A

B

M/S. SIL IMPORT, USA

v.

M/S. EXIM AIDES SILK EXPORTERS, BANGALORE

MAY 3, 1999

[K.T. THOMAS AND M.B. SHAH, JJ.]

Negotiable Instruments Act, 1988-Sections 138, 142-Prosecution for

dishonour

of cheques-Appellant issuing a cheque to Respondent-Returned

by Bank for want

of funds-Respondents sending notice by fax-Subsequent

C notice also sent by registered post-Complaint filed within

30 days after

receipt

of registered notice but beyond limitation after receipt of fax notice­

Whether barred by time-Held, yes-The cause of action arose on receipt of

fax notice, Hence the court

1has no jurisdiction to take cognizance of the

complaint.

D

Interpretation of Statutes

Negotiable Instruments Act, 1988-Sections

138, 142-Whether notice

by fax is compliance with legal requirement

of

"Notice in Writing"-Held,

yes-The legislature must be presumed to have been aware of the modern

E devices and equipment already in vogue and also in store for future.

The appellant owed a huge sum of money to the Respondent towards·

export sale consideration of finished silk products on the orders placed by

them.

The appellant issued two post-dated cheques to Respondent.

On

presentation they were returned for want of sufficient funds. The respondent

p sent a notice to appellant by fax on 11.6.1996 and on the next day the notice

was again sent by registered post which was served on 25.6.1996.

The

respondent then filed a complaint before the Magistrate's Court on 8.8.1996.

After process was served, the appellant filed a petition to quash the complaint

and the Magistrate dismissed the complaint on the ground of delay.

G The revision petition filed before the High Court by the Respondent

was allowed.

The High Court held that the cause of action would arise only

after expiry of 15 days from date of receipt of registered notice and therefore

the complaint was filed within time.

On appeal the appellant contended that the magistrate .tias no

H jurisdiction to take cognizance of the offence after expiry of 30 days from

958

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SILIMPORT, USA v. EXIM AIDES SILK EXPORTERS 959

the date of cause of action and in the present case the respondent's complaint A

is barred by time, and that if the notice sent by fax is to be treated as the

notice in writing contemplated under the provisions

of the Act the period of

limitation expired on 26. 7.1996.

The respondent contended

that 15 days can be counted only from the

date when the appellant received the notice sent by registered post,

and that B

the complaint was therefore within time.

Allowing the Appeal, the

Court

HELD : 1.

On the date when the notice sent by fax reached the drawer

of the cheque the period of 15 days has started running and on the expiry C

of that 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. In this case the

complainant has admitted the fact

that written notice was sent by fax. The D

appellant has admitted its receipt on the same date. The last day when the

respondent could have

filed the complaint was 26-7-1996. But the complaint

was fded only on 8-8-1996. So the court has no jurisdiction to take cognizance

of the offence on the said complaint. [966-E-G]

2. The High Court's view that the sender of the notice must know the E

date when it was received by the sendee, for otherwise he would not be in a

position to count the period in

order to ascertain the date when cause of

action has arisen is fallacious. As per the clause (c) of

Section 138, the

starting date

of

"the receipt of the said notice". Once it starts, the offence

is completed on the failure to pay the amount within 15 days therefrom.

Cause

of action would arise if the offence is committed. If a different F

interpretation is given, the absolute interdict incorporated in

Section 142 of

the Act that no court shall take cognizance of any offence unless the complaint

is made within one month of the date on which the cause of action arises,

would become otiose. (964-G; 965-A-B]

Sadanandan Bhadran v. Madhavan Sunil Kumar, (1998] 6

SCC 514,

referred to.

G

3. When the legislature contemplated that notice in writing should be

given to the

drawer of the cheque, the legislature must be presumed to have

been aware

of the modern devices an equipment already in vogue and also H

960' SUPREME COURT REPORTS [1999] 2 S.C.R.

A in store for future. So if the notice envisaged in clause (b) of the proviso to

Section 138 was

transmitted by fax it would be compliance with the legal

requirement. [963-H; 964-G]

State v.

S.J. Choudhary, [1996) 2 SCC 428, referred to.

B Francis Bennion "Statutory interpretation", referred to.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.

488of1999 .

