When the Drawee can File a Complaint under Section 138 of the NI Act? Clarified Allahabad High Court

When the Drawee can file complaint under Section 138 of the NI Act?

The Allahabad High Court has held that once the intention of the party is clear that it does not wish to make the payment, the Complainant need not wait for the minimum period 15 days.

In the case in hand, the petitioner herein replied to the notice which goes to show that the intention of the drawer is clear that he did not wish to make the payment. Once this is clarified, should the complainant wait for the minimum period of 15 days, the answer would be ‘no’.

Brief Facts of the Case

  • As stated in the facts, the cheques were dishonoured on 28.5.2019.
  • The complainant sent a notice to the Petitioner on 11.6.2019.
  • As the Complainant did not receive any money, he filed a complaint under Section 138 of the NI Act (Negotiable Instrument Act, 1881) on 29.6.2019.
  • The Petitioner had challenged the summoning order passed by the Magistrate while contending that he had already filed a reply and the complaint could have been filed only after 15 days of his reply.
  • The Petitioner had contended that cheques were dishonoured as he had directed stop of payment. Further, if the notice was sent on 11.6.2019 and no date of service has been mentioned, as per general clause Act, 30 days’ time would have been presumed for service of notice and 15 days thereafter for a waiting period of payment and, then only the complaint should have been filed in the submission of the learned counsel for the petitioner.

Observation of the Court

  • The Court observed that proviso (c) of the said provision, which stipulates the 15 days period, is to see the bonafide of the drawer of the cheque and is with a view to grant him a chance to make the payment. “The only object of proviso (c) to Section 138 of the NI Act, 1881 is to avoid unnecessary hardship if the drawer wants to make the payment,” it noted.  However, it cannot be interpreted to mean that even if the accused refuses to make the payment, the complainant can’t file a complaint.
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  • The Court referred the verdict of Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129.and held that “Proviso to Section 138 of the Act, 1881 does not constitute ingredients of an offence punishable under Section 138. The proviso to Section 138 simply postpones the actual prosecution of the offender till such time he fails to pay the amount, then the statutory period prescribed begins for lodgement of the complaint. The Parliament has granted just and proper time to give to the drawer the opportunity to pay the amount before he could be prosecuted. The offence is completed the moment the cheque is dishonoured.”
  • The Court noted that the Petitioner had replied to the notice which goes to show that he had no intention to make the payment. Once this is clear, the Court held, the complainant does not have to wait for the minimum period of 15 days.
  • In this case, judgment in N. Parameswaram Unni v. G. Kannan, (2017) 5 SCC 737 can be relied upon as in this case it appears that notice was deemed to have been served to the petitioner and he was under an obligation to discharge his liability which he has not done. The only object of proviso (c) to Section 138 of the NI Act, 1881 is to avoid unnecessary hardship if the drawer wants to make payment. Hence, this Court does not find any reason to interfere with the well-reasoned summoning order passed by the learned Magistrate, the Court said.
  • It, therefore, directed the Petitioner to appear before the Court of Magistrate in terms of the summoning order, on or before 15.10.2020, failing which the Court shall be free to take steps as provided by law. The petition was dismissed with costs of Rs. 15,000/-.

Case Name: Ravi Dixit v. State of UP & Anr.

Citation: APPLICATION U/S 482 No. – 14068 of 2020

Coram: Hon’ble Dr. Kaushal Jayendra Thaker,J.

When the Drawee can file complaint under Section 138 of the NI Act?

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