Sardar Singh vs Karam Singh

This criminal reference is made on 12.02.1996 by the learned Sessions Judge, Jammu in a revision petition against the order dated 6.9.1995

passed by the learned 1st Additional Munsiff (Forest Magistrate), Jammu, whereby he has rejected the application holding the complaint

maintainable filed under Section 138 of the Negotiable Instrument Act, 1981, (hereinafter referred to as the Act).

The parties are brothers. The petitioner/accused issued a Cheque on 18.04.1994 for an amount of Rs. 47.000/in favour of the complainant

drawn on Jammu and Kashmir Bank Limited, Town Hall, Jammu. The cheque on presentation through the Punjab & Sind Bank, Shalimar Road,

Jammu, thrice on 19.07.994, 18.08.1994 and 01.09.1994 was returned with an endorsement not sufficient. The Respondent complainant, Karam

Singh, served a notice on the petitioner making a demand to pay the amount within fifteen days from the receipt of the notice which was received

by the petitioner on 16.09.94. Having not received the payment, the complainant filed a complaint under Section 138 of the Act before the 1st

Additional Munsiff, Judicial Magistrate for prosecution of the petitioner.

The trial court took cognizance of the complaint and summoned the petitioner, who on his appearance before the court, filed an application

seeking to drop the proceedings on the ground that the complaint for prosecution of the petitioner has been filed within a period of 15 days as laid

down under Clause (c) of Section 138 of the Act and on the day the complaint was presented, the complainant has no cause of action to set the

criminal law in motion against the drawer of the cheque, petitioner herein. The trial court has dismissed the application holding that the cause of

action has accured to the respondent for prosecution of the petitioner.

I have heard the learned counsel for the parties and perused the impugned order and the other evidence on record. It is not in dispute that the

cheque was issued on 18.04.1994 and presented for encashment on three occasions. The cause of action shall accrue only after having the

demand made by means of a written notice by the holder of the cheque and if the drawer fails to make the payment within 15 days of receipt of the

notice. The presentation of the Cheque on 19.07.1994 and 18.08.1994 are not relevant as no notice against the dishonour of the cheque was

served upon the petitioner making a demand for payment of money. The notice has been served by the respondent against the dishonour of the

Cheque on 01.09.1994 which has been received by the petitioner on 16.09.1994.

The dispute raised by the petitioner is that the complaint has been presented by the respondent for prosecution of the petitioner without any

cause of action as it could have accrued for setting the criminal law in motion only after the expiry of 15 days as contemplated under clause (c) of

the proviso to Section 138 of the Act. The presentation of the complaint on 1.10.1994 would be premature in so far as the period of 15 days has

not elapsed on the date of the presentation of the complaint.

The complaint under Section 138 of the Act can be presented in accordance with the mandate of clause (b) of Section 142 of the Act, which

stipulates that such complaint can be made 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.

For appreciation of the law on the issue, it would be useful to reproduce the provisions of Section 138 of the Act which read thus:

Dishonor 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 either because the amount of money standing to the credit of the

account is insufficient to honour the cheque or that accounts 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 this 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 with both: Provided that nothing contained in this section shall apply unless,

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity,

whichever is earlier;

(b) the payee of the holder in due course or the cheque,, asthe case may be, makes a demand for the payment of the said amount of money 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

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.

The above Section is controlled by a regulatory proviso containing three clauses. If any basic requirement of the Section is not fulfilled by

noncompliance of the conditions specified therein, neither the complaint will be maintainable nor person can be prosecuted under this Section.

Clauses (a) and (b) of the Proviso to Section 138 of the Act will not be relevant for the purpose as the case is required to be tested on the touch

stone of law contained in Clause (c) of the proviso.

The complaint under Section 142 can be made 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. The cheque can be presented to the Bank for any number of times within the period of its validity but the action for filing

a complaint under Section 138 read with Section 142 of the Act can be taken only once and before the complaint is presented. The requirement

contained in Section 138 of the Act must have been complied with by the complainant seeking a cause of action for prosecution of the drawer of

the cheque. Clause (b) of the proviso imposes a legal duty upon the holder of the cheque, when presented to the Bank and payment not received

within the validity period, to make a demand for payment of the said amount of money by giving a notice in writing to the drawer of the Cheque to

make payment. The notice is required to be issued within 15 days of the receipt of the information by the holder of the cheque from the Bank

regarding the return of the cheque as unpaid. The cheque in the present case was presented on 01.09.1994 and notice has been issued to the

petitioner on 13 09.1994, which is well within 15 days and the requirement of Clause (b) of Section 138 of the Act stands complied with and

satisfied. Clause (c) of the proviso has significance so far as the contention of the learned counsel for the petitioner is concerned. Clause (c) of the

Proviso contemplates that pursuant of the notice by the holder to the drawer, if drawer fails to make the payment of the said amount of money to

the holder of the cheque within 15 days of the receipt of the said notice, the holder of the cheque, the payee, has a cause of action against the

drawer for seeking prosecution by presenting a complaint before a criminal Court. Therefore, the complaint ought to have been presented after

1.10.1994.

The trial court for holding the complaint maintainable has returned the finding that the period of 15 days will commence from 17.9.1994 and

expire on 1.10.1994, therefore, the cause of action has arisen on or after 1.10.1994. The view taken by the trial court appears to be erroneous. In

view of the special provisions of the Act, the period prescribed therein can only be taken into account and considered for purposes of limitation.

Conjoint reading of clause (b) of Section 142 and clause (c) of Proviso to Section 138 of the Act makes it clear that the cause of action shall

accrue for setting the criminal law in motion, if the drawer of the cheque fails to make the payment on demand by giving a written notice by the

payee within 15 days of the receipt of the said notice. Admittedly, the notice raising demand for payment of money was received by the petitioner

on 16.09.1994. For the purposes of counting of 15 days, the first day of receipt of the notice has to be excluded and, therefore, 15th day of the

receipt of the notice expires on 1101994, which in other words, means that the period of 15 days spreads over from 17.09.1994 to 1.10.1994

and the complaint would be presented within one month after 1.10.1994. The clause (c) of the Proviso confers on the accused a total period of

immunity for a period of 15 days from the date on which the notice has been served on him and within this notice period, it is open to the petitioner

to save himself from the consequences of prosecution under Section 138 of the Act. The statutory period of 15 days for making the payment by

the accused means also that period made available to the accused is for the purpose that during this period no complaint can be filed against him

and till the expiry of the period of 15 days, no offence can be said to have been committed by the accused.

For the foregoing reasons, the impugned order dated 06.09.1995 is set aside, consequently, holding the complaint premature.

The Revision Petition is allowed accepting the reference.