IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA Criminal Revision No.28 of 2004. Judgment Reserved on: 20.4.2011. Date of decision:23.05.2011 Madan Singh … …Petitioner Versus Duni Chand … …Respondent Coram The Hon’ble Mr.Justice Dev Darshan Sud,J. Whether approved for reporting ?1 Yes. For the Petitioner: Mr.J.L. Bhardwaj, Advocate. For the Respondent: Mr.Neeraj Gupta, Advocate. Dev Darshan Sud,J. This revision petition has been preferred against the judgment of the learned Sessions Judge reversing the judgment and sentence imposed by the learned Chief Judicial Magistrate convicting the respondent herein for offences under Section 138 of the Negotiable Instruments Act (hereinafter referred to as the `Act’) imposing a penalty of Rs.7,50,000/- (Rs.7,00,000/- representing the dishonoured cheque and Rs.50,000/- as penalty) and in default of payment of fine to suffer simple imprisonment for a period of three months. 1 Whether the reporters of Local Papers may be allowed to see the judgement? Yes. 2 2. The petitioner herein instituted complaint under Section 138 of the Act against the respondent on the pleading that the complainant is an agriculturist and was on visiting terms with the respondent who approached him for funds for the purposes of felling, conversion and carriage of timber which had been undertaken by him. Complainant acceded to his request and in all a sum of Rs.seven lacs was paid to him for which the accused issued cheque No.SB-19/0759619 Ex.CW-1/A payable on State Bank of Patiala Branch at Kullu on 31.8.1998. When this cheque was presented by the complainant in his account on 7.9.1999 it was returned by the bank with the remarks “stop payment”. It was pleaded that a notice dated 18.9.1999 was issued to the accused calling upon him to make the payment within 15 days, but no action was taken and therefore a complaint was instituted. 3. The memo returning the cheque Ex.CW-1/B has 15 columns, 14 are printed and the 15th is blank. Columns 1 and 2 contained blank and thereafter printed words. Against column No.9, the printed remarks are “Payment stopped by drawer”. Ex.CW-1/E is the acknowledgement receipt of the notice sent to the respondent and Ex.CW-1/D is receipt issued by the post office sending the notice. Ex.CW-1/C is the notice sent to the respondent. 4. In support of his claim, the complainant examined himself in addition to PW-2 Beli Ram, PW-3 3 Amar Singh, Accountant, State Bank of Patiala, PW-4 Piara Singh, Junior Assistant, Divisional Post Office, Banjar, PW-5 Ramesh the delivery agent to the Post Office. In defence, the respondent appeared as his own witness in addition to the other witnesses produced. The learned trial Court considered the evidence in some detail holding that respondent is an authorized contractor engaged in timber business etc. The Court holds that the exact details of the money borrowed has not been detailed on the record, but it is established that a cheque Ex.CW-1/A was issued for Rs.7 lacs in favour of the complainant which cheque was drawn on the State Bank of Patiala at Kullu Branch. On the date when the cheque was presented, there was only Rs.785/- in the account of the respondent, the notice was not answered and in these circumstances the Court holds that the respondent was not having sufficient funds and proceeded to convict the respondent. 5. It was urged before the learned Sessions Judge in appeal that the notice Ex.CW-1/C has not been duly proved by the complainant as it had been issued by Shri M.K. Sood, Advocate, but he had not been examined as a witness. The Court holds that in these circumstances there has been a breach of Section 138 of the Act providing for a mandatory notice to be served upon the respondent. Since Shri M.K. Sood, has not appeared as a witness, there is no material on the record to establish that this notice was infact issued. 4 The second point noticed by the learned appellate Court is that the cheque Ex.CW-1/A is dated 31.9.1999, whereas in the notice Ex.CW-1/C the date has been mentioned as 31.8.1998 which is also the date in the complaint. On examination of the cheque the Court holds that there has been a manipulation in the writing on the cheque. 6. In these circumstances, the Court concludes that according to the notice Ex.CW-1/C the cheque was to be encashed on 31.8.1998, the notice Ex.CW-1/C was issued on 18.9.1999 which is beyond the period of six months and therefore, it cannot be held that any offence has been committed. The cheque Ex.CW-1/A, according to the learned Court, cannot be taken to be the one as mentioned in the notice. In these circumstances, on the very factual foundation, no conviction can follow. The complainant is now in revision before this Court. 7. I have heard learned counsel for the parties and have gone through the record of the case. 8. Adverting to the judgment of the learned appellate Court what I find is that his approach has been hyper technical. What the learned Court forgets is that the number of the cheque Ex.CW-1/A both in the notice Ex.CW-1/C as also in the complaint is the same. In these circumstances, it cannot be said that it is beyond the period of presentation of six months. 5 9. If only the learned appellate Court had paid some more attention to the memo returning the cheque, most of what it holds would have been answered there. It is in these circumstances that a detailed consideration of Ex.CW-1/B the columns as set out therein are being undertaken by me. The columns read:- “STATE BANK OF PATIALA KULLU 23 Branch Date 07.9.99 MEMORANDUM Cheque No.0759619 for Rs.700000/- Returned unpaid for reason(s) No.s(s) 9 1. ………..… endorsement required. 2. ……………… endorsement irregular. 3. Post dated/out date. 4. amount in words and figures differ. 5. Signature of differs. 6. Effects not cleared, present again. 7. Full cover not received. 8. Refer to drawer. 9. Payment stopped by drawer. 10. Alteration requires drawer’s signature in full. 11. Cheque mutilated payment can be made on Bank’s guarantee. 