Delhi District Court
Cs No.185/13 M/S Kay Sons (India) Pvt. ... vs M/S Nandini Foods Page 1 Of 9 on 4 February, 2013
IN THE COURT OF CIVIL JUDGE, SOUTH EAST DISTRICT,
SAKET COURTS COMPLEX, SAKET, NEW DELHI
Presiding Officer : Dinesh Kumar, DJS
CC No. 185/2013
Unique ID No.
In the matter of :
M/s Kay Sons (India) Pvt. Ltd. ..........Complainant.
Vs
M/s Nandini Foods .................Accused.
Date of institution : 25.02.2013
Date on which order was reserved : 31.01.2014
Date of pronouncement of the order : 04.02.2014
ORDER
1. Vide this order, I shall decide whether the complaint is maintainable or not. The matter is at the stage of consideration on notice U/s 251 Cr.P.C.
2. Ld. counsel for the complainant has argued that the complaint is maintainable and a prima facie case has been made out against the accused and therefore notice U/s 251 Cr.P.C. may be served upon the accused.
3. Per contra, Ld. counsel for the accused has argued that the complaint is not maintainable as the notice sent by the complainant was defective and it did not comply with the requirement of the law. Therefore, the accused cannot be prosecuted on the basis of a defective notice and therefore the complaint is not maintainable. It is therefore submitted that the accused may be discharged and the CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 1 of 9 complaint may be dismissed.
4. Before proceeding further, it becomes necessary to discuss the facts of the complaint in brief. The complainant has filed the present complaint U/s 138 NI Act against the accused. It is alleged in the complaint that accused Ram Bir Singh, proprietor of M/s Nandini Foods, approached the complainant for purchasing laminated films and printed packaging material of different sizes. The complainant supplied the goods worth Rs.8,82,850/ to the accused vide retail invoices for different dates.
5. The accused, to discharge his liability, and to make the part payment, issued cheques bearing no.095264 dated 10.08.2012 for Rs. 1,00,000/, cheque no.095265 dated 14.08.2012 for Rs.1,00,000/ and cheque no.095266 dated 28.08.2012 for Rs.2,78,000/ (total amount Rs.4,78,000/).
6. The complainant deposited the cheques for encashment. However, the cheques were dishonoured by the bank of the accused. They were returned unpaid with the remark 'insufficient funds'. The complainant informed the accused. The accused requested to deposit the chqeues once again. At request of the accused complainant deposited the cheques once again. However, they were again dishonoured with remarks 'insufficient funds' vide return memo dated 27.12.2012. The complainant sent a legal notice dated 08.01.2013 by registered A.D. However, despite service of the notice CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 2 of 9 the accused has not made the payment. Hence, the present complaint has been filed U/s 138 NI Act.
7. Perusal of the file would show that the cheque bearing no. 095264 dated 10.08.2012 for Rs.1,00,000/ which is Ex.CW1/6 was returned unpaid vide return memo dated 27.12.2012, Ex.CW1/9, with the reason that the instrument had become outdated / stale. Similarly, the cheque bearing no.095265 dated 14.08.2012 for Rs.1,00,000/ which is Ex.CW1/7 was returned unpaid vide return memo dated 27.12.2012, Ex.CW1/10, with the reason that the instrument had become outdated / stale. Only the cheque bearing no.095266 dated 28.09.2012 for Rs.2,78,000/, Ex.CW1/8 was returned unpaid with the remarks "funds insufficient" vide return memo dated 27.12.2012, Ex.CW1/11.
8. Section 138, NI Act lays down some conditions which are required to be fulfilled before proceeding under the Section. One of the condition is provided in proviso (a) of the Section which reads as under:
"(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier."
9. Therefore, one of the condition which is required to be fulfilled before the section can be applied in a given case is that the cheque must be presented by the complainant to the bank within a CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 3 of 9 period six months from the date on which it has been drawn or within the period of its validity, whichever is earlier. It is settled position of law that "the bank" mentioned in proviso is the bank of the drawer of the cheque. As per the circular / notice dated 04.11.2011, issued by Reserve Bank of India, the validity of a cheque is three months from the date on which it is drawn.
