K. Sandhya Anand vs U.B. Seetharamappa

A.N. Venugopal Gowda, J.—A complaint having been filed by the respondent alleging commission of offences punishable under S. 138 read with S. 142 of the Negotiable Instruments Act, 1881 (for short, ''the Act''), case was registered and process having been issued against the petitioner, this petition was filed to quash the proceedings pending before the learned Magistrate.

Sri Rajkumar C, learned advocate, contended that the petitioner having not received the notice sent by the respondent and the ingredients under S. 138(b) of the Act having not been complied with, the registration of criminal case and issue of process against the petitioner being illegal, the entire proceedings is liable to be quashed. He submitted that the giving of notice and receipt of notice are continuing process to file a complaint against the drawer of the cheque due to its dishonour and in the instant case, no cause of action having arisen, on account of not producing the acknowledgement regarding the service of statutory notice and the ingredients of the offence under S. 138 of the Act having not been made out, this petition is liable to be allowed.

Perused copy of the complaint vide Annexure-B. According to the complainant, the petitioner borrowed Rs. 2,00,000/- as hand-loan on 20.01.2013 and towards repayment, issued a cheque dated 31.03.2013 bearing No. 121407 of State Bank of Mysore, Hosadurga Branch and requested to present the same after 1 1/2 months for arranging payment and the cheque when presented on 25.03.2013 through Karnataka Bank Ltd., Chitradurga Branch, was returned unpaid with endorsement "funds insufficient" along with bank memo dated 24.05.2013. It has been stated that a legal notice was issued to the accused on 03.06.2013 and that the same was served on 10.06.2013 and that there was neither any reply nor payment and hence, the complaint was filed.

In the sworn statement, copy of which is at Annexure - C, there is reiteration of the statements made in the complaint. A copy of legal notice dated 03.06.2013 has been produced as Ex. P4 and postal receipt thereof is at Ex. P5 and the consequential postal acknowledgement is at Ex. P6. Signature of the addressee is not appearing in Ex. P6.

Learned Magistrate after going through the contents of the complaint and the sworn statement, being of the opinion that the materials on record are sufficient to proceed against the accused for the offences punishable under S. 138 of the Act, directed registration of the case and issued the process against the petitioner.

The condition pertaining to the notice to be given to the drawer as per the language of clauses (b) and (c) of S. 138 of the Act read as follows:

"138. Dishonour of cheque for insufficiency, etc., of funds in the account.- xxxxxx

(a) xxxxxx

(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."

From the above, it is clear that the payee has to make a demand by "giving a notice" in writing and that is 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". Thus, it is clear that "giving" is a process of which "receipt" is the accomplishment and the stipulation is that the payee should perform the process of sending the notice to the drawer at the correct address. If there is compliance to the said extent, then the issue with regard to service has to be decided during trial. Hence, the complaint cannot be dismissed at the threshold on the purported ground that there was no proper service of notice.

In V. Raja Kumari Vs. P. Subbarama Naidu and Another, , respondent No. 1 filed a complaint against the appellant - accused, under S. 138 read with S. 142 of the Act, alleging that a cheque issued by the accused in his favour was dishonoured by the bank on account of the insufficiency of funds and on 09.08.1997, respondent No. 1 issued a legal notice to the correct address of the appellant which was later returned with an endorsement that the door of the house of the accused/appellant was locked and subsequently the amount was not paid by the appellant. The Magistrate dismissed the complaint on the ground that under S. 138 of the Act, service of notice was mandatory and mere sending a notice was not sufficient. When that order was assailed by the complainant, while reversing the said order, the High Court held that non service of notice was not a ground for rejecting the complaint even before numbering it and that the effect of non service of notice was to be considered during trial. The said order was questioned by the accused and while dismissing the appeal, the Apex Court has held that the burden was on the complainant to show that the accused has managed to get an incorrect postal endorsement made and what is the effect of it has to be considered during trial as the statutory scheme unmistakably shows the burden was on the complainant to show the service of notice and therefore, where material is brought to show that there was false endorsement about the non-availability of notice, the inference that is to be drawn has to be judged on the background facts of each case and that therefore the High Court was justified in its view and no interference was called for. It has been made clear that the question, whether notice as required under S. 138 of the Act has been served has to be decided during trial and the complaint ought not to be dismissed at the threshold on the purported ground that there was no proper service of notice.

The aforesaid decision completely negates the contention put forth by the learned advocate for the petitioner.

In the result, the petition is rejected. However, the learned Magistrate shall decide the case in accordance with law, uninfluenced by the observations made supra.