Case Note & Summary
The petitioner, Sri M. Gopal, was the accused in C.C. No. 561/2016 pending before the Principal Civil Judge and JMFC, Mulabagal, arising out of P.C.R. No. 54/2015 filed by the respondent, Sri Ganga Reddy. The petitioner and respondent were directors of a company. The respondent alleged that the petitioner had issued a cheque for Rs. 1,00,000 which was dishonoured. The petitioner filed this petition under Section 482 CrPC seeking quashing of the proceedings on the ground that the statutory notice under Section 138 of the Negotiable Instruments Act, 1881 did not demand payment of the cheque amount but only threatened legal action. The court examined the notice and found that it stated: "If you fail to make the payment, we will be constrained to take legal action against you." The court held that the notice did not contain a demand for the cheque amount, which is a mandatory requirement under proviso (b) to Section 138. The court relied on the principle that the notice must demand payment of the amount of the cheque; a mere threat of legal action is insufficient. Consequently, the court allowed the petition and quashed the entire proceedings in C.C. No. 561/2016.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Mandatory Notice - The statutory notice under proviso (b) to Section 138 must demand payment of the cheque amount; a notice that merely threatens legal action without demanding payment is not a valid notice and cannot form the basis for prosecution. The court quashed the proceedings as the notice sent by the complainant only stated that legal action would be taken if payment was not made, but did not demand the cheque amount. (Paras 1-10) B) Criminal Procedure Code - Inherent Powers - Section 482 - Quashing of Proceedings - The High Court can exercise its inherent powers under Section 482 CrPC to quash criminal proceedings if the complaint does not disclose the essential ingredients of the offence. In this case, the absence of a valid demand in the statutory notice made the complaint liable to be quashed. (Paras 1-10)
Issue of Consideration
Whether the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 can be sustained when the statutory notice under the proviso to Section 138 does not demand the payment of the cheque amount but only threatens legal action?
Final Decision
The petition is allowed. The entire proceedings in C.C. No. 561/2016 pending on the file of the learned Principal Civil Judge and JMFC, Mulabagal, are quashed.
Law Points
- Section 138 of Negotiable Instruments Act
- 1881
- mandatory notice requirement
- demand of cheque amount
- quashing of criminal proceedings
- Section 482 CrPC
