The Delhi High Court has ascertained legal position on computing the limitation period of 30 days prescribed under Section 138(b) N.I. Act for issuance of a valid legal notice, and observed that the day on which intimation is received by the complainant from the bank that the cheque in question has been returned unpaid has to be excluded.
The single-judge Bench of Justice Manoj Kumar Ohri analysed a slew of legal precedents and the Act itself to arrive at the conclusion while dealing with a bunch of petitions filed under sec. 482 of Cr.P.C. seeking quashing of Criminal Complaints qua them.
Brief Facts of the Case
The petitions arose out of different complaints filed under Section 138 read with Sections 141/142 of the Negotiable Instruments Act, 1881. Learned Counsel for the petitoners has agrued that complaints are not maintainable qua the petitioners, as the relevant legal demand notices were issued after the expiry of statutory period of 30 days set out under the N.I. Act. It was contended that the said notices being invalid, the necessary ingredients of Section 138(b) N.I. Act are not satisfied and thus, the impugned criminal complaints ought to be quashed.
The respondent/complainant is a Company engaged in the business of lending of financial assistance for renewable energy projects.
Pursuant to the petitioner Company approaching it for a loan facility, a transaction was entered into between the complainant Company and the petitioner Company, in due course whereof, three cheques dated 31.03.2015, 30.09.2015 and 30.06.2016 respectively were issued by the petitioner Company in favor of the complainant Company towards partial discharge of its liability. However, the cheques in question got dishonored upon presentation and were returned vide return memos dated 29.05.2015, 19.10.2015 and 21.07.2016 respectively with the remarks „drawer sign differ‟ and „no funds‟.
The complainant Company is stated to have received return statements from its Bank on 19.06.2015, 29.10.2015 and 27.07.2016 in respect of the aforesaid cheques, indicating that the same had got dishonored. Consequently, it posted legal demand notices on 07.07.2015, 28.11.2015 and 26.08.2016 respectively calling upon the petitioner Company to repay the debt owed within 15 days of receipt of the notices. When the due amount was not repaid within the statutory period, the impugned criminal complaints came to be filed against the petitioners, who as noted above are the accused Company and its Managing Director/Authorized Signatory respectively.
In the criminal complaints, it was alleged that the complainant Company had sanctioned and disbursed a loan facility of Rs.2014.00 lacs to Signature Not Verified Digitally Signed By:SANGEETA ANAND Signing Date:331.01.2022 18:10:20 Page4of10 the petitioner Company, as per the loan agreement dated 07.12.2005. In order to discharge its liability, the petitioner Company had issued various cheques, of which 3 cheques, as mentioned in the complaints, got dishonored and the factum of dishonor of the cheques was notified to the complainant Company by its Bank vide the aforesaid return statements.
The short issue involved in the present case is whether or not the legal demand notices issued by the complainant Company were sent within the limitation period of thirty days prescribed under Section 138(b) N.I. Act.
High Court Observastion
The Court at the outset noted that the N.I. Act, being a penal statute, warrants strict construction and as a result, before attributing criminal liability on an accused under the N.I. Act, the necessary ingredients of the offence alleged to have been committed are required to be satisfied.
Under the factual matrix of the case, the Court ciited SC Rulings in M/S. Munoth Investments Ltd. Vs. M/S. Puttukola Properties Ltd. & ANR , 2001 Latest Caselaw 389 SC
The Court noted that to appreciate whether or not the day on which information regarding dishonor of cheque is received by the complainant is to be included in calculation of limitation period under Section 138(b) N.I. Act, it is deemed expedient to allude to the decision rendered in Econ Antri Ltd. Vs. Rom Industries Ltd. & ANR., 2013 Latest Caselaw 581 SC where a three-Judge Bench of the Supreme Court, while answering a reference, rejected the contention that use of two different words in Section 138 N.I. Act, i.e. „from‟ and „of‟, is indicative of different meanings and resolved the conflict arising from discordant views taken in M/S. Saketh India Limited & Ors Vs. M/S. India Securities Limited , 1999 Latest Caselaw 59 SC, M/S. SIL Import, USA Vs. M/S. Exim Aides Silk Exporters, Bangalore, 1999 Latest Caselaw 174 SC,
It further added that the view taken in Econ Antri Ltd. Vs. Rom Industries Ltd. has been reiterated and applied by the Supreme Court in Rameshchandra Ambalal Joshi Vs. The State of Gujarat and ANR, 2014 Latest Caselaw 103 SC. Recently, a Co-ordinate Bench of this Court in Simranpal Singh Suri v. State and Another reported also discussed the issue of limitation at length and relied upon the decision in Econ Antri (Supra) to decide the issues arising under Sections 138/142 N.I. Act., it stated.
"In view of Econ Antri (Supra), a decision albeit rendered in relation to Section 138(c) and Section 142(b) N.I. Act, it is discernible that the words „of and „from‟ used under Section 138 N.I. Act do not imply different meanings. It is safe to infer that the use of the word „of‟ in Section 138(b) N.I. Act does not imply either that the day on which information regarding dishonor of cheque is received by the complainant from the bank is to be included while computing the limitation period for issuance of a valid legal notice. The legal position, as culled out from the judicial dicta referred to hereinabove, is that while computing the limitation period of 30 days prescribed under Section 138(b) N.I. Act for issuance of a valid legal notice, the day on which intimation is received by the complainant from the bank that the cheque in question has been returned unpaid has to be excluded."
Applying the law to the facts of the present case, it was noted that the complainant relies on the dates of receipt of return statements from its Bank, i.e., the dates on which intimation was received regarding dishonor of the cheques in question, to submit that the legal demand notices were issued within the statutory period and the Court was prima facie of the opinion that the legal notices were posted by the complainant Company within 30 days of the receipt of information from its Bank regarding dishonor of the cheques in question and were not time-barred.
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