Case Note & Summary
The appellant, S. Selvakumari Perulmal, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against Kaushal Realtors Pvt. Ltd. (Respondent No.1) and its Director, Rajendra M. Rajan (Respondent No.2), for dishonour of a cheque. The trial court acquitted Respondent No.2 but did not give any finding regarding Respondent No.1. The appellant challenged the acquittal. The High Court examined whether the statutory notice was issued to the proper person, whether the trial court erred in acquitting the director, and whether the failure to give findings on the company's liability affected the outcome. The court found that the trial court had misdirected itself on the issue of notice and had not properly considered the liability of the company. The High Court set aside the acquittal and remanded the matter for fresh consideration, directing the trial court to decide the case afresh after giving both sides an opportunity to be heard.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Statutory Notice - Section 138 - The issue was whether the statutory notice was issued to the proper person, i.e., the drawer of the cheque. The court held that the notice must be sent to the drawer, and in case of a company, to its director or authorized signatory. (Paras 2-10) B) Negotiable Instruments Act - Dishonour of Cheque - Liability of Director - Section 141 - The trial court acquitted the director without considering the company's liability. The High Court held that the director can be held liable if the company is liable, and the trial court's failure to give findings on the company's liability was an error. (Paras 10-15) C) Criminal Procedure Code - Appeal against Acquittal - Section 378 - The High Court can interfere if the trial court's view is perverse or unreasonable. Here, the trial court misdirected itself on the issue of notice and failed to decide the case against the company, warranting interference. (Paras 16-20)
Issue of Consideration
Whether the statutory notice under Section 138 of the Negotiable Instruments Act, 1881 was issued to the proper person; whether the trial court erred in acquitting the director; whether the trial court's failure to give findings on the company's liability affects the outcome.
Final Decision
The appeal is allowed. The impugned judgment and order of acquittal dated 5th February 2019 passed by the learned Metropolitan Magistrate, 43rd Court, Borivali, Mumbai is set aside. The matter is remanded back to the trial court for fresh consideration. The trial court is directed to decide the case afresh after giving both sides an opportunity to be heard, preferably within six months from the date of receipt of the order.
Law Points
- Statutory notice under Section 138 NI Act must be issued to the drawer of the cheque
- Proper person for service of notice on company
- Trial court's failure to give findings on company's liability is an error
- Acquittal can be set aside if trial court misdirects itself
