Application U/S 482 No.3896 of 2006

15th February, 2019.

Petitioner Counsel: AMIT DAGA
Respondent Counsel: PANKAJ BHARTI

Cases Cited:
Sarav Investment & Financial Consultancy Private Ltd. & Anr. Vs. Llyods Register of Shipping Indian Office Staff Provident Fund & Anr., 2008 ALL MR (Cri) 300 (S.C.)=(2007) 14 SCC 753 [Para 4,15]
Patel Dinesh Kumar Shivram Somdas Vs. Patel Keshavlal Mohan Lal & Anr., 2002 (44) ACC 480 [Para 6]
Yogendra Pratap Singh Vs. Savitri Pandey, 2014 ALL MR (Cri) 4137 (S.C.)=(2014) 10 SCC 713 [Para 14]
Kusum Ingots & Alloys Ltd., (2002) 2 SCC 745 [Para 14]
Narsingh Das Tapadia Vs. Goverdhan Das Partani, 2001 ALL MR (Cri) 561 (S.C.)=(2000) 7 SCC 183 [Para 15]

JUDGMENT

Saumitra Dayal Singh, J. :- The present 482 Cr.P.C. application has been filed to quash the Criminal Complaint Case No. 3042/9 of 2002 (M/S Mithai Udhyog Vs. M/S Pyare Lal Surendra Mohan & Another), under Section 138 N.I. Act, pending in the Court of Additional Chief Judicial Magistrate, Court No.-1, Muzaffarnagar.

2. List revised. None is present on behalf of the private respondent. Heard Sri Amit Daga, learned counsel for the applicant and learned A.G.A. for the State.

3. Short ground of challenge raised is, the complaint made was premature. Therefore, the cognizance order is without jurisdiction. Undisputedly, a notice under proviso (b) to Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the Act), was issued to the applicant on 18.10.2002 by registered post and UPC. Such averment had been clearly made in the complaint itself. Though no date of actual service of that notice had been disclosed in the complaint and no assumption as to that fact may exist or arise yet, for the sake of arguments, assuming the notice to have been served on the same date, it is submitted, 15 days time would have to be excluded beginning 19.10.2002 before the cause of action could arise to file any complaint in terms of section 142(1) (b) of the N.I. Act, 1881.

4. It is on record, the complaint in the present case was filed on the 15th day being 02.11.2002 and the learned Magistrate took cognizance on that complaint on the same date i.e. on 02.11.2002 itself. Therefore, the proceedings are claimed to be wholly premature. Reliance has been placed on a decision of the Supreme Court in the case of Sarav Investment & Financial Consultancy Private Ltd. & Anr. Vs. Llyods Register of Shipping Indian Office Staff Provident Fund & Anr., (2007) 14 SCC 753 : [2008 ALL MR (Cri) 300 (S.C.)] (paragraph 16). In that decision, the Supreme Court amongst others observed:-

"Complaint petition, thus, can be filed for commission of an offence by a drawee of a cheque only 15 days after service of the notice. What are the requirements of service of a notice is no longer res integra in view of the recent decision of this Court in C.C. Alavi Haji V. Palapetty Muhammed, (2007) 14 SCC 750."

5. Thus, learned counsel for the applicant submits, the time "within 15 days of the receipt of the said notice" [under proviso (c) of section 138 of the Act], would necessarily exclude the date on which service is claimed to have been made which, in the present case, cannot be assumed on any date prior to 18.10.2002 itself. Beginning 19.10.2002, the applicant had time till 02.11.2002 to clear the default. The cause of action could have arisen and complaint lodged only on the next date i.e. 03.11.2002, upon the failure on part of the drawer/applicant to clear the default by end of the 15th day.

6. Also, reliance has been placed on a Full Bench decision of the Gujarat High Court in the case of Patel Dinesh Kumar Shivram Somdas Vs. Patel Keshavlal Mohan Lal & Anr., 2002 (44) ACC 480, wherein a Full Bench of the Gujarat High Court specifically held, the 15 days period envisaged under Section 138(c) of the Act would begin to run on the day following the day on which date notice may have been served. Learned counsel for the applicant has further stated, no contrary view has been expressed by our Court, on the aforesaid issue.

7. Learned AGA on the other hand submits, the defect being pointed out by learned counsel for the applicant is merely a procedural one and not one which may be incurable. He would therefore submit, the applicant may raise all objections before the learned Court below on merits and legality as he may be advised.

