M/s. C.R. Engineering and Constructions (P) Ltd. vs M/s. Kiesco Kalinga Steels Ltd. and Mr. J.K. Singh, Director, M/s. Mesco Kalinga Steels Ltd.

A. Ramamurthi, J.—The complainant has preferred an Appeal aggrieved against the judgment of acquittal passed by the learned XVIII

Metropolitan Magistrate in C.C.No.6088 of 1966 dated 8.1.1999 relating to an offence u/s 138 of Nagotiable Instruments Act (hereinafter

referred to as ''N.I. Act'').

The case in brief is as follows: The complainant/appellant filed a private complaint u/s 138 of N.I. Act against the 4 accused in connection with

the dishonour of 9 cheques to the total value of Rs. 82,12,551-90. All these cheques were presented and they were dishonoured on the ground of

insufficient funds/exceeds arrangement. The accused issued these cheques towards the discharge of balance of liability for the bill raised by the

complainant in respect of the work carried out. In fact, the accused have admitted their liability under the letters Exs. P 4 to P 6 They have also

accepted for payment of two bills of exchange under Exs.P7 and P8. To the Legal notice issued, the accused sought extension of time for payment

of the money as seen from Exs. P45 and Ex.P46. the issuance of cheques was admitted by the accused and the burden is upon the accused to

show that no offence u/s 138 of N.I Act is made out. The complainant after observing the statutory formalities laid the complaint and the trial court

convicted the accused only in respect of two cheques involved in C.C.No.6092 of 1996 and acquitted in respect of the other two cases in C.C.

6088 and 6093 of 1996. The total amount involved in the cases under the acquittal comes to about Rs.53 lakhs.

P.Ws. 1 to 5 were examined on the side of the complainant and Exs. P1 to P55 were marked On the side of the accused, Exs. D1 and D2

were marked. After hearing the parties and on the basis of the evidence, the trial court found them guilty in respect of two cheques Exs.P9 and

P10 and imposed a fine of Rs.50000/- for the first accused 2 to 4 and awarded compensation amount u/s 357 of the Code of Criminal Procedure.

Since the accused were found not guilty in respect of the other cheques, the complainant has come forward with the present appeal.

Heard the learned counsel for the parties.

Learned counsel for the complainant contended that the trial court ought to have come to the conclusion that the cheques were issued towards

the discharge of liability. When the cheques were issued for legally enforceable debt, the acquittal in respect of some of the cheques transaction is

not proper and correct. The intimation of dishonour was given to the complainant in writing by the bank only on 10.9.1996. The trial court erred in

concluding as if the intimation was given to the complainant on 10.8.1996. The evidence of PWs.2 and 5 had been wrongly analysed by the court

below relating to the communication in respect of the dishonoured cheques. PW5 stated that the date 10.8.1996 has been altered by her and she

alone put the date as 10.9.1996. She also denied the suggestion that she had altered the date to favour the complainant. Under Ex.P55, the

intimation was served on the representative of the complainant on 17.9.1996. The evidence further disclosed that as per the procedure by the

Reserve Bank of India and the Rules laid down by the bank, it is mandatory to send the intimation of dishonour in writing. The complainant is

bound to issue notice within 15 days after receiving the written intimation from the bank. In the present case, notice was issued on 19.9.1996 and it

is well within the period of 15 days stipulated u/s 138(b) of N.I. Act. The trial court also failed to note about sections 91 and 92 of the Evidence

Act to eschew consideration of oral evidence in respect of any matter which has been reduced in writing. The liability of the accused has been

admitted in the reply notice under Ex.P38 also.

Learned counsel for the accused contended that the court below has properly analysed the evidence of the witnesses and in fact, the evidence of

PWs2 and 5 is inconsistent with reference to the communication sent to the complainant about the dishonour of the cheques. Learned counsel

further stated that in respect of one cheque bearing No. 576065 dated 10.3.1996, the payment has been made in time even before the issue of

statutory notice. He further pointed out that in respect of the two cheques transaction, they were convicted and a sum of Rs. 3.25 lakhs ws also

paid. In the grounds of appeal now put forward by the complainant, the cheque No 965289 has been omitted. Section 138 being a penal

provision, the interpretation of the statute should be made favourable to the accused. There is also discrepancy in the notice sent by the

complainant relating to the date of dishonour of the cheques. Ex.D1 has been filed to show that the dishonour of the cheque was only on

10.8.1996. According to him, the correction has been made by P.VV.5 subsequently only to enable the customer so as to save him.

