Kiran Raj

The High Court at Calcutta, Criminal Appellate Jurisdiction, has granted special leave to appeal in a case concerning Sections 138 and 141 of the Negotiable Instruments Act, 1881. The judgement, delivered by Justice Bibhas Ranjan De on March 11, 2025, follows a petition filed under Section 378(4) of the Code of Criminal Procedure (Cr.P.C) seeking special leave to challenge an order passed by the Metropolitan Magistrate, 6th Court, Calcutta, on January 19, 2023.

The court has also condoned a 292-day delay in filing the special leave petition under Section 5 of the Limitation Act, allowing the appellant, MMTC Limited, to proceed with the appeal against M/s. R. Priyarelall Iron & Steel Private Limited and another. The case revolves around dishonoured cheques totalling Rs. 18 crores, issued as part of a business transaction for the supply of LAM Coke.

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The dispute originated from a complaint filed under Section 138 of the Negotiable Instruments Act by MMTC Limited, a Government of India enterprise. MMTC Limited alleged that it had engaged in business transactions with M/s. R. Priyarelall Iron & Steel Private Limited, which involved supplying LAM Coke under various agreements. As part of the transaction, the accused company issued post-dated cheques as security for outstanding dues.

Initially, the accused company had issued cheques amounting to Rs. 58.05 crores, which were later reduced to Rs. 25 crores upon mutual agreement. The appellant claimed that after repeated assurances and discussions, the liability of the accused company was further reduced to Rs. 11.50 crores during a joint meeting held on July 18, 2011. To reinforce trust and confidence, the accused company replaced the previously issued cheques with fresh post-dated cheques amounting to Rs. 25 crores.

Despite these assurances, the accused company allegedly failed to honour its financial commitments. On January 16, 2012, four cheques drawn on HDFC Bank, totalling Rs. 18 crores, were presented for clearance but were dishonoured with the reason "payment stopped by drawer." Subsequently, the accused moved the Calcutta High Court on January 17, 2012, obtaining an interim order of status quo on payments secured by a bank guarantee.

On February 8, 2012, MMTC Limited sent a final communication demanding payment of the outstanding amount. Following non-compliance, the appellant issued a statutory demand notice under Section 138(b) of the NI Act on February 11, 2012, requiring the accused to clear the dues within 15 days. The notice was duly served on February 14, 2012. However, the accused did not comply with the demand, leading to the filing of the complaint case.

The case was initially tried before the Metropolitan Magistrate, 6th Court, Calcutta, under Sections 138/141 of the NI Act. However, due to the absence of the complainant, the trial court dismissed the complaint under Section 256 Cr.P.C on January 19, 2023, acquitting the accused. The appellant subsequently sought special leave to appeal against the dismissal and applied for condonation of the delay.

Justice Bibhas Ranjan De considered the reasons for the delay and the arguments presented by both parties. The appellant contended that the delay was due to procedural formalities intrinsic to government enterprises, administrative approvals, and the COVID-19 pandemic, which led to the temporary closure of its regional office. The appellant further argued that its former advocate failed to take necessary steps in the trial court, and the notice issued by the trial court on November 21, 2022, was not received due to the relocation of the regional office.

The respondents opposed the condonation of delay, asserting that the appellant failed to explain the period between January 14, 2020, and the start of the COVID-19 lockdown in March 2020. They also pointed out that the appellant’s office resumed operations in November 2020, yet no attempt was made to pursue the matter. The respondents further argued that administrative lapses within a government entity cannot be a valid excuse for delay, stating that the appellant had sufficient opportunity to file the appeal through online modules available during the pandemic.

The court examined relevant judicial precedents regarding condonation of delay, including Pathapati Subba Reddy vs. Special Deputy Collector (2024 SCC OnLine SC 513), Union of India vs. Rishabh Constructions Pvt Ltd. (ARB.A. (COMM.) 44/2024), and Government of Maharashtra vs. Borse Brothers Engineers and Contractors Pvt. Ltd. (2021) 6 SCC 460. The respondents relied on these cases to argue that government bodies are not entitled to automatic condonation and must provide sufficient cause with detailed justifications for the delay.

The court, however, also considered the judgement in CBI vs. Binod Kumar Maheswari (2024 SCC OnLine Cal 1339), which stated that procedural and bureaucratic delays in government entities should be examined pragmatically.

In its observations, the court recorded:

"In my humble opinion, any party to an application, even if it is a government organization, should strictly adhere to the rules of limitation, and therefore, no relaxation should automatically be granted to a party for being a government organization due to procedural delay."

However, the court further noted that since the trial court dismissed the case due to non-prosecution rather than on merits, there was still scope for the appellant to present its case. The explanation provided for the delay was found to be plausible and not indicative of deliberate negligence or malafide intent. Therefore, the court deemed it appropriate to condone the delay.

The court allowed the application for condonation of delay and granted special leave to appeal. The appellant was directed to file the memorandum of appeal within the statutory period.

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Additionally, the court issued a cautionary note:

"I would like to remind the concerned Government Department that they are under a special obligation to perform their duties with due diligence and commitment. Condonation of delay should not be used as an anticipated benefit for the Government Departments who are party to a case, as the law shelters everyone under the same light."

Advocates Representing the Parties

For the Petitioner/Appellant: Sandipan Ganguly, Sr. Counsel, Swarajit Dey, Piyush Kumar Ray, Vipul Vedant, Advocates.

For the Respondents: Mr. Phiroze Edulji, Sr. Counsel and Mr. Koushik Kundu, Advocate.

Case Title: MMTC Limited vs. M/s. R. Priyarelall Iron & Steel Private Limited & Anr.

Case Number: CRMSPL 78 of 2023 with IA NO: CRAN 1 of 2023

Bench: Justice Bibhas Ranjan De

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