4 April 2023 8:00 AM GMT
The Orissa High Court has held that a proceeding under Section 138 of the Negotiable Instruments Act cannot be invalidated only because the notice claims costs for some miscellaneous expenses alongside demanding the cheque amount.While relying on the decisions of the Apex Court, the Single Judge Bench of Justice Radha Krishna Pattanaik observed,“…in view of the settled legal position in...
The Orissa High Court has held that a proceeding under Section 138 of the Negotiable Instruments Act cannot be invalidated only because the notice claims costs for some miscellaneous expenses alongside demanding the cheque amount.
While relying on the decisions of the Apex Court, the Single Judge Bench of Justice Radha Krishna Pattanaik observed,
“…in view of the settled legal position in K.R. Indira (supra), the irresistible conclusion is that the defect in notice cannot invalidate the proceeding when the demand is only for the cheque amount with additional claim towards the miscellaneous expenses…”
Three cheques were allegedly issued by the petitioner to the opposite party for an amount of Rs. 14,00,000/- and when they were presented before the Bank, all stood dishonoured due to insufficiency of fund.
Therefore, the opposite party served a legal notice calling upon the petitioner to pay the cheque amount and in case of legal action, to bear the entire cost of the proceeding, interest on the amount besides legal fees. As the payment was not done despite such notice, the complaint under Section 138 was filed.
However, the petitioner approached the High Court to quash the entire proceeding claiming the notice to be defective as more amount was claimed than what was due for dishonour of the cheques.
The petitioner referred to the impugned notice which called upon it to pay the cheque amount of Rs. 14,00,000/- within fifteen days from the date of receipt, failing which appropriate legal action would be taken and in that event, he would also be liable to pay the entire cost of the proceeding, interest over the amount besides legal fee for an amount of Rs. 3,000/-.
Relying upon decisions of the Supreme Court, the petitioner contended that such notice cannot be acted upon as it is not permissible to demand more than the dishonoured amount in the notice.
The Court noted that a demand was placed by the opposite party by the way of notice whereby calling upon the petitioner to pay the amount or else to face legal action and, in such case, to pay the cost of the proceeding besides other miscellaneous charges.
“It is not a case that the opposite party demanded an amount more than the cheque amount of Rs.14,00,000/-. Any such additional demand which is alleged by Mr. Bose, learned counsel for the petitioner relates to the cost of the proceeding with the interest on the total sum and other expenses and therefore, in the considered view of the Court, the impugned notice dated 6th November, 2020 cannot be said to be not in conformity with law and according to the provisions of Section 138 of the N.I. Act,” the Court added.
The Court referred to the decision of the Apex Court in Vijay Gopala Lohar v. Panduram Ramachandra Ghorpade & Anr., wherein it was held that when the cheque amount and the loan amount is same, the notice issued with demand for payment is in accordance with law.
It also placed reliance on K.R. Indira v. Dr. G. Adinarayana, wherein the Supreme Court observed that if there is indication in the notice of any other amount covered by the cheque, it is not invalidated.
“In categorical term the Apex Court in the aforesaid decision concluded that when there was specific demand in respect of the amount of the cheque and the fact that certain additional claim incidental is made in the form of expenses incurred for clearance and charges, the notice is not vitiated”, the Court clarified.
Accordingly, the criminal miscellaneous case was dismissed being devoid of merit.
Case Title: Hemalata Mohapatra v. Bijay Kumar Pradhani
Case No.: CRLMC No. 545 of 2022
Date of Judgment: March 23, 2023
Counsel for the Petitioner: Mr. A.P. Bose, Advocate
Counsel for the Opposite Party: Mr. S.K. Samantaray, Advocate
Citation: 2023 LiveLaw (Ori) 44
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