IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA: Cr.A.No.57/2001. Reserved on: 27th June, 2008. Date of Decision : 30th June, 2008 M/s Ram Lal Durga Dass. …Petitioner. Versus: Gurmail Singh. …Respondent. Coram: The Hon’ble Mr.Justice Sanjay Karol, Judge. Whether approved for judgment?1 Yes. For the appellant: Mr.Ajay Kumar, Advocate. . For Respondent. Mr.Ramakant Sharma, Advocate. Sanjay Karol, J. The present appeal arises out of the judgment dated 24th August, 2000 passed by the Judicial Magistrate, Ist Class (II), Shimla in Criminal Case No. 164/3 of 1997 titled as M/s Ram Lal Durga Dass Vs. Gurmail Singh dismissing the appellant’s complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as `the Act’) Complainant, through its partner filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as `the Act’) on the ground that a cheque dated 30th April, 1997 bearing No.244876 (Ext.CW-1/A) drawn on UCO. Bank H.P.MIDC, Branch Shimla, issued by the accused in favour of the complainant was deposited for clearing with their banker, namely, Oriental Bank of Commerce, Shimla 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Branch and on presentation the same was dishonoured on 17th September, 1997 for the reason “insufficient funds”. The complainant consequently issued a legal notice dated 23rd September, 1997 (Ext.CW- 1/D) sent by registered A.D. and U.P.C. at the last known address of the accused. Postal receipts of the notice sent by registered A.D. dated 23rd September, 1997 (Ext.CW-1/E, Ext. CW-1/F, Ext.CW-1/G) were filed with the complaint. The registered A.D. notices sent to the accused at his official address (Ext.CW-1/J) were received back with the remarks “the addressee working in the office of D.H.S. has left the service, hence returned back”. Registered A.D. notice sent at the residential address of the accused (Ext.CW-1/K) was returned back with the remarks that the “addressee is out of station, hence be awaited” and the registered A.D. notice sent at the native place of the accused (Ext.CW-1/L) was returned back with the remarks that there is no hotel by the name at which the notice was sent. The notices sent by U.P.C, at all the addresses, as per receipt (Ext. CW-1/H) which were correctly addressed were not received back. Since the money was not paid within the prescribed time hence the complaint was filed against the accused. After recording of pre-summoning evidence the accused was summoned and after compliance of the provisions of law, notice of accusation was issued to the accused for an offence punishable under Sections 138 and 142 of the Act to which the accused did not plead guilty and claimed trial. In order to prove its case, the complainant examined its partner Sh. Jagdish Lal (CW-1), Sh. Ramesh Chand (CW-2), Sh. Anil Kumar (CW-3) and the statement of the accused under Section 313 3 Cr.P.C. was also recorded. In his defence the accused examined three witnesses, namely, Sh.D.K.Negi (DW-1), Sh.Satish Khera (DW-2) and accused himself as DW-3 to prove that the accused worked as a part time Accountant with the complainant and from the bag which he used to keep in the complainant’s shop Sh. Jagdish Lal (CW-1), stolen a blank signed cheque. The court below, after appreciating the material on record dismissed the complaint for the following reasons: The complainant had failed to plead what was the debt or liability for which the alleged cheque had been issued; the complainant had failed to prove the notices, sent to the accused, were served as no witness from the Postal Department had been examined; the accused had denied having issued the cheque; and the complainant had failed to plead and prove his capacity to file the complaint on behalf of the registered partnership firm. I have heard learned counsel for the parties and also perused the record. Sh. Jagdish Lal (CW-1) has deposed that he is a partner of the complainant firm in whose favour the accused had issued a cheque of Rs.2,00,000/- dated 30th April, 1997 (Ext.CW-1/A). He and his wife Shakuntala are the only partners. Their firm is registered and he has been orally authorized by the partner to file the complaint. The cheque was presented but returned back as per the banker’s memo (Ext. CW-1/B) and Ext.CW-1/C). He got the notices in question served. He has proved legal notice, postal receipts and envelopes (Ext. CW-1/D, Ext.CW-1/E to Ext.CW-1/G, Ext.CW-1/J and Ext.CW-1/K and Ext.CW-1/L). The proceedings were initiated as no money was paid. In cross-examination, it 4 has been admitted that the accused had been working with him for the last 14-15 years as an Accountant. He specifically denied the suggestion put to him in the affirmative, that the complainant had borrowed money from the accused which were withdrawn from his G.P.F account. He categorically denied the suggestion that the accused used to leave his bag in the shop containing a cheque book or that he had removed any cheque, including Ext.CW-1/A, from the bag. He proved that Rs.2,00,000/- was advanced to the accused and as consideration thereof the cheque was issued. He specifically denied the suggestion that to avoid service upon the accused the name of the father of the accused was deliberately not written on the legal notice. Witnesses CW-2 and CW-3, bank officials, have proved that the cheque in question was dishonoured for the reason “insufficient funds” and the complainant was informed thereof as per memos (Ext. CW-1/B and Ext. CW-1/C). Defendant’s witness (DW-1) bank