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2024 (3) TMI 273 - HC - Indian LawsDishonor of cheques - Condonation of delay of 1259 days in filing the complaint for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - sufficient reason to condone the delay or not - HELD THAT:- The nature of the proceedings in a complaint under Section 138 of the Act, assumes significance. Learned Counsel for the Petitioner made an earnest endeavour to draw home the point that the prosecution for an offence under Section 138 of the Act, entails punishment, and, therefore, a strict interpretation is the norm. The courts below could not have, therefore, condoned the delay in a light manner. Chapter XVII came to be inserted in the N.I. Act by the Amendment Act, 1988 with the object of enhancing the acceptability of the cheques for the settlement of liabilities. The primary object of visiting the penal consequences to the dishonour of the cheque is not mere penal, but also to maintain the efficiency and value of a negotiable instrument in commercial transactions by making the accused to honour the negotiable instrument and pay the amount for which such instrument had been drawn. The object of provisions contained in Chapter XVII has thus been described as both punitive and compensatory. The Supreme Court in P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT] delved into the question as to whether the proceedings under Section 138 of the Act, are quasi criminal in nature. In paragraph No. 84 of the said judgment, the Supreme Court concluded that given the hybrid nature of a civil contempt proceeding, described as ‘quasi-criminal’ by several judgments of the Supreme Court, there was nothing wrong with the same appellation ‘quasi-criminal’ being applied to Section 138 proceeding for the reasons given by the Supreme Court on an analysis of Chapter XVII of the Act, 1888. Another three Judge Bench of the Supreme Court again had an occasion to consider the nature of the proceedings under Chapter XVII of the Act, 1888 in the case of M/S GIMPEX PRIVATE LIMITED VERSUS MANOJ GOEL [2021 (10) TMI 378 - SUPREME COURT]. The Supreme Court observed that the nature of the offence under Section 138 of the NI Act is quasi-criminal in that, while it arises out of a civil wrong, the law, however, imposes a criminal penalty in the form of imprisonment or fine. The purpose of the enactment is to provide security to creditors and instil confidence in the banking system of the country. In the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [2010 (5) TMI 380 - SUPREME COURT] the Supreme Court has observed that it is quite obvious that with respect to offence of dishonour of cheques, it is compensatory aspect of the remedy which should be given priority over the punitive aspect. The aforesaid being the nature of the proceedings under Section 138 of the Act, 1881, the circumstances in which the complainant could not lodge the complaint, within the prescribed period, deserves to be apprised in a slightly different perspective than a case where the prosecution is under an enactment, the primary object of which, is punitive. The conduct of the parties also becomes relevant. In the case at hand, there are documents which indicate that after the service of the demand notice, the accused had not only acknowledged the liability, but also expressly requested the complainant not to act on the demand notice. Subsequently, again a MOU was executed acknowledging the liability and promising to pay the amount in five installments. There are number of messages exchanged between the parties on Whatsapp, which lend prima facie credence to the claim of the complainant that he was made to believe the representations of the accused and forebear from lodging the complaint. The learned Magistrate cannot be said to have committed an error in exercise of discretion to condone the delay. The Revisional Court was justified in refraining from interfering with the exercise of discretion by the learned Magistrate. As the courts below cannot be said to have exercised the discretion in the manner which could be termed perverse and the discretion has been exercised positively to condone the delay which promotes the cause of substantive justice, this Court does not find any reason to interfere with the impugned orders - Petition dismissed.
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