The Lucknow Bench of the Allahabad High Court while setting aside the summoning order observed that in a demand notice if other amount is mentioned with the cheque amount in a separate portion in detail, the said notice cannot be faulted in a legal term of Section 138 (b) of the Negotiable Instrument Act, 1881.
A Single Bench of Justice Suresh Kumar Gupta passed this order while hearing an application under Section 482 filed by Prashant Chandra.
The application under Section 482 Cr.P.C has been filed with the prayer to quash the order dated 25.4.2023 passed by the Additional Court, Lucknow U/s 203 CrPC in Complaint under Section 138 of the Negotiable Instruments Act, Police Station- Hazratganj, District- Lucknow and a direction may be issued to the court concerned to treat the demand notice dated 4.8.2022 as a valid notice of cheque amount of Rs 50 lacs and summon the accused persons in accordance with law and conclude the trial at the earliest.
Counsel for applicant has submitted that the applicant presented the cheque of Rs 50 lacs on 10.05.2022 bearing cheque drawn on Axis Bank Limited, Mahanagar with his Banker, Bank of Baroda, Branch-Jopling Road, Lucknow, after opposite parties had given clearance but the same was dishonored vide bank return memo dated 03.08.2022 recording that the cheque was dishonored because of “Insufficient Funds”.
It is further submitted by the counsel for the applicant that the trial court dismissed the complaint under section 203 Cr.P.C with perverse finding that the demand notice served to the accused persons is bad whereas the demand notice dated 04.08.2022 is wholly legal and as per the provisions of section 138 (b) Negotiable Instrument Act, 1881 as well as the law laid down by the Apex Court in Suman Sethi Versus Ajay K Churiwal and another (2000) 2 Supreme Court Case 380 as in the demand notice dated 04.08.2022 there is break-up of the cheque amount of Rs 50 lacs, and another amount of Rs 50 lacs has been mentioned by virtue of the provisions contained in Section 138 of the Act 1881 along with 21 percent interest with quarterly interests w.e.f 05.10.2022, as such the said demand notice cannot be termed as bad in the eye of law.
Further submission of the counsel for the applicant that the opposite parties gave two cheques dated 28.03.2022 bearing cheque for a sum of Rs 11 lacs drawn on Axis Bank Limited, Mahanagar, Lucknow and another cheque dated 10.05.2022 bearing cheque drawn on Axis Bank Limited, Mahanagar, Lucknow for a sum of Rs 50 lacs from the account of the opposite party no 2 duly signed by the opposite party no3.
The petitioner deposited the cheque for Rs 11 lacs on 28.06.2022 but the same was dishonored. The petitioner apprised the opposite parties about the dishonor of the said cheque and expressed his displeasure regarding the manner in which the opposite parties had deceitfully exacted a huge amount of Rs 56 lacs from the petitioner. Importantly the opposite parties maintained that things had got delayed because of the after effects of COVID and the funds will soon be arranged for clearance of the cheques.
Counsel for the applicant also submitted that the applicant filed the complaint under Section 138 of the Act, 1881 read with Section 142 of the Act, 1881 well within time before the Court of Additional Chief Judicial Magistrate-VI, Lucknow on 19.09.2022 which was admitted and transferred to Additional Court, Lucknow on the very next date.
It is further submitted that the notice dated 04.08.2022 which was issued under section 138(b) upon the cheque having been dishonored categorically mentioned the amount indicated in the dishonored cheque and a demand for payment of a sum of Rs 50 lacs was made. Since the offence as per section 138 is deemed to have been committed upon dishonor of the cheque, the notice sent on behalf of the petitioner (complainant) also apprises the drawer about the cheque of the consequences of non-payment and mentions the maximum amount payable by the drawer on account of the offence under Section 138 having been committed.
The contention of the counsel for the applicant is that in the impugned order dated 25.4.2023, the Magistrate has taken note of the fact that upon perusal of the notice of demand sent on behalf of the complainant by his lawyer it was apparent that a demand had been made to pay a sum of Rs 50 lacs within 15 days of the receipt of the notice. Another Rs 50 lacs has been mentioned by virtue of the provisions contained in Section 138 of the Act 1881 along with 21 percent interest with quarterly rests w.e.f 05.10.2022.
However, completely misreading the provisions contained in section 138 (b) and (c) of the Act 1881, the trial court has recorded that a demand only for the cheque amount could have been made and not of a further Rs 50 lacs and interest with quarterly rests; and as such the notice issued on behalf of the complainant was not compliant with the provisions of section 138 (b) of the Negotiable Instrument Act. It has accordingly been held that the demand notice is rendered illegal and does not satisfy the ingredients of section 138 (b) and (c) of the Act, 1881 and hence no offence had been committed and consequently there was no ground to summon the accused persons and the complaint was dismissed under Section 203 CrPC.
Counsel for the applicant further submitted that the trial court rejected the complaint of Negotiable Instrument Act, 1881 in a mechanical manner vide order dated 25.4.2023 and it is liable to be quashed.
AGA for the State submitted that there is no illegality, irregularity or perversity in the impugned order dated 25.4.2023 passed by the trial court and thus, it is not liable to be quashed.
The Court held that,
In this petition, the trial court rejected the summoning of the accused U/s 138 of the Act, 1881 with the findings that the applicant violated the provision of 138 (b) of the Act, 1881. So the moot question arises in this matter whether demand notice can be faulted if any other sum indicated in addition to the said amount U/s 138 (b) of the Act, 1881.
The provision of Section 138 (b) of the Act, 1881 deals with the demand notice which is given by the holder of the cheque. When we read Clause (b) and (c) of the proviso to Section 138, there is specifically mentioned, a whole word means “said amount of money”. This is referred to as the words “payment of any amount of money,” which means the cheque amount. so, in the notice under clause (b) to the proviso, the holder can demand only for the cheque amount.
As per the settled principle of the law, the demand notice should be read as a whole, and not consider only part of the notice. In the demand notice, the holder or payee can demand to pay out for the said amount, i.e. cheque amount.
Now the main question arises here whether the holder adds such types of the amount then, what is the validity of said notice? It could be said that it depends on the language of the demand notice. When the holder demands these types of other amounts with the cheque amount, he has to specify that amount with details in the notice. It does not affect the validation of such demand notice.
Thus, to make a valid demand notice as per the proviso of section 138 (b) of the Act, 1881, the notice should be mentioned in a separate portion of the due amount of bounced cheque, and other amounts which are additionally claimed i.e interest of loss, cost, etc.
As per the legislature which clearly explains that in provision of section 138 of the Act, 1881, it is mentioned that regarding the cheque bounce matter, the drawer would be liable for conviction if he does not make payment within 15 days after receipt of the notice.
So if the drawer pays the cheque bounce amount within the above period or before the complaint filed against him, he might be the end of his legal liability regarding the cheque U/s 138 of the Act, 1881 and for the recovery of other sums which is additionally mentioned in the notice, the payee should apply for the civil proceeding and that jurisdiction he can pray for that remedy.
With these observations/directions, the Court allowed the application and the order dated 25.4.2023 is hereby set aside.