. From the Judgment and Order dated 4.11.98 of the Karnataka High Court

C in Crl. R. No. 851of1996.

D

Dhruv Mehta, S.K. Mehta, F. Anam and Ms. Shobha for the Appellant.

Krishnamurthi Swami and G.R. Mohan for the Respondent.

The Judgment

of the Court was delivered by

THOMAS,

J. Leave granted.

A fax message sent by the respondent for his own safeguard has now

boomeranged. Neither can he disown sending the fax message nor can he

E own its full implication. Thus he is forked in a catch-22-situation.

Such a

situation arose in a criminal proceeding which respondent launched against

appellant for the offence under Section 138 of the Negotiable Instruments Act

(for short 'the Act').

F

How the

above situation is reached can be summarised thus:

Respondent

is a proprietary concern doing business in finished silk

products by exporting them to foreign countries. Appellant

is a company

having its Headquarters in California

(USA). Appellant has been placing

orders with the respondent for exporting such silk materials. According to the

G respondent, appellant owed a sum of 72075

U.S. dollars (equivalent to more

than 26 lakhs

of rupees) towards the sale consideration of several consignments

of materials despatched to the appellant on the orders placed. After much

correspondence and negotiations appellant company issued some post dated

cheques on

State Bank of India (California-ARTESIA Branch). Three of such

cheques were presented on 3-5-1996 after those cheques attained maturity, for

H encashment through Bank of Madurai, Bangalore Branch. Two cheques were

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SILIMPORT, USAv. EXIMAIDES SILK EXPORTERS [THOMAS,J.] 961

returned dishonoured with the reason "no sufficient funds". A

On receipt of such intimation respondent sent a notice to the appellant

company by

fax on 11-6-1996.

On the next day the respondent sent the same

notice by registered post also which was served on the appellant on 25-6-

1996. On 8-8-1996 respondent filed a complaint before the Additional Chief

Metropolitan Magistrate, Bangalore

in respect of cheque No.188 dated 20-1

~ B

1995 (for 5998.40 US dollars) and another cheque No.187 (with which the

present appeal

is not concerned). The Metropolitan Magistrate, after receiving

the complaint on file took cognizance

of the offence and

issued process to

the appellant. It was sought to be quashed for which the appellant filed a

petition before the magistrate on various grounds. Learned magistrate upheld

C

some of the grounds urged by the appellant and dismissed the complaint

discharging the accused by his order dated 20-11-1996.

Respondent thereupon moved the High Court

of Karnataka in revision

against the aforesaid order

of discharge. A single judge of the High Court

allowed the revision petition and set aside the order

of the Metropolitan D

Magistrate and restored the complaint on file with a direction to proceed with

the prosecution

in respect of cheque No.188. It is the said order of the High

Court which

is now being challenged.

The only point canvassed by the appellant, in this appeal, was that the

magistrate has

no jurisdiction to take cognizance of the offence after the E

expiry of

30 days from the date of cause of action and in this case when

respondent filed a complaint on 8-8-1996, the aforesaid period

of

30 days

stood expired much earlier. The said plea was based on the fact situation that

respondent sent the notice by fax on 11-6-1996 receipt

of which has been

owned by the appellant

in full measure. If the notice sent by fax is to be F

treated as

tile notice in writing contemplated in the Section, the cause of

action should have arisen on the expiry of 15 days therefrom (i.e. 26-6-1996)

and the period

of limitation for filing the complaint expired on 26-7-1996,

according to the appellant. As the complaint was filed long after that date the

magistrate has no jurisdiction to take cognizance

of the offence, contended

learned counsel.

G

Section 142 of the Act reads thus:

'142.

Cognizance of ojfences:-Notwithstanding

anythfog contained

in the Code

of Criminal Procedure, 1973 (2of1974),

(a) no court shall take cognizance of any offence punishable under H

962 SUPREME COURT REPORTS [1999) 2 S.C.R.

A section 138 except upon a complaint, in writing, made by the payee

or,

as the case may be, the holder in due course of the cheque;

B

(b) such complaint is made within one

month of the date on which

the cause

of action arises under clause (c) of the proviso to section

138;

(c) no court inferior to that of a Metropolitan Magistrate

or a Judicial

Magistrate

of the first class shall try any offence

punish~ble under

Section 138.'

