2024 (3) TMI 273 - HC - Indian Laws

Dishonor 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.

Summary

Issues Involved:
1. Legality, propriety, and correctness of the order condoning the delay in filing the complaint under Section 138 of the Negotiable Instruments Act, 1881.
2. Justifiability of the reasons for condonation of delay.
3. Approach towards condonation of delay in criminal prosecution under Section 138 of the Act, 1881.
4. Impact of assurances and promises by the accused on the delay in filing the complaint.
5. Difference in approach towards condonation of delay in civil and criminal matters.
6. Right of the accused to a fair and speedy trial.
7. Nature of proceedings under Section 138 of the Negotiable Instruments Act, 1881.

Summary:

1. Legality, propriety, and correctness of the order condoning the delay:
The Petitioner challenged the order dated 20 December 2022, passed by the Additional Sessions Judge, which affirmed the Metropolitan Magistrate's order condoning a delay of 1259 days in filing the complaint under Section 138 of the Negotiable Instruments Act, 1881. The delay was condoned based on repeated assurances from the accused, which dissuaded the complainant from filing the complaint within the statutory period.

2. Justifiability of the reasons for condonation of delay:
The courts below found the reasons ascribed by the complainant for the delay, including the accused's repeated assurances and promises to pay the due amount, to be justifiable. The learned Magistrate and the Additional Sessions Judge held that these reasons constituted a sufficient cause for not filing the complaint within the prescribed period.

3. Approach towards condonation of delay in criminal prosecution:
The court emphasized that the principles governing condonation of delay are well recognized. It is not the length of the delay but the sufficiency of the cause that is of critical salience. Courts should adopt a liberal approach in considering the prayer for condonation of delay, promoting the cause of justice by adjudicating matters on merits rather than technicalities.

4. Impact of assurances and promises by the accused:
The accused's repeated assurances and promises to pay the due amount were considered sufficient cause for the delay. The complainant was dissuaded from filing the complaint within the stipulated time due to these assurances, which were supported by documents and correspondence exchanged between the parties.

5. Difference in approach towards condonation of delay in civil and criminal matters:
The court acknowledged a subtle yet significant difference in approach when condoning delay in civil versus criminal matters. While a liberal approach is generally adopted, the court must balance the interests of justice with the rights of the accused to a fair and speedy trial.

6. Right of the accused to a fair and speedy trial:
The court recognized that inordinate delay in criminal proceedings could infringe the accused's right to a speedy trial guaranteed under Article 21 of the Constitution of India. However, in this case, the delay was justified by the accused's conduct, which dissuaded the complainant from filing the complaint earlier.

7. Nature of proceedings under Section 138 of the Negotiable Instruments Act, 1881:
The proceedings under Section 138 of the Act are quasi-criminal in nature, with both punitive and compensatory aspects. The primary object is to ensure the efficiency and value of negotiable instruments in commercial transactions. The court emphasized that the nature of these proceedings warrants a slightly different perspective when considering the condonation of delay.

Conclusion:
The court found no reason to interfere with the impugned orders, as the discretion to condone the delay was exercised positively and promoted substantive justice. The petition was dismissed, and the ad-interim relief was continued for four weeks to allow the Petitioner to approach the Supreme Court.