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CASE NO.:

Appeal (crl.) 957 of 2000

PETITIONER:

DALMIA CEMENT (BHARAT) LTD.

Vs.

RESPONDENT:

M/S.GALAXY TRADES & AGENCIES LTD. & ORS.

DATE OF JUDGMENT: 19/01/2001

BENCH:

R.P.Sethi,, K.T.Thomas

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

SETHI,J.

The complaint filed under Section 138 of the

Negotiable Instruments Act, 1881 (hereinafter called "the

Act") was quashed by the High Court vide the judgment

impugned in this appeal holding that the same was barred by

time as the complainant had allegedly failed to file it

within the statutory period from the date of accruing of the

cause of action. In order to appreciate the legal

submissions, a resume of facts of the case is necessary. In

its complaint, the appellant-company had stated that Accused

Nos.2 to 9 who are partners of respondent-firm purchased

cement from it and issued cheque for Rs.9,13,353.84 on 26th

May, 1998 which was drawn on Karur Vysa Bank Ltd., Ernakulam

Branch. When presented for collection, the cheque was

dishonoured on account of insufficiency of funds in the

account of the accused. The information regarding non

payment of the cheque amount was communicated by the Bank to

the complainant on 2.6.1998. The complainant on 13.6.1998,

through its Advocate, issued a statutory notice in terms of

Section 138 of the Act intimating respondents 1 and 2

regarding the dishonour of the cheque and calling upon the

respondents to pay the said amount within a period of 15

days from the receipt of the said notice. The postal

acknowledgement receipt of the notice, served upon the

respondents, was received by the complainant on 15.6.1998.

However, the respondents 1 and 2, vide their letter dated

20th June, 1998, which was received by the Advocates of the

appellant on 30th June, 1998, intimated that they had in

effect received empty envelopes without any contents and

requested the appellant to mail the contents. It is worth

noticing that by the time the complainant received the

intimation of the respondents, the statutory period of

filing the complaint was about to expire. Believing the

averments of the respondents to be true, though not

admitting but as an abundant caution the appellant presented

the cheque again on 1.7.1998 to the drawee bank through

their bankers. The cheque was again dishonoured by the

drawee bank on 2.7.1998. A registered statutory notice was

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issued to the accused intimating the dishonour of the cheque

and the payment was demanded. The accused received the said

notice on 27.7.1998 but did not make the payment. According

to the complainant, the accused on 6.7.1998 sent a

registered cover to its Ernakulam office which contained

some waste newspaper bits. As despite dishonour of the

cheque and receipt of notice, the cheque amount was not

paid, the appellant filed the complaint on 9th Setpember,

1998, admittedly, within the statutory period from the

second notice. The Additional Chief Judicial Magistrate,

Ernakulam took the cognizance and issued process to the

respondents. Instead of appearing before the Magistrate,

the respondents filed a petition under Section 482 of the

Code of Criminal Procedure in the High Court praying for

quashing the complaint on the ground that the same was

barred by limitation which was disposed of vide the judgment

impugned in this appeal. The Act was enacted and Section

138 thereof incorporated with a specified object of making a

special provision by incorporating a strict liability so far

as the cheque, a negotiable instrument, is concerned. The

law relating to negotiable instrument is the law of

commercial world legislated to facilitate the activities in

trade and commerce making provision of giving sanctity to

the instruments of credit which could be deemed to be

convertible into money and easily passable from one person

to another. In the absence of such instruments, including a

cheque, the trade and commerce activities, in the present

day would, are likely to be adversely affected as it is

impracticable for the trading community to carry on with it

the bulk of the currency in force. The negotiable

instruments are in fact the instruments of credit being

convertible on account of legality of being negotiated and

are easily passable from one hand to another. To achieve

the objectives of the Act, the legislature has, in its

wisdom, thought it proper to make such provisions in the Act

for conferring such privileges to the mercantile instruments

contemplated under it and provide special penalties and

procedure in case the obligations under the instruments are

not discharged. The laws relating to the Act are,

therefore, required to be interpreted in the light of the

objects intended to be achieved by it despite there being

deviations from the general law and the procedure provided

for the redressal of the grievances to the litigants.

