Criminal Appeal No.61 of 2000

30th August, 2001

Petitioner Counsel: Mr. S. S. KANTAK
Respondent Counsel: Mr. S. S. KAKODKAR, Mrs. WINNIE COUNTINHO

Cases Cited:
K. Bhaskaran Vs. Sankaran Vaidyhan Balan, 1999(4) ALL MR 452 (S.C.)=AIR 1999 SC 3762 [Para 10,11]
M/s. Dalmia Cement (Bharat) Ltd. Vs. M/s. Galaxy Traders and Agencies Ltd., 2001(1) ALL MR 846 (S.C.)=AIR 2001 SC 676 [Para 10,12]
The State of Madhya Pradesh Vs. Hiralal, 1996(1) Supreme 753 [Para 10,13]
Shivnarayan Kabra Vs. The State of Madras, AIR 1967 SC 986 [Para 19]
K. Bhaskaran Vs. Sankaran Vaidyhan Balan, 1999 ALL MR (Cri) 1845 (S.C.)=AIR 1999 SC 3762 [Para 10,11]

JUDGMENT

JUDGMENT :- The Appellant in this Appeal is the unsuccessful complainant who had filed Criminal Case No.359/N/95/C in the Court of Judicial Magistrate, First Class, Margao, against the Respondent No.1 herein for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The Appellant herein assails the Judgment of the learned Judicial Magistrate, First Class, Margao, acquitting the Respondent No.1/Original Accused of the aforesaid offence.

2. The facts necessary for the decision of the Appeal are set out hereunder:-

The Appellant had filed the aforesaid complaint case, against the Respondent No.1 under Section 138 of the Negotiable Instruments Act, 1881 on the allegations that the Appellant had given a loan of Rs.1,00,000/- to the Respondent No.1 as the Respondent No.1 was in need of money. The Respondent No.1 had promised to repay the said amount within a short time, however, the Respondent No.1 did not repay the said amount for a long time despite the assurances to the Appellant.

3. The Respondent No.1 ultimately gave a cheque dated 10th July, 1995, bearing No.0445006, drawn on the Bank of Maharashtra, Margao Branch, Goa. The Appellant presented the said cheque to his Bank i.e. the Union Bank of India, Margao Branch on 11th July, 1995. The said cheque was returned on the same day to the Appellant with a memo to the effect that the cheque could not be encashed due to insufficiency of funds. The Appellant thereafter addressed a notice dated 14th July, 1995, which was sent by registered post with acknowledgement due to the Respondent No.1. The said notice contained in the envelope addressed to the Respondent No.1 was returned back to the Appellant with an endorsement "not claimed returned to sender". Thereafter, the Appellant met the Respondent No.1 and requested him to pay the amount due to the Appellant and on the request of the Respondent No.1, the Appellant represented the cheque on 9th September, 1995. On this occasion also, the cheque was not honoured and was returned back to the Appellant because of insufficiency of funds. The Appellant thereafter issued another notice dated 12th September, 1995, also by registered post with acknowledgement due to the Respondent No.1. The aforesaid notice contained in the envelope was again returned back to the Appellant with the endorsement "Refused, Returned to sender". The two envelopes, one containing the unclaimed notice is marked as Exh.P.W.1/D colly and the other envelope refusing to accept the notice is marked as Exh.P.W.1/G colly. The copies of the notices were marked as Exh.P.W.1/D colly and Exh.P.W.1/G colly respectively.

4. On the basis of the complaint presented to the Judicial Magistrate, First Class, Margao, the Trial Court explained the substance of the accusation to the Respondent No.1 at Exh.11. The substance of accusation is reproduced hereunder :-

SUBSTANCE OF ACCUSATION

" The substance of accusation against you is that you owe legally enforceable debt to the complainant Mr. Eslie P. M. Noronha, you issued a cheque bearing no.0445006 dt.10-7-95 of Bank of Maharashtra, Margao branch. When the cheque was presented by the complainant it was dishonoured, inspite of legal notice dt.14-7-95 you have not made payments, thereby you have committed offence punishable u/s 138 r/w 142 of Negotiable Instrument Act within the cognizance of this Court.