The points that arise for consideration are,

(1) Whether the accused have committed the offence u/s 138 of N.I, Act?

(2) Whether there are any valid and sufficient cause to interfere in the finding given by the court below?

(3) To what relief?

Points : The complainant filed a complaint against the accused alleging that payment of a sum of Rs. 82,12,551.60 is due towards payment for

the construction work. They issued cheques under Exs P 9 to P 17. All these cheques were presented; but they were returned on the ground of

insufficient funds/exceeds arrangement. It is admitted that the trial court found the accused guilty relating to the cheques under Exs.P 9 and P 10

only and convicted them as aforesaid. In respect of Ex.P11, according to the accused, the payment has been made in time and the same has not

been disputed by the complainant. Under the circumstance, the appeal has been filed only in respect of the cheques covered under Exs.P 12 to

P17. Learned counsel for the complainant stated that the cheques covered under Exs. P12 to P17 were presented for encashment and they were

dishonoured. The memo by Andhra Bank was given only on 10.9.1996 and the statutory notice was issued on 19.9.1996 and under the

circumstance, me formality has been duly complied with by the complainant. Learned counsel further stated mat originally the date was put as

10.8.1996, the actual date of dishonour, but the communication was given only on 10.9.1996 and as such, the acquittal by the trial court relating to

Exs. P11 to P17 is not proper and correct.

Ex.P 21 is the document relating to the dishonour of the cheques in dispute. Originally it was written as 10.8.1996. P.W.2, the Manager in the

evidence, admitted mat there is correction in the date and he was not aware who did the same. PW5 the Bank Clerk categorically stated that she

alone altered the date and the communication might have been given orally on 10.8.1996 but written communication was sent only on 10.9.1996.

No doubt, the attestation of P.W.5 has not been made in the correction and this has been made much of by the trial court. PW5 hereself in the

course of cross examination stated that due to pressure of work, she might not have attested the correction. She even denied the suggestion in the

cross examination that she had altered the date only to help the complainant because they happened to be their regular customer. It has also come

out in the evidence that if the person who presented the cheque in the bank did not turn up for 10 or 15 days, they would intimate at a later point of

time. There is also no Rule that it should be immediately intimated. After the cheques are bounced, they would prepare a memo. PW5 also stated

that the returned cheques were sent to the complainant through local tapal register on 17.9.1996 as per Ex.P55. The trial court came to the

conclusion that for want of attestation, the date of communication to the complainant was determined as 10.8.1996 and the statutory notice was

sent only on 19.9.1996 and it came to the conclusion that it was not issued within a period of 15 days and, as such, acquitted the accused.

The short question that has to be decided in the Appeal is whether the intimation relating to the dishonour of the cheques Exs. P12 to P17 was

sent to the complainant on 10.8.1996 or on 10.9.1996. The evidence of PW5 only supported the case of the complainant and there is no difficulty

in fixing the date as 10.9.1996. The evidence of PW2 only raised a doubt as to whether the correction could have been made at a later point of

time; but after the examination of PW5, there is no room for any suspicion on the part of the bank officials. However, the learned counsel for the

accused contended that even assuming that the intimation was given on 10.9.1996 according to Ex, P55, the written communication was received

by the representative of the complainant only on 17.9.1996 and, as such, there is a discrepancy. As adverted to, the statutory notice was sent on

19.9.1996 and even if the date of intimation is taken as 10.9.1996 or 17.9.1996, it will not affect the case of the complainant in any way or it

cannot be said that it is favourable to the accused. It really the complainant was informed even on 10.8.1996 about the dishounoured cheques to

the value of Rs.53 lakhs, there was no necessity to allow the intimation to lie in the bank without claiming the same. It is probable that orally the

dishonour of the cheques might have been informed to the complainant, but it is not sufficient compliance under law. The dishonoured cheques as

well as the reason of the dishonour should be duly communicated to the complainant in order to find out the reason or cause. Hence, I am of the

view that the cause of action for the complainant would commence only on receipt of the written intimation from me bank and not from the oral

information given to the complainant.