Efforts to defeat the objectives of law by resorting to

innovative measures and methods are to be discouraged, lest

it may affect the commercial and mercantile activities in a

smooth and healthy manner, ultimately affecting the economy

of the country. Section 138 of the Act makes a civil

transaction to be an offence by fiction of law. Where any

cheque drawn by a person on an account maintained by him

with a banker for payment of any amount of money to another

person is returned by the bank unpaid either because of the

amount or money standing to the credit of that person being

insufficient to honour the cheque or that it exceeds the

amount arranged to be paid from that account, such person,

subject to the other conditions, shall be deemed to have

committed an offence under the Section and be punished for a

term which may extend to one year or with fine which may

extend to twice the amount of cheque or with both. To make

the dishonour of the cheque as an offence, the aggrieved

party is required to present the cheque to the bank within a

period of six months from the date on which it is drawn or

within the period of its validity, whichever is earlier and

the payee or the holder in due course of the cheque makes a

demand for payment of the cheque amount by giving a notice

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in writing to the drawer of the cheque within 15 days of the

receipt of information by him from the bank regarding the

return of the cheque as unpaid and drawer of the such cheque

fails to make the payment of the amount within 15 days of

the receipt of the said notice. Section 139 refers to

presumption that unless the contrary is proved, the holder

received the cheque of the nature referred to under Section

138 for the discharge in whole or in part or of any debt or

other liability. Section 140 restricts the defence in any

prosecution under Section 138 of the Act and Section 141

refers to such offence committed by the companies. Section

142 provides that notwithstanding anything contained in the

Code of Criminal Procedure no court shall take congnizance

of an offence under the Section except upon a complaint in

writing made by the payee or as the case may be, the holder

of the cheque and that such complaint is made within one

month of the date on which the cause of action arose under

clause (c) of proviso to Section 138 of the Act. Supporting

the judgment of the High Court, the learned counsel

appearing for the respondents has submitted that as upon

presentation and dishonour of the cheque by the bank on 28th

May, 1998 which was intimated to the complainant, a cause of

action had accrued, the complaint could be filed only within

30 days from the date of the alleged receipt of the first

notice by the accused. He contends that as according to the

complainant the postal acknowledgement receipt of the notice

was received by the complainant on 15th June, 1998, the

complaint filed by it after 15th July, 1998 was barred by

time. As admittedly, the complaint was filed by the

appellant on 9th September, 1998, it is contended that the

same being barred by limitation was rightly quashed by the

High Court. However, the learned counsel for the appellant

submitted that as the respondents had disclaimed to have

received the notice of dishonour sent to them on 13th June,

1998, no option was left to the appellant except to present

the cheque again and when not paid, serve a fresh notice for

the purposes of making out a case and offence within the

meaning of Section 138 of the Act. To constitute an offence

under Section 138 of the Act the complainant is obliged to

prove its ingredients which include the receipt of notice by

the accused under clause (b). It is to be kept in mind that

it is not the 'giving' of the notice which makes the offence

but it is the 'receipt' of the notice by the drawer which

gives the cause of action to the complainant to file the

complaint within the statutory period. This Court in

K.Bhaskaran v. Sankaran Vaidhyan Balan & Anr. [1999 (7)

SCC 510] considered the difference between 'giving' of a

notice and 'receipt' of the notice and held: "On the part

of the payee he has to make a demand by 'giving a notice' in

writing. If that was the only requirement to complete the

offence on the failure of the drawer to pay the cheque

amount within 15 days from the date of such 'giving', the

travails of the prosecution would have been very much

lessened. But the legislature says that failure on the part

of the drawer to pay the amount should be within 15 days 'of

the receipt' of the said notice. It is, therefore, clear

that 'giving notice' in the context is not the same as

receipt of notice. Giving is a process of which receipt is

the accomplishment. It is for the payee to perform the

former process by sending the notice to the drawer at the

correct address.

In Black's Law Dictionary 'giving of notice' is

distinguished from 'receiving of notice' (vide p.621): "A

person notifies or gives notice to another by taking such

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steps as may be reasonably required to inform the other in

the ordinary course, whether or not such other actually

comes to know of it'. A person 'receives' a notice when it

is duly delivered to him or at the place of his business.

If a strict interpretation is given that the drawer

should have actually received the notice for the period of

15 days to start running no matter that the payee sent the

notice on the correct address, a trickster cheque drawer

would get the premium to avoid receiving the notice by

different strategies and he could escape from the legal

consequences of Section 138 of the Act. It must be borne in

mind that the court should not adopt an interpretation which

helps a dishonest evader and clips an honest payee as that

would defeat the very legislative measure.