10. In the present case, the complainant had deposited the cheques Ex.CW1/6 and Ex.CW1/7 after expiry of three months of the date on which they were drawn. The cheques bear the dates 10.08.2012, and 14.08.2012 respectively while the cheque return memos are dated 27.12.2012. Thus, the complainant had deposited the abovementioned two cheques after expiry of their validity and therefore they were returned unpaid with remarks "Instrument outdated / stale. As the complainant did not present the cheques for encashment to the bank within their validity, the proceedings U/s 138 NI Act could not be started against the accused. The complainant did not have any right to issue a legal notice U/s 138 NI Act demanding the payment of the abovementioned two cheques. He could demand only the amount of cheque Ex.CW1/8 which was returned unpaid with remarks "funds insufficient".
11. Perusal of the legal notice Ex.CW1/12 would show that the complainant had issued the legal notice to the accused Us/ 138 NI Act demanding the amount. In para4 of the legal notice the CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 4 of 9 complainant has mentioned about all the three cheques issued by the accused. It is further stated in para5 that the cheques were dishonoured and they were returned with the remarks "Insufficient funds". The complainant has nowhere mentioned in the notice that the cheques Ex.CW1/6 and Ex.CW1/7 were returned unpaid as they had become outdated / stale. Further, in para7 of the notice the complainant has demanded amount of Rs.4,78,000/ from the accused in lieu of the abovementioned three cheques. Even though, in the notice the amount is mentioned as Rs.4,7,000/, during the course of the arguments Ld. counsel for the complainant has submitted that it is typographical error and the amount is Rs.4,78,000/. In the complaint also the same amount is mentioned as in prayer clause (B) the complainant has prayed for a compensation of Rs.9,56,000/, equivalent to the double of the cheques amount. Further, in last part of para7 the complainant has demanded sum of Rs.8,82,500/ from the accused.
12. One another condition of the law provided U/s 138 NI Act is in proviso (b) which lays down at the demand has to be made in writing for the payment of 'the said amount' within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The law has been settled through judicial pronouncements that 'the said amount' mentioned in the proviso is the amount of the cheque. Hon'ble High Court of Delhi in Alliance CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 5 of 9 Infrastructure Project Pvt. Ltd. & Ors. vs Vinay Mittal, ILR (2010) 3 Del 459 (in Crl. M. C. No.2224/2009 and Crl. M. C. No.2225/2009 decided on 18.01.2010) while citing various judgments has held that the notice has to be issue demanding only the amount of the cheque. The complainant cannot claim the entire amount due against the drawer of the cheque only because a cheque issued by drawer for a amount less than the entire due amount has got dishonored. The Hon'ble High Court has held as under:
" 12. ....Therefore, a notice of demand which requires the drawer of the cheque to make payment of the whole of the cheque amount, despite receiving a substantial amount against that very cheque, much before issue of notice, cannot be said to be a legal and valid notice envisaged in Section 138 (b) of Negotiable Instrument Act. The expression "amount of money" used in Section 138 (b) of Negotiable Instrument Act, to my mind, in a case of this nature would mean the amount actually payable by the drawer of the cheque to the payee of the cheque. Of course, if the payee of the cheque makes some demands on account of interest, compensation, incidental expenses, etc. that would not invalidate the notice so long as the principal amount demanded by the payee of the cheque is correct and is clearly identified in the notice. When the principal amount actually payable to the payee of the cheque and the notice also does not indicate the basis for demanding the excess amount, such a notice cannot be said to be a legal and valid notice envisaged in Section 138 (b) of Negotiable Instrument Act. In such a case, it is not open to the complainant to take the plea that the drawer of the cheque could have escaped CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 6 of 9 liability by paying the actual amount due from him to the payee of the cheque. In order to make the notice legal and valid, it must necessarily specify the principal amount payable to the payee of the cheque and the principal amount demanded from the drawer of the cheque should not be more than the actual amount payable by him though addition of some other demands in the notice by itself would not render such a notice illegal or invalid.
