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CASE NO.:

Appeal (crl.) 113 of 2000

PETITIONER:

SUMAN SETHI

RESPONDENT:

AJAY K, CHURIWAL

DATE OF JUDGMENT: 02/02/2000

BENCH:

G.T. NANAVATI & S.N. PHUKAN

JUDGMENT:

JUDGMENT

2000 (1) SCR 601

The Judgment of the Court was delivered by PHUKAN, J. Leave granted.

This appeal is directed against the judgment and order dated 3,10.1997

passed by the Calcutta High Court in Criminal Revision No. 1611/97. By the

impugned judgment, the High Court set aside the order of the Metropolitan

Magistrate - 16th, Calcutta passed b case No. C/1661/96.

Briefly stated the facts are as follows :

The appellant issued a cheque for Rs. 20,00.000 (Rupees Twenty Lacs) in

favour of respondent No, 1 The cheque was presented to the banker which was

returned on 2nd August, 1996 with the remarks "Insufficient Fund".

Thereafter within 15 days of return of the cheque, respondent No. 1 gave a

notice of demand as required under proviso (b) to Section 138 of the

Negotiable Instruments Act, 1881, as amended, (for short the Act). As the

appellant failed to meet the demand, a complaint was filed before the

Metropolitan Magistrate. On perusal of the above notice, the Magistrate was

of the view that the (demand made in the notice being higher than the

amount of the cheque), notice was bad in view of an earlier decision of the

High Court. Respondent No. 1 approached the High Court by filing the

revision petition which was allowed by the impugned order and the order of

the Metropolitan Magistrate was set aside. The High Court was of the view

that the decision of the High Court on which reliance was placed by

Magistrate was distinguishable. The High Court held that as in notice,

respondent No. 1 clearly demanded the cheque amount, the notice was a valid

one and accordingly set aside the order of the Metropolitan Magistrate.

We have heard Dr. Rajeev Dhawan, learned senior counsel for the appellant,

Mr. Sanjiv Sen, learned counsel for respondent No. 1 and Mr. Dilip Sinha,

learned counsel for respondent No. 2 - the State of West Bengal.

The only question for consideration by us is whether the notice in question

issued under proviso (b) to Section 138 of the Act was valid or not. We

extract below Sections 138 and 139 of the Act :

"138 - Dishonour of cheque for insufficiency, etc., of funds in the account

- 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 from out of

that account for the discharge, in whole or in part, of any debt or other

liability, is returned by the bank unpaid, either because of the amount of

money standing to the credit of that account is insufficient to honour the

cheque or that it exceeds the amount arranged to be paid from that account

by an agreement made with that bank, such person shall be deemed to have

committed an offence and shall, without prejudice to any other provision of

this Act, be punished with imprisonment for a term which may extend to one

year, or with fine which may extend to twice the amount of the cheque, or

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both :

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".

(Emphasis supplied)

"139 - Presumption in favour of holder. - It shall be presumed, unless the

contrary is proved, that the holder of a cheque received the cheque, of the

nature referred to in Section 138 for the discharge, in whole or in part,

of any debt or other liability."

We have to ascertain the meaning of the words "said amount of money"

occurring in clauses (b) and (c) to the proviso to Section 138. Reading the

Section as a whole we have no hesitation to hold that the above expression

refers to the words "payment of any amount of money" occurring in main

Section 138 i.e. the cheque amount. So in notice, under clause (b) to the

proviso, demand has to be made for the cheque amount. Dr. Dhawan, learned

senior counsel has urged that Section 138 being a penal provision has to be

construed strictly. We may refer the decision of this Court in M. Narayanan

Nambiar v. State of Kerala, AIR (1963) SC 1116 = [1963] 2 Supp. SCR 724.

