Jacob Cherian vs T.G. Ramachandran

M.C. Hari Rani, J.—The complainant in C.C. No. 704/96 on the file of the Judicial First Class Magistrate''s Court, Thiruvalla is the appellant. The complaint was filed against the first respondent herein complaining of commission by him of the offence punishable u/s 138 of the Negotiable Instruments Act. The learned Magistrate found "that the complaint which ought to have been filed by 30.4.1996 is seen filed only on 26.7.1996 which is nearly two months beyond the time as prescribed in the Act. Therefore, one of the essential ingredient u/s 138 of the Negotiable Instruments Act has not been satisfied by the complainant." On that finding, the learned Magistrate acquitted the accused u/s 255(1) of Cr.P.C. Hence, this appeal preferred by the aggrieved complainant against acquittal of the accused.

The case of the complainant is that Exhibit P1 cheque dated 15.12.1995 was issued by the first respondent in his favour for an amount of Rs. 55,000/- in discharge of debt due to him, that on presentation, it was dishonoured due to insufficient funds in the account of the accused on 21.3.1996. Notice was sent to the accused on 12.4.1996 and the same was returned unclaimed to the sender on 22.4.1996 and that return notice was received by the complainant on 23.4.1996 as revealed from Exhibit P2. That notice was purposely not accepted by the accused and later on the accused came and requested the complainant to give a further period of two months to clear the transaction between them. Accordingly, the complainant granted two months more to the accused to settle the matter. But, the accused did not pay off the amounts due to him and subsequently, the complainant again presented the cheque before the Bank which was again dishonoured due to insufficient funds as revealed from Exhibit P5 memo dated 3.6.1996 issued from the Bank. Thereafter, another lawyer notice was sent on 10.6.1996, the copy of which is marked as Exhibit P6. That notice was received by the accused on 14.6.1996 as revealed from Exhibit P7 acknowledgment card. Despite intimation of dishonour and demand made vide Exhibit P6 notice received and acknowledged by the first respondent under Exhibit P7, he has not cared to repay the amount. Hence, it was complained by the complainant/appellant that the accused has committed the offence u/s 138 of the Negotiable Instruments Act.

The appellant gave evidence as PW1 consistent with the allegations in the complaint. The Bank Manager was also examined as PW2 on the side of the appellant. One witness was examined on the side of the accused as DW1, but it was stated in the impugned judgment that no evidence was adduced on the side of the accused which is an inadvertent mistake.

It is contended in this appeal by the appellant/complainant that the lower court did not consider the evidence adduced by the parties and acquitted the accused on the finding that the complaint has not been filed within the time limit as contemplated u/s 138 of the Negotiable Instruments Act.

In the light of the contentions raised by the parties in this case, the point for consideration is when does the cause of action arises in this case.

According to the learned Counsel for the appellant, the cause of action arises only after the issuance of the second lawyer notice which was received by the accused on 14.6.1996 as revealed from Exhibit P7 acknowledgment. The first notice which was returned to the complainant as unclaimed was discarded by the appellant and taken the risk of issuing the second notice for proving that the accused in fact had actually received the lawyer notice intimating him about the dishonour of the cheque drawn by him. The complainant had not claimed the benefit of presumption u/s 27 of the General Clauses Act as that presumption is rebuttable one. The learned Counsel relied on the decision in Dalmia Cement Ltd. v. Galaxy Trades & Agencies 2001 (1) KLT 528 SC to establish his argument. The learned Counsel further argued that the word used in Section 138(c) is receipt of the notice and leaving an intimation date cannot be the date of receipt of notice as enunciated in the Section.

This contention of the appellant has been stoutly denied by the learned Counsel for the first respondent and submitted that the cause of action again arose on 15.4.2006, the date on which intimation was given to the accused regarding the original notice sent by the complainant on 12.4.1996 and therefore, there is no ground for any interference in the impugned judgment of the learned Magistrate. To decide the point in controversy in this case, it is relevant to refer the facts of the case as alleged by the appellant.

The accused borrowed an amount of Rs. 55,000/- from the complainant and in discharge of the debt issued a cheque (Exhibit P1) dated 15.12.1995, drawn on Federal Bank Ltd., Changanassery. The cheque was presented through Bank of Baroda, but the cheque was dishonoured with the note "insufficient funds" on 21.3.1996. The advocate''s notice sent on 12.4.1996 demanding payment was returned with the remark ''unclaimed''. On the request of the accused the cheque was presented once again on 3.6.1996 and again it was dishonoured. The dishonoured cheque was returned to the appellant on 6.6.1996 with the note "Insufficient Funds''. The appellant caused to send a lawyer''s notice on 10.6.1996 demanding payment within 15 days. The notice was received by the respondent on 14.6.1996. As the respondent accused did not make payment within the stipulated period of 15 days the cause of action has occurred on 29.6.1996. The complaint was filed on 27.7.1996. The lower court has acquitted the 1st respondent/accused on the ground that it appears that intimation of the notice about the dishonour of the cheque has been given on 15.4.1996 and in that case the complaint should have been filed by 30.4.1996.

