REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1190 OF 2008

[Arising out of SLP (Crl.) No. 541 of 2008]

Subodh S. Salaskar …Appellant

Versus

Jayprakash M. Shah & Anr. …Respondents

J U D G M E N T

S.B. SINHA, J :

1. Leave granted.

2.Whether the proviso appended to Section 142 of the Negotiable

Instruments Act, 1881 (for short “the Act”) inserted by the Negotiable

Instruments (Amendment and Miscellaneous Provisions) Act, 2002, is

retrospective in operation is the question involved in this appeal which

arises out of a judgment and order dated 19.10.2007 passed by the High

Court of Judicature at Bombay in Criminal Writ Petition No. 330 of

2007.

3. The relationship between the parties hereto was that of a borrower

and creditor. A financial loan of Rs. 1,70,000/- was obtained by the

appellant in 1996 from the respondent No. 1, which according to him has

been paid off. Two post dated cheques, one bearing No. 460157 dated

6.12.1996 for a sum of Rs. 26,900/- and the other bearing No. 460158

dated 28.09.2000 for a sum of Rs. 1,70,000/-, however, were handed

over to him.

4. Appellant contends that the amount of loan was repaid in cash.

Admittedly, the cheques were presented before the bank on 10.01.2001.

They were returned to the respondent No. 1 by the bank alleging that no

such account, in the name of the appellant was in operation. A legal

notice dated 17.01.2001 was sent by speed post asking the appellant to

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pay the said amount of Rs. 1,70,000/- failing which legal action

including criminal action would be taken against him.

5.A complaint petition alleging commission of an offence under

Section 138 of the Act, however, was filed only on 20.04.2001.

6. Indisputably, the complaint petition was sought to be amended for

adding Section 420 of the Indian Penal Code in the complaint petition.

The said application was allowed by an order dated 14.08.2001.

7. Appellant filed an application for discharge on 16.12.2003 inter

alia on the premise that the said complaint petition was barred by

limitation. It was dismissed by an order dated 14.11.2006. The revision

application filed by the appellant before the learned Additional Sessions

Judge was also dismissed. A criminal writ petition filed by the appellant

marked as Criminal Writ Petition No. 330 of 2007 before the High Court

of Bombay has been dismissed by reason of the impugned judgment

holding:

(i)The question as to whether the complaint is barred by limitation

is a mixed question of law and fact. Even otherwise as a result

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of amendment of Clause (b) of Section 142 of the Act even if

delay has been caused in filing the complaint, the Magistrate

has power to condone the delay;

(ii)Although the Magistrate could not have allowed amendment of

the complaint petition but as it discloses sufficient averments in

regard to commission of an offence under Section 420 of Indian

Penal Code, the Trial Court was justified in issuing the process

in respect of the said provision also.

8. Mr. Manish Mohan, learned counsel appearing on behalf of the

appellant would submit that the High Court committed a serious error in

passing the impugned judgment insofar as it failed to take into

consideration that :

(i)the complaint petition was barred by limitation, which would

be evident from the admitted facts;

(ii)the proviso appended to Clause (b) of Section 142 being

substantive in nature cannot be held to be retrospective in

operation;

(iii)allegations made in the complaint petition even if given face

value and taken to be correct in their entirety, no case has been

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made out for taking cognizance under Section 420 of the Indian

Penal Code;

(iv)in any event, as the principal complaint being for commission

of an offence under Section 138 of the Act was not

maintainable, the application for amendment to insert Section

420 of the Indian Penal Code was also not maintainable.

9. Mr. Santosh Paul, learned counsel appearing on behalf of the

respondent No. 1, submitted that from a perusal of the complaint petition

it would appear that the date of service of notice being not fixed and the

complainant having asked the post office to disclose the date of actual

service of notice, it cannot be said that the legal notice was served upon

the accused immediately after issuance thereof.

In any event, as the complaint petition disclosed commission of an

offence on the part of the appellant under Section 420 of the Indian Penal

Code, the High Court’s judgment is unassailable.

