented on 29.07.2022 before the learned Chief Judicial Magistrate, who assigned them to the learned Judicial Magistrate 1st Class on the same day, but they were listed before the said Magistrate on the next day, who took cognizance and issued process against the petitioner on the same day.

The Court held,

“The provisions of the Act seek to remedy the financial indiscipline during the course of commercial dealings which at times may ruin the business/trade of the effected party and therefore, the provisions must receive fair, pragmatic, harmonious and purposive interpretation so that object of the enactment is achieved and the cause of justice is advanced.”

The Court further held,

“Viewed thus, it is evident that complaints, although instituted before the expiry of the statutory period of fifteen days, yet by the time cognizance thereon was taken on the next day as per the delivery reports of the demand notice, the fifteen days' time for making the payments thereunder was already over.”

The Court noted that even if no cause of action had accrued on the date of filing of the complaints, by the time the complaints were considered and cognizance was taken by the learned Magistrate, the statutory period had expired. The Court held,

“Not only that, petitioner had the time to make payments or respond to the demand notice even thereafter till he received the summon for appearance. But that being not the case, mere filing of the complaints a day earlier was of no consequence when the cognizance thereon came to be taken on the next day only and moreover, the petitioner has nowhere exhibited his inclination to pay the cheque amounts at any stage of the proceedings during the last more than four years and thus, has not been prejudiced at all in any manner.”

The Court further held that while the complaints were instituted a day before the expiry of the statutory period of fifteen days, cognizance was taken after the statutory period had expired, and the petitioner had not exhibited any inclination to pay the cheque amounts during the pendency of the proceedings for over four years, thus suffering no prejudice.

Interpreting Section 138 of the Act purposively, the Court dismissed both petitions and upheld the orders whereby cognizance was taken and process was issued against the petitioner.