official, has proved on record the ledger (Ext.DW-1/A) pertaining to the complainant’s account maintained by the Oriental Bank of Commerce. He deposed that for the period in question a cheque amounting to Rs.20,000/- dated 17th May, 1997 issued in the name of Gurmail Singh-accused was encashed. In cross-examination he deposed that cheque bearing No. 919948 dated 30th April, 1997 for Rs. 2,00,000/- (Ext. PX) drawn in favour of Gurmail Singh by the complainant was encashed by Gurmail Singh on 26th August, 1997. He identified Gurmail Singh’s signature on the back of the cheque (Ext. PX) and also the cheque dated 17th May, 1997 for Rs. 20,000/-. Shri Satish Khera (DW-2) has deposed fact that he is the colleague of accused DW-3, who used to keep his bag in the 5 complainant’s shop. The said bag used to contain blank signed cheque book. In cross-examination, he has admitted that he cannot state whether the accused had lodged any complaint with regard to missing the cheques nor does he know that any cheque was stolen. From the sworn testimony of DW-3, it is clear that he was a Government servant and was working as an accountant on part time basis with the complainant from 1984 till August, 1997. He admitted the receipt and encashment of the cheque for a sum of Rs.20,000/- in May, 1997 but, however denied his signature on cheque dated 30.4.1997 for Rs.2,00,000/- (Ext.PX) . According to him the cheque book containing blank signed cheque used to be kept by him in a bag in the complaint’s shop and the cheque in question was stolen from the bag by the complainant. He learnt about the same only after he received notices from the Court. He admitted that he was on leave from his office from 9th December, 1996 upto 27th November, 1997 as he was constructing his hotel at his native place. In cross-examination he admitted to be still in service and the registered A.D. letter containing legal notice Ext.CW-1/J & Ext. CW-1/K was correctly addressed. He denied having received the notices sent by U.P.C. According to him at any given point in time he used to keep 3-4 bank cheques signed and also used to regularly maintain the counterfoil. He would make entries in the counterfoil after the cheque was issued or cancelled. He categorically admitted his signatures on Ext.CW- 1/A the cheque in question. He also admitted that he had not made any complaint to the Police with regard to the missing of the blank cheque. He could not state as to how many cheques had been issued by him after cheque in question. He categorically admitted that in March, 1998 he had learnt about the missing of the cheque and yet did not file any complaint in 6 that regard. He denied having signed and purnote mark ‘PY’ given to the complainant. This is the complete evidence and documentary material on record. I have heard the learned counsel for the parties and also perused the record. In Goa Plast (P) Ltd. v. Chico Ursula D’Souza, (2004) 2 SCC 235 , the Apex Court has held that proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire creditability of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee. It is a settled position of law that in order to bring an application under Section 138 of the Act the complaint must show: 1. That cheque was issued; 2. The same was presented; 3. It was dishonoured on presentation; 7 4. A notice in terms of the provisions was served on the person sought to be made liable; 5. Despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the notice. [In N.K.Wahi Vs. Shekhar Singh and other, (2007) 9 SCC 481 and Uniplas India Ltd. And others Vs. State (Govt. of NCT of Delhi) and another, (2001) 6 SCC 8]. In the present case notice sent by registered A.D. has been returned back with an incorrect report that “the addressee working in the office of D.H.S. has left the service, hence returned back”. In cross- examination the accused has admitted that he is still in service. Notice sent at the residential address of the accused was returned back with the remarks that “the addressee is out of station, hence be awaited” and the notice sent at the native place of the accused has been returned back with the remarks that there is no hotel by the name at which the notice was sent. However, the notices sent by U.P.C. which were correctly addressed, as was admitted by the accused in his cross-examination, were not received back. In this regard the law laid down by the Apex Court is relevant and needs to be reproduced as under: In K. Bhaskaran v. Sankaran Vaidhyan Balan and another, 1999(7) SCC 510 , the Apex Court has held as under: 18. 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 8 the amount should be within 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 at the correct address. 19. In Black’s Law Dictionary “giving of notice” is distinguished from “receiving of the notice” (vide P.621). “A person notifies or gives notice to another by taking such steps as may be reasonably required to inform the other in the ordinary course, whether or not such other actually comes to know of it.” A person “receives” a notice when it is duly delivered to him or at the place of his business. 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 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 the 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 Statutes, the learned author has emphasized that “provisions relating to giving of notice often receive liberal interpretation” (vide P.