The language used in the above Section admits of no doubt that the

C magistrate is forbidden from taking cognizance of the offence ifthe 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.

D

E

F

·'

G

To circumvent the above hurdle, respondent submitted that 15 days can

be counted only from 25-6-1996 the date when 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.

The above controversy could have been averted

if respondent had

filed

the complaint on any day between I Ith and 26th of July, 1996, because any

date during that interregnum would have been good either when the fax

message

is treated as the notice or when the registered notice is treated as

the required intimation. Hence, on the facts

of the case, the real

point in

controversy is, when did the cause

of action arise? A decision on the said

point is vitally crucial for further continuance

of the criminal proceeding, as

law has imposed an interdict on the court against taking cognizance

of the

offence after the expiry

of

30 days counted from the date of arising of cause

of action.

Learned single judge has adopted the following reasoning for concluding

that the cause

of action had arisen on the expiry.of 15 days from 25-6-1996:

"This is a situation whereby the petitioner/complainant had placed

himself within the two horns

of a bull and it was not possible for him

to avoid strike to one or the other. To put it otherwise,

if the

H complainant had lodged the complaint under the assumption that the

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SIL IMPORT, USA v. EXIM AIDES SILK EXPORTERS [THOMAS, J.] 963

fax message was received by him, the accused would have contended A

that he had not received the fax message and therefore, the complaint

filed on the basis

of it is premature, as there is nothing for the

complainant to establish that the same was served on him. To be on

a safer side, he has waited for the acknowledgement

of the notice sent

to him and filed

it within 45 days from the date of receipt of the B

acknowledgement."

The sum and substance

of the said reasoning appears to be that cause

of action would arise only on the expiry of 15 days from the date which the

complainant knows to be the date

of service of notice.

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 riroviso to Section 13 8

of the Act. They read thus:

"Provided that nothing contained in this section shall apply unless:-

(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

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.

Chapter XVII

of the Act, containing Sections 138 to 142, was inserted

in the Act

as per Banking

Public Financial Institution and Negotiable

Instruments Laws (Amendment) Act, 1988. When the legislature contemplated

that notice in writing should

be given to the drawer of the cheque, the

legislature must

be presumed to have been aware of the modem devices and

c

D

E

F

G

H

964 SUPREME COURT REPORTS [1999]'2 S.C.R.

A equipment already in vogue and also in store for future. If the court were to

interpret the words 'giving notice

in writing' in the section as restricted to the

customary mode

of sending notice through postal service or even by personal

delivery, the interpretative process would fail to cope

up with the change of

time.

B

Facsimile (or Fax) is a way of sending hand-written or printed or

tyQed

materials as well as pictures by wire or radio. In the West such mode of

transmission came to wide use even way back in the late 1930s. By 1954

International News Service began to use Facsimile quite extensively.

Technological advancement like Facsimile, Internet, E-mail etc. were

on swift

C progress even before the Bill for the Amendment Act was discussed by the

Parliament.

So when Parliament contemplated notice in writing to be given we

cannot overlook the fact that Parliament was aware

of modem devices and

equipment already

in vogue.

Francis Bennion

in

"Statutory Interpretation" has stressed the need to

D interpret a statute by giving "allowances for any relevant changes that have

occurred, since the Act's passing,

in law, social conditions, technology, the

meaning

of words, and other

matters."

For the need to update legislations, the Courts have the duty to use

E interpretative process to the fullest extent permissible by the enactment. The

following passage at page 167

of the above book has been

quote~ with

approval by a three Judge-Bench

of this Court in

State v. S.J. Chaudhary,

[1996] 2 sec 428:

F

"It is presumed that Parliament intends the court to apply to an

ongoing Act a construction that continuously updates its wording to

allow for changes since the Act was initially framed (an updating

construction). While it remains law, it

is to be treated as always

speaking. This means that

in its application on any date, the language

of the Act, though necessarily embedded in its own time, is

nevertheless to

be construed in accordance with the need to treat it

G as current

law."

So if the notice envisaged in clause (b) of the proviso to Section 138 •

was transmitted by fax it would be compliance with the legal requirement.

