Section 138 NI Act: Demand Notice sent to director is sufficient notice to company

Section 138 NI Act: Demand Notice sent to director is sufficient notice to company [Read the Order]

Section 138 NI Act: Demand Notice sent to director is sufficient notice to company [Read the Order]

Recently, Supreme Court has upheld an order of the Delhi High Court wherein it was observed that demand notice issued to director is sufficient notice to the company.

A bench of Justice Sapre and Justice Malhotra has passed the order in the case titled as M Tech Developers Pvt. Ltd. vs State of NCT of Delhi on 30.07.2019.

Supreme Court observed "Having   heard   the   learned   counsel   for   the parties and on perusal of the record of the case, we are   not   inclined   to   interfere   with   the   impugned order passed by the High Coourt". 

It then observed and held "In our view, the reasoning and the conclusion arrived at by the High Court does not call for any interference. The   Special   Leave   Petition   is accordingly dismissed".

Read also : Mediation in Cheque Bounce Cases: A critical analysis of DB Judgment on Sec.138 NI Act Cases

Earlier, the matter was dealt with by the Delhi High Court in the case titled as Sarabjit Singh vs State on 08.10.2019.

Delhi High Court had noted:

Read also : Section 138, NI Act: Position of Law on Cheque Bounce and Punishment in India By: Akanksha Yadav

"After the said cheques had been returned unpaid, the complainant had sent a legal notice of demand on 01.11.2007. It does appear that the said notice of demand was addressed to the third respondent. But then, it is also clear that the third respondent was not called upon by the said demand notice to be accountable for any personal liability. Reference was made to the three cheques, which concededly had been issued against the account of the company. The notice thus was addressed to the third respondent in his capacity as the director of the company accused, calling him upon to pay against the cheques which had been returned dishonoured. That the notice of demand was directed against the company is how the said notice of demand was understood not only by the third respondent but also by the second respondent. This is reflected by the fact that the reply dated 19.11.2007 to the demand notice was sent not by the third respondent but for and on behalf of the company i.e. the second accused by its authorized representative".

It then observed:

"The scrutiny of the case by the revisional court for purposes of examining as to whether the Metropolitan Magistrate could have exercised the jurisdiction under Section 319 Cr. PC was apparently mis-directed. It examined the case from the perspective of its maintainability against the third respondent which was not a correct approach. It ignored the settled principle that notice to director of the company was sufficient notice to the company".