Can a Magistrate Take Cognizance Under Section 138 NI Act Before Condoning a Belated Complaint?

Summary

Practical Impact

What’s New / What Lawyers Should Note

• Condonation of delay under the proviso to Section 142(1)(b) NI Act must precede taking of cognizance; any other sequence is a curable irregularity only if the delay is subsequently condoned.
• A Magistrate taking cognizance of a belated cheque-dishonour complaint before condoning delay lacks jurisdiction until satisfaction is recorded.
• Failure to accurately aver compliance with limitation in the complaint can lead to quashing of proceedings.
• The ruling binds all subordinate courts in cheque-dishonour matters, defeating any late‐cognizance strategy.
• Lawyers may cite this decision to challenge cognizance orders in pending NI Act prosecutions.

Summary of Legal Reasoning

1. Statutory Text: The proviso to Section 142(1)(b), inserted by Act 55 of 2002, mandates that a belated complaint “may be taken” only after the complainant “satisfies the Court that he had sufficient cause for not making a complaint within such period.”
2. Ordinary Principle of Limitation: Delay‐linked proceedings are not regular court matters until condonation—analogous to CPC Order XLI Rules 3A & 5(3) in civil appeals.
3. Precedent: Dashrath Rupsingh Rathod holds cognizance of Section 138 offences is forbidden before the statutory cause of action accrues and proper limitation compliance.
4. Application: Here, the Magistrate took cognizance on 09.10.2013 before condoning the two-day delay, making that act irregular.
5. Cure vs. Vitiation: Subsequent condonation (30.10.2018) cures the irregularity only if recorded before trial on merits; otherwise the court lacks jurisdiction.
6. Conclusion: The High Court’s acceptance of belated cognizance without prior satisfaction was set aside; the complaint stands quashed.

Arguments by the Parties

Petitioner (Appellant – S. Nagesh)

• The complaint was filed with a delay of sixteen days, not two.
• The Magistrate lacked jurisdiction to take cognizance before condoning delay.
• The entire procedure was contrary to Section 142(1)(b) NI Act and Dashrath Rupsingh Rathod.

Respondent (Shobha S. Aradhya)

• The order dated 23.05.2014 taking cognizance remained unchallenged.
• Delay of two days was bonafide (viral fever) and later condoned, validating initial cognizance.

Factual Background

Between January and July 2010, the appellant borrowed ₹5,40,000 from the respondent. On 10.07.2013 he issued a cheque which was dishonoured for insufficiency of funds. The respondent served notice on 13.08.2013 and, after a two-day delay due to viral fever, filed her complaint on 09.10.2013 under Section 138 NI Act. The Magistrate first took cognizance without noticing delay, granted liberty to contest it at trial, then condoned the two-day delay on 30.10.2018. The Karnataka High Court refused to quash, prompting this appeal.

Statutory Analysis

• Section 138 NI Act creates a presumption of dishonour and a mandatory notice–complaint regime.
• Section 142(1)(b) NI Act (via Act 55/2002) prescribes a one-month limitation after cause of action accrues under clause (c) of the proviso to Section 138.
• The proviso permits belated cognizance only if the complainant shows “sufficient cause” for delay; “satisfaction” by the court must precede cognizance.
• Analogy drawn to CPC Order XLI Rules 3A & 5(3) underscores that delay must be condoned before a matter becomes regular.

Procedural Innovations

• Establishes that magistrates must record satisfaction of sufficient cause before cognizance in NI Act complaints.
• Clarifies that pre-cognizance condonation is a prerequisite, not optional sequencing.
• Consolidates the view that subsequent condonation cures only prior irregularity if recorded before merits hearing.

Alert Indicators

• 🚨 Breaking Precedent – Overrules High Court’s interchangeable approach to delay and cognizance.
• ✔ Precedent Followed – Aligns with Dashrath Rupsingh Rathod v. State of Maharashtra.