12. Crossed Cheques must be presented through a Bank. 13. Not arranged for. 14. Vernacular endorsement requires confirmation. 15. ……………………………. Sd/- Manager/Accountant S.B.P.411 C. No.120050.6 I.P. 8/95” 6 10. In the memorandum issued by the State Bank of Patiala, Kullu, a reading of the column No.3 takes care of the reasoning of the learned appellate Court. If the cheque had been out of date the bank would have marked this column. Column No.10 also deals with “Alteration requires drawer’s signatures”. In other words the memorandum is complete and replete with the objections to be raised on returning a cheque. How and under what circumstances learned appellate Court came to the conclusion on its own is not clear. If the dates had been altered, amount had been altered, Column No.10 would have taken care of this objection which requires an alteration to be authenticated by the drawer. 11. Learned counsel appearing for the petitioner submits that the notice was complete in all respects and that no particular form of notices is required to be given. He places reliance on the judgment of the Bombay High Court in Abdul Rehman M.Mulgand vs. Mohammad Hashan Mulgand & Anr. 2006 Cri.L.J.1159 (Bom) to urge that the discrepancies, such as, number and date will not make any difference. The Court while considering the purport and import of the provisions of Section 138, held:- “9. As regards the notice, the learned Sessions Judge noted that in the legal notice the number of the cheque was shown as 223304 dated 22.5.04 whereas the cheque bore no. 223004 dated 26.3.04 but a perusal of original cheque shows that it was presented on 22.5.04 as well as on 7 8.6.04 and these mistakes were not bona fide. In fact, the complainant time and again has been making mistakes in the dates whether they are of the cheque or whether of presentment. Even before this Court the complainant has stated that the cheque was presented twice on 22.5.05 and 8.6.05, but, it is not disputed that the case of the complainant otherwise, is that the cheque was having no. 223004 and was dated 26.3.04 but was presented on 22.5.04 and 8.6.04 to Punjab National Bank, Vasco- da-Gama. The finding of the learned Sessions Judge that the complaint deserved to be dismissed for the said mistakes is not supported on behalf of the accused as well. The complainant's notice dated 5.7.04 had clearly mentioned the amount of the cheque as Rs.79,800/- and that the complainant had drawn the same on UCO bank, Hubli Branch. … … … … … … … … … … … … … … Shri Singbal has also placed reliance on the case of Kavuri Suwarna Bala Sundaram v. Karnati Poorna Chandra Rao, (2004 (1) DCR 518 : 2004 Cri. LJ 712) wherein the A.P. High Court observed that when Section 138 of the Act contemplated that only the amount covered by the dishonoured cheque, but not its number, to be mentioned in the notice contemplated by that section, it was not necessary for the drawer to mention the number of the cheque, for the drawer to comply with the demand made in the notice since the drawer have 15 days to comply with the demand made ..... etc. The Court held that only because there was a variation in the number of the cheque mentioned in the notice and in the body of the complaint and the cheque that was filed into Court 8 was of no consequence when in the notice of demand the amount covered by the dishonoured cheque was correctly mentioned. In the case at hand, the complainant's notice had the necessary and material particulars regarding the bank's name and the amount of the cheque in case the accused wanted at all to comply with the same and therefore, in my view, the complaint could not have been dismissed for mixing up the number and the date of the cheque as mentioned in the notice and the complaint.” (p-1160) 12. Adverting to the question on notice, in C.C. Alavi Haji vs. Palapetty Muhammed and Another, (2007)6 SCC 555, the Supreme Court has considered the law in extenso and laid down the principles applicable for presumption of valid service of notice. However, adverting to the point in issue in this petition, that no notice was received by the complainant, the Court in C.C. Alavi Haji case (supra) holds:- “17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the 9 complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran2 case, if the _giving of notice_ in the context of Clause (b) of the proviso was the same as the _receipt of notice_ a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.” (p-565) (Emphasis supplied) On the other aspect, the principles laid down by the Court may be considered. The Court lays down the principle:- “5. As noted above, the controversy arises in the context of service of notice in terms of Section 138 of the Act. The conditions pertaining to the notice to be given to the drawer, have been formulated and incorporated in Clauses (b) and (c) of the proviso to Section 138 of the Act, which read as follows:_ Provided that nothing contained in this section shall apply unless _ (a) _ _ _ 10 (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 30 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._ 6. As noted hereinbefore, Section 138 of the Act was enacted to punish unscrupulous drawers of cheques who, though purport to discharge their liability by issuing cheque, have no intention of really doing so. Apart from civil liability, criminal liability is sought to be imposed by the said provision on such unscrupulous drawers of cheques. However, with a view to avert unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions. These conditions are stipulated in the proviso to Section 138 of the Act, extracted above. Under Clause (b) of the proviso, the payee or the holder of the cheque in due course is required to give a written notice to the drawer of the cheque within a period of thirty days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. Under Clause (c), the drawer is given fifteen days time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a complaint may 11 be filed against him. As noted above, the object of the proviso is to avoid unnecessary hardship to an honest drawer. Therefore, the observance of stipulations in quoted Clause (b) and its aftermath in Clause (c) being a pre-condition for invoking Section 138 of the Act, giving a notice to the drawer before filing complaint under Section 138 of the Act is a mandatory requirement. 