The High Court's view

is that the sender of the notice must know the

H date when it was received by the sendee, for otherwise he would not be in

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SILIMPORT,USAv. EXIMAIDESSILKEXPORTERS [THOMAS, I.) 965

a position to count the period in order to ascertain the date when cause of A

action has arisen. The fallacy of the above reasoning is that it erases the

starting date

of the period of 15 days envisaged in

clause ©. As per the said

clause the starting date is the date of "the receipt of the said notice". Once

it starts, the offence is completed on the failure to pay the amount within 15

days therefrom. Cause of action would arise if the offence is committed.

If a different interpretation is given to the absolute interdict incorporated

in Section 142 of the Act that, no court shall take cognizance of any offence

unless the complaint

is made within one month of the date on which the cause

of action arises, would become otiose.

B

In this context the decision of a two Judge-Bench in Sadanandan C

Bhadran v. Madhavan

Sunil Kumar, [1998) 6 SCC 514, can be referred to. A

payee did not file the complaint within 45 days

of sending the notice after

the cheque was bounced back, but he presented the cheque once again

thereafter and issued another notice. When a new cause

of action arose on

the strength

of

t~e second presentation of the cheque a complaint was filed

by the payee on the strength of that second presentation of the cheque. This D

Court has stated the law in that case as follows:

"Consequent upon the failure of the drawer to pay the money

within the period

of 15 days as envisaged under clause © of the

proviso

to Section 138, the liability of the drawer for being prosecuted E

for the offence he has committed arises, and the period of one month

for filing the complaint under Section

142 is to be reckoned accordingly.

The combined reading

of the above two sections of the Act leaves

no room for doubt that cause

of action within the meaning of Section

142 ©arises-and can'arise-only

once."

(emphasis supplied) F

(para 6)

Learned Judges proceeded further to consider whether in a case where

notice

in writing was sent after the first dishonour of the cheque, the payee

can once again present the cheque, get

it dishonoured for the purpose of

filing the complaint. Following statement of law has been clearly adumbrated G

by this Court in paragraph 7 thereof.

"Besides the language of Section 138 and 142 which clearly postulates

only one cause

of action, there are other formidable impediments

which negate the concept

of successive causes of action.

One of them

is that for dishonour of one cheque, there can be only one offence H

966

A

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SUPREME COURT REPORTS [1999] 2 S.C.R.

and such offence is committed by the drawer immediately on his

failure to make the payment within fifteen days

of the receipt of the

notice served

in

ai;cordance with clause (b) of the proviso to Section

138. That necess!}fily means that for similar failure after service of

fresh notice on subsequent dishonour, the drawer cannot be liable for

any offence nor can the first offence be treated as offence of the first

one. At that stage, it will not be a question

of waiver of the right of

the payee to prosecute the drawer but of absolution of the drawer of

an offence, which stands already committed by him and which cannot

be committed

by him

again."

The above view of this Court is in direct conflict with the view expressed

C by the Full Bench of the Kerala High Court in Mis. SKD Lakshmanan Fireworks

Industries

v. K.

V. Sivarama Krishnan, (1995) Crl. Law Journal 1384. (In the

headnote made in a volume

of

Supreme Court Cases which reported

Sadanandan Bhadran, [ 1998] 6 SCC 514 the Editor has noted thus: SKD

Lakshmanan Fireworks Insustries v. K. V. Sivarama Krishnan, (1995) Crl. Law

D Journal 1384 Ker. FB is approved. This needs correction through a corrigendum

because the dictum

of the Full Bench in

SKD Lakshmanan Fireworks

Industries v. Sivaram Krishnan .has been disapproved

by this Court in

Sadanandana Bhadran

's case).

The upshot

of the discussion 1s, on the date when the notice sent by

E 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 that 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. '

F In this case the complainant has admitted the fact that written notice

was sent

by fax. Appellant has admitted its receipt on the same date. (It must

be remembered that respondent has no case that fax has not reached the

appellant on the same date). The last day when the respondent could have

filed the complaint was 26-7-1996. But the complaint was filed only on 8-8-

G 1996.

So the court has no jurisdiction to take cognizance of the offence on

the said complaint.

In the result, we allow th is appeal and set aside the impugned judgment

in so far as

it relates to cheque No.188. The complaint filed by the respondent

on the said cheque will stand dismissed.

H V.M. Appeal allowed.