S.A. is explained to the acc. to which he admits to have understood the same and pleads as under :

I plead not guilty".

5. It would be pertinent to note that with the substance of accusation, the learned Trial Court has stated that inspite of legal notice dated 14th July, 1995, the Respondent No.1 had not made payments, thereby committing an offence punishable under Section 138 r/w 142 of the Negotiable Instruments Act, 1881. The learned Trial Judge has not made a reference to the notice dated 12th September, 1995, which was issued by the Appellant in response to the return of the cheque for insufficiency of funds.

6. The Appellant examined himself as P.W.1 and led evidence in support of the complaint filed by him. The Appellant was cross-examined by the Respondent No.1. I do not propose to dilate on either the examination-in-chief or the cross-examination at this stage. Suffice it to say that the Respondent No.1 pointed out in the cross-examination that Respondent No.1 denied his liability to pay the amount of Rs.1,00,000/- to the Appellant. The Appellant had also examined P.W.2, Madhuri Kulkarni, Branch Manager of Bank of Maharashtra, Margao Branch to prove that the cheque had been returned unpaid for insufficiency of funds.

7. The learned Trial Judge after recording the statement of the Respondent No.1 under Section 313 of the Criminal Procedure Code by its Judgment dated 30th March, 1999, acquitted the Respondent No.1 on two grounds namely :-

(i). The Appellant had issued notice dated 14th July, 1995, to the Respondent No.1 which was returned back as "unclaimed" and thus due to the presumption available, it would be presumed that the Respondent No.1 had received the notice. Since, the Respondent No.1 did not pay the amount despite the receipt of the notice the appellant could not have represented the cheque and issue another notice as the cause of action had arisen on the receipt of the first notice dated 14th July, 1995. Therefore, according to the learned Trial Court, the complaint of the Appellant was beyond the time prescribed under the Negotiable Instruments Act, 1881.

(ii). The Appellant had failed to prove that he had given a loan of Rs.1,00,000/- to the Respondent No.1 and since, the Respondent No.1 had denied the receipt of the loan of Rs.1,00,000/-, it was incumbent for the Appellant to prove that he had advanced the loan of Rs.1,00,000/-.

In short, what the learned Trial Court found was that the Appellant had not been able to prove that the cheque had been issued by the Respondent No.1 towards the discharge of the debt.

8. With the assistance of Mr. S. S. Kantak, the learned Advocate appearing on behalf of the Appellant and Mr. S. S. Kakodkar, the learned Advocate appearing on behalf of the Respondent No.1, I have perused the Judgment, the evidence and the documents exhibited during the trial.

9. The learned Advocate appearing on behalf of the Appellant has raised an interesting question regarding the interpretation of the provisions of the Negotiable Instruments Act, 1881. According to him, the Appellant had issued the notice dated 14th July, 1995 to the Respondent No.1, which had been returned back as "unclaimed". The learned Advocate appearing on behalf of the Appellant submits that had he chosen to file the complaint case in the Court of Judicial Magistrate, First Class, Margao, on the basis of the unclaimed notice, a presumption would be available to him under Section 27 of the General Clauses Act, 1897 that the Respondent No.1 had been duly served with the notice. According to him, the presumption would be available only in the event he proceeds to prosecute the matter on the basis of the unclaimed notice. A presumption, according to him, that the Respondent No.1 had received the first notice would not be available and would not enure to the benefit of the Respondent No.1, if the Appellant had not chosen to make the said notice a foundation for launching the prosecution.

