REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.  1077  OF 2009 [Arising out of SLP (Crl.) No. 7797 of 2007]

Sivakumar …Appellant

Versus

Natarajan …Respondent

J U D G M E N T  

S.B. SINHA, J :   

1. Leave granted.

2. This appeal is directed against a judgment and order dated 03.02.2007  

passed by the Madurai Bench of the Madras High Court in Crl. Revision No.  

849 of  2005 whereby and whereunder  the  Criminal  Revision application  

filed by the appellant herein was dismissed affirming the judgment of the  

learned Principal Session Judge, Trichrapalli dated 08.11.2005 passed in Crl.  

A No. 87/2005, preferred against the judgment dated 03.05.2005 in CC No.  

69/2004 by the learned Judicial Magistrate III, Tiruchirapalli.

3. On or about 14.08.2003, appellant borrowed a sum of Rs. 1,00,000/-  

for the purpose of his business as loan from the complainant - respondent.  

The said amount was to be repaid within a period of three months. On or  

about 20.11.2003 the appellant handed over a cheque bearing No. 0652756  

dated 27.11.2003 for a sum of Rs. 1,00,000/- in favour of the respondent.  

The  said  cheque  was  presented  by  the  complainant  for  collection  to  his  

banker  namely  UCO  Bank,  Trichy  Main  Branch  on  27.11.2003.  It  was  

dishonoured with the remarks “insufficient funds” on 2.12.2003. Information  

thereabout was received by the respondent on 3.12.2003.   

4. On 02.01.2004, the respondent issued a legal notice to the appellant  

calling upon him to pay the amount in question within 15 days from the date  

of the receipt of the notice. Admittedly, the appellant neither sent a reply to  

the said notice nor paid the amount due.   

Respondent thereafter filed a complaint petition against the appellant  

under Section 138 of the Negotiable Instruments Act, 1881 (for short “the  

Act”) before the Judicial Magistrate No. III, Tiruchirapalli.   

2

5. The  learned  Judicial  Magistrate  III  convicted  the  appellant  under  

Section 138 of  the Act and sentenced him to undergo one year’s  simple  

imprisonment  and a fine of Rs.  5000/-  and in default  thereof to undergo  

further six months of simple imprisonment. He was also directed to pay a  

sum of  Rs.  1,00,000/-  as  compensation  to  the  respondent  under  section  

357(1) of the Code of Criminal Procedure.   

6. Aggrieved thereby and dissatisfied therewith, appellant preferred an  

appeal  before  the  Principal  Session  Judge,  Tirchirapalli,  which  was  

dismissed.   

7. Appellant  filed  a  revision  application  thereagainst  before  the  High  

Court, which by reason of the impugned judgment has been dismissed.

Appellant is, thus, before us.   

8. Before proceeding further, we may place on record that subsequent to  

the passing of the impugned judgment, a settlement has been entered into by  

and between the appellant and the respondent wherein it has been stated:

3

“At this juncture,  with the consensus of both the  parties,  on the assurance of the 2nd party, the 2nd  party shall receive a sum of Rs. 30,000/- from the  1st party and shall not take any action against the  judgment rendered by the court and there shall be  no  interest  over  the  issue  before  or  after  the  settlement and as such we both have signed in the  presence  of  the  witnesses.   2nd party  has  also  consented to issue a receipt for having received the  said amount to the 1st party.”

9. The core question which arises for consideration is as to whether the  

notice dated 2.01.2004 was issued within the stipulated period of thirty days  

from the date of receipt of intimation of the dishonour of cheque.   

Section 138 of the Act reads as under:

“138. Dishonour of cheque for insufficiency, etc.  of  funds  in  the  account.—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 from out of that account  for the discharge, in whole or in part, of any debt  or other liability, is returned by the bank unpaid,  either because of the amount of money standing to  the credit of that account is insufficient to honour  the cheque or that it exceeds the amount arranged  to be paid from that account by an agreement made  with  that  bank,  such  person  shall  be  deemed  to  have  committed  an  offence  and  shall,  without  prejudice to any other  provisions of  this  Act,  be  punished with imprisonment for a term which may  extend to two years, or with fine which may extend  to twice the amount of the cheque, or with both:  

4

Provided  that  nothing  contained  in  this  section  shall apply unless—

(a)  the  cheque  has  been  presented  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;

(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  thirty  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.