Section 138 (b) of N.I. Act is relevant to be extracted to appreciate the contentions of the parties and it reads as follows:

Dishonour of cheque for insufficiency, etc., of funds in the accounts......

(b) the payee or the holder induce 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 cheques as unpaid.

Prima facie it is clear that only on receipt of the written information, the statutory notice has to be issued to the drawer of the cheque. If that is

taken into consideration, there is no doubt in coming to the conclusion that the written information was given on 10.9.1996 or on 17.9.1996 and

the statutory notice was issued on 19.9.1996. The accused also sent a reply for the statutory notice seeking further time to pay the amount. PWs 2

and 5 also admitted that if and when the payee does not come to collect the memo or the dishonoured cheques, they would be sent through local

delivery. The procedure normally adopted in the bank is clearly stated by these two witnesses. PW5 simply stated that information must have been

passed on to the complainant on 10.8.1996 and this has been blown out of proportion by the trial court and came to the conclusion as if the

written information itself was given on that date. The entry under Exs D1 and D2 also would not affect the case of the complainant. Normally when

the cheques are retruned, the date will be put up in the official records; but this cannot be equated as the date of intimation to the complainant.

There should be a proper record to show the actual date of written intimation to the party and that alone can be taken note of by the court.

Learned counsel for the accused relied on the decision reported in W.H. King Vs. Republic of India and Another, ), wherein it was observed

mat as the statute creates an offence and imposes a penalty of fine and imprisonment, the words of the section must be strictly construed in favour

of the subject. The court is not concerned so much with what might possibly have been intended as with what has been actually said in and by the

language employed. Reliance is also placed upon the decision in Shrimati Hira Devi and Others Vs. District Board, Shahjahanpur, mat no doubt it

is the duty of the court to try and harmonise the various provisions of an Act passed by the Legislature. But it is certainly not me duty of the court

to stretch the words used by the legislature to fill in gaps or omissions in the provisions of an Act.

Learned counsel for the accused also relied on Thinma Boomi v. State (2000 (I) CTC 351) mat in respect of interpretation of statutes,

applying principles laid down by the Apex court while interpreting an Act scope and object of which is totally different from Act under question

may not be correct. The court cannot rewrite, recast or reframe legislation for very good reason that it has no power to legislate. If me words are

capable of two constructions, one of which is more favourable to accused than prosecution, Court will be justified in accepting construction one of

which is more favourable to accused. It is also cardinal principle that in case of doubt, construction favourable to subject should be preferred,

Reliance is also placed upon another decision in Tara Singh Vs. State of Madhya Pradesh, , wherein it was observed mat it is well settled mat if

two views of the evidence are reasonably possible, one supporting the acquittal and the omer indicating conviction, the High Court should not in

such a situation reverse the order of acquittal recorded by the trial court. There is no dispute about the principle enunciated in the aforesaid

decisions, but they have no application to the case on hand. A careful reading of me evidence of P.WS 2 and 5 would clearly demonstrate mat the

written intimation was prepared only on 10.9.1996 and it was duly delivered to the representative of the complainant only on 17.9.1996.

Learned counsel for the complainant/appellant relied on John v. George Jacob (2000 (I) Crimes 401) mat expression ''receipt of information''

used in proviso (b) to section 138 of Negotiable Instruments Act is in information in writing and not a mere oral information. This decision is

applicable to the case on hand in all fours. It is clear in the decision cited above mat the complainant knew about the dishonour of the cheques

when he went to the bank on 20.12.1989 but the written memo from the bank was received on 6.1.1990 and, as such only, it was held, receipt of

information is to be taken as receipt of information in writing and not a mere oral information and, as such, the convictioh called for no interference,

If the principles in the aforesaid decision are applied to the case on hand, it is clear mat the written memo was prepared on 10.9.1996 and it was

delivered to the representative of the complainant on 17.9.1996 and the statutory notice was issued on 19.9.1996 and, as such, there is no

illegality or impropriety.