10. Section 138 of the Act provides a penal provision. The object of

the Parliament in brining the same in the statute book is well-known,

viz., to create an atmosphere of faith and reliance in the banking system.

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11.The Act was amended in the year 2002 whereby additional powers

have been conferred upon the court to take cognizance even after expiry

of the period of limitation by conferring on it a discretion to waive the

period of one month.

12. Before embarking on the questions raised, we may notice that the

proviso appended to Section 138 of the Act limits the applicability of the

main provision stating:

“138 - Dishonour of cheque for insufficiency,

etc., of funds in the account

*** ***

*** Provided that nothing contained in this

section shall apply unless--

(a) the cheque has been presented 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;

(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 thirty days of the receipt of

information by him from the bank regarding the

return of the cheque as unpaid; and

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(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.”

Section 142 of the Act also puts a limitation in the power of the

court to take cognizance of the offences, which reads as under:

“142 . Cognizance of offences

Notwithstanding anything contained in the

Code of Criminal Procedure, 1973 ( 2 of

1974 )--

(a) no court shall take cognizance of any

offence punishable under 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) 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 :

Provided that the cognizance of a complaint

may be taken by the Court after the prescribed

period, if the complainant satisfies the Court

that he had sufficient cause for not making a

complaint within such period.

(c) no court inferior to that of a Metropolitan

Magistrate or a Judicial Magistrate of the first

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class shall try any offence punishable under

section 138.”

13. As noticed hereinbefore, the proviso appended to Clause (b) of

Section 142 of the Act was inserted by the Negotiable Instruments

(Amendment and Miscellaneous Provisions) Act, 2002.

14. A complaint petition alleging commission of an offence under

Section 138 of the Act must demonstrate that the following ingredients

exist, i.e.:

(a) a cheque was issued;

(b) the same was presented;

(c) but, it was dishonoured;

(d) a notice in terms of the said provision was served on the

person sought to be made liable; and

(e) despite service of notice, neither any payment was made

nor other obligations, if any, were complied with within

fifteen days from the date of receipt of the notice.

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[See S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another

(2007) 4 SCC 70, Saroj Kumar Poddar v. State (NCT of Delhi) and

Another (2007) 3 SCC 693 and DCM Financial Services Ltd. v. J.N.

Sareen and Another 2008 (8) SCALE 54]

15. Indisputably, therefore, unless the conditions precedent for taking

cognizance of an offence under Section 138 of the Act are satisfied, the

court will have no jurisdiction to pass an order in that behalf.

16. We will have to examine the contentions raised by the leaned

counsel for the parties hereto keeping in view the aforementioned legal

principles in mind. Before, however, we advert thereto, we may place on

record that the averments made in the complaint petition in regard to

service of notice are in the following terms:

“8.I say that the said Bank of the Accused,

returned / dishonoured Cheque No. 460158

dated 28.09.2000 of Rs. 1,70,000/- drawn on

Bank of India, Maheshwari Udyan Branch,

Mumbai, under Bank remark “NO SUCH

ACCOUNT WITH US”. The said remark was

given in handwriting by the Branch Manager of

the Bank of India, Maheshwari Udyan Branch,

Mumbai in its Bank Memo dated 10.01.2001,

though in the said Bank Memo at Sr. No. 11, it

is printed at 11(b) Account closed and at 11(c)

no account. This Bank Memo was received by

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me on 17.01.2001. Attached herewith is Xerox

copy of the said Cheque No. 460158 dated

28.09.2000 of Bank of India, 10.01.2001 and

marked thereto as Exhibit “A” thereto which

are very clear and self-explanatory. I am also

attaching herewith Xerox copy of dishonoured

Cheque No. 460157 dated 06.12.1996 of Rs.

26,900/- of the Accused drawn on Bank of

India, Maheshwari Udyan Branch, Mumbai and

marked it as Exhibit “B” thereto which speak

much more about the Bank account No. 1365 of

the Accused lying with his said Bank.