Explanation.—For  the  purposes  of  this  section,  ‘debt or other liability’ means a legally enforceable  debt or other liability.”

10. By reason of the provisions of the Act, a legal presumption in regard  

to commission of a crime has been raised.  The proviso appended thereto,  

however, states that nothing contained in the main provision would apply  

unless conditions specified in clauses (a), (b) and (c) thereof are complied  

with.  Clauses (a), (b) and (c) of the proviso, therefore, lay down conditions  

precedent for applicability of the main provision.  Section 138 of the Act  

being penal in nature, indisputably, warrants strict construction.

5

In  M/s.  Harman  Electronics  (P)  Ltd.  &  Anr. v.  M/s.  National  

Panasonic India Ltd. [2008 (16) SCALE 317], this Court held:

“8. The proviso appended thereto imposes certain  conditions  before  a  complaint  petition  can  be  entertained.

9.  Reliance  has been placed by both the learned  Additional Sessions Judge as also the High Court  on  a  decision  of  this  Court  in  K.  Bhaskaran  v.  Sankaran  Vaidhyan  Balan  and  Anr..  This  Court  opined that  the offence under Section  138 of  the  Act can be completed only with the concatenation  of a number of acts, namely, (1) Drawing of the  cheque, (2) Presentation of the cheque to the bank,  (3)  Returning  the  cheque  unpaid  by  the  drawee  bank, (4) Giving notice in writing to the drawer of  the  cheque  demanding  payment  of  the  cheque  amount, (5) failure of the drawer to make payment  within 15 days of the receipt of the notice. It was  opined that if five different acts were done in five  different localities, any one of the courts exercising  jurisdiction  in  one  of  the  five  local  areas  can  become  the  place  of  trial  for  the  offence  under  Section 138 of the Act and the complainant would  be at liberty to file a complaint petition at any of  those places. As regards the requirements of giving  a notice as also receipt thereof by the accused, it  was stated:

‘18. 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  

6

cause of action but  communication of the notice  would.”

Keeping in view the aforementioned legal principle, interpretation of  

clause  (b)  of  the  proviso  appended to  Section 138 of  the  Act  has  to  be  

considered.

11. We may, however, at the outset notice that both clauses (a) and (b) of  

the proviso appended to Section 138 of the Act employed the term “within a  

period”.  Whereas clause (a) refers to presentation of the cheque to the bank  

within a period of six months from the date on which it is drawn, clause (b)  

provides for issuance of notice “to the drawer of the cheque within thirty  

days of the receipt of information”.  The words “within thirty days of the  

receipt  of  information”  are  significant.   Indisputably,  intimation  was  

received by the respondent from the bank on 3.12.2003.   

The Parliament  advisedly  did  not  use the  words ‘from the date  of  

receipt  of  information’  in  Section  138  of  the  Act.   It  is  also  of  some  

significance to notice that in terms of Section 9 of the General Clauses Act,  

1897, whereupon reliance has been placed by the High Court, the statute is  

required to use the word “from” and for the purpose of including the last in a  

series of days or any other period of time, to use the word “to”.

8

The departure made from the provisions of Section 9 of the General  

Clauses Act by the Parliament, therefore, deserves serious consideration.

12. Indisputably, the notice was issued on the 31st day and not within a  

period of thirty days from the date of receipt of intimation from the bank.  If  

Section 9 of the General Clauses Act is  not applicable,  clause (b) of the  

proviso appended to Section 138 of the Act was required to be complied  

with by the respondent for the purpose of maintaining a complaint petition  

against the appellant.