10. Mr. S. S. Kakodkar, the learned Advocate appearing on behalf of the Respondent No.1 has submitted that in view of the presumption available under Section 27 of the General Clauses act, 1897, it has to be presumed that the unclaimed notice dated 14th July, 1997 was duly received by the Respondent No.1. According to him, this presumption is available immediately on receipt of the unclaimed notice by the Appellant. The raising of this presumption is, therefore, not dependent upon the launching of the prosecution on the basis of the said unclaimed notice. He thus submits that the Appellant after issuing the first notice had surrendered his right of filing the case against the Respondent No.1 and, therefore, the learned Trial Court was perfectly justified in dismissing the case of Appellant. In support of his proposition, Mr. Kakodkar, the learned Advocate appearing on behalf of the Respondent No.1 has relied on the Judgments of the Supreme Court in the matters of K. Bhaskaran v. Sankaran Vaidhyan Balan another reported in AIR 1999 SC 3762 : [1999(4) ALL MR 452 (S.C.) : 1999 ALL MR (Cri) 1845 (S.C.)], M/s. Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy Traders and Agencies Ltd. and others reported in AIR 2001 SC 676 : [2001(1) ALL MR 846 (S.C.)] and The State of Madhya Pradesh v. Hiralal and others reported in 1996(1) Supreme 753.

11. The Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan (supra) has held :-

"The conditions pertaining to the notice to be given to the drawer, have been formulated and incorporated in Cls.(b) and (c) of the proviso to S.138(1) of the Act. 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 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 in the correct address. No doubt S.138 of the Negotiable Instruments Act does not require that the notice should be given only by "post". Nonetheless, the principle incorporated in S.27 of General Clauses Act can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that is was not really served and that he was not responsible for such non-service. Another interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice.

Thus, when a notice is returned by the sendee as unclaimed such date would be the commencing date in reckoning the period of 15 days contemplated in Cl.(d) to the proviso of the S.138 of the Act. Of course such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address. In the present case, the accused did not even attempt to discharge the burden to rebut the aforesaid presumption, the accused is guilty of the offence under S.138 of the Act."

12. The Supreme Court in M/s. Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy Traders and Agencies Ltd. and others (supra) has held thus;

"It is not the giving of the notice but its receipt that gives rise to cause of action. S.27 of the General Clauses Act deals with the presumption of service of a letter sent by post. The despatcher of a notice has, therefore, a right to insist upon and claim the benefit of such a presumption. But as the presumption is rebuttable one, he has two options before him. One is to concede to the stand of the sendee that as a matter of fact he did not receive the notice, and the other is to contest the sendee's stand and take the risk for proving that he has in fact received the notice."

13. The Supreme Court in The State of Madhya Pradesh v. Hiralal and others (supra) has held thus :

"In view of the office report, it would be clear that the respondents obviously managed to have the notice returned with postal remarks "not available in the house". "House locked" and "shop closed" respectively. In that view, it must be deemed that the notices have been served on the respondents."

14. It is true that if the drawee of the cheque issues a notice to the drawer of the cheque and the notice has been duly received by the drawer, the drawee has no other option but to file a case against the drawer under the provisions of the Negotiable Instruments Act, 1881, on the failure of the drawer, on receipt of the notice, to pay the amount as claimed within 15 days thereof, a cause of action arises in favour of the drawee for launching the prosecution against the drawer. The drawee cannot abdicate or surrender his right by representing the cheque and issuing another notice on such dishonour of the cheque. The cause of action for launching the action under the Negotiable Instruments Act, 1881 arises on the failure of the drawer, on receipt of the notice, to pay the amount as claimed. A notice sent by the drawee if it is returned back with endorsements such an "unclaimed", "refused", "not available in the house", "house locked" or such other similar endorsements denoting non-availability of the drawer/addressee, a presumption regarding due receipt of the notice would be available to the drawee in the prosecution launched by him against the drawer against (under) the Negotiable Instruments Act, 1881.

15. It would be useful to make a reference to Section 27 of the General Clauses Act, 1897.

"27. Meaning of service by post - Where any Central Act or Regulation made after the commencement of this Act authorizes of requires any document to be served by post, whether the expression 'serve' or either of the expression 'give' or 'send' or any other expressions is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."

16. The Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan and another (supra) has held that a notice which is returned back as unclaimed will be deemed to have been received or served on the addressee. Relying on this, Mr. Kakodkar, the learned Advocate appearing on behalf of the Respondent No.1 contends that the notice was duly received by him, in view of the presumption, and, therefore, the prosecution against him was not maintainable.

