The Supreme Court of India, in a significant ruling, has held that a court cannot take cognizance of a complaint filed under Section 138 of the Negotiable Instruments Act, 1881, beyond the statutory limitation period unless the complainant files a specific application seeking condonation of delay and provides sufficient reasons for it. The Court quashed the criminal proceedings where a trial court had issued summons on a time-barred complaint without such an application, emphasizing that condonation of delay cannot be “automatic or presumed.”
The judgment was delivered by a division bench comprising Justice Ahsanuddin Amanullah and Justice K. Vinod Chandran in an appeal filed by H. S. Oberoi Buildtech Pvt. Ltd. and its directors against an order of the High Court, which had upheld the trial court’s decision to summon them.
Background of the Case
The appellants, H. S. Oberoi Buildtech Pvt. Ltd. & Ors., had approached the Supreme Court challenging an order dated 21.11.2024 passed by the High Court. The High Court had affirmed a summoning order issued by a lower court in a case initiated by the respondent, M/s MSN Woodtech, under Section 138 of the Negotiable Instruments Act, 1881.
The central issue revolved around the fact that the complaint was filed five days after the expiry of the maximum 30-day period allowed from the date the cause of action arose. The Trial Court, in its order issuing summons, had proceeded on the incorrect premise that the complaint was filed within the period of limitation.
Arguments of the Parties
Learned counsel for the appellants argued that the Trial Court could not have issued summons on a complaint that was admittedly filed beyond the prescribed time limit. It was submitted that the Trial Court “has gone totally beyond the records and has categorically stated in the order issuing summons that the petition filed by the respondent was within the limitation period.” The appellants contended that while the proviso to Section 142 of the Act grants courts the power to condone delay, this power can only be exercised upon the filing of a proper application or affidavit by the complainant detailing the reasons for the delay.
Conversely, learned counsel for the respondent argued that the delay was merely five days and the statute confers power on the court to take cognizance even beyond the limitation period. It was submitted that an affidavit for condonation had been prepared but was “only due to inadvertence” not attached to the complaint at the time of filing. The respondent’s counsel also informed the Court that such an application was pending before the Trial Court and could still be considered.
Court’s Analysis and Findings
After considering the arguments, the Supreme Court found that “the order taking cognizance and issuing summons needs interference.” The bench observed that where the facts clearly show that a complaint was filed beyond the time prescribed by statute, “there cannot be an automatic or presumed condonation.”
The Court heavily criticized the Trial Court’s approach, noting that it proceeded on an “erroneous presumption” that the complaint was filed within limitation. The judgment laid down the correct procedure a court must follow when faced with a time-barred complaint. The bench stated, “…the first requirement is that the Court has to take note of the fact that there is a delay and thereafter it had to go on the point whether the reasons which have been furnished by the complainant are sufficient to condone such delay and only then move on to take cognizance and proceed for issuing of summons.”
The Supreme Court also found the High Court’s reasoning to be “erroneous.” The High Court had opined that the filing of an application for condonation of delay under Section 142(b) of the Act is not a “statutory mandate.” Disagreeing with this view, the Supreme Court held:
“Once the statute prescribes a mandatory time limit for filing a complaint, there cannot be any deviation from the same except when an application accompanying the complaint is filed seeking condonation disclosing reasons for the delay and even then it is obligatory on the part of the Court to take note of such filing beyond limitation and to consider the reasons disclosed independently and to come to a judicious conclusion that in the facts and circumstances of that case condonation is justified.”
Decision
Finding that the mandatory procedure was not followed, the Supreme Court concluded that the summoning order could not be sustained. “The same not having been done, the order cannot be sustained,” the bench ruled.
Accordingly, the appeal was allowed, and the order issuing summons to the appellants by the Trial Court, as upheld by the High Court, was set aside. As a result, the complaint itself was quashed.
The Court also observed that any civil proceedings for the recovery of the amount instituted by the respondent would not be prejudiced by this order.