In Munoth Investments Ltd. v. Puttukola Properties Ltd. and Another  

[(2001) 6 SCC 588] construing clause (a) of the proviso appended to Section  

138 of the Act, this Court held:

“5.  In  our  view,  the  High  Court  committed  material  irregularity  in  not  referring  to  the  aforesaid  evidence  which  was  recorded  by  the  Metropolitan Magistrate. Section 138(b) of the Act  inter  alia  provides  that  the  payee  has  to  make  demand  for  the  payment  of  money  by  giving  a  notice “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”.  So fifteen days are to be counted from the receipt  of information regarding the return of the cheque  as unpaid. In the present case, it is the say of the  complainant  that  the  cheque  was  presented  for  

9

encashment on 12th; it  was returned to the Bank  on  13th  and  information  was  given  to  the  complainant only on 17th, as 14th, 15th and 16th  were Pongal holidays. The learned counsel fairly  pointed out that in the complaint it has been stated  that the complainant had received intimation with  regard to  the return of  the  said cheque from his  banker on 13-1-1994. However, he submitted that  this is an apparent mistake and for explaining that  mistake the appellant has led the evidence before  the trial court. Undisputedly, he pointed out that in  the State of Tamil Nadu, 14-1-1994 to 16-1-1994  there  were  Pongal  holidays  and,  therefore,  the  appellant came to learn about the dishonour of his  cheque on 17-1-1994.”  

We, with respect, agree with the approach of the learned Judges.

13. Our attention has furthermore been drawn to a decision of the Kerala  

High Court in  K.V. Muhammed Kunhi v.  P. Janardhanan [1998 Crl. L.J.  

4330], wherein construing proviso (a) appended to Section 138 of the Act, a  

learned Single Judge held:

“…A comparative study of both the Sections in the  Act  and  the  General  Clauses  Act  significantly  indicate  that  the  period  of  limitation  has  to  be  reckoned from the  date  on  which  the  cheque or  instrument was drawn.  The words ‘from’ and ‘to’  employed in Section 9 of the General Clauses Act  are evidently clear that in cases where there is an  ambiguity or suspicion with reference to the date  of  commencement  of  period of limitation in any  Act  or  special  enactment,  the  words  ‘from’  and  

1

‘to’ employed in Section 9 of the General Clauses  Act can be pressed into service..”

[See also K.C. Nanu v. N. Vijayan and Anr. 2008 (1) KLJ 327]

We are in agreement with the aforementioned view.

14. Mr. B. Balaji, learned counsel appearing on behalf of the respondent,  

however, would contend that the appellant having entered into a settlement  

in terms whereof he had deposited a sum of Rs. 30,000/- and an assurance  

having  been  given  that  no  action  would  be  taken  against  the  judgment  

rendered by the High Court, this Court should not exercise its discretionary  

jurisdiction under Section 136 of the Constitution of India to interfere with  

the impugned judgment.  We fail to persuade ourselves to agree with the  

aforementioned submission.

15. Appellant has a fundamental right of liberty in terms of Article 21 of  

the Constitution of India.  Liberty of the appellant, therefore, could not have  

been taken away except  in accordance with the procedure established by  

law.

Principles of ‘Estoppel’ or ‘Waiver’ would not, therefore, apply in the  

instant case.

1

In  any  event,  the  respondent  himself  has  backed  out  from  the  

aforementioned settlement.   He,  therefore,  cannot  be  permitted  to  take  a  

different stand.   

16. Having, however, regard to the facts and circumstances of the case,  

we, in exercise of our jurisdiction under Article 142 of the Constitution of  

India, direct that as the civil liability of the appellant stands admitted, the  

said sum received by the respondent need not be refunded.

17. For the reasons aforementioned,  the  impugned judgment cannot  be  

sustained, which is set aside with the aforementioned directions.  The appeal  

is allowed.

………………………….J. [S.B. Sinha]

..…………………………J.     [Asok Kumar Ganguly]

New Delhi; May 15, 2009

1