Case Note & Summary
The petitioner, M/s. J.M. Financial Asset Management Ltd., filed a criminal petition under Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the order dated 22.03.2016 passed by the IV Additional District and Sessions Judge at Madhugiri, which confirmed the issuance of summons against the petitioner by the order dated 07.07.2012 in C.C.No.760/2012 on the file of the Additional Civil Judge and JMFC, Madhugiri. The respondent No.1, Sri. Channegowda (since deceased, represented by legal representatives), had filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging dishonour of a cheque issued by the petitioner. The petitioner contended that the demand notice was not served on them as it was sent to an address that was not their registered office. The court examined the complaint and found that the notice was sent to an address in Bangalore, whereas the petitioner's registered office was in Mumbai. There was no evidence that the notice was served on the petitioner. The court held that the essential ingredient of proper service of demand notice was not satisfied, and therefore, the proceedings against the petitioner were an abuse of process. The court allowed the petition and quashed the proceedings against the petitioner.
Headnote
A) Criminal Law - Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Proper Service of Demand Notice - The complainant must prove that the demand notice was sent to the correct address of the accused and was duly served. In this case, the notice was sent to an address that was not the registered office of the petitioner-company, and there was no evidence of service. Held that the issuance of summons was not sustainable (Paras 3-5).
B) Criminal Procedure - Quashing of Proceedings - Section 482 Cr.P.C. - Abuse of Process - Where the complaint does not disclose the essential ingredients of the offence, the High Court can quash the proceedings to prevent abuse of process. Held that the proceedings against the petitioner were liable to be quashed (Paras 5-6).
Issue of Consideration
Whether the issuance of summons against the petitioner-company for an offence under Section 138 of the Negotiable Instruments Act, 1881, was valid when the demand notice was not properly served on the petitioner.
Final Decision
The petition is allowed. The order dated 22.03.2016 passed by the IV Additional District and Sessions Judge, Madhugiri, and the order dated 07.07.2012 issuing summons in C.C.No.760/2012 on the file of the Additional Civil Judge and JMFC, Madhugiri, are quashed. The proceedings against the petitioner are set aside.
Law Points
- Section 138 of Negotiable Instruments Act
- 1881
- Section 482 of Code of Criminal Procedure
- 1973
- Proper service of demand notice
- Vicarious liability of company directors
Case Details
2019 LawText (KAR) (12) 27
Criminal Petition No.3166 of 2016
Sri. Kuloor Arvind Kamath, Senior Advocate for Smt. Veena J. Kamath for Sri.K.J. Kamath and Sri. D.C.Prakash, Advocate for Petitioner; Sri. Vivek S. Advocate for R1; Sri. K.V. Satish, Advocate for R2; Sri. Harish Kumar H.C, Advocate for R-1(a-c)
M/s. J.M. Financial Asset Management Ltd.
Sri. Channegowda (since dead, represented by Smt. Girijamma, Smt. Suma, Smt. Shubha) and Sri. Gangaraju
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Nature of Litigation
Criminal petition under Section 482 CrPC seeking quashing of summons in a cheque dishonour case under Section 138 NI Act.
Remedy Sought
Petitioner sought quashing of order dated 22.03.2016 confirming issuance of summons and the order dated 07.07.2012 issuing summons in C.C.No.760/2012.
Filing Reason
Petitioner contended that the demand notice was not served on them as it was sent to an address that was not their registered office, and therefore the essential ingredients of Section 138 NI Act were not satisfied.
Previous Decisions
The trial court issued summons on 07.07.2012, which was confirmed by the Sessions Court on 22.03.2016.
Issues
Whether the demand notice under Section 138 NI Act was properly served on the petitioner-company.
Whether the proceedings against the petitioner constitute an abuse of process warranting quashing under Section 482 CrPC.
Submissions/Arguments
Petitioner argued that the demand notice was sent to an address in Bangalore, not their registered office in Mumbai, and there was no evidence of service.
Respondents argued that the notice was sent to the correct address and service was proper.
Ratio Decidendi
For an offence under Section 138 of the Negotiable Instruments Act, 1881, the complainant must prove that the demand notice was sent to the correct address of the accused and was duly served. Where the notice is sent to an address that is not the registered office of the accused company and there is no evidence of service, the essential ingredient of the offence is not satisfied, and the proceedings are liable to be quashed under Section 482 CrPC as an abuse of process.
Judgment Excerpts
Learned Senior counsel appearing for the Petitioner-Company submits that respondent No.1 – Complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that a cheque issued by the petitioner was dishonoured.
The notice was sent to an address in Bangalore, whereas the registered office of the petitioner is in Mumbai. There is no evidence that the notice was served on the petitioner.
In the absence of proper service of demand notice, the essential ingredient of Section 138 NI Act is not satisfied. The proceedings against the petitioner are an abuse of process of law.
Procedural History
The complainant filed PCR No.56/2011, which resulted in C.C.No.760/2012. The trial court issued summons on 07.07.2012. The petitioner challenged this before the Sessions Court, which confirmed the summons on 22.03.2016. The petitioner then filed this criminal petition under Section 482 CrPC before the High Court.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
- Code of Criminal Procedure, 1973: 482
