BIRENDRA PRASAD SAH versus THE STATE OF BIHAR & ANR. on 8 May 2019

1. Delay condoned.

2. Leave granted.

3. This appeal arises from a judgment of a learned Single Judgeof the High Court of Judicature at Patna dated 10 May 2018 by whichDan order taking cognizance of an offence under Section 138 of theNegotiable Instruments Act, 1881[1] has been quashed.

4. The facts, briefly stated, are thus:

5. The dispute arises over two cheques drawn on the State Bankof India in the amount of Rs 36,00,000 and Rs 13,00,000 which wereEreturned unpaid under a memo issued by the UCO Bank, Begusarai on20 November 2015. The appellant received the memo on 4 December2015. Following this, a legal notice was issued on 31 December 2015intimating the dishonour of the cheque. According to the appellant,between 14 February 2016 and 23 February 2016, he made queries withthe postal department but no proof of service was provided. Accordingly,Fon 26 February 2016, a second legal notice was issued. This was repliedto by the second respondent on 2 March 2016. Eventually, a complaintunder Section 138 was instituted on 11 May 2016.

6. The Chief Judicial Magistrate, Begusarai by an order dated 14July 2016, condoned the delay in filing the complaint. While takingGcognizance, the CJM issued summons to the second respondent. Thesecond respondent instituted revisional proceedings before the SessionsJudge which were rejected on 8 March 2017. In a further recourse tothe High Court under Section 482 CrPC, the learned Single Judge heldthat the complaint under Section 138 was not filed within the statutory H1 “Act”

period of thirty days prescribed under Section 138 as a result of whichthe proceedings were quashed.

7. Assailing the judgment of the High Court, Mr Nagendra Rai,learned Senior Counsel submitted that in MSR Leathers v. SPalaniappan[2] a three judge Bench of this Court has taken the view thatthe issuance of successive notices is permissible under the provisions ofSection 138 having regard to the object of the legislation. Moreover, thelearned Senior Counsel submitted that the delay in the institution of thecomplaint was condoned by the CJM under Section 142. Hence, therewas an error on the part of the High Court in quashing the proceedings.

8. On the other hand, Mr Jay Savla, learned Senior Counselappearing on behalf of the second respondent submitted that:

(i) The second legal notice dated 26 February 2016 was sent beyonda period of thirty days of the receipt of the memo of dishonouron 4 December 2015 and hence cannot be the basis of a validinstitution of a criminal complaint;

(ii) If at all, the complaint could have only been instituted on thebasis of the first legal notice dated 31 December 2015 whichwas within thirty days of the receipt of the memo of dishonour;

(iii) The complaint which was lodged on 11 May 2016 was beyondthe stipulated period from the date of issuance of the first notice;

(iv) The CJM had condoned the delay which had occurred in theinstitution of the complaint only for the period after 6 April 2016after the issuance of the second notice; and

(v) In the decision of the three judge Bench in MSR Leathers(supra), there was a re-presentation of the cheque as a resultof which, a fresh notice was held to be within the ambit of thelaw.

9. Section 138 provides thus:

“138. Dishonour of cheque for insufficiency, etc., of funds inthe account. –

Where any cheque drawn by a person on an account maintainedby him with a banker for payment of any amount of money toanother person from out of that account for the discharge, in whole A

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or in part, of any debt or other liability, is returned by the bankunpaid, either because of the amount of money standing to thecredit of that account is insufficient to honour the cheque or thatit exceeds the amount arranged to be paid from that account byan agreement made with that bank, such person shall be deemedto have committed an offence and shall, without prejudice to anyother provision of this Act, be punished with imprisonment for[3] [aterm which may be extended to two years], or with fine whichmay extend to twice the amount of the cheque, or with both:Provided that nothing contained in this section shall apply unless—

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(a) the cheque has been presented to the bank within a period ofsix months[4] from the date on which it is drawn or within the periodof its validity, whichever is earlier; C

(b) the payee or the holder in due course of the cheque, as thecase may be, makes a demand for the payment of the said amountof money by giving a notice in writing, to the drawer of thecheque,[5] [within thirty days] of the receipt of information by himfrom the bank regarding the return of the cheque as unpaid; and D

(c) the drawer of such cheque fails to make the payment of thesaid amount of money to the payee or, as the case may be, to theholder in due course of the cheque, within fifteen days of theEreceipt of the said notice.”