17. According to me, the presumption available under Section 27 of the General Clauses Act, 1897 is a presumption of fact regarding service of notice. This presumption can be raised in favour of a person who has issued such a notice only when the prosecution has been launched on the basis of the said notice. The presumption is a rebuttable presumption which can be rebutted by the Accused by pointing out that he had in fact not received the notice.

18. In the present case, the Appellant had issued a notice dated 14th July, 1995 which was returned back as unclaimed. Thereafter, the Appellant had represented the cheque and on it being dishonoured had issued another notice dated 12th September, 1995. Was it incumbent on the Appellant to have filed a complaint in the Court of Judicial Magistrate, First Class, Margao, on the basis of the receipt of the notice as unclaimed or could he have represented the cheque? On receipt of such unclaimed notice, the party addressing the notice is certainly put in a quandry. He has two options before him. The first is to file the prosecution on the basis of the said notice and run the risk of the presumption being rebutted by the Accused in the trial. The second option is to represent the cheque and nurture a hope that the notice would be duly served. The presumption regarding the receipt of the notice can only be raised in the event the prosecution is launched on the basis of the notice. In the present case, the presumption regarding receipt of the notice could have been raised had the Appellant filed the case on the basis of the notice dated 14th July, 1995. As stated earlier, this presumption is a rebuttable presumption. On filing cases on the basis of such rebuttable presumption, the Complainant always runs the risk of the Accused putting up a plea of not having received such a notice. On putting up such a plea and on its acceptance by the Court, which often takes a considerably long time, the case of the Complainant would be dismissed and he would have no opportunity of issuing a fresh notice again as the dismissal of the case or the adjudication of the plea of non receipt would obviously be after a period of 6 months i.e. beyond the validity period of the cheque. An unscrupulous drawer can resort to this modus operandi of seeing that the notice is returned back to the sender with an endorsement "not claimed" and in the trial raise a plea regarding non receipt of the notice. Since the presumption is a rebuttable presumption, he would be elimently (utimately) successful in rebutting the presumption and the result would be that the complaint regarding dishonour of the cheque would be dismissed. The presumption available under Section 27 of the General Clauses Act, 1897 is available only when the case is instituted and it is not available as soon as the envelope is returned back with the endorsement "unclaimed" or like such other endorsements. It, therefore, cannot lie in the mouth of the accused to contend that the earlier notice has been returned back as "unclaimed" and, therefore, a presumption was available in a proceeding which is filed on the basis of a subsequent notice. To hold otherwise, according to me, would be to defeat the objects for which the provisions under Section 138 and onwards were introduced in the Negotiable Instruments Act, 1881. The object for which the provisions were introduced have been referred to by the Supreme Court in M/s. Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy Traders & Agencies Ltd. (supra) wherein it is held thus:

The Act was enacted and Section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instrument is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, in the present day world, are likely to be adversely affected as it is impracticable for the trading community to carry on with it the bulk of the currency in force. The negotiable instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to another. To achieve the objectives of the Act, the legislature has, in its wisdom thought it proper to make such provisions in the Act for conferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not discharged. The laws relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants. Efforts to defeat the objectives of law by resorting to innovative measures and methods are to be discouraged, lest it may affect the commercial and mercantile activities in a smooth and healthy manner, ultimately affecting the economy of the country."

19. Mr. Kantak, the learned Advocate appearing on behalf of the Appellant has also invited my attention to the Judgment of the Supreme Court in the matter of Shivnarayan Kabra v. The State of Madras reported in AIR 1967 SC 986 which reads thus :-

"Statute should be so construed as to prevent mischief and advance remedy according to true intention of makers of statute - In ascertaining intention, factor such as history of statute, reason which led to its being passed, mischief which it intended to suppress and remedy provided by statute for curing mischief can be taken into account."

