K.V. Davis Vareed vs M.K. Unnikrishnan and State of Kerala

M.L. Joseph Francis, J.—This appeal is filed by the complainant against the judgment of acquittal of the first respondent herein passed by the Chief Judicial Magistrate Court, Trichur dt. 18.7.2002 in S.T. No. 1002 of 1999. That was a private complaint filed by the complainant against the first respondent/accused alleging commission of the offence punishable u/s 138 of the N.I. Act.

The case of the complainant is briefly as follows. The accused issued Ext.P1 cheque for Rs. 30,000/- on 11.3.1999 in favour of the complainant for the discharge of a legally enforceable subsisting liability. When the complainant presented that cheque for encashment on 14.6.1999, it was dishonoured due to insufficiency of funds in the account of the accused and the cheque was received back by the complainant on 28.6.1999. On 1.7.1999, the complainant issued a lawyer notice to the accused intimating dishonour of the cheque and demanding the amount. That notice was not received/accepted by the accused and it was returned to the complainant on 10.7.1999 with an endorsement ''returned to the sender''. Non-acceptance of the notice was wilful and so far the accused has not made any payment and as such the accused committed the offence punishable u/s 138 of the N.I. Act.

In the Chief Judicial Magistrate Court, on the side of the complainant Pws. 1 and 2 were examined and Exts. P1 to P7 were marked. On the side of the accused he himself was examined as RW1 and Exts. D1 and D2 were marked. The learned Chief judicial Magistrate, on considering the evidence, found that the complainant failed to prove that the accused has committed an offence punishable u/s 138 of the N.I. Act as there was no proper giving of notice to the accused as contemplated u/s 138(b) of the N.I. Act. Against that judgment of acquittal the complainant filed this appeal.

Learned Counsel for the appellant submitted that the learned Chief Judicial Magistrate ought to have concluded from the evidence of PW2, the postman, that the contention of the accused that notice has been issued in a wrong address cannot be believed. The learned Counsel for the appellant submitted that the court below failed to take note of the fact that the accused was arrested at the address given in Ext.P6 notice as well as in the complaint. The learned Counsel for the first respondent/accused supported the judgment of the court below.

To prove the case of the complainant he himself was examined as PW1. He deposed that the accused borrowed a sum of Rs. 30,000/- from him as loan and when the amount was demanded back, the accused issued Ext.P1 cheque on 11.3.1999. PW1 sent Ext.P1 cheque for collection on 14.6.1999 and it was dishonoured due to insufficiency of funds on 28.6.1999 as evidenced by Exts.P2 and P Crl.A. No. 332 of 2003 memos. PW1 issued a lawyer notice to the accused, the copy of which is Ext.P4 and the postal receipt is Ext.P5. PW1 deposed that the accused did not accept the notice and hence it was returned. Ext.P6 series are the returned notices. PW1 further stated that he had issued notices to the accused in his own address as well as in the address of the wife of the accused, since he used to reside at his wife''s house.

PW2 was the Postman of Puthuruthi Post Office. According to him, he knew the accused and his wife Bhanumathi and he had gone to the house mentioned in Ext.P6 notice and he also used to serve notice to the accused as well as to his wife Bhanumathi in the address mentioned in Ext.P6. According to him, the endorsement in Ext.P6 is in his own handwriting and the accused never informed to the Post Office that he had changed his address.

The evidence of PW1 shows that the accused issued Ext.P1 cheque for a legally enforceable debt. It is further proved that Ext.P1 cheque was dishonoured due to insufficiency of funds. Moreover, DW1, the accused, admitted that the signature in Ext.P1 is that of himself. His contention is that he had subscribed to the chitty conducted by the brother of the complainant, one Kurian, in the year 1995 and he bid the said chitty in auction during 1996 and on receipt of the amount he handed over signed blank cheques, one of which is Ext.P6. To prove this aspect, he produced Ext.D1 chitty pass book. But nowhere in Ext.D1 the name of the said Kurian is mentioned. Hence the evidence of DW1 is not sufficient to rebut the presumption u/s 139 of the N.I. Act that it is supported by consideration.

Dishonour of cheque by itself does not give rise to a cause of action u/s 138 of the N.I. Act, because the payment can be made on receipt of notice of demand contemplated in Clause (b) of Section 138 and in that event there is no offence nor any attempt to commit the offence. Failure to pay the amount within 15 days of receipt of notice alone is the cause of action.

