Cri. R.P.No.541 of 2000

8th December, 2000

Petitioner Counsel: Mr. K.BABU THOMAS
Respondent Counsel: Mr. N.RAMCHANDRAN

Cases Cited:
Jolly George Verghese v. Bank of Cochin, AIR 1980 SC 470 [Para 4]

JUDGMENT

KURIAN JOSEPH, J. :- An interesting novel question of general importance arises for consideration in this Criminal Revision Petition. Is a Magistrate justified in awarding rigorous imprisonment under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the Act')? It is profitable to extract the said Section as such before analysing the above question :-

"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 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 or the holder in due 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 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.

Explanation. - For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."

It may be seen that the Section only provides that the offenders shall be "punished with imprisonment for a term which may extend to one year".

2. For answering the above mooted question, it may be necessary to trace the history behind Section 138 of the Act. The said provision was enacted by "The Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988(Act 66 of 1988) inserting a new Chapter, viz, Chapter XVII, comprising of Sections 138 to 142 in the Negotiable Instruments Act, with effect from 1-4-1989. The said Chapter was introduced with a view to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the account or for the reason that it exceeds the arrangement made by the drawer, with adequate safeguards to prevent harassment of drawers. In short, dishonour of cheques under the above mentioned circumstances was criminalised by the said amendment.

3. Section 138 of the Act excludes mens rea taking away the hurdles under Section 420 of the Indian Panel Code. While fastening absolute liability, it is now well-settled by a catena of decisions of the Apex Court that the provision has to be construed strictly, since absolute liability offences entail conviction on the mere proof that the accused committed the act and it is not a defence even if the accused is entirely without fault and morally innocent. But is it in tune with the fundamental principles of justice that a person is punished with rigorous imprisonment for his poverty?

4. The Apex Court in Jolly George Varghese and Anr. v. Bank of Cochin, AIR 1980 SC 470 considered the question regarding the justifiability of arrest and detention in civil prison of a person in proceedings under Section 51 read with O. XXI, R. 37 CPC. In the said decision Krishna Iyer, J. after considering Article 11 of the Covenant of Civil and Political rights, reading "No one shall be imprisoned merely on the ground of inability to fulfil a contractual obligation", at paragraph 10 of the judgment held as follows :-

"......It is too obvious to need elaboration that to cast a person in prison because of his poverty and consequent inability to meet his contractual liability is appalling. To be poor, in this land of Daridra Narayana (land of poverty) is no crime and to recover debts by the procedure of putting one in prison is too flagrantly violative of Article 21 unless there is proof of the minimal fairness of his wilful failure to pay inspite of his sufficient means and absence of more terribly pressing claims on his means such as medical bills to treat cancer or other grave illness. Unreasonableness and unfairness in such a procedure is inferable from Article 11 of the Covenant. But this is precisely the interpretation we have put on the proviso to Section 51, CPC and the lethal blow of Article 21 cannot strike down the provision as now interpreted."

Further, at paragraph 11 it is stated as follows:-

"......The simple default to discharge is not enough. There must be some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or alternatively, current means to pay the decree or a substantial part of it. The provision emphasizes the need to establish not mere omission to pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree."

5. In India, Criminal Jurisprudence came into existence from the time of Manu. According to Manusmriti, punishment has to be proportionate to the gravity of offence and if punishment is not properly administered, it would ruin everybody. Manu Samhita, Chapter VIII, verses 126-127 reads as follows :-

"Considering the wilful repetition (i.e., wilful and repeated perpetration) of a crime by (an offender), as well as the time, place, and circumstances of its perpetration, the light or serious nature of the offence committed, and bodily strength (and pecuniary circumstances of the offender to bear the penalty), punishment should be inflicted on an offender.

An unlawful punishment destroys fame and renown and shuts out the heaven in the next world; hence, (the king) shall withhold an illegal punishment."

6. It is also significant in this context to refer to Arthashastra, the oldest and the most exhaustive treatise on the Covenants and Administration of a State. In Book 3, Chapter Twenty, verses 20, 21 and 22 read thus :-

"20. Special fines should be imposed according to the special nature of men and offences;

21. The head of a religious order, an ascetic, a sick person, one exhausted by hunger, thirst or a journey, a foreigner, one groaning under a fine, and an indigent person should be shown leniency.

22. The Judges themselves shall look into the affairs of Gods, Brahmins, ascetics, women, minors, old persons, sick persons, who are helpless, when these do not approach(the Court), and they shall not dismiss (their suits) under the pretext of place, time or (adverse) possession."

Further in Book 4, Chapter Ten verses 17,18, it is provided as follows :-

"17-18. After taking into full consideration the person and the offence, the motive, seriousness or lightness (of the offence), the consequences, the present (effects), and the place and time, the Magistrate shall fix the highest, the lowest and the middle in the matter of punishment remaining neutral between the king and the subjects."