It is argued by the learned Counsel for the appellant that the learned Magistrate has failed to comprehend the meaning of the remark ''unclaimed'' which does not mean refused. The cause of action u/s 138(c) of the Negotiable Instruments Act arises on the 15th day of the receipt of notice demanding payment provided payment is not made within fifteen days of the receipt of the notice. As the earlier notice was not claimed by any one, there is no particular date of receipt of the notice or refusal of the notice, hence the cause of action has not arisen. The date of receipt of the notice being very vital in determining the date on which the cause of action arises, an unclaimed letter cannot be the basis for deciding the date on which the cause of action has arisen. The appellant filed the complaint within one month of the date on which the cause of action has arisen under Clause (c) of the proviso to Section 138 of the N.I. Act. Therefore, it is highly necessary that the impugned order is set aside and the case is restored to file and tried, it is submitted.

Section 138 of the N.I. Act reads as under:

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 provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:

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 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.

On a reading of the above Section and the proviso, it is clear that in order to constitute an offence u/s 138 of the N.I. Act, the complainant is obliged to prove the following ingredients.

(a) that the cheque was drawn for payment of an amount of money for discharge of a debt/liability and the cheque was dishonoured.

(b) the cheque should have been presented to the bank within six months of its issue or within the period of its validity whichever is earlier;

(c) payee should have made a demand for payment by registered notice after the cheque is returned unpaid and

(d) that the drawer should have failed to pay the amount within 15 days of the receipt of notice.

It is only when all the above four conditions are satisfied that a prosecution can be launched for the offence u/s 138. So far as the 2nd condition is concerned Clause (a) of the proviso to Section 138 does not put any embargo upon the payee to successively present a dishonoured cheque during the period of its validity. It cannot be disputed that a cheque can be presented any number of times during the period of its validity. u/s 142 of the Act a competent Court can take cognizance of a written complaint of an offence u/s 138 if it is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to S.138. It is significant to note that Clause (b) of Section 142 refers to only one fact which will give rise to the cause of action and that is the failure to make payment within 15 days from the date of receipt of the notice. Consequent upon the failure of the drawer to pay the money within the period of 15 days as envisaged under Clause (c) of the proviso to Section 138, the liability of the drawer for being prosecuted for the offence he has committed arises, and the period of one month for filing the complaint u/s 142 is to be reckoned accordingly. Sections 138 and 142 postulates only one cause of action for dishonour of one cheque and for one offence only and such offence is committed by the drawer immediately on his failure to make the payment within fifteen days of the receipt of the notice served in accordance with Clause (b) of the proviso to S.138. The payee can repeatedly present the cheque during its period of validity and on each presentation of the cheque and its dishonour a fresh right will arise, but only one opportunity to file a complaint for its dishonour, i.e., within one month from the date of the cause of action arises. That cause of action under Clause (c) of the proviso to Section 138 of the Act is within 15 days of receipt of notice issued under Clause (b) of Section 138 and in case of failure of the drawer to pay the money within the stipulated time he would be liable for the offence and the cause of action for filing the complaint will arise u/s 142(b) of the Act. The period of one month for filing the complaint will be reckoned from the date immediately following the date on which the period of 15 days from the date of receipt of the notice by the drawer expires.

In Sadanandan Bhadran Vs. Madhavan Sunil Kumar, it was held by the Apex Court that when notice of demand is issued by the payee to the drawer of the cheque after dishonour of the cheque and the drawer receives such notice, the clock of limitation will start ticking and the complaint must be filed within 45 days of such receipt of the notice of demand. Thereafter no fresh cause of action for prosecution u/s 138 of the N.I. Act can arise from the very same cheque.

In this case Exhibit P2 notice is returned as ''unclaimed'' and not as ''refused''. The appellant/complainant exercised the option to issue a fresh notice after presenting the cheque again before the bank. That notice, Exhibit P6 was received by the accused as revealed from Exhibit P7, the acknowledgment card. It is revealed from the evidence of PWs 1 and 2 and from the endorsement in Exhibit P2 that the addressee was absent from 15.4.1996 to 22.4.1996. It was endorsed by the postal authorities in that notice, Exhibit P2 "unclaimed, so rtd. to sender" Is it sufficient to presume receipt of notice as contended by the first respondent/accused? Definitely not. The sending of notice is different from receipt of notice. There cannot be any compulsion on the part of the accused to the complainant to adopt the option of presumption.

Section 27 of the General Clauses Act deals with the presumption of service of a letter sent by post. The dispatcher of a notice has a right to insist upon and claim the benefit of presumption of service of a letter sent by post in correct address. 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 proving that he in fact received the notice. It is open to the dispatcher 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 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 first respondent.

Therefore the cause of action for filing the complaint in the present case started on 29.6.1996, that is, 15 days after Exhibit P7 dated 14.6.1996 and the complaint was filed by the complainant on 26.7.1996, i.e.; within the stipulated period of 30 days. Instead of that, the learned Magistrate took the first notice as the starting point of cause of action and fell in error by dismissing the complaint on the finding that the same was barred by time.

Under the circumstances, this appeal is allowed and the finding of the learned Magistrate regarding the dismissal of the complaint filed by the appellant is set aside. The learned Magistrate is directed to proceed against the first respondent in accordance with the provisions of law and expeditiously dispose of the complaint, at any rate, before the expiry of three months from the date of receipt of this judgment.