Cheque bouncing / dishonour cases are usually pretty open and shut. A garden variety case is where a cheque is dishonoured; Complainant issues legal notice; in the event of no response, file complaint before Magistrate and have your day in Court. Generally, Accused settle the matter though mediation / out of the Court settlement and pay up in installments. In other cases, trials go on for whole nine yards and as a matter of practice, conviction is awarded, unless case is thrown out after trial.
A post I wrote 3 years earlier about cheque bouncing cases can be accessed here.
In this small branch of Section 138 Negotiable Instrument Act proceedings, there are cases which are amazingly interesting. One such case is as follows (However, the facts and dates are culled out from the complaint only):
- Two cheques are dishonoured on April 8, 2015;
- Complainant’s Counsel issues legal notice on May 7th (30th day after dishonour);
- Counsel realises GRAVE errors in the notice and sends a corrigendum on (3rd June);
- Complainant files complaint on June 5th in Court; and
- Magistrate summoned the Accused.
Now the law is that the notice under Section 138 MUST be dispatched within 30 days from the date of dishonour. Here the initial notice was indeed dispatched in 30 days from the date of dishonour but the notice had following glaring defects:
- Notice had same cheque number for both the cheques; and
- Notice had wrong amount for one of the cheque (instead of 30 lacs, 25 lacs was written at two places).
Counsel, after realising the error, sent a corrigendum letter on June 3. However, the fact that corrigendum letter did not have any error was irrelevant since the Counsel sent it way beyond 30 days from date of dishonour / return memo.
After summoning order, the Accused is supposed to appear before the Magistrate and state his defense under Section 251 of Criminal Procedure Code. Thereafter, the Magistrate frames the notice and records the defense of the Accused the list the matter for trial if Accused pleads not guilty.
The law, as it stands post Arvind Kejriwal versus Amit Sibbal, is that at the stage of Framing of Notice u/s 251, the Magistrate can discharge the Accused and dismiss the case if She finds that the case is not maintainable for any reason.
In the instant case, the Accused appeared after summoning and I apprised the Magistrate about the defective legal notice. Though the Counsel for the Complainant argued that the stage of arguments of such kind can be only post evidence but the Magistrate, as also held in Arvind Kejriwal ruling, observed that if the case is not maintainable then there is no point going on with a trial. The Magistrate fixed a date for arguments on the point of defective legal notice and time barred corrigendum.
Now researching case laws for such a proposition wasn’t easy and thanks to solid database of IndianKanoon.Org I was able to find few judgements where Magistrates have taken the view of dismissing the complaints at threshold. Though a judgement by a Magistrate is not binding on another but it does have some persuasive value to it.
After extensive arguments, the Magistrate reserved the order and finally discharged my Client. Though the Complainant pleaded that the cheque which was corectly mentioned may be allowed to be pursued in the complaint. However, I had cited rulings where the legal notice is defective, the entire proceedings have to be closed. There cannot be any pick and choose policy on this.
The final judgement can be accessed here.
After losing the case under Negotiable Instrument Act, the Complainant is not remedy-less. There is always an option for filing a civil suit for recovery. Then, the genuineness of the transaction and claim shall be tested.
As of now, one heavy duty matter got over at the initial stages only.
PS: The amount of the cheques was 45 lacs.