CRIMINAL APPEAL 250 of 2004 on 18 August 1995

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

Criminal Appeal No. 250 and 251 of 2004 Date of Decision: 21[st] December, 2010__________________________________________________________ Cr. Appeal No. 250 of 2004Mohan Meaking Ltd. ….Appellant. Versus Niranjan Chauhan & others ….Respondents. Cr. Appeal No. 251 of 2004Mohan Meaking Ltd. ….Appellant. Versus Bhagwan Singh and another ….Respondents. ___________________________________________________________

Coram

The Hon’ble Mr. Justice Dev Darshan Sud, J.

Whether approved for reporting?[1] Yes ___________________________________________________________ Cr.Appeal No. 250 of 2004For the Appellant: Mr. K.D. Sood, Advocate. For Respondent Nos 1 & 2: Mr. K.S. Kanwar, Advocate. For Respondent No. 3: Ms. Shubh Mahajan, Depuy A.G. Cr. Appeal No. 251 of 2004For the Appellant: Mr. K.D. Sood, Advocate. For Respondent No.1: Mr. K.S. Kanwar, Advocate. For Respondent No.2: Ms. Shubh Mahajan, Deputy A.G. ___________________________________________________________

1 Whether Reporters of Local Papers may be allowed to see the judgment? Yes.

Dev Darshan Sud, J (oral).

Both these appeals are disposed of by a common judgment as they involve the same question of law and facts. The respondent had preferred separate appeals before the learned Presiding Officer (Additional Sessions Judge), Fast Track Court against the judgment of convition by the Judicial Magistrate Ist Class, Solan, which were accepted.

2. The appellant has preferred these appeals against the judgment of the learned Presiding Officer (Additional Sessions Judge), Fast Track Court, Solan, acquitting the respondents for offence under Section 138 of the Negotiable Instrument Act (hereinafter referred to as “the Act”).

3. The appellant had instituted proceedings against the respondents under the Act, as aforesaid, on the allegations that the respondents had issued a cheque Ext.PW1/A for `3,61,772.31 for valuable consideration, but the cheque was dishonoured on its presentation without any reasonable cause. Learned trial Court, on consideration of evidence, convicted the respondents.

4. Appeal filed before the learned Fast Track Court, was accepted and the conviction set aside by holding the complaint barred by time. The appellant alleges that this judgment is against law and facts on record and that the judgment of the learned trial Court is in accordance with law. 5. It is undisputed before me that cheque Ext.PW1/A was issued by M/s Tarlok Niranjan and Co. which was presented by the appellant for encashment through its bankers Punjab National Bank, Solan. This cheque was dishonoured vide memo Ext.PW1/B issued by the UCO Bank, Chhaila with the remarks “Not arranged for”. Vide Ext.PW1/C the UCO bank returned this cheque to the Punjab National Bank, Solan, who informed the appellant vide Ext.PW1/D dated 18.8.1995 that the cheque was dishonoured.

6. Notice Ext.PW1/E dated 24[th] August, 1995 was issued for and on behalf of the appellant to M/s Tarlok Niranjan and Company as also notice Ext.PW1/F was issued to Niranjan Chauhan and Bhagwan Singh Tanta. These were despatched vide postal receipt Ext.PW1/G. The notices were returned by the Postal Authorities vide Ext.PW1/H-1 to Ext.PW1/H-5 with the report that the person to whom it was addressed is not available on the address as given. The said person is stated to have gone to Delhi and it is not known when he will return. Thereafter, notices Ext.PW1/J, Ext.PW1/K, Ext.PW1/L and Ext.PW1/M dated 6[th]December, 1995 were again issued to the respondents both by registered AD post and UPC. The postal receipts have been proved on record as Ext.PW1/N and Certificate of Posting as Ext.PW1/O. The registered AD notices Ext.PW1/P-1 to Ext.PW1/P-4 have been received back unclaimed.

7. I am not adverting to the other evidence on record as the basic point for consideration in this case is as to whether the appellant has complied with the provisions of Section 142 and that the complaint was instituted by it is within limitation.

8.

Section supra provides:

“142. Cognizance of offences-Notwithstanding anything contained in the Code of Criminal Procedure, 19723 (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 interior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.”