The learned Counsel for the first respondent/accused invited my attention to the decision of this Court reported in Jithendranath v. Walson Laboratories 2007 (1) KHC 97 in which it was held that when acknowledgment card is returned with the endorsement ''door locked'', it cannot be said that notice was served in the correct address.

The learned Counsel for the first respondent/accused invited my attention to the decision reported in D. Vinod Shivappa Vs. Nanda Belliappa, wherein it was held:

It is no doubt true that the receipt of the notice has to be proved, but if the notice is refused by the addressee, it may be presumed to have been served. In a case where notice is not claimed even though sent by registered post, with the aid of Section 27 of the General Clauses Act, the drawer of the cheque may be called upon to rebut the presumption which arises in favour of service of notice. However, no rule of universal application can be laid down that in all cases where notice is not served on account of non-availability of the addressee, the court must presume service of notice.

The learned Counsel for the appellant invited my attention to the decision reported in C.C. Alavi Haji Vs. Palapetty Muhammed and Another, wherein it was held that:

The Supreme Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed.

Ext.D2 is the photo identity card issued to the accused in 1998 by the Election Commission of India showing the address of the accused as residing in House No. 287, Ward No. 8 of Mundathi thode Grama Panchayat in Chandayil house. Ext.P7 is the true extract of the Savings deposit Register of the Service Co-operative Bank, in which the address of the accused is given as S/o. Krishnan, Manjinamkudy House, Putturuthi P.O. Ext.P6 (b) is the registered lawyer notice with acknowledgment sent to the accused with the address S/o. Manjinamkudy Krishnan, Putturuthi P.O., which was returned unserved with the endorsement that "house was locked". Ext.P6(a) is another lawyer notice with acknowledgment sent to the accused with the address S/o. Manjinamkudy Krishnan, C/o. Bhanumathi Unnikrishnan, D/o, Chandayamveettil Narayanan, Putturuthi P.O., which was also returned with the endorsement "door locked".

The lower Court records would show that the summons issued from the Chief judicial Magistrate Court on 12.1.2000 in the address mentioned in the complaint and as shown in Ext.P6(a) notice was affixed in House No. 8/287 of Mundathi thodu Grama Panchayat and therefore it is clear that the house number shown is the same as the house shown in Ext.P6(a) notice and in the complaint. Therefore it is evident that Exts.P6(a) and (b) lawyer notices sent by the complainant intimating the dishonour of the cheque was not accepted by the accused as the door was locked and in view of the principles laid down in the decision reported in Alavi Haji (supra), it has to be presumed that the notice was served. Since the accused executed Ext.P1 cheque in favour of the complainant, which was dishonoured due to insufficiency of funds in the account of the accused and the complainant had validly complied with Clauses (a) and (b) of the proviso to Section 138 of the N.I. Act and the accused failed to make the payment within 15 days of the notice, I find that the accused has committed an offence punishable u/s 138 of the Act and he is convicted for that offence. Therefore, the Chief Judicial Magistrate is not justified in finding that the accused has not committed the offence u/s 138 of the N.I. Act.

In the decision reported in Damodar S. Prabhu v. Sayed Babalal H 2010 (2) KHC 428 it was held that in a case of dishonour of cheques, compensatory aspect of the remedy should be given priority over the punitive aspect. Considering the facts and circumstances of the case, I am of the view that sentencing the accused to pay a fine of Rs. 30,000/- would meet the ends of justice. The said fine shall be paid as compensation u/s 357(1) of Cr.P.C.

Accordingly this appeal is allowed and the acquittal of the accused in S.T. No. 1002 of 1999 on the file of the Chief judicial Magistrate Court, Trichur u/s 138 of the N.I. Act is set aside and the accused is found guilty u/s 138 of the N.I. Act and he is convicted and sentenced to pay a fine of Rs. 30,000/- The said fine shall be paid to the appellant as compensation u/s 357(1) of Code of Criminal Procedure The accused is permitted either to deposit the fine amount before the court below or directly pay the compensation to the appellant within three months from today and produce a memo to that effect before the court below in case of direct payment. If the accused failed to deposit or pay the said amount within the aforesaid period, he shall suffer S.I. for a period of three months by way of default sentence.