This Court considered the rule of construction of a penal provision and

quoted with approval the following passage of the decision of the Judicial

Committee in Dyke v, Elliot, (1872) LR 4 AC 184. The passage runs as

follows :

''No doubt all penal Statutes are to be construed strictly, that is to say,

the Court must see that the thing charged as an offence is within the plain

meaning of the words used, and must not strain the words on any notion that

there has been a slip, that there has been a casus omissus, that the thing

is so clearly within the mischief that it must have been intended to be

included if thought of. On the other hand, the person charged has a right

to say that he thing charged although within the words, is not within the

spirit of the enactment. But where the thing is brought within the words

and within the spirit, there a penal enactment is to be construed, like any

other instrument, according to the fair commonsense meaning of the language

used, and the Court is not to find or make any doubt or ambiguity in the

language of a penal statute, where such doubt or ambiguity would clearly

not be found or made in the same language in any other instrument."

There is no ambiguity or doubt in the language of Section 138. Reading the

entire Section as a whole and applying commonsense, from the words, as

stated above, it is clear that the legislature intended that in notice

under clause (b) to the proviso, the demand has to be made for the cheque

amount. According to Dr. Dhawan, the notice of demand should not contain

anything more or less than what is due under the cheque.

It is well settled principle of law that the notice has to he read as a

whole. In the notice, demand has to be made for the "said amount" i.e.

cheque amount. If no such demand is made the notice no doubt would fall

.short of its legal requirement Where in addition to "said amount" there is

also a claim by way of interest, cost etc. whether the notice is bad would

depend on the language of the notice. If in a notice while giving the break

up of the claim the cheque amount, interest, damages etc. are separately

specified, other such claims for interest, cost etc. would be superfluous

and these additional claims would he severable- and will not invalidate the

notice. If, however, in the notice an ommbus demand is made without

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specifying what was due under the dishonored cheque, notice might well fail

to meet the legal requirement and may be regarded as bad.

This Court had occasion to deal with Section 138 of the Act in Central Bank

of India & Anr. v. M/s. Saxons Farms & Ors., JT (1999) 8 SC 58 and held

that the object of the notice is to give a chance to the drawer of the

cheque to rectify his omission. Though in the notice demand for

compensation, interest, cost etc. is also made drawer will be absolved from

his liability under Section 138 if he makes the payment of the amount

covered by the cheque of which he was aware within 15 days from the date of

receipt of the notice or before complaint is filed.

In Section 138 legislature clearly stated that for the dishonored cheque

the drawer shall be liable for conviction if the demand is not met within

15 days of the receipt of notice but this is without prejudice to any other

provision of the Act. If the cheque amount is paid within the above period

or before the complaint is filed the legal liability under Section 138 will

cease and for recovery of other demands as compensation, costs, interest

etc., a civil proceeding will lie. Therefore, if in a notice any other sum

is indicated in addition to the "said amount" the notice cannot be faulted,

as stated above.

Drawing our attention to Section 139 of the Act, Mr. Dhawan has urged that

if in the notice in addition to ''said amount" other demands are made the

presumption as contemplated under Section 138 would operate. We are unable

to accept the submission of the learned senior counsel as Section 139 has

to be read with Section 138 and reading both the Sections together it would

appear that presumption would arise only in respect of the "said amount".

We extract below the relevant portion of notice :

"I, therefore, by means of this notice call upon you to pay the amount of

Rs. 20,00,000 along with the incidental charges of Rs. 1,500 spent on the

cheque on its presentation and also Rs. 340 as notice charges within a

period of 15 days from the date of receipt thereof, failing which my

clients shall take necessary legal steps against you holding you liable for

all costs and consequences thereof, which please note."

In the notice in question the "said amount" i.e. the cheque amount has been

dearly stated. Respondent No. 1 had claimed in additional to the cheque

amount, incidental charges and notice charge. These two amounts are

severable. In the notice it was clearly stated that on failure to comply

with the demand necessary legal steps will be taken up. If respondent No. 1

had paid the cheque amount he would have been absolved from the criminal

liability under Section 138. Regarding other claims, a civil suit would be

necessary

We, therefore, do not Find any merit in the present appeal and accordingly

it is dismissed.