Sanji Ram vs Nand Kishore Mehta

S.K. Gupta, J.—This revision is directed against the order dated 31.1.2001 formulated by District Judicial Mobile Magistrate, Kathua,

whereby proceedings initiated against the accused respondent in a complaint u/s 138 of the Negotiable Instruments Act (hereinafter referred to as

the Act"") has been dropped and complaint dismissed. A brief narration of the facts for the purpose of this revision may be noticed.

The respondent issued a cheque in favour of the petitioner for an amount of Rs. 20,000 drawn at Punjab National Bank Branch, Kathua in

discharge of his debt liability. The cheque, when presented by the petitioner to the Bank, was returned uncashed with an endorsement ""insufficient

funds"". The petitioner-complainant served a legal notice dated 4.5.2000 upon the respondent in terms of Section 138 of the Act intimating about

the dishonour of the cheque and demanding of payment of cheque amount alongwith interest @ 24% per annum within 15 days of the receipt of

the notice. The respondent having failed to discharge the liability by making the demanded cheque amount occasioned a cause of action to the

petitioner-complainant to commence a complaint u/s 138 of the Act. The Trial Court, after recording preliminary evidence, took cognizance of the

offence punishable u/s 138 of the Act and issued notice to the respondent. In response to the notice, respondent entered appearance and

maintained that the notice is not in conformity with the provisions of Section 138 of the Act, as it does not indicate the date of receipt of the notice

and is defective and illegal. The complaint based on such notice is not maintainable and prayed for dropping the proceedings in an application

made to this effect before the Trial Court.

On the filing of the demurrer by the petitioner complainant in opposing the contention of the accused that mention of the date of the receipt of

notice is not mandatory, the Trial Court in placing reliance on the judgment of a coordinate Bench of this Court in case entitled Inderjeet Kour v.

Gandotra Trading and Leasing Corporation 1998 KLJ 402 allowed the application, dropped the proceedings and dismissed the complaint in

resultant thereof, which became subject-matter of challenge in this revision.

I have heard the arguments and perused the record, meticulously.

The sole controversy raised in this revision centres around a narrow compass as to whether the Court can take cognizance and initiate

proceedings u/s 138 of the Act when the date of receipt of notice for making payment of the demanded cheque amount is neither reflected in the

complaint nor mentioned in the preliminary evidence by the complainant. It may be pointed out at the first flush that 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 (b). It is to be kept

in mind that it is not the ""giving"" of the 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. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, , the Apex

Court considered the difference between ""giving"" of a notice and ""receipt"" of the notice and held:

On the part of the payee he has to make a demand by 'giving a notice' in writing. If that was 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', the travails of the prosecution would have been very

much lessened. But the Legislature says that failure on the part of the drawer to pay the amount should be within 15 days 'of the receipt' of the said

notice. It is, therefore, clear that 'giving notice' in the context is not the same as receipt of notice. Giving is a process of which receipt is the

accomplishment. It is for the payee to perform the former process by sending the notice to the drawer at the correct address.

The maintainability of the prosecution proceedings before the learned Magistrate have been challenged by the accused respondent mainly on the

ground that material so placed on record by the petitioner-complainant does not disclose actual date of service of the said demand notice on the

accused so as to give rise to cause of action by the complainant to initiate criminal prosecution against him. The learned Magistrate, however, held

that it is imperative requirement for the complainant to place sufficient material establishing the actual date of service of demand notice, as

contemplated u/s 138(c) of the Act. It is also found by the Trial Court that in the absence of that date mentioned in the complaint or in the

evidence, it was not possible to assume that any cause of action has arisen in the complaint for his complaint.

Mr. B.B. Kotwal, learned counsel for the petitioner, further submitted that it is not mandatory to mention the date of receipt of the notice in the

complaint. According to him, it is sufficient if the notice of demand is dispatched to the drawer on the correct address, pre-paid through registered

AD. It was further contended by Mr. Kotwal that complainant dispatched the notice dated 4.5.2000 through registered AD on correct address

and the service shall be presumed to have been made on the drawer. For facility of reference, the material provision of Section 138(c) of the Act

reads as under:

138 Dishonour of cheque for insufficiency, etc. of funds in the account.-- 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 his 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 both:

Provided that nothing contained in this Section shall apply unless

(a) & (b) ..... ..... .....

(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.

