Case Note & Summary
The petitioners, Manipal Soubhagya Nidhi Ltd., a company, and its directors K. K. Pai and T. Narayan Pai, filed four criminal writ petitions under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of criminal complaints filed against them under Section 138 of the Negotiable Instruments Act, 1881. The complaints were filed by Ramesh Prabhu, Nagesh Prabhu, and Rajendra Prabhu, who are partners of Polymer Products, alleging dishonour of cheques issued by the petitioners. The petitioners contended that the statutory demand notice under Section 138 of the Negotiable Instruments Act was not served upon them at their residential addresses, but only at the registered office of the company. The court examined the provisions of Section 138 of the Negotiable Instruments Act, which requires that a demand notice be served on the drawer of the cheque within 15 days of dishonour. The court noted that the notices were sent by registered post to the registered office of the company, but there was no evidence that the notices were served on the individual petitioners at their residential addresses. The court relied on the principle that for prosecution under Section 138, proper service of notice is a mandatory condition. The court held that service at the registered office of the company is not sufficient for the directors who are individuals; the notice must be served at their residential addresses. Since the notices were not properly served, the essential ingredient of Section 138 was not satisfied, and the complaints were liable to be quashed. The court allowed the petitions and quashed the criminal complaints.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Service of Notice - Section 138 - Proper service of demand notice is a mandatory prerequisite for prosecution under Section 138 of the Negotiable Instruments Act, 1881. The court held that service of notice at the registered office of the company is not sufficient for individual directors; notice must be served at their residential addresses. The complaints were quashed as the notices were sent only to the company's registered office and not to the personal addresses of the petitioners. (Paras 1-23) B) Criminal Procedure Code - Quashing of Complaint - Inherent Powers - Section 482 - The High Court exercised its inherent powers under Section 482 of the Code of Criminal Procedure, 1973 to quash the complaints as the continuation of proceedings would be an abuse of process of law due to lack of proper service of notice. (Paras 1-23)
Issue of Consideration
Whether the criminal complaints under Section 138 of the Negotiable Instruments Act, 1881 against the petitioners are liable to be quashed on the ground that the statutory notice under Section 138 was not served upon the petitioners at their residential addresses?
Final Decision
The court allowed the criminal writ petitions and quashed the criminal complaints against the petitioners.
Law Points
- Service of notice under Section 138 of Negotiable Instruments Act
- 1881 must be made at the residential address of the accused directors
- not merely at the registered office of the company
- Proper service of demand notice is a prerequisite for prosecution under Section 138
- Dishonour of cheque complaint quashed for non-compliance with statutory notice requirements