20. A fervent plea has been raised in the present Appeal by the learned Advocate appearing on behalf of the Appellant that if it is construed that the drawee of the cheque is estopped from representing the cheque again merely because the notice issued by him has been returned back as unclaimed, a floodgate would be opened for all unscrupulous drawers of the cheque. After a notice has been returned back as unclaimed and the drawee of the cheque represents the cheque and on its bounching issues a fresh notice, the issuance of fresh notice does not amount either to abdication or surrendering his right of prosecution. As stated by me earlier, the drawee has certainly the option of going to the Court on the basis of the unserved notice relying on the presumption or to represent the cheque nurturing a hope that the notice that would be issued thereafter would be received by the Accused. Since, as per the statute, the offence is complete on the failure of the drawer to pay the amount within 15 days from the receipt of the notice, a notice which has come back as "unclaimed" cannot be made the foundation of jettisoning the case of Complainant who has represented the cheque apprehending that the presumption under Section 27 of the General Clauses Act, 1897 could be rebutted by the drawer.

21. In the present case, a very curious answer appears to have been given by the Respondent in his statement under Section 313 of Criminal Procedure Code which reads thus :-

"Q.4. It is further in his evidence that he issued you a legal notice dated 14-7-95 by registered A/D demanding amount of cheque which was returned by you as unclaimed, what you have to say?

Ans. It is not true".

22. The Respondent No.1 does not in response to this question state that the notice has been duly served on him or that he had received the intimation regarding the notice. Thus, the Respondent No.1 by his answer denied that the notice dated 14th July, 1995 was returned back as unclaimed. The Respondent No.1 should have in response to that question stated that he had received the notice or that he had been intimated about the notice and thus fortifying the presumption available to the Appellant. As discussed by me earlier, the presumption regarding the receipt of the notice dated 14th July, 1995 cannot be raised as the prosecution has not been launched on the basis of the notice dated 14th July, 1995. The substance of accusation explained by the learned Trial Court to the Accused, according to me, is not correct. The learned Trial Judge has made a reference to the notice dated 14th July, 1995 which has not been made the foundation for launching the prosecution by the Appellant. The Appellant relies on the notice dated 12th September, 1995.

23. Since the Trial Court has dismissed the complaint principally on the ground of the complaint being beyond the period of limitation and has also dismissed the complaint on the ground that the Appellant had failed to prove that he had advanced a loan of Rs.1,00,000/- to the Respondent No.1, oblivious of the presumption available under Section 29 of the Negotiable Instruments Act, 1881, I do not propose to decide the complaint on merit. Another reason is that the learned Trial Court has not properly explained the Substance of Accusation to the Accused. The learned Trial Court has referred to the notice dated 14th July, 1995. Whereas the Complainant has relied on notice dated 12th September, 1995. The complainant has contended that despite notice dated 12th September, 1995 the Accused has not paid the amount of the cheque and hence an offence punishable under Section 138 of the Negotiable Instruments Act.

24. It would be in the fitness of things to remit the complaint back to the learned Judicial Magistrate Flirt Class, Margao, giving opportunity to both the Appellant and the Respondent No.1 to lead such further evidence as they may desire in support of their respective pleas. The learned Magistrate shall frame and explain the Substance of Accusation keeping in mind that the Complainant relies on notice dated 12th September, 1995 and not notice dated 14th July, 1995. It would of course be expected of the Judicial Magistrate First Class, Margao, since the complaint is of the year 1995 to expeditiously decide the complaint and not later than 4 months from the receipt of the copy of this order.

25. In the result, therefore, the Appeal is allowed. The Judgment of the learned Trial Court acquitting the Respondent No.1 is hereby set aside. The complaint case is remitted back to the learned Judicial Magistrate First Class, Margao for decision according to law within 4 months from receipt of this order after giving a reasonable opportunity to the Appellant and the Respondent to adduce any further evidence, if they so desire. It is expected that the learned Judicial Magistrate First Class, Margao, shall decide the case within 4 months as per the directions.

26. The Record and Proceedings be remitted back to the learned Trial Court.

27. With these observations, the Appeal is disposed of. Any observations made by me on merits while deciding the Appeal shall be ignored by the Trial Court while deciding the matter.

Appeal allowed.