7. The issue with regard to interpretation of the expression “giving of notice” used in Clause (b) of the proviso is no more res integra. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan, (1999)7 SCC 510, the said expression came up for interpretation. Considering the question with particular reference to scheme of Section 138 of the Act, it was held that failure on the part of the drawer to pay the amount should be within fifteen days “of the receipt” of the said notice. “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 and for the drawer to comply with Clause (c) of the proviso. Emphasizing that the provisions contained in Section 138 of the Act required to be construed liberally, it was observed thus: (SCC p.519, paras 20-21) “20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to 12 avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that Court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure. 21. In Maxwell's Interpretation of Statues the learned author has emphasized that "provisions relating to giving of notice often receive liberal interpretation," (vide page 99 of the 12th Edn.) The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in Clause (b) of the proviso to Section 138 of the Act show that payee has the statutory obligation to “make a demand” by giving notice. The thrust in the clause is on the need to “make a demand”. It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is dispatched his part is over and the next depends on what the sendee does. 8. Since in Bhaskaran2 case, the notice issued in terms of Clause (b) had been returned unclaimed and not as refused, the Court posed the question: “Will there be any significant difference between the two so far as the presumption of service is concerned?” It was observed that though Section 138 of the Act does not require that the notice should be given only by “post”, yet in a case where the sender has dispatched the notice by post with correct address written on it, the principle 13 incorporated in Section 27 of the General Clauses Act, 1897 (for short “G.C. Act”) could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. 9. All these aspects have been highlighted and reiterated by this Court recently in Vinod Shivappa1 case. Elaborately dealing with the situation where the notice could not be served on the addressee for one or the other reason, such as his non availability at the time of delivery, or premises remaining locked on account of his having gone elsewhere etc; it was observed that if in each such case, the law is understood to mean that there has been no service of notice, it would completely defeat the very purpose of the Act. It would then be very easy for an unscrupulous and dishonest drawer of a cheque to make himself scarce for sometime after issuing the cheque so that the requisite statutory notice can never be served upon him and consequently he can never be prosecuted. It was further observed that once the payee of the cheque issues notice to the drawer of the cheque, the cause of action to file a complaint arises on the expiry of the period prescribed for payment by the drawer of the cheque. If he does not file a complaint 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, his complaint gets barred by time. Thus, a person who can dodge the 14 postman for about a month or two, or a person who can get a fake endorsement made regarding his non availability, can successfully avoid his prosecution because the payee is bound to issue notice to him within a period of 30 days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. He is, therefore, bound to issue the notice, which may be returned with an endorsement that the addressee is not available on the given address. This Court held: (SCC p.463, para 15)_ “15. We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. Therefore, it would be pre-mature at the stage of issuance of process, to move the High Court for quashing of the 15 proceeding under Section 482 of the Code of Criminal Procedure. The question as to whether the service of notice has been fraudulently refused by unscrupulous means is a question of fact to be decided on the basis of evidence. In such a case the High Court ought not to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.” 10. It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address. 11. However, the Referring Bench was of the view that this Court in Vinod Shivappa1 case did not take note of Section 114 of Evidence Act in its proper perspective. It felt that the presumption under Section 114 of the Evidence Act being a rebuttable presumption, the complaint should contain necessary averments to raise the presumption of service of notice; that it was not sufficient for a complainant to state that a notice was sent by registered post and that the notice was returned with the endorsement “out of station”; and that there should be a further averment that the addressee-drawer had deliberately 16 avoided receiving the notice or that the addressee had knowledge of the notice, for raising a presumption under Section 114 of Evidence Act.” (pp-559-563) Thereafter the Court proceeds to consider the presumption which can be drawn under Section 114 of the Evidence Act. The judgment has been reproduced in some detail in order to meet the argument of the learned counsel for the respondents that an envelop without any notice was received by the respondent and there was no notice inside. Learned counsel has also argued with skill that the learned trial Court had acted in contravention of the Fundamental Principles of Criminal Jurisprudence wrongly rejected application under Section 311 Cr.P.C. to establish that no notice but only an envelope had been received. Normal rule is that evidence should and