In Maxwell's Interpretation of Statutes, the learned

author has emphasised that 'provisions relating to giving of

notice often receive liberal interpretation' (vide p. 99 of

the 12th Edn.). The context envisaged in Section 138 of the

Act invites a liberal interpretation for the person who has

the statutory obligation to give notice because he is

presumed to be the loser in the transaction and it is for

his interest the very provision is made by the legislature.

The words in clause (b) of the proviso to Section 138 of the

Act show that the payee has the statutory obligation to

'make a demand' by giving notice. The thrust in the clause

is on the need to 'make a demand'. It is only the mode for

making such demand which the legislature has prescribed. A

payee can send the notice for doing his part for giving the

notice. Once it is despatched his part is over and the next

depends on what the sendee does.

It is well settled that a notice refused to be

accepted by the addressee can be presumed to have been

served on him (vide Harcharan Singh v. Shivrani 1981 (2)

SCC 535 and Jagdish Singh v. Natthu Singh 1992 (1) SCC 647.

Here the notice is returned as unclaimed and not as

refused. Will there by any significant difference between

the two so far as the presumption of service is concerned?

In this connection a reference to Section 27 of the General

Clauses Act will be useful. The section reads thus:

27. Meaning of service by post-- Where any Central

Act or Regulation made after the commencement of this Act

authorises or requires any document to be served by post,

whether the expression 'serve' or either of the expression

'give' or 'send' or any other expression is used, then,

unless a different intention appears, the service shall be

deemed to be effected by properly addressing, pre-paying and

posting by registered post, a letter containing the

document, and unless the contrary is proved, to have been

effected at the time at which the letter would be delivered

in the ordinary course of post."

Section 27 of the General Clauses Act deals with the

presumption of service of a letter sent by post. The

despatcher of a notice has, therefore, a right to insist

upon and claim the benefit of such a presumption. But as

the presumption is rebuttable one, he has two options before

him. One is to concede to the stand of the sendee that as a

matter of fact he did not receive the notice, and the other

is to contest the sendee's stand and take the risk for

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proving that he in fact received the notice. It is open to

the despatcher to adopt either of the options. If he opts

the former, he can afford to take appropriate steps for the

effective service of notice upon the addressee. Such a

course appears to have been adopted by the appellant-company

in this case and the complaint filed, admittedly, within

limitation from the date of the notice of service conceded

to have been served upon the respondents. In Sadanandan

Bhadran v. Madhavan Sunil Kumar [1998 (6) SCC 514] this

Court held that clause (a) of the proviso to Section 138 did

not put any embargo upon the payee to successively present a

dishonoured cheque during the period of its validity. On

each presentation of the cheque and its dishonour a fresh

right and not cause of action accrues. The payee or holder

of the cheque may, therefore, without taking pre-emptory

action in exercise of his right under clause (b) of Section

138 of the Act, go on presenting the cheque so as to enable

him to exercise such right at any point of time during the

validity of the cheque. But once a notice under clause (b)

of Section 138 of the Act is 'received' by the drawer of the

cheque, the payee or the holder of the cheque forfeits his

right to again present the cheque as cause of action has

accrued when there was failure to pay the amount within the

prescribed period and the period of limitation starts to run

which cannot be stopped on any account. This Court

emphasised that "needless to say the period of one month

from filing the complaint will be reckoned from the date

immediately falling the day on which the period of 15 days

from the date of the receipt of the notice by the drawer

expires" (emphasis supplied). In SIL Import, USA v. Exim

Aides Silk Exporters, Bangalore [1999 (4) SCC 567] the

respondents therein was an exporter of finished silk goods

and the appellant company based at USA was an importer. The

appellant owed a certain amount towards sale consideration

of goods exported to it by the respondent and issued some

cheque in their favour. Two of such cheques were returned

dishonoured with reason "no sufficient funds". The

respondents sent a notice to the appellant-company by fax on

11.6.1996 and notice by registered post on the next day

which was received by the appellant on 25th June, 1996. The

respondents filed a complaint before the Magistrate in

respect of the said cheques on 8.8.1996. The appellant

contended that the cause of action having accrued on the

expiry of 15 days from the date of notice sent by fax on

26th June, 1996, the limitation for filing the complaint

expired on 27th June, 1996, therefore, the complaint filed

on 8.8.1996 could not be taken congnizance of by the trial

court. Allowing the appeal this Court held: "The language

used in the above section admits of no doubt that the

Magistrate is forbidden from taking cognizance of the

offence if the complaint was not filed within one month of

the date on which the cause of action arose. Completion of

the offence is the immediate forerunner of rising of cause

of action. In other words cause of action would arise soon

after completion of the offence, and the period of

limitation for filing the complaint would simultaneously

start running.