9.I say that immediately, vide my letter

Ref. No. JMS/SSS/CRIM/01/2001 dated

17.01.2001, I sent demand notice to the

Accused through Speed Post Acknowledgment

due postal services. Attached herewith is

Xerox copy of the said Demand Notice along

with copy of postal speed post A.D. receipt No.

000271184 – SSPNL 650 dated 19.01.2001 and

marked it as Exhibit “C” Colly thereto which is

very clear and self-explanatory. I say that I

have not yet received Speed Post

Acknowledgement Slip with due

acknowledgement thereon from the Accused as

to the receipt of the said Demand notice.

10.I say that with abundant and due

precautions with a view to avoid technicalities,

through my advocate, Mr. Sunil Bagwe’s letter

Ref. No. SSB/JMS/BOI/01/2001 dated

05.03.2001 asked for detailed information as to

the reasons given by the Branch Manager, in

his Bank memo dated 10.01.2001. The Branch

Manager of the said Bank Branch of the

Accused, after various my approaches, finally

given acknowledgement of the receipt of the

aforesaid letter of my advocate on 14.03.2001,

attached herewith is Xerox copy of the said

letter and marked it as Exhibit “D” thereto

which is very clear and self-explanatory. The

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Branch Manager of Bank of India, Maheshwari

Udyan Branch, Mumbai vide his letter Ref. No.

MU/ADV/MNI/39/853 dated 14.03.2001, given

vague, non-cooperative, unwilling, ill-wishes

reply to my advocate’s letter by courier services

on 26.03.2001. Attached herewith is Xerox

copy of the said letter of the Bank of India and

marked it as Exhibit “E” thereto which is very

clear and self-explanatory.”

17. As regards purported commission of an offence under Section 420

of the Indian Penal Code, on the part of the petitioner, it was alleged:

“16.I say that the aforesaid Cheque which

was issued by the Accused in discharge of his

debts and liability to me in full, which were

dishonoured by the Bank of the accused with

reason “No such account with us”. I say that

the Accused failed and neglected to make

payments as per my demand notice dated

17.01.2001. The Accused has failed and

neglected to make good attempts for payment

of his dishonoured cheques on receipt of my

demand notice, within the stipulated period as

provided under Section 138(c) of the N.I. Act,

1988, therefore, the Accused has committed an

offence punishable under section 138 read with

section 141 and section 142 of the N.I. Act

1881 (as amended) and Section 420 of the

I.P.C.”

18. The cause of action of filing the said complaint was stated in the

following terms:

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“17.I say that the aforesaid cheque of the

drawer, the Accused herein was returned by the

Complainant’s banker i.e. the Deccan Merchant

Co-op. Bank Ltd. Ghatkopar (E) Branch,

Mumbai 400 077, which is situated within the

jurisdiction of this Hon’ble Court and,

therefore, this Hon’ble Court is competent to

take cognizances of this present complaint and

try the same. The demand notice to the

Accused was issued within the stipulated period

and the present complaint has been filed within

the prescribed period as provided under Section

142 (b) of the Negotiable Instruments Act,

1881 (as amended) and, therefore, the Accused

has committed an offence punishable under

Section 138 read with section 141 and section

142 of the N.I. Act 1881 (as amended) and

Section 420 of the I.P.C.

18.I say that the Accused has drawn Cheque

of post dated in Mumbai with intention to cheat

me. Hence, the accused must have closed his

Bank Account No. 1365 of Bank of India,

Maheshwari Udyan Branch, Mumbai

subsequently and now, after the receipt of my

demand notice, the accused has refused to make

the payment of his dishonoured cheques as

above in Mumbai. Hence, this Hon’ble Court

has jurisdiction to entertain, try and decide this

present complaint. I say that the Accused has

committed criminal offences under the

Negotiable Instruments Act, 1881 (as

Amended) and section 420 of the I.P.C., within

the jurisdiction to take cognizances of the same

and try and decide the said offences.”