The material portion of relevant Section 142, which relates to cognizance of offences' reads:

142 Cognizance of offences.-- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974).

(a) no court shall take cognizance of any offence punishable u/s 138 except upon a complaint, in writing, made by the payee or, as the case may

be, the holder in due course of the cheque:

(b) such complaint is made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138

The legal position is brought 'to the fore by combined reading of Sections 138(c) and 142(b), which clearly envisages that it is the date of the

actual service of the complainant's demand notice on the accused (drawer of the cheque), which gives to cause of action under Clause (c) of the

proviso to Section 138 for the former to lodge the complaint u/s 138 of the Act against the latter and that this cause of action arises on the date

when the said notice has been shown to be duly served on the accused and that if within 15 days of the receipt of the notice if the drawer accused

pays up the dishonoured cheque amount to the payee complainant or the holder in due course of the cheque, the cause of action for the said

purpose would cease to exist. The learned Magistrate gets the jurisdiction to entertain the complaint u/s 142 and take cognizance of the offence u/s

138 of the Act only when a valid cause of action therefore exists.

The crucial point that was required to be considered by the Magistrate in the instant case was whether the complaint had placed sufficient

material on record disclosing the actual date of service of demand notice on the accused so as to make out whether the cause of action for the

former had arisen to present the complaint against the latter. Adverting to the record of the file, neither complaint not the preliminary statement of

the complainant disclosed the actual date of receipt of the notice of the demand for payment of the dishonoured cheque amount by the accused-

drawer of the cheque served by the complainant. The complaint mention's only that a notice dated 4.5.2000, whereby the accused was intimated

regarding the dishonouring of the cheque amount of Rs. 20.000 alongwith interest @24%. It, therefore, makes it abundantly clear that the

complaint does not recite as to when the notice required under clause (c), was dispatched by the complainant and on which date it was received

by the accused. Even the preliminary statement of the complainant does not reveal the date of dispatch of the notice though registered AD and also

on which the said notice was received by the accused-respondent. The complaint also does not recite that the notice was served by registered AD

and on which date it was issued. In nutshell by referring to the complaint u/s 138 of the Act, there is nothing found to suggest as to when the notice

was issued by the complainant and on which date it was received by the accused. The cause of action has to accrue to the complainant to file a

complaint for the criminal prosecution of the accused only when the accused (drawer of the cheque) fails to make the payment of the cheque

amount to the payee within 15 days of the receipt of the notice. It is only thereafter a cause of action accrues to the complainant to lodge criminal

prosecution within the statutory period provided u/s 142(b) of the Act. This controversy earlier also came up before this Court in case entitled

Inderjeet Kour v. Gandotra Trading and Leasing Corporation 1998 KLJ 402 and Hon'ble justice Arun Kumar Goel dealt with the proposition

threadbare and in his pellucid and elaborate judgment held that non-disclosure of the date of receipt of notice by the complainant for making

payment of the demanded cheque amount in the complaint and also in preliminary evidence of the complainant, does not give jurisdiction to the

Magistrate to take cognizance of the offence u/s 138 of the Act.

Another limb of argument put across by Mr. Kotwal is that once a notice of demand is dispatched on the correct address, there is a

presumption of service of the notice on the accused-drawer of the cheque u/s 27 of the General Clauses Act. Undoubtedly, Section 27 of the

General Clauses Act deals with the presumption of the service of letters sent by post. A dispatcher of a notice has, therefore, right to insist upon

and take the benefit of such presumption. But in this case, neither the complaint mentions that a statutory notice of demand was served upon the

drawer of the cheque by post nor is so exacted in the preliminary evidence of the complainant. The provision of Section 27 of the General Clauses

Act, therefore, in such circumstances, is not attracted so as to entitle the complainant to claim the benefit of such presumption.

In the facts and circumstances of the case, I am of the considered opinion that the view expressed by the learned Magistrate is the view to

which no exception can be taken. The anatomy of Section 138 of the Act comprises certain components before the offence can be said to be

complete the last of them being the act of non-payment inspite of 15 days having elapsed after receipt of the final notice. It is, thus, the date of

receipt of the final notice, which is significant so as to accrue a cause of action to the complainant to launch a criminal prosecution against the

accused within the statutory period provided u/s 142(b) thereafter.

In view of the above, I do not find any merit in this revision and the same is hereby dismissed.