CRM(M)/520/2022 of ABDUL BARI GANIE Vs GHULAM HASSAN DAR on 30 December 2022

JUDGMENT

1) The petitioner has challenged the complaint filed by respondent against him alleging commission of offences under Section 138/142 of the Negotiable Instruments Act (hereinafter referred to as the NI Act). Challenge has also been thrown to order dated 09.09.2022 passed by the learned Chief Judicial Magistrate, Shopian (hereinafter referred to as the trial Magistrate), whereby process has been issued against the petitioner.

2) The respondent (hereinafter referred to as the complainant) has filed a complaint against the petitioner (hereinafter referred to as the accused) before the learned trial Magistrate, alleging therein that the accused has issued two cheques for an amount of Rs.5.00 lacs each in favour of the complainant for discharging his liability towards him. When the cheques in question were presented by the complainant before the banker of the accused, the same were returned unpaid on 29[th] July, 2022, for insufficiency of funds. The complainant is stated to have issued a notice of demand to the accused on 12.08.2022 through registered post but the same was returned back with the endorsement “the accused was not present in his home and the family members of the accused refused to receive the notice”. It has been further pleaded in the complaint that the accused despite many requests, did not pay the cheque amount despite having knowledge of the notice of demand. It is pleaded that the cause of action in favour of the complainant arose on 27.08.2022 when the accused failed to pay the cheque amount despite knowledge of the notice of demand. The complaint has been filed before the trial court on 9[th] September, 2022.

3) The learned trial Magistrate after recording the preliminary evidence and after recording satisfaction that the offence under Section 138 of the NI Act is made out against the accused, issued process against him in terms of order dated 09.09.2022.

4) It has been contended in the petition that the complainant has filed the impugned complaint before the trial Magistrate prematurely, inasmuch as the notice of demand has been issued on 12.08.2022 and in the complaint it is pleaded that the cause of action in favour of the complainant has arisen on 27.08.2022. Thus, according to the accused, the statutory period of fifteen days had not expired after the date of issuance of notice of demand. It has been further contended that the notice of demand was not served upon the accused, which is an essential requirement to give rise to cause of action in favour of a complainant in a cheque bound case.

3) Heard learned counsel for the parties and perused the material on record.

4) The first contention of the petitioner is that the complaint has been filed prematurely by the complainant as the notice of demand was issued on 12.08.2022 but without waiting for expiry of fifteen days after the service of notice, the complainant has filed the impugned complaint. It has been submitted that in para (8) of the complaint it has been pleaded that the cause of action accrued to the complainant on 27.08.2022, meaning thereby that fifteen days had not expired from the date of issuance of demand notice.

5) The argument raised by learned counsel for the petitioner is without any merit for the reason that the notice of demand had been issued on 12.08.2022 but the complaint has been presented before the court on 09.09.2022 and not on 27.08.2022, though the complainant has pleaded that the cause of action had accrued in his favour on 27.08.2022. Thus, it is not a case where the complaint has been made by the complainant before the trial Magistrate without waiting for the expiry of statutory period of fifteen days from the date of service of demand notice. It would be a matter of trial to determine as to on which date the accused acquired the knowledge of the notice of demand.

6) It has been pleaded by the complainant that though the notice of demand was returned unserved because of refusal to receive it by the family members of the accused yet it has been specifically pleaded by the complainant that the accused had the knowledge of the notice. The question as to how the accused gained the knowledge of demand notice and on which date, he gained such knowledge is a matter to be decided during the trial of the case. Therefore, it would be premature at the stage of issuance of process to move the High Court for quashing of the proceedings under Section 482 of the Cr. P. C, as at this stage it cannot be determined as to on which date the issuance of notice came to the knowledge of the accused, without the trial of the case.

