Dalmia
Cement (Bharat) Ltd. Vs. M/S.Galaxy Trades & Agencies Ltd. & Ors [2001]
Insc 31 (19 January
2001)
R.P.Sethi,,
K.T.Thomas Sethi,J.
L.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 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 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 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 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.
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 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.
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