Section 142 lays down the pre-conditions for taking cognizance. Proviso Clause (b) deals with the cases of the complainant filed beyond limitation. For the purpose of this appeal, the question of service of the notice is no more res integra. In C.C. Alavi Haji vs. Palapetty Muhammed and another (2007) 6 SCC 555 the Supreme Court while dealing with these provisions has dealt in extenso with the provisions of Clause (c) of Section 138 and sub-section (b) of Section 142 of the Act. The Court holds:

“6. As noted hereinbefore, Section 138 of the Act was enacted to punish unscrupulous drawers of cheques who, though purport to discharge their liability by issuing cheque, have no intention of really doing so. Apart from enacted to punish unscrupulous drawers of cheques who, though purport to discharge their liability by issuing cheque, have no intention of really doing so. Apart from civil liability, criminal liability is sought to be imposed by the said provision on such unscrupulous drawers of cheques. However, with a view to avert unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions. These conditions are stipulated in the proviso to Section 138 of the Act, extracted above. Under Clause (b) of the proviso, the payee or the holder of the cheque in due course is required to give a written notice to the drawer of the cheque within a period of thirty days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. Under Clause (c), the drawer is given fifteen days time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a complaint may be filed against him. As noted above, the object of the proviso is to avoid unnecessary hardship to an honest drawer. Therefore, the observance of stipulations in quoted Clause (b) and its aftermath in Clause (c) being a pre-condition for invoking Section 138 of the Act, giving a notice to the drawer before filing complaint under Section 138 of the Act is a mandatory requirement.

7. The issue with regard to interpretation of the expression “giving of notice” used in Clause (b) of the proviso is no more res integra. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan & Anr. (1999) 7 SCC 510, the said expression came up for interpretation. Considering the question with particular reference to scheme of Section 138 of the Act, it was held that failure on the part of the drawer to pay the amount should be within fifteen days “of the receipt” of the said notice. “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 and for the drawer to comply with Clause (c) of the proviso. Emphasizing that the provisions contained in Section 138 of the Act required to be construed liberally, it was observed thus: (SCC p. 519, paras 20-21)

“20. 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 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 Statues the learned author has emphasized that "provisions relating to giving of notice often receive liberal interpretation," (vide page 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 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 dispatched his part is over and the next depends on what the sendee does.

8. Since in Bhaskaran_s case (supra), the notice issued in terms of Clause (b) had been returned unclaimed and not as refused, the Court posed the question: “Will there be any significant difference between the two so far as the presumption of service is concerned?” It was observed that though Section 138 of the Act does not require that the notice should be given only by “post”, yet in a case where the sender has dispatched the notice by post with correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 (for short “the G.C.

Act”) could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sendee unless he proves that it was not really served and that he was not responsible for such non-service.

9. All these aspects have been highlighted and reiterated by this Court recently in Vinod Shivappa_s case. Elaborately dealing with the situation where the notice could not be served on the addressee for one or the other reason, such as his non availability at the time of delivery, or premises remaining locked on account of his having gone elsewhere etc; it was observed that if in each such case, the law is understood to mean that there has been no service of notice, it would completely defeat the very purpose of the Act. It would then be very easy for an unscrupulous and dishonest drawer of a cheque to make himself scarce for sometime after issuing the cheque so that the requisite statutory notice can never be served upon him and consequently he can never be prosecuted. It was further observed that once the payee of the cheque issues notice to the drawer of the cheque, the cause of action to file a complaint arises on the expiry of the period prescribed for payment by the drawer of the cheque. If he does not file a complaint within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 of the Act, his complaint gets barred by time. Thus, a person who can dodge the postman for about a month or two, or a person who can get a fake endorsement made regarding his non availability, can successfully avoid his prosecution because the payee is bound to issue notice to him within a period of 30 days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. He is, therefore, bound to issue the notice, which may be returned with an endorsement that the addressee is not available on the given address. This Court held: (SCC p.463. para 15)

We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. Therefore, it would be pre- mature at the stage of issuance of process, to move the High Court for quashing of the proceeding under Section 482 of the Code of Criminal Procedure. The question as to whether the service of notice has been fraudulently refused by unscrupulous means is a question of fact to be decided on the basis of evidence. In such a case the High Court ought not to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.

10. It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address…….

15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the Court to draw presumption or inference either under Section 27 of the G.C. Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasis that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the Court is required to be prima facie satisfied that a case under the said Section is made out and the aforenoted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends.”

(p. 560-562 &564)

9. In these circumstances, the time when notices Ext.PW1/E, Ext.PW1/E and Ext.PW1/F have been firstly addressed to the respondent and the validity of their service would be presumed. There is nothing on record to show that the proviso to Sub-section (b) of Section 142 of the Act has been considered by the Court below or an attempt was made to satisfy the Court that there was genuine delay in filing the petition. I accordingly hold that the complaint was barred by time. This appeal is accordingly dismissed. No order as to costs.

December 21[st], 2010(ms)

(Dev Darshan Sud) Judge