SRINAGAR: The Jammu Kashmir and Ladakh High Court has dismissed two petitions filed by a property dealer seeking quashing of cheque dishonour complaints against him, holding that the fact that the complaints were filed a day before the expiry of the statutory 15-day payment period did not invalidate the proceedings, as the period had expired by the time the magistrate took cognizance.
Justice Yash Paul Bourney, while dismissing the petitions filed by Yudhvir Singh Katoch, upheld the orders dated July 30, 2022, passed by the Judicial Magistrate First Class (Sub-Registrar), Srinagar, taking cognizance of offences under Section 138 of the Negotiable Instruments Act, 1881, and issuing process against him.
The court observed that although the complaints had been presented before the expiry of the statutory period, the 15-day period had elapsed by the time the magistrate considered them and took cognizance.
“Thus, even if no cause of action had accrued on the date of filing of the complaints, still by the time the complaints were considered and cognizance was taken by the learned Magistrate, the statutory period had expired,” the court held.
The High Court further observed that the petitioner had not demonstrated any prejudice on account of the complaints being filed a day earlier, particularly as he had not shown any inclination to pay the cheque amounts during the subsequent proceedings.
The dispute arose from a proposed purchase of a plot of land at Nagrota in Udhampur, which the respondents, Basharat Khan and his son Mohsin Khan, had agreed to purchase from Katoch for a total consideration of Rs 83 lakh. According to the respondents, they agreed to purchase the plot in equal proportions after learning that a relative owned a house in the vicinity.
The respondents alleged that Basharat Khan paid Rs 12 lakh in cash to Katoch at his residence, while Mohsin Khan paid another Rs 16 lakh in cash. They later discovered that a dispute existed over the land and that a civil suit concerning it was pending. Following this, the proposed transaction was cancelled and Katoch allegedly undertook to refund the advance payments.
According to the complaints, Katoch issued three cheques in favour of each respondent, all dated April 29, 2022. The cheques issued to Basharat Khan were for Rs 4 lakh, Rs 3 lakh and Rs 2.5 lakh. An identical set of amounts was issued in favour of Mohsin Khan. The cheques were drawn on Jammu and Kashmir Bank’s Jaganoo Morh branch and Union Bank of India’s Udhampur branch.
The respondents further claimed that Katoch subsequently transferred Rs 2 lakh to Basharat Khan through RTGS on May 31, 2022, and assured him that the remaining Rs 50,000 would be transferred shortly. Certain amounts were also transferred to Mohsin Khan through UPI, Google Pay, M-Pay and RTGS on different dates.
However, the respondents maintained that these transfers were towards repayment of amounts owed over and above the liabilities represented by the six cheques, disputing Katoch’s claim that they constituted part-payment of the cheque amounts.
The record showed that the first cheque was returned unpaid on June 8, 2022, while the remaining two cheques were dishonoured on July 4, 2022. Thereafter, composite demand notices covering all three cheques in each complaint were issued on July 7, 2022.
Although Katoch denied receiving the notices, the respondents produced postal tracking reports indicating that the registered letters had been delivered on July 15, 2022, at 1.10 pm.
Both complaints were presented before the Chief Judicial Magistrate, Srinagar, on July 29, 2022, and assigned to the Judicial Magistrate First Class (Sub-Registrar) on the same day. The matter was listed before the latter court on July 30, when cognizance was taken and process issued against Katoch.
Challenging the proceedings, Katoch approached the High Court under Section 482 of the Code of Criminal Procedure, seeking quashing of complaint No. 126/Comp./M, titled Mohsin Khan versus Yudhvir Singh Katoch, and complaint No. 127/Comp./M, titled Basharat Khan versus Yudhvir Singh Katoch, along with the orders taking cognizance.
His counsel, advocate Wajid Mohammad Haseeb, argued that the complaints were premature because they had been instituted before expiry of the statutory 15-day period available to the drawer of a dishonoured cheque to make payment after receiving the demand notice.
He also contended that the demand notices were not issued within the prescribed 30-day period in respect of one of the cheques in each complaint and that a composite notice covering cheques dishonoured on different dates was legally impermissible.
The petitioner further argued that part of the amounts covered by the cheques had already been paid, making recovery of the entire cheque amounts unjustified. He also questioned the proceedings on the ground that the procedure prescribed under Section 202 of the CrPC had not been followed despite his being a resident of Udhampur.
Opposing the petitions, senior advocate S. T. Hussain, assisted by advocate Nida Nazir, argued that the proceedings were an afterthought intended to delay the trial, which had already remained pending for more than three years.
The respondents maintained that the amounts transferred through banking channels were towards repayment of liabilities separate from those covered by the cheques. They also contended that the complaints had been instituted after expiry of the statutory period and that the magistrate’s orders suffered from no illegality or jurisdictional error warranting interference.
Examining the claim of part-payment, Justice Bourney observed that the respondents had furnished details of the amounts advanced, the cheques issued and the subsequent transfers, along with the assurances allegedly given by the petitioner.
The court noted that Katoch had failed to produce material establishing that the transfers made through Google Pay, RTGS and other banking channels were actually towards part-payment of the amounts covered by the cheques.
It also pointed out that he had neither responded to the demand notices nor raised such a plea before the trial court when examined on March 2, 2023, in connection with the allegations in the complaints.
“In these circumstances, the plea now sought to be raised is apparently to be an afterthought, advanced with a view to invoking the jurisdiction of this Court,” the judgment observed.
On the objection concerning the statutory payment period, the High Court relied on the postal tracking reports showing delivery of the notices on July 15, 2022. It held that the petitioner had until July 30, 2022, to make the payments.
The court noted that although the complaints were presented on July 29, cognizance was taken only on July 30, by which time the statutory period had expired.
Referring to the purpose of Section 138 of the Negotiable Instruments Act, the court said its provisions were intended to address financial indiscipline in commercial transactions and must receive a fair, pragmatic, harmonious and purposive interpretation to advance the cause of justice.
Relying on the Supreme Court judgment in Union of India versus Ranbaxy Laboratories Limited and Others, reported as 2008 (7) SCC 502, Justice Bourney observed that courts must avoid interpretations resulting in injustice, absurdity or anomalies.
The court also referred to the Supreme Court judgment in Narashimaha Murthy versus Susheelabai and Others, reported as 1996 (3) SCC 644, which emphasised that the purpose of law was to prevent a sense of injustice.
It further observed that Katoch had not demonstrated any inclination to pay the cheque amounts at any stage during the proceedings spanning more than four years and had suffered no prejudice merely because the complaints were presented a day before expiry of the statutory period.
“Merely filing of the complaints a day earlier was of no consequence when the cognizance thereon came to be taken on the next day only,” the court held.
Dismissing both petitions, the High Court upheld the July 30, 2022, orders taking cognizance and issuing process against Katoch in the two cheque dishonour complaints. It also vacated any interim directions operating in the matter.
The judgment was reserved on October 9 and pronounced on October 28, 2026, by Justice Yash Paul Bourney at Srinagar.
