Magistrate’s Order taking cognizance of offence couldn’t be quashed on ground of payment of insufficient Court fees

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  • Last Updated on 7 October, 2021

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Negotiable Instruments Act 1881 - Dishonour of cheque for insufficiency of funds

Case Details: Sree Metaliks Ltd. v. Agarwal Fuel Corporation (P.) Ltd. - [2021] 130 taxmann.com 398 (Orissa)

Judiciary and Counsel Details

    • S.K. Mishra, J.
    • Sanjeev Udgata, S.B. Udgata and A. Mishra for the Petitioner. 
    • Biswajit Nayak, B.R. Sahu and S. Samal for the Respondent.

Facts of the Case

In the given case, the complainant supplied coal to the petitioner company for valuable consideration. As a result, the petitioner issued several cheques amounting to almost 10 crore rupees. All the cheques were presented before the bank, but the cheques were not honored, which led to the issuance of notices as envisaged under clause (b) of the proviso to section 138 of the Negotiable Instrument Act, 1881.

After service of such notices, there is no payment by the petitioner; the complaints were lodged before the SDJM. The Magistrate took cognizance of the offence under section 138 of the NI Act.

Thereafter, the petitioner submitted that the complaint was to be filed through the Director or Principal Officer of the complainant. However, in the present cases, the complaint was filed by the In-charge, Senior Clerk of the complainant company who had no statutory power nor had been authorized by the Board of Directors of the company to file a complaint case against the petitioner.

In addition to the foregoing, it was also alleged that as insufficient court fees were paid in the cases, the complaint should be dismissed.

High Court Held

The High Court of Orissa found that the complaint has been filed by the Deputy In-charge of the complainant and he has been duly authorized by the Board of Directors of the company to file the case and that he is competent to swear an affidavit on behalf of the company.

So, it is apparent from the record that in these cases, the complaint has been filed by an employee of the company, he was duly authorized by a Resolution of the Board of Directors (as there is nothing on record to disbelieve this document on the face of it), and that the complaint has been made in the name of the company.

Further, if insufficient court fees are paid in a proceeding, be it a civil or criminal, the proceeding should not be dismissed at the threshold, rather the Court is under a duty to give a reasonable opportunity to the petitioner in a complaint case or the plaintiff in a civil proceeding to pay the deficit court fees. In no case, a proceeding should be dismissed for payment of inadequate court fees without affording a reasonable opportunity to the petitioner, complainant, or plaintiff to make good deficit court fees.

Further, if the petitioner accused wants to disputes those facts and statements, the said issues may be raised at the time of the trial of the cases. Hence, the orders taking cognizance of offences against the petitioners cannot be quashed. Furthermore, when the complainant alleges that a large sum of money (approximately ten crores of rupees) was to be paid to it through cheques and all the cheques bounced, the complaints should not be dismissed at the threshold. As a result, the cognizance taken by the Magistrate, cannot be quashed or set aside.

List of Cases Referred to

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