7. Guided by these broad indications, it has now to be considered whether what is provided under Section 138 of the Act as imprisonment. No doubt, Clause 27 of Section 3 of the General Clauses Act provides as follows :-

"(27), "imprisonment" shall mean imprisonment of either description as defined in the Indian Penal Code."

Further Section 60 of the Indian Penal Code also provides as follows :-

60. Sentence may be (in certain cases of imprisonment) wholly or partly rigorous or simple. - In every case in which an offender is punishable with imprisonment which may be of either description, it shall be competent to the Court which sentences such offender to direct in the sentence that such imprisonment shall be wholly rigorous, or that such imprisonment shall be wholly simple, or that any part of such imprisonment shall be rigorous and the rest simple."

But the question is merely because there is an enabling provision to provide either simple or rigorous imprisonment, is it that casual or whether there has to be judicious exercise of discretion in awarding simple or rigorous imprisonment. On an analysis of the indications it is to be seen that only in a situation where the dishonour of cheque is due to absolute bad faith and deliberate intention to cheat, a Magistrate would be justified in awarding rigorous imprisonment. In other words, a Magistrate shall award rigorous imprisonment under Section 138 of the Act only in the rarest of rare cases where he is absolutely certain that the accused was calculatedly and designedly cheating the payee of the cheque. As otherwise it would amount to awarding a harsh punishment for one's poverty which is not contemplated or warranted under the scheme of our Constitution when analysed with particular reference to Article 21 of the Constitution of India. This is all the more so, particularly since the proceedings under Section 138 of the Act is that of a summary trial and it is not obligatory on the part of Magistrate to hear the accused regarding the sentence. And then there is a heavy duty cast on the Magistrate to satisfy himself as to the absolute necessity to award rigorous imprisonment, keeping in mind the very purpose of punishment.

8. In the instant case what the learned Magistrate did was to award the sentence of rigorous imprisonment for a period of one year on a mere satisfaction of the ingredients of an offence under Section 138 and without anything more. On that sole ground the judgment in C.C. No. 616 of 1993 on the files of the Judicial Magistrate of First Class, Karunagappally which was confirmed in Crl. Appeal No. 22 of 1998 of the II Additional Sessions Court, Kollam is liable to be setaside and the matter remitted to the learned Magistrate to consider afresh whether it was a case warranting rigorous imprisonment, in the light of the principles laid above.

9. On the merits of the case also,there is yet another serious reason why the matter should go back not to say of many other reasons. The execution of the cheque is proved by Ext. P1 dated 15-6-1993. The presentation and dishonour of the same are proved by Exts. P4 and P5. Ext. P5 is the notice which shows that it was sent on 29-6-1993 and was returned as unclaimed. The learned counsel for the revision petitioner contended that Ext. P5 does not satisfy the requirements under proviso (b) to Section 138 of the Act. Under the said proviso, the payee or the holder in due course of the cheque has to make 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 receipt of information by him from the bank regarding the return of the cheque as unpaid. And under proviso (c), only if the drawer of the said instrument fails to make the payment of the said amount of money to the payee within fifteen days of receipt of the said notice, the prosecution succeeds. From the records it can be seen that what is marked as Ext. P5 is only a sealed letter. Its contents are not proved. As far as notice under Section 138 of the Act is concerned, it is now well settled by various decisions of the Apex Court as also of this Court that the ingredients of the notice issued under Section 138 are pivotal for a successful prosecution. One does not know what are the contents of Ext. P5. If only there is proof that the notice contains a demand for the amount covered by Ext. P1 cheque, and that too a demand for the payment within fifteen days of receipt of the notice, and the consequential failure alone would attract the provisions of Section 138 as against the revision petitioner. In the absence of such crucial evidence in the interests of justice, the only course open to this Court is to set-aside the judgment and send back the matter for fresh consideration.

10. Learned counsel for the petitioner also contended on many other aspects touching the merits of the case, particularly regarding lack of sufficient opportunity to adduce evidence. It is not necessary to deal with all those aspects of the matter, since the matter is sent back.

11. As the matter is remanded for fresh consideration, it will be open to the parties to adduce necessary evidence.

12. In the result, the conviction and sentence against the revision petitioner in C.C.No. 616 of 1993 on the files of the Judicial Magistrate of First Class, Karunagappally as confirmed in Crl. A. No. 22 of 1998 of the II Additional Session Court, Kollam are set-aside and the matter is remitted to the Magistrate for fresh consideration as stated above. The parties shall appear before the Magistrate's Court on 9-1-2001 and the case will be finally disposed of within a period of four months thereafter.

Matter remanded.

Revision allowed.