10. In the present case, the facts narrated above indicate that theappellant issued a legal notice on 31 December 2015. This was within aperiod of thirty days of the receipt of the memo of dishonour on 4December 2015. Consequently, the requirement stipulated in proviso (b)to Section 138 was fulfilled. Proviso (c) spells out a requirement that thedrawer of the cheque has failed to make payment to the holder in duecourse or payee within fifteen days of the receipt of the notice. Thesecond respondent does not as a matter of fact, admit that the legalnotice dated 31 December 2015 was served on him. The appellant hasin the complaint specifically narrated the circumstance that despite F

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3 Sub. by Act 55 of 2002, sec. 7, for a “term which may be extended to one year” (w.e.f.6-2-2003).

4 The period has been reduced from six months to three months vide R.B.I NotificationNo. RBI/2011-12/251, DBOD.AML BC. No. 47/14.01.001/2011-2012, dated 4[th]November, 2011 (w.e.f. 1-4-2012).

5 Subs. by Act 55 of 2002, sec. 7, for “within fifteen days” (w.e.f. 6-2-2003).

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repeated requests to the postal department, no acknowledgment of thenotice was furnished. It was in these circumstances that the appellantissued a second notice dated 26 February 2016. Cognizant as we are ofthe requirement specified in proviso (b) to Section 138, that the noticemust be issued within thirty days of the receipt of the memo of dishonour,we have proceeded on the basis that it is the first notice dated 31December 2015 which constitutes the cause of action for the complaintunder Section 138.

11. The complaint was instituted on 11 May 2016. Under Section142(1), a complaint has to be instituted within one month of the date onwhich the cause of action has arisen under clause (c) of the proviso toSection 138[6]. The proviso however stipulates that cognizance of thecomplaint may be taken by the court after the prescribed period, if thecomplainant satisfies the Court that he had sufficient cause for not makinga complaint within such period. Both in paragraphs 7 and 8 of thecomplaint, the appellant indicated adequate and sufficient reasons fornot being able to institute the complaint within the stipulated period. Thesehave been adverted to above. The CJM condoned the delay on the causewhich was shown by the appellant for the period commencing from 6April 2018. However, if paragraphs 7 and 8 of the complaint are readtogether, it is evident that the appellant had indicated sufficient cause forseeking condonation of the delay in the institution of the complaint. TheHigh Court has merely adverted to the presumption that the first noticewould be deemed to have been served if it was dispatched in the ordinarycourse. Even if that presumption applies, we are of the view that sufficientcause was shown by the appellant for condoning the delay in institutingthe complaint taking the basis of the complaint as the issuance of thefirst legal notice dated 31 December 2015.

6 142 (1) 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 exceptupon a complaint, in writing, made by the payee or, as the case may be, the holder indue course of the cheque; (b) such complaint is made within one month of the date on which the cause of actionarises under clause (c) of the proviso to section 138:

[Provided that the cognizance of a complaint may be taken by the Court after theprescribed period, if the complainant satisfies the Court that he had sufficient cause fornot making a complaint within such period];

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of thefirst class shall try any offence punishable under section 138..

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[2019] 8 S.C.R.

A12. In the view which we have taken, we have come to theconclusion that the impugned judgment of the High Court is unsustainable.The appeal is accordingly allowed and the order passed by the learnedSingle Judge is set aside. The complaint shall accordingly stand restoredto the file of the trial court.

B13. We have not expressed any opinion on the merits of the rivalcontentions which will be adjudicated upon during the trial.

Devika Gujral

Appeal allowed.

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