Case Note & Summary
The appellant, Ex-Major Uday Sathe, was the original complainant in a case under Section 138 of the Negotiable Instruments Act, 1881. He sold 50 equity shares of J & K Bank Ltd. to the accused, Rahul Rajendra Borundia, on 25.4.2003, with delivery on 26.4.2003. The accused issued a cheque for Rs.6,204.50 on 30.4.2003 as payment. The cheque was dishonoured on 5.5.2003 due to insufficient funds, and the complainant received the dishonour memo on 7.5.2003. A legal notice of demand was sent on 9.5.2003 (Exh.18). The accused replied on 13.5.2003, requesting the complainant to re-deposit the cheque and assuring that it would be honoured. Instead of re-depositing, the complainant filed a criminal complaint on 6.6.2003. The trial court (J.M.F.C., Pune) convicted the accused on 6.9.2003 in Summary Criminal Case No.6032 of 2003, sentencing him to one year simple imprisonment and compensation of Rs.6,204/-. The accused appealed to the Sessions Court (IIIrd Extra Jt. District Judge & Addl. Sessions Judge, Pune), which allowed Criminal Appeal No.244 of 2003 on 27.5.2004, setting aside the conviction. The complainant then appealed to the High Court. The legal issue was whether the appellate court was justified in acquitting the accused on the ground that the complainant should have re-deposited the cheque as requested. The High Court held that the appellate court's reasoning was perverse; the cause of action under Section 138 arises upon dishonour and failure to pay within 15 days of notice, and the accused's assurance does not bar prosecution. The complaint was filed within limitation. The High Court allowed the appeal, restored the trial court's conviction and sentence, and directed the accused to surrender to serve the sentence.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Cause of Action - The cause of action under Section 138 arises upon dishonour of cheque and failure to pay within 15 days of receipt of notice. The accused's subsequent assurance to honour the cheque on re-deposit does not extinguish the cause of action or bar the complainant from filing a complaint within the statutory period. The complainant is not obliged to accept such assurance and may proceed with prosecution. (Paras 1-6) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Limitation - The complaint filed on 6.6.2003 was within the limitation period of one month from the expiry of 15 days after notice (notice dated 9.5.2003, expiry on 24.5.2003, complaint filed on 6.6.2003). The appellate court erred in holding that the complaint was premature or that the complainant should have waited for re-deposit. (Paras 1-6) C) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Appellate Court's Interference - The appellate court's order setting aside conviction was perverse and based on irrelevant considerations. The High Court, in exercise of appellate jurisdiction, can interfere when the lower appellate court's findings are not supported by evidence or are contrary to law. The conviction and sentence imposed by the trial court were restored. (Paras 1-6)
Issue of Consideration
Whether the appellate court was justified in setting aside the conviction under Section 138 of the Negotiable Instruments Act, 1881 on the ground that the complainant failed to re-deposit the cheque despite the accused's assurance to honour it, and whether such assurance amounts to a waiver of the right to prosecute.
Final Decision
The High Court allowed the appeal, set aside the judgment of the appellate court dated 27.5.2004, and restored the conviction and sentence imposed by the trial court on 6.9.2003. The accused was directed to surrender to serve the sentence.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- Dishonour of cheque
- Notice of demand
- Cause of action
- Limitation
- Accused's assurance to pay
- Waiver of right to prosecute