To circumvent the above hurdle, the respondent

submitted that 15 days can be counted only from 25.6.1996,

the date when the appellant received the notice sent by

registered post and the cause of action would have arisen

only on 11.7.1996. The complaint which was filed on

8.8.1996 is therefore within time, according to the learned

counsel for the respondent.

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xxxxxx

The requirement for sending a notice after the cheque

is returned by the bank unpaid is set out in clauses (b) and

(c) of the proviso to Section 138 of the Act. They read

thus:

"Provided that nothing contained in this Section shall

apply unless--

(a) x x x

(b) the payee or the holder in due course of the

cheque, as the case may be, makes a demand for the payment

of the said amount of money by giving a notice in writing,

to the drawer of the cheque, within fifteen days of the

receipt of information by him from the bank regarding the

return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the

payment of the said amount of money to the payee or as the

case may be, to the holder in due course of the cheque

within fifteen days of the receipt of the said notice".

The duty cast on the payee on receipt of information

regarding the return of the cheque unpaid is mentioned in

clause (b) of Section 138. Within 15 days he has to make a

demand for payment. The mode of making such a demand is

also prescribed in the clause, that it should be 'by giving

notice in writing to the drawer of the cheque'. Nowhere it

is said that such notice must be sent by registered post or

that it should be despatched through a messenger."

and concluded:

"The upshot of the discussion is, on the date when the

notice sent by fax reached the drawer of the cheque the

period of 15 days (within which he has to make the payment)

has started running and on the expiry of the period the

offence is completed unless the amount has been paid in the

meanwhile. If no complaint was filed within one month

therefrom the payee would stand forbidden from launching a

prosecution thereafter, due to the clear interdict contained

in Section 142 of the Act."

It is conceded in this case that in response to the

notice sent by the appellant through their counsel on 13th

June, 1998, the respondents herein, vide their letter dated

20th June, 1998, intimated "received one empty envelope

without any content in it. Therefore request you to kindly

send the content, if any". This intimation was received by

the appellant on 30th June, 1998, the day on which the

period of limitation on the basis of earlier notice was to

expire. They had exercised the option to accept the

averments made by the respondents in their letter dated 20th

June, 1998 and issue a fresh notice after again presenting

the cheque. The respondents have not denied the issuance of

their letter dated 20th June, 1998. Despite admitting its

contents, they opted to approach the High Court for quashing

the proceedings merely upon assumption, presumption and

conjectures. They tried to blow hot and cold in the same

breath, stating on the one hand that the notice of dishonour

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has not been received by them and on the other praying for

dismissal of the complaint on the plea that the complaint

was barred by time in view of the notice served by the

appellant which they had not received. The plea of the

respondents was not only contradictory, and after thought

but apparently carved out to resist the claim of the

complainant and thereby frustrate the provisions of law.

The High Court fell in error by not referring to the letter

of the respondents dated 20th June, 1998 and quashing the

proceedings merely by reading a line from para 6 of the

complaint. The appellant in para 7 of their complaint had

specifically stated that "Even though the complainant is not

admitting the said allegation, on abundant caution the

complainant presented the cheque again on 1.7.98 to the

drawee bank through the complainant's bankers, Punjab

National Bank. The cheque was again dishonoured by the

drawee bank on 2.7.98 a registered lawyer notice was issued

to the 1st accused firm as well as to the 2nd accused

intimating the dishonour of the cheque and demanding

payment. The accused have received the notice on 27.7.98.

The accused did not make any payment so far". The receipt

of the second notice has concededly not been denied by the

respondents. Under the circumstances the appeal is allowed

and the order of the High Court quashing the complaint filed

by the appellant is set aside. The trial Magistrate is

directed to proceed against the respondents in accordance

with the provisions of law and expeditiously dispose of the

complaint.