8. Having heard learned counsel for the parties and having gone through the record of the present application, the position in law appears fairly well settled. A complaint under the Act has to comply with the requirements preceding it being lodged. The Act contemplates specific steps to be taken by the complainant within a particular time frame, for the cause of action to arise. It also allows time to the drawer of the negotiable instrument to make good the deficiency, before he may be exposed to criminal prosecution.

9. In view of the three provisos appended to section 138 of the Act, dishonour of a cheque itself does not constitute or complete the ingredient of offence under that section. First, in view of the proviso (a), the cheque in dispute must have been presented for encashment by the drawee within its period of validity. Second, thereafter, under proviso (b), the drawee must have made a written demand/notice on the drawer for payment - within the prescribed time, computed from the date of receipt of the intimation of dishonour of that cheque, by his bank. Third, by virtue of proviso (c), to complete the ingredient of the offence under that section, the drawee must allow the drawer 15 days time (from the service of such demand/notice), to clear the alleged default.

10. After all steps so prescribed by the statute (itself) have been taken or are satisfied, the ingredients of the offence would be complete. Only then the deeming fiction appearing in the main part of section 138 would come to life. In that event and at that stage, the cause of action to lodge a criminal complaint would arise, on which cognizance may be taken by the proper Magistrate and the accused person summoned.

11. At this stage, even if it is assumed, the notice under the proviso (b) to Section 138 of the Act was served on the applicant on 18.10.2002 itself, the first day thereafter would begin on 19.10.2002 and not earlier. Accordingly, the 15 days period under proviso (c) of Section 138 of the Act would exhaust at the end of that time, on 02.11.2002. Thus, the ingredient of the offence as contemplated under proviso (c) of section 138 of the Act was not complete on the date when the complaint was lodged or cognizance taken, on 02.11.2002.

12. Also, under section 142(1)(b) of the Act, the complaint could be made within one month of the date on which the cause of action first arose. Since the cause of action could arise only after the drawer/applicant failed to comply with proviso (c) to Section 138 of the Act, the cause of action that could arise only after expiry of the 15 days contemplated under that proviso i.e. after end of time on 02.11.2002. That time period would start running from 03.11.2002 and not earlier.

13. Thus, in absence of ingredients of the offence being complete [under proviso (c) to section 138 of the Act] and in absence of the cause of action [under section 142 (1) (b) of the Act] having arisen, the complaint though lodged by the drawee on 02.11.2002 could not be acted upon and cognizance may not have been taken on that date.

14. In this context, the ratio laid down by a three Judge bench of the Supreme Court in Yogendra Pratap Singh v. Savitri Pandey, (2014) 10 SCC 713 : [2014 ALL MR (Cri) 4137 (S.C.)], may be noted, profitably. First, it quoted with its approval, the view earlier expressed by a two judge bench of that Court, in Kusum Ingots & Alloys Ltd., (2002) 2 SCC 745. As to the ingredients of an offence under section 138 of the Act, it was observed:

"30. Section 138 of the NI Act comprises of the main provision which defines the ingredients of the offence and the punishment that would follow in the event of such an offence having been committed. Appended to this section is also a proviso which has three clauses viz. (a), (b) and (c). The offence under Section 138 is made effective only on fulfilment of the eventualities contained in clauses (a), (b) and (c) of the proviso. For completion of an offence under Section 138 of the NI Act not only the satisfaction of the ingredients of offence set out in the main part of the provision is necessary but it is also imperative that all the three eventualities mentioned in clauses (a), (b) and (c) of the proviso are satisfied. Mere issuance of a cheque and dishonour thereof would not constitute an offence by itself under Section 138.

31. Section 138 of the NI Act has been analysed by this Court in Kusum Ingots & Alloys Ltd. wherein this Court said that the following ingredients are required to be satisfied for making out a case under Section 138 of the NI Act: (SCC p. 753, para 10)

"(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;

(ii) that 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;

(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the 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 the bank;

(iv) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice."