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 the 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 9 dispatched his part is over and the next depends on what the sendee does. 22. It is well settled that a notice refused to be accepted by the addressee can be presumed to have been served on him (vide Harcharan Singh v. Shivrani (1981(2) SCC 535), and Jagdish Singh v. Natthu Singh (1992(1) SCC 647. 23. Here the notice is returned as unclaimed and not as refused. Will there be any significant difference between the two so far as the presumption of service is concerned? In this connection a reference to Section 27 of the General Clauses Act will be useful. The section reads thus: “27. Meaning of service by post:- Where any Central Act or any Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression ‘serve’ or either of the expressions ‘give’ or ‘send’ or any other expression 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.” 24. No doubt, Section 138 of the Act does not require that the notice should be given only by “post”. Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has dispatched 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 it was not really served and that he was not responsible for such non-service. Any other 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. 25 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 clause (c ) to the proviso of 10 Section 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. (Emphasis supplied) In C.C.Alavi Haji Vs. Palapetty Muhammed and another (2007) 6 SCC 555 , it is held as under: 14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement “refused” or “not available in the house” or “house locked” or “shop closed” or “addressee not in station”, due service has to be presumed. [Vide Jagdish Singh Vs. Natthu Singh ; State of M.P. Vs. Hiralal & Ors. and V.Raja Kumari Vs. P.Subbarama Naidu & Anr. ] It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved. 15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the Court to draw presumption or inference either under Section 27 of the G.C. Act or Section 114 of 11 the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasise that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the Court is required to be prima facie satisfied that a case under the said Section is made out and the afore noted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends. (Emphasis supplied) In D.Vinod Shivappa Vs. Nanda Belliappa (2006) 6 SCC 456, Dalmia Cement (Bharat) Ltd. Vs. Galaxy Traders & Agencies Ltd. and others.(2001) 6 SCC 463 and United Credit Ltd. Calcutta v. Agro Sales India and others (2001(10) SCC 763, the apex Court has also laid the law to the said effect. Applying the ratio of law laid down by the Apex Court, to the facts and material on record, it cannot be said that the accused had not been served with the notice as required under the provisions of the Negotiable Instruments Act. The Court below has seriously erred in coming to the conclusion that the complainant had failed to prove the 12 notice sent to the accused stood served as no witness of the Postal Department had been examined. The service of the notice is not necessary and what is essential is the giving of the notice which in the present case duly stands proved. The notices/ letters were correctly addressed and would be deemed to have been served upon the accused. Except for mere denial, the accused has stated nothing and no evidence has been led or material placed to prima facie rebut the presumption of service. The accused has admitted that the notice sent by registered A.D. and also the address given on the U.P.C. receipt is correct. In this view of the matter, it cannot be said that the notices were not issued or received by the accused. The Court below has dismissed the complaint on the ground that the complainant had failed to plead what was the debts and liability for which the cheque had been issued and that the accused had denied having issued the cheque in question. In my view the reasoning adopted by the court below while arriving at such a conclusion is perverse and needs to be set aside. There is no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability is on the accused. Mere denial by the accused that there is no liability is not enough. The accused has to prove in the trial, by leading cogent evidence, that there was no debt or liability. [M.M.T.C.Ltd. and another Vs. Medchl Chemicals and pharama (P) Ltd and another,(2002) 1 SCC 234 and K.N.Beena Vs. Uniyappan and another (2001) 8 SCC 458]. 13 In M.S.Narayana Menon Alias Mani Vs. State of Kerala and another, (2006) 6 SCC 39, the apex Court has held as under: 28. What would be the effect of the expressions 'May Presume', 'Shall Presume' and 'Conclusive Proof' has been considered by this Court in Union of India (UOI) v. Pramod Gupta (D) by L.Rs. and Ors., [(2005) 12 SCC 1] in the following terms: "It is true that the legislature used two different phraseologies "shall be presumed" and "may be presumed" in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government vis-`-vis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words "shall presume" would be conclusive. The meaning of the expressions "may presume" and "shall presume" have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression "shall presume" cannot be held to be synonymous with "conclusive proof" 29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean: - "Proved” A fact is said to be proved when, after considering the matters before it, the Court