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CASE NO.: Appeal (crl.) 957  of  2000

PETITIONER: DALMIA CEMENT (BHARAT) LTD.

       Vs.

RESPONDENT: M/S.GALAXY TRADES & AGENCIES LTD.  & ORS.

DATE OF JUDGMENT:       19/01/2001

BENCH: R.P.Sethi,, K.T.Thomas

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

     SETHI,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

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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

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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

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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

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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.

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     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

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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.