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19. A complaint petition in view of Clause (b) of Section 142 of the

Act was required to be filed within one month from the date on which the

cause of action arose in terms of clause (c) of the proviso to Section 138

of the Act which stipulates that “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 legal notice admittedly was issued on 17

th

January, 2001. It

was sent by speed post. It was supposed to be served within a couple of

days. A bare perusal of the statements made in paragraph 10 of the

complaint petition, as quoted hereinbefore, clearly demonstrate that

although the actual date of service of notice was allegedly not known, the

complainant proceeded on the basis that the same was served within a

reasonable period; otherwise in absence of service of notice or deemed

service thereof, the question of non-compliance of clause (c) of the

proviso appended to Section 138 of the Act would not arise and

consequently the complaint petition would not be maintainable..

20. In Jindal Steel and Power Ltd. and Another v. Ashoka Alloy Steel

Ltd. and Others [(2006) 9 SCC 340], this Court held:

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“2. By the impugned order, the High Court

has quashed the prosecution under Section 138

of the Negotiable Instruments Act, 1881 (for

short “the Act”) and Section 420 of the Penal

Code, on the sole ground that the complaint

was filed two days after the expiry of

limitation. In the present case, notice was sent

under Section 138 of the Act on 4-1-1997,

which was served on the accused on 10-1-1997,

giving him 15 days’ time for making payment,

which expired on 25-1-1997. Cause of action to

file the complaint accrued on 26-1-1997, which

day has to be excluded in computing the period

of limitation, as required under Section 12(1) of

the Limitation Act, 1963. Therefore, the

limitation would be counted from 27-1-1997

and the complaint was filed on 26-2-1997,

within a period of one month from that date, as

such, the same was filed well within time. We

find that the point is concluded by a judgment

of this Court in Saketh India Ltd. v. India

Securities Ltd. in which case taking into

consideration the provisions of Section 12(1) of

the Limitation Act, it was laid down that the

day on which cause of action had accrued has

to be excluded for reckoning the period of

limitation for filing a complaint under Section

138 of the Act. In the present case, after

excluding the day when cause of action

accrued, the complaint was filed well within

time; as such the High Court was not justified

in holding that there was two days’ delay in

filing the complaint. For the foregoing reasons,

we are of the view that the High Court was not

justified in quashing prosecution of the

respondents.”

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21. In terms of the provisions of the General Clauses Act, a notice

must be deemed to have been served in the ordinary course subject to the

fulfillment of the conditions laid down therein. Section 27 of the

General Clauses Act reads as under:

“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.”

Thirty days’ time ordinarily must be held to be sufficient for

service of notice. In fact when the service of notice is sought to be

effected by Speed Post, ordinarily the service takes place within a few

days. Even under Order V, Rule 9(5) of the Code of Civil Procedure,

1908, summons is presumed to be served if it does not come back within

thirty days. In a situation of this nature, there was no occasion for the

Court to hold that service of notice could not be effected within a period

of thirty days.

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22. Presumption of service, under the statute, would arise not only

when it is sent by registered post in terms of Section 27 of the General

Clauses Act but such a presumption may be raised also under Section

114 of the Evidence Act. Even when a notice is received back with an

endorsement that the party has refused to accept, still then a presumption

can be raised as regards the valid service of notice. Such a notice, as has

been held by a Three-Judge Bench of this Court in C.C. Alavi Haji v.

Palapetty Muhammed and Another [(2007) 6 SCC 555] should be

construed liberally, stating :

“17. It is also to be borne in mind that the

requirement of giving of notice is a clear

departure from the rule of criminal law, where

there is no stipulation of giving of a notice

before filing a complaint. Any drawer who

claims that he did not receive the notice sent by

post, can, within 15 days of receipt of summons

from the court in respect of the complaint under

Section 138 of the Act, make payment of the

cheque amount and submit to the court that he

had made payment within 15 days of receipt of

summons (by receiving a copy of complaint

with the summons) and, therefore, the

complaint is liable to be rejected. A person who

does not pay within 15 days of receipt of the

summons from the court along with the copy of

the complaint under Section 138 of the Act,

cannot obviously contend that there was no

proper service of notice as required under

Section 138, by ignoring statutory presumption

to the contrary under Section 27 of the GC Act

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and Section 114 of the Evidence Act. In our

view, any other interpretation of the proviso

would defeat the very object of the legislation.