"13. In Central Bank of India & Another vs. Saxons Farms & Others, I (2010) BC 12 (SC)=VIII (1999) SLT 399=IV (1999) CCR 115 (SC)=1999 (8) SCC 221, the Hon'ble Supreme Court observed that the object of the notice under Section 138 (b) Negotiable Instrument Act is to give a chance to the drawer of the cheque to rectify his omission and also to protect the honest drawer. If the drawer of the cheque is demanded as the principal amount due from him and that amount is demanded as the principal sum payable by him, it is not possible for an honest drawer of the cheque to meet such a requirement. "14. In Suman Sethi vs. Ajay K. Churiwala, II (2001) BC 144 (SC)=I (2000) SLT 605=I (200) CCR 163 (SC)=2000 (2) SCC 380, the Hon'ble Supreme Court held that where the notice also contains a claim by way of cost, interest, etc. and gives breakup o the claim of the cheque amount, interest, damages etc. which are separately specified, the claim for interest, cost etc. would be superfluous and these additional claims being severable would not invalidate the notice. It was further held that if an ominous demand is made in a notice as to what was due against a dishonoured cheque, the notice might fail to meet the legal requirement and may be regarded as bad. The same consequence, in my view, CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 7 of 9 would follow where the principal sum demanded in the notice is more than the actual amount payable to the payee of the cheque as principal sum. In the present case, while demanding Rs.49,47,600/ vide notice dated 19.12.2008, the complainant did not even indicate that the actual amount due to him was only Rs.32,97,600/ and he called upon the complainant to pay the whole of the amount of the cheque without even trying to justify the demand made by him.
"15. In K. R. Indira vs. Dr. G. Adinarayana, III (2005) BC 384 (SC)=VI (2003) SLT 330=2003 (3) JCC (NI) 273, a consolidated notice was sent in respect of four cheques. Two of which were issued to him in the name of of the husband and the two were in the name of the wife. It was noted by the Hon'ble Supreme Court that the cheque amounts weer different from the alleged loan and the demand made was not of the cheque amount but was of the loan amount. It was held that the complainant was required to make demand for the amount recovered by the cheque which was conspicuously absent in the notice and, therefore, the notice was imperfect. The same would be the legal effect when a partpayment against a cheque is made, after its issue. The amount covered by the cheque would necessarily mean the principal amount due to the payee after giving credit for the partpayment received by him and, therefore, if the notice does not specifically demand that particular amount, it would not be a valid notice and would not fasten criminal liability on account of its noncompliance."
13. As discussed earlier, in the present case also the complainant had issued a demand notice asking the accused to pay the amount of Rs.4,78,000/ within 15 days of receiving of the notice. CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 8 of 9 The amount includes the amount of two cheques Ex.CW1/6 and Ex.CW1/7 which were returned unpaid as they had become outdated / stale and therefore the complainant could not issue notice U/s 138 NI Act demanding the amount of those two cheques. The accused was also not under any obligation to pay amount of Rs.4,78,000/ to the complainant within 15 days of the receiving of the notice. As the complainant has demanded amount more than the cheque amount i.e. Rs.2,78,000/, the notice was a defective notice, and therefore accused was not under any legal obligation to pay the entire amount claimed in the notice.
14. In the light of the discussion herein above, I am of the considered opinion that the notice issued by the complainant was not a valid notice U/s 138 NI Act. The complaint is therefore not maintainable. The complaint is dismissed. The accused stands acquitted. Bail bond if any, stands cancelled. Surety stands discharged. Endorsement, if any, stands cancelled. Documents retained, if any, be released to the rightful claimant against proper receipts as per law.
15. File be consigned to record room after necessary compliance.
Pronounced in the open Court (Dinesh Kumar) on this 04th day of January, 2014. Civil Judge, South East, Saket Court, New Delhi.
CS No.185/13 M/s Kay Sons (India) Pvt. Ltd. vs M/s Nandini Foods Page 9 of 9