Learned counsel for the accused next contended that one of the cheques No. 965289 has been omitted in the grounds of appeal; but I am of

the view that while giving the total amount of the dishonoured cheques, the amount has been correctly given. Simply because one cheque number is

omitted in the grounds of appeal, it cannot be taken advantage of by the accused. There is no basis to come to the conclusion that the corrections

have been made subsequently by the bank officials to oblige the complainant. The corrections made have been properly explained by PW5 and

there is no reason to discredit her testimony. 1 am of the view that the trial court was simply carried away by the alleged oral intimation dated

10.8.1996 and came to the wrong conclusion that the statutory notice was not issued within a period of 15 days. According to me, the written

intimation to the complainant is the starting point relating to the cause of action for giving the statutory notice and as the trial court had committed an

error in appreciating the legal position it is just and necessary that it has to be interfered with by the Appellate Court to meet the ends of justice. As

adverted to, it is admitted by the accused that all the cheques have been given towards existing liability and in fact, the liability towards Exs.P9 to

P17 was also admitted by the accused in their reply notice. So far as Exs.P9, P10 and P12 to P17 are concerned, the amount due and payable

comes to Rs. 3.25 lakhs had been paid and if that is deducted, the amount payable by the accused comes to Rs. 69,17,210/-. In respect of

cheque No. 576065, the amount has been paid even prior to the receipt of the statutory notice and as such, that was not included. Hence, I hold

that the statutory notice given by the complainant is in accordance with section 138(b) of N.I Act and under the circumstance, the finding given by

the trial court is set aside and I hold that the accused have committed an offence u/s 138 of N.I Act.

The first accused is a company and accused 2 to 4 are the Directors of the Company. Learned counsel for the accused stated that the

punishment can be imposed depending upon the nature of the offence and ability to pay the fine amount or compensation amount. It is seen from

138 of M.I Act that the punishment prescribed is 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 bodi. It is settled position of law and it has been held in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999 (III)

CTC 358), a decision under the Negotiable Instruments Act itself relating to power of both to impose fine and sentence. The Magistrate cannot

impose fine exceeding Rs. 5000/- and High Court could not impose fine exceeding Rs.5000/-, but u/s 357(3) of Criminal Procedure code, the

Magistrate can award any sum as compensation to be paid to the complainant; but while fixing compensation, Magistrate has to consider what

would be reasonable amount of compensation payable. It is also made clear in the aforesaid decision that strict interpretation should not be given

to words that drawer should have actually received notice for 15 days. The Court should not adopt interpretation which helps dishonest evader

and clips an honest payee as that would defeat very legislative measure. It is also stated in para 29 of the said order that the High Court while

convicting the accused in the same case could not impose a sentence of fine exceeding the said limit of Rs.5000/-. If that is taken into

consideration, the fine amount cannot be imposed more that Rs.5000/-; but a reasonable compensation can be awarded u/s 357 (3) of criminal

procedure code, which is extracted as follows:

357: Order to pay compensation.

(1)XXXX

(2)XXXX

(3) When a court imposes a sentence, of which fine does not form a part, the court may, when passing judgment, order the accused person to pay

by way of compensation, such amount as may be specified in the order to the person who has suffered any loss or injury by reason of the act for

which the accused person has been so sentenced.

The accused have issued number of cheques and they were dishonoured on the grounds stated supra. The statutory notice was also issued to

the accused within the period provided under law. The first accused is a firm and the other accused are Directors in the company and in spite of

their having received the notice and having admitted the liability and also sought for extension of time for payment of the amount, they have not paid

the amount. As a result of this, now the complainant company had sustained a loss of Rs. 70 lakhs. I am of the view that the loss sustained by the

complainant company has to be compensated by the accused and for which, a reasonable compensation amount has to be awarded. The accused

have deliberately committed the offence and they cannot escape without any sentence of imprisonment and, as such, I am of the view mat the ends

of justice would be best met by imposing sentence of imprisonment and also reasonable amount by way of compensation to the complainant to

make good the loss suffered by them.

For the reasons stated above, the Appeal is allowed and the order of acquittal passed by the trial court is set aside and the accused are found

guilty u/s 138 of N.I. Act and convict them. The first accused being a company, is directed to pay a compensation of Rs. 15 lakhs (Rupees fifteen

lakhs only) to the complainant. Accused 2 to 4 are sentenced to suffer rigorous imprisonment for six months each and to pay a compensation of

Rs.20 lakhs (Rupees twenty lakhs only) each to make good the loss sustained by the complainant company.

The trial court is directed to issue non-bailable warrant to accused 2 to 4 to undergo the imprisonment and also take steps to collect the

compensation amount.