15. Then, as to effect and impact on the legality of the complaint proceedings instituted within 15 days time from service of notice, it the ratio of Narsingh Das Tapadia Vs Goverdhan Das Partani, (2000) 7 SCC 183 : [2001 ALL MR (Cri) 561 (S.C.)] and affirmed the view taken in Sarav Investment & Financial Consultancy (P) Ltd. Vs Lloyd Registrar of Shipping India Office Staff Provident Fund, (2007) 14 SCC 753 : [2008 ALL MR (Cri) 300 (S.C.)]. It was was held:

"35. Can an offence under Section 138 of the NI Act be said to have been committed when the period provided in clause (c) of the proviso has not expired? Section 2(d) of the Code defines "complaint". According to this definition, complaint means any allegation made orally or in writing to a Magistrate with a view to taking his action against a person who has committed an offence. Commission of an offence is a sine qua non for filing a complaint and for taking cognizance of such offence. A bare reading of the provision contained in clause (c) of the proviso makes it clear that no complaint can be filed for an offence under Section 138 of the NI Act unless the period of 15 days has elapsed. Any complaint filed before the expiry of 15 days from the date on which the notice has been served on the drawer/accused is no complaint at all in the eye of the law. It is not the question of prematurity of the complaint where it is filed before the expiry of 15 days from the date on which notice has been served on him, it is no complaint at all under law. As a matter of fact, Section 142 of the NI Act, inter alia, creates a legal bar on the court from taking cognizance of an offence under Section 138 except upon a written complaint. Since a complaint filed under Section 138 of the NI Act before the expiry of 15 days from the date on which the notice has been served on the drawer/accused is no complaint in the eye of the law, obviously, no cognizance of an offence can be taken on the basis of such complaint. Merely because at the time of taking cognizance by the court, the period of 15 days has expired from the date on which notice has been served on the drawer/accused, the court is not clothed with the jurisdiction to take cognizance of an offence under Section 138 on a complaint filed before the expiry of 15 days from the date of receipt of notice by the drawer of the cheque.

36. A complaint filed before the expiry of 15 days from the date on which notice has been served on drawer/accused cannot be said to disclose the cause of action in terms of clause (c) of the proviso to Section 138 and upon such complaint which does not disclose the cause of action the court is not competent to take cognizance. A conjoint reading of Section 138, which defines as to when and under what circumstances an offence can be said to have been committed, with Section 142(b) of the NI Act, that reiterates the position of the point of time when the cause of action has arisen, leaves no manner of doubt that no offence can be said to have been committed unless and until the period of 15 days, as prescribed under clause (c) of the proviso to Section 138, has, in fact, elapsed. Therefore, a court is barred in law from taking cognizance of such complaint. It is not open to the court to take cognizance of such a complaint merely because on the date of consideration or taking cognizance thereof a period of 15 days from the date on which the notice has been served on the drawer/accused has elapsed. We have no doubt that all the five essential features of Section 138 of the NI Act, as noted in the judgment of this Court in Kusum Ingots & Alloys Ltd.21 and which we have approved, must be satisfied for a complaint to be filed under Section 138. If the period prescribed in clause (c) of the proviso to Section 138 has not expired, there is no commission of an offence nor accrual of cause of action for filing of complaint under Section 138 of the NI Act.

37. We, therefore, do not approve the view taken by this Court in Narsingh Das Tapadia and so also the judgments of various High Courts following Narsingh Das Tapadia that if the complaint under Section 138 is filed before the expiry of 15 days from the date on which notice has been served on the drawer/accused the same is premature and if on the date of taking cognizance a period of 15 days from the date of service of notice on the drawer/accused has expired, such complaint was legally maintainable and, hence, the same is overruled.

38. Rather, the view taken by this Court in Sarav Investment & Financial Consultancy wherein this Court held that service of notice in terms of Section 138 proviso (b) of the NI Act was a part of the cause of action for lodging the complaint and communication to the accused about the fact of dishonouring of the cheque and calling upon to pay the amount within 15 days was imperative in character, commends itself to us. As noticed by us earlier, no complaint can be maintained against the drawer of the cheque before the expiry of 15 days from the date of receipt of notice because the drawer/accused cannot be said to have committed any offence until then. We approve the decision of this Court in Sarav Investment & Financial Consultancy and also the judgments of the High Courts which have taken the view following this judgment that the complaint under Section 138 of the NI Act filed before the expiry of 15 days of service of notice could not be treated as a complaint in the eye of the law and criminal proceedings initiated on such complaint are liable to be quashed."

16. Therefore, the ingredients of the offence were not complete; the complaint may not have been lodged and; cognizance could not have been taken on 02.11.2002. Those are found to be non-est. The present application is thus allowed. The order and complaint dated 02.11.2002 are quashed leaving it open to the complainant respondent to seek his remedies, if any, in conformity with the proviso to section 142 of the Act.

Application allowed.