Kohinoor International vs Shukla (Proprietor) and Others

M. Yaqoob Mir, J.—Cheque bearing No. 136608 dated 20.07.2003 for an amount of Rs. 75,040/-drawn at Corporation Bank

Vasundhara Enclave New Delhi issued by respondent in favour of the petitioner. On presentation before the UCO Bank, Budshah Chowk,

Srinagar for clearance, was received back on 19.11.2003 from the drawee bank alongwith a memo revealing not honoured for the reason

Account Closed"".

Faced with this situation, petitioner issued a notice of demand for payment which was sent to respondents No. 1 and 2 under postal receipt No.

RLADA 3218 & 3219 dated 29.11.2003. Both the two registered covers were received back with the endorsement ""Unclaimed"" and ""Company

Closed"".

Respectively shown to have been returned back on 05.12.2003 and 01.12.2003. Petitioner after waiting for a period of twenty days lodged the

complaint u/s 138 of Negotiable Instruments Act (hereinafter for short referred to ""the Act"")

Learned Magistrate after taking cognizance has issued the process as is clear from the interim order recorded on 22.12.2003. On 05.03.2004,

scheduled date, bailable warrant has been ordered to be issued and case scheduled for further proceedings on 19.05.2004. On the said date has

recorded ""counsel for the appellant present. Heard, list on 19.06.2004 for orders."" On 19.06.2004, impugned order has been passed.

By virtue of order impugned, learned Magistrate, while referring to Sections 138,142 of ""the Act"" and after relying on judgments as referred in

the order has concluded that essential ingredients as envisaged under Clause (c) of the proviso to Section 138 of ""the Act"" have not been fulfilled

i.e. the notice of demand has not been received by the accused so as to make them liable for penal action u/s 138 of ""the Act"". The process issued

against the accused dropped. Complaint dismissed.

Dissatisfied with the order impugned, instant revision has been filed. Clause (c) of Proviso to Section 138 of ""the Act"" reads as under:

(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.

Plain reading of this clause envisages that on receipt of the notice, if the drawer of the cheque fails to make payment, then on complaint,

cognizance can be taken for commission of offence punishable u/s 138 of the Act. The important question which emerge for consideration is as to

whether petitioner has complied Clause (c) of Section 138 of ""the Act"". As per record, notice of demand has been sent to the accused on the

given addresses under registered covers but were received back with an endorsement"" unclaimed and Company Closed"", hence-, returned on

05.12.2003 and 01.12.2003 respectively. Whether it amounts to sufficient compliance of Clause (C) of Section 138 of the act. Whether it

amounts to receipt of notice by the accused. As per Section 26 of the General Clause of the Act, receipt of the notice is to be presumed because

notice has been sent on correct address but returned back as "" Unclaimed Company Closed"" which shall not absolve the sendee to have received

the notice.

The provisions of ""the Act"" more particularly Section 138 of the Act has to be liberally construed, as the object is to save the bonafide person

be it drawer or the drawee. Once learned trial court had taken cognizance, bailable warrant was issued. It was for the respondents to appear and

to claim and prove that they have not received the notice and that they were not responsible for the non-service.

Learned Magistrate has scuttled the proceedings by dismissing the complaint. Judgment delivered in the context of Clause (c) of Section 138 of

the Act"" are applied in accordance with the particular facts and features of a particular case. Judgment cited in support of the conclusion drawn by

the trial court is distinguishable. In the judgment reported in 2003 (4) Crimes 169 J&K High Court, it has been held that the cause of action arise

on the date when the notice has been shown to have been duly served on the accused. It has further been held that the complainant had to place

sufficient material on record disclosing the actual date of demand of notice on accused. In the aforesaid judgment, it has been concluded that there

is nothing to suggest as to when the notice was issued by the complainant and on which date it was received by the accused. Whereas, in the case

in hand it is clear that notice of demand is dated 28.11.2003 same has been dispatched on 29.11.2003 returned ""unclaimed Company Closed

respectively on 05.12.2003 and 01.12.2003, therefore, this judgment is distinguishable so does not apply. Though in the said judgment, it has been

ruled that presumption of service of notice on accused u/s 27 of General Clause of the Act can be taken advantage if dates would have been

specified. It was not mentioned by the complainant as to when such notice was served, when it was received by the accused. While as, in the

instant case as stated herein above date of issuance of notice, dated of dispatch, and date of return is prima-facie available.