As observed in Bhaskaran case if the “giving

of notice” in the context of Clause ( b ) of the

proviso was the same as the “receipt of notice”

a trickster cheque drawer would get the

premium to avoid receiving the notice by

adopting different strategies and escape from

legal consequences of Section 138 of the Act.”

[Emphasis supplied]

23. The complaint petition admittedly was filed on 20.04.2001. The

notice having been sent on 17.01.2001, if the presumption of service of

notice within a reasonable time is raised, it should be deemed to have

been served at best within a period of thirty days from the date of

issuance thereof, i.e., 16.02.2001. The accused was required to make

payment in terms of the said notice within fifteen days thereafter, i.e., on

or about 2.03.2001. The complaint petition, therefore, should have been

filed by 2.04.2001.

24.Ex facie, it was barred by limitation. No application for

condonation of delay was filed. No application for condonation of delay

was otherwise maintainable. The provisions of the Act being special in

nature, in terms thereof the jurisdiction of the court to take cognizance of

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an offence under Section 138 of the Act was limited to the period of

thirty days in terms of the proviso appended thereto. The Parliament

only with a view to obviate the aforementioned difficulties on the part of

the complainant inserted proviso to Clause (b) of Section 142 of the Act

in 2002. It confers a jurisdiction upon the court to condone the delay. It

is, therefore, a substantive provision and not a procedural one. The

matter might have been different if the Magistrate could have exercised

its jurisdiction either under Section 5 of the Limitation Act, 1963 or

Section 473 of the Code of Criminal Procedure, 1976. The provisions of

the said Acts are not applicable. In any event, no such application for

condonation of delay was filed. If the proviso appended to Clause (b) of

Section 142 of the Act contained a substantive provision and not a

procedural one, it could not have been given a retrospective effect. A

substantive law, as it is well-settled, in absence of an express provision,

cannot be given a retrospective effect or retroactive operation.

25. In Madishetti Bala Ramul (Dead) By LRs. v. Land Acquisition

Officer [(2007) 9 SCC 650], this Court held as under:

“18. It is not the case of the appellants that

the total amount of compensation stands

reduced. If it had not been, we fail to

understand as to how Section 25 will have any

application in the instant case. Furthermore,

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Section 25 being a substantive provision will

have no retrospective effect. The original award

was passed on 8-2-1981: Section 25, as it

stands now, may, therefore, not have any

application in the instant case.”

The question is now covered by a judgment of this Court in Anil

Kumar Goel v. Kishan Chand Kaura [2008 AIR SCW 295] holding:

“8. All laws that affect substantive rights

generally operate prospectively and there is a

presumption against their retrospectivity if they

affect vested rights and obligations, unless the

legislative intent is clear and compulsive. Such

retrospective effect may be given where there

are express words giving retrospective effect or

where the language used necessarily implies

that such retrospective operation is intended.

Hence the question whether a statutory

provision has retrospective effect or not

depends primarily on the language in which it

is couched. If the language is clear and

unambiguous, effect will have to be given to

the provision is question in accordance with its

tenor. If the language is not clear then the court

has to decide whether, in the light of the

surrounding circumstances, retrospective effect

should be given to it or not. (See: Punjab Tin

Supply Co., Chandigarh etc. etc. v. Central

Government and Ors., AIR 1984 SC 87).

9. There is nothing in the amendment made to

Section 142(b) by the Act 55 of 2002 that the

same was intended to operate retrospectively.

In fact that was not even the stand of the

respondent. Obviously, when the complaint was

filed on 28.11.1998, the respondent could not

have foreseen that in future any amendment

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providing for extending the period of limitation

on sufficient cause being shown would be

enacted.”