7) The next contention that has been raised by learned counsel for the accused is that as per complainant’s own case, the demand notice was returned unserved with the remarks that its receipt was refused by the family members of the accused. According to the learned counsel, receipt of the demand notice by the accused in a cheque bounce case is an essential part of cause of action and unless these facts are established, no process can be issued against an accused as, in absence of service of notice, the offence would not be constituted against him. In this regard, the learned counsel has relied upon a number of judgments of the Supreme Court and various High Courts of the Country.

8) There can be no dispute to the proposition of law that the service of demand notice upon an accused in a cheque bounce case is an essential ingredient to be proved for constituting the offence under Section 138 of the NI Act but in a case where the notice of demand has been dispatched by the complainant on the correct address of the accused and the same has been returned undelivered on account of refusal or on account of the fact that the accused was not available at the relevant time, the question would be whether it is to be assumed that the notice of demand has been received by the accused.

9) The aforesaid question came up for consideration before the Supreme Court in the case of K. Bhaskaran v. Sankaran Vaidhyan Balan and anr. (1999) 7 SCC 510. The Court in the said case refused to give a strict interpretation to the provisions contained in Section 138 of the NI Act despite noticing the Black’s Law Dictionary in regard to the meaning of the term ‘giving of notice’ and ‘receiving of the notice. The Court observed as under:

“19. In Black's Law Dictionary, `giving of notice' is distinguished from `receiving of the notice.' (vide page 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 distinguished from `receiving of the notice.' (vide page 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.

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 in interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure.

10) Again, in D. Vinod Shivappa v. Nanda Belliappa, (2006) 6 SCC 456, the Supreme Court has, while dealing with a similar situation, observed as under:

“One can also conceive of cases where a well-intentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond his control, even though he genuinely intended to honour the cheque drawn by him. The law treats such lapses induced by inadvertence or negligence to be pardonable, provided the drawer after notice makes amends and pays the amount within the prescribed period. It is for this reason that clause (c) of proviso to Section 138 provides that the section shall not apply unless the drawer of the cheque fails to make the payment within 15 days of the receipt of the said notice. To repeat, the proviso is meant to protect honest drawers whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfil their promise but on account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque. The proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, it being a part of their modus operandi to cheat unsuspecting persons.”

11) This question action came up before the Supreme Court in the case of C. C. Alavi Haji vs. Palapetty Muhammed & anr.

(2007) 14 SCC 750. The following observations of the Supreme Court made in the said judgement are relevant to the context and the same are reproduced as under:

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 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 (supra). 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:

“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.”

12) From the foregoing enunciation of the law, it is clear that once a notice of demand has been sent on the correct address of the accused and the same is returned because of non-availability of the accused at the relevant time, it would be a matter of trial as to whether the accused had gained the knowledge of the notice of demand. The Magistrate, at the stage of summoning of the accused, would not insist upon the complainant to establish the date on which the notice has been received by the accused.

13) Now coming to the instant case, it has been pleaded by the complainant that he had sent a notice of demand to the petitioner on his correct address and the same was returned undelivered because family members of the accused refused to receive the sane. The envelope has been annexed by the complainant along with his complaint. He has also pleaded in the complaint that the accused has the knowledge of notice and despite knowledge, he did not make the payment. So, all these questions i.e. as to whether the accused had the knowledge of the notice of demand and whether he deliberately avoided the service of the notice, can only be answered after the trial of the case. At the stage of summoning of the accused, these questions could not have been determined by the learned trial Magistrate and these questions cannot be determined by this Court in these proceedings by holding a mini trial.

14) For the foregoing reasons, I do not find the instant case a fit one where this Court should exercise its powers under Section 482 of the Cr. P. C to quash the impugned complaint and the proceedings emanating therefrom. The petition lacks merit and is dismissed accordingly.

15) A copy of the order be sent to the learned Magistrate for information.

(SANJAY DHAR) JUDGE

Srinagar, 30.12.2022“Bhat Altaf, PS”

Whether the order is speaking: Yes/NoWhether the order is reportable: Yes/No