Another judgment relied by the Trial Court, has been delivered in Criminal Revision No. 21 and 22 titled Mohd. Shafi Ahangar v. Yasir Paul

wherein it has been held:

notice should not be deemed to have been served as a matter of course. It is the date of receipt of notice which is material to provide cause of

action to the complainant to maintain the complaint. It is the receipt of the notice and not giving the notice which gives a cause of action"". Same

proposition has been propounded in judgment reported in SLJ 2000 page 147 wherein it has been again held that there was nothing to suggest that

notice was issued or it was served. Similar view has been taken in judgment reported in SLJ 1988. While relying upon judgment reported in M/s.

Dalmia Cement (Bharat) Ltd. Vs. M/s. Galaxy Traders and Agencies Ltd., , it has been held:

...To constitute an offence u/s 138 of the Act, the complainant is obliged to prove its ingredients which include the receipt of notice by the accused

under Clause (6). It is to be kept in mind that it is not the giving of 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....

The principle of law as propounded is that issuance of notice of demand, its service on the other side, and then its non-compliance gives rise to

cause of action. In the instant case the complainant has correctly taken the relevant steps and has mentioned rather specified the date of dispatch

correct address and the date of return, hence is covered by the ratio of judgment delivered by Apex Court reported in D. Vinod Shivappa Vs.

Nanda Belliappa, It shall be quite relevant to quote para 14 and 15:

If a notice is issued and served upon the drawer of the chaque, no controversy arises. Similarly, if the notice is refused by the addressee, it may

be presumed to have been served. This is also not disputed. This leaves, us with the third 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 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 some time after issuing the cheque so that the requisite statutory notice can never be

served upon him and consequently he can never be prosecuted. There is good authority to support the proposition that once the complainant, 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 this 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

cheque as unpaid. He is, therefore, bound to issue the legal notice which may be returned with an endorsement that the addressee is not available

on the given address.

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 nut 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 amount to refusal of the notice. If the

complaint 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 the 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

premature at the stage of issuance of process, to move the High Court for quashing of the proceeding u/s 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 High Court ought not to exercise its jurisdiction u/s 482 of the Code of Criminal Procedure.

Appearing counsel for the petitioner has placed much reliance on the judgment reported in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and

Another, Rightly so, it is quite relevant to quote para 19 and 25:

In Black's Law Dictionary ""giving of notice"" is distinguished from ""receiving of the notice"" (vide P.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.

Thus, when a notice is returned by the sendee as unclaimed such date would be the commencing date in reckoning the period of 15 days

contemplated in Clause (c) to the proviso of Section 138 of the Act. Of course such reckoning would be without prejudice to the right of the

drawer of the cheque to show that he had no knowledge that the notice was brought to his address. In the present case the accused did not even

attempt to discharge the burden to rebut the aforesaid presumption.

While applying the ratio of the aforementioned judgment to the facts and circumstances of the present case returning of the notice sent through

RD cover on the correct address appears prima-facie a trick for avoiding receipt of notice. If the proceedings are scuttled the way learned

Magistrate has done particularly in the background of service of notice of demand which the petitioner has reasonably done and in case same is not

accepted then cheque drawer will get other benefit of dragging the beneficiary of the cheque and cheque cheating will be on rise.

In my opinion once a cheque is bounced, person is under legal obligation to issue notice in terms of sub Clause (C) of Section 138 of the Act

so as to provide opportunity to the drawer of the cheque to pay the cheque amount. In case of failure, complaint u/s 138 of the Act is warranted.

Now the question is how the notice can be presumed to have been served. In the facts of the instant case, the petitioner as a prudent person issued

notice of demand dispatched it under Registered covers properly on correct address as given by the accused so once it has been dispatched the

part of the petitioner was over and it was open for the respondent to respond either by making payment or by appearing before the court for

disproving proper service of the notice.

Cumulative effect of the aforesaid discussion leads to the conclusion that learned trial court has not appreciated the law in the back drop of

facts and features of this case correctly. Order impugned, as such, is liable to be set aside. So is set aside. Learned trial court shall proceed ahead

in accordance with law. Copy of the order alongwith case file be sent to Chief Judicial Magistrate , Srinagar, who may retain or may assign it to

any other Judicial Magistrate of competent jurisdiction.

Appellant to appear before the Court of Chief Judicial Magistrate, Srinagar on 24.03.2008.