26. Therefore, there cannot be any doubt whatsoever that the courts

below committed a manifest error in applying the proviso to the fact of

the instant case. If the complaint petition was barred by limitation, the

learned Magistrate had no jurisdiction to take cognizance under Section

138 of the Act. The direction to issue summons on the appellant,

therefore, being illegal and without jurisdiction was a nullity.

27.Section 415 of the Indian Penal Code defines “cheating”. The said

provision requires: (i) deception of any person, (ii) whereby fraudulently

or dishonestly inducing that person to deliver any property to any person

or to consent that any person shall retain any property, or (iii)

intentionally inducing that person to do or omit to do anything which he

would not do or omit if he were not so deceived, and which act or

omission causes or is likely to cause damage or harm to that person in

body, mind, reputation or property. Deception of any person is common

to the second and third requirements of the provision. [See Devender

Kumar Singla v. Baldev Krishan Singla (2005) 9 SCC 15]

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28. Noticing the ingredients of cheating, this Court in Suryalakshmi

Cotton Mills Ltd. v. Rajvir Industries Ltd. and Ors., [JT 2008 (1) SC

340], held :

“A bare perusal of Section 415 read with

Section 420 of the Indian Penal Code would

clearly lead to the conclusion that fraudulent or

dishonest inducement on the part of the accused

must be at the inception and not at a subsequent

stage.

22. For the said purpose, we may only notice

that blank cheques were handed over to the

accused during the period 2000-2004 for use

thereof for business purposes but the dispute

between the parties admittedly arose much

thereafter i.e. in 2005.

In B. Suresh Yadav v. Sharifa Bee 2007 (12)

SCALE 364, it was held;

13. For the purpose of establishing the offence

of cheating, the complainant is required to

show that the accused had fraudulent or

dishonest intention at the time of making

promise or representation. In a case of this

nature, it is permissible in law to consider the

stand taken by a party in a pending civil

litigation. We do not, however, mean to lay

down a law that the liability of a person cannot

be both civil and criminal at the same time. But

when a stand has been taken in a complaint

petition which is contrary to or inconsistent

with the stand taken by him in a civil suit, it

assumes significance. Had the fact as purported

to have been represented before us that the

appellant herein got the said two rooms

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demolished and concealed the said fact at the

time of execution of the deed of sale, the matter

might have been different. As the deed of sale

was executed on 30.9.2005 and the purported

demolition took place on 29.9.2005, it was

expected that the complainant/first respondent

would come out with her real grievance in the

written statement filed by her in the

aforementioned suit. She, for reasons best

known to her, did not choose to do so.

No case for proceeding against the respondent

under Section 420 of the Indian Penal Code is

therefore, made out.

23. Filling up of the blanks in a cheque by itself

would not amount to forgery. Whereas in the

complaint petition, allegations have been made

that it was respondent Nos. 2 and 3 who had

entered into a conspiracy to commit the said

offence as indicated hereinbefore, in the

counter affidavit, it has been alleged that the

employees of the Respondent Company did

so.”

29.The cheques were post dated ones. Admittedly they were issued in

the year 1996. They were presented before the bank on a much later

date. They were in fact presented only on 10.01.2001. When the

cheques were issued, the accounts were operative. Even assuming that

the account was closed subsequently the same would not mean that the

appellant had an intention to cheat when the post dated cheques were

issued. Even otherwise the allegations made in the complaint petition,

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even if given face value and taken to be correct in its entirety do not

disclose commission of an offence under Section 420 of the Indian Penal

Code. They do not satisfy the ingredients of the suit provision. It is,

therefore, in the fact situation obtaining in the instant case, difficult to

hold that the provisions of Section 420 of the Indian Penal Code were

attracted.

30. The court had no jurisdiction to allow the amendment of the

complaint petition at a later stage. Therefore, the High court was not

correct in taking the aforementioned view in the facts and circumstances

of the present case.

31. For the reasons aforementioned, the impugned judgment cannot be

sustained which is set aside accordingly. The appeal is allowed.

………………………….J.

[S.B. Sinha]

..…………………………J.

[Cyriac Joseph]

New Delhi;

August 01, 2008

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