IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THURSDAY, THE 10TH DAY OF SEPTEMBER TWO THOUSAND AND NINE PRESENT HON’BLE SRI JUSTICE G.V.SEETHAPATHY CRL.A.No.346 OF 2005 Between: Machabathini Sreenivasarao …Appellant/Complainant A n d Sri Mani Pavan Traders, Rep. by its Proprietor Sri Polisetti Veeranjaneyulu and another. …Respondent/Accused HON’BLE SRI JUSTICE G.V.SEETHAPATHY CRL.A.No.346 OF 2005 JUDGMENT: This appeal is directed against the judgment dated 31-12-2004 in C.C.No.426 of 2004, on the file of the Judicial Magistrate of the First Class for Excise, Guntur, wherein the first respondent herein was found not guilty of the offence under Section 138 of the Negotiable Instruments Act (for short ‘the Act’) and was acquitted under Section 255(1) Cr.P.C. 2. Heard the learned counsel for the appellant/complainant and the learned counsel for the first respondent/accused. Perused the record. 3. The appellant herein filed complaint against the first respondent herein alleging, in brief, as follows: The accused was doing wholesale paddy business by purchasing paddy from rice millers at Guntur and selling the same in retail in villages. For the said business purpose, he took hand loan from the complainant on 01-03-2004 and issued a cheque for the said amount drawn on Andhra Bank, Phirangipuram. When the cheque was presented for collection in Canara Bank, Chandramoulinagar, Guntur, it was dishonoured for the reasons ‘account closed’ and ‘date alteration requires full signature’. The complainant got issued a legal notice dated 18-03-2004 calling upon the accused to pay the amount, but the accused managed to return the notice with an endorsement ‘door locked’. The accused intentionally evaded to receive the notice and did not pay the amount and hence the complaint under Section 138 of the Act. 4. The accused denied the offence and pleaded not guilty. 5. In support of his case, the complainant examined himself as P.W.1 and marked Exs.P-1 to P-5. The accused examined himself as D.W.1 and marked Exs.D-1 to D-4. 6. On a consideration of the evidence available on record, the learned Magistrate held that there was no service of notice as required by the Act and the complainant had also failed to discharge the initial burden showing that there was subsisting liability by the accused towards the complainant and, therefore, the ingredients of the offence under Section 138 of the Act are not made out. Accordingly, the accused was acquitted. Aggrieved by the same, the complainant filed the present appeal. 7. According to the complainant/P.W.1, the accused was doing paddy business and in that connection, he took hand loan of Rs.1 lakh on 01-03-2004 from the complainant and gave a cheque-Ex.P-1 on the same day and when the same was presented for collection, it was returned vide memo-Ex.P-2 and debit advice-Ex.P-3 with an endorsement ‘account closed and date alteration requires full signature’. Thereafter, P.W.1 got issued a registered notice under the original of Ex.P-4, which was returned unserved under Ex.P-5. 8. The accused, as D.W.1, testified that he was doing business in cement in his village as dealer of Vishnu cements and he never did rice business and he was having account in Andhra Bank, Phringipuram in connection with his business and he closed the said account on 21-11-2001 and by that date two cheques were missing. According to him, as he closed the account itself, he did not lodge any police report and also because he had no suspicion against anyone. He categorically denied that he borrowed any amount of Rs.1 lakh by way of hand loan from the complainant or gave the cheque-Ex.P-1 to P.W.1. He denied to have received any notice from P.W.1 and he had no knowledge of issuance of notice-Ex.P-4 by P.W.1. In support of his plea that he was doing business as agent of Vishnu Cements and opened the account in connection with cement business by taking loan of Rs.75,000/- from Andhra Bank, he filed Exs.D-1 to D-4. In the cross-examination D.W.1, however, admitted that there was no other firm by name Sri Mani Pavan Traders, Nudurupadu, except his firm and Exs.D-1 to D-4 were addressed to his firm’s name. He also admitted that Ex.P-5 was addressed in the name of his firm and his name is also noted. He denied the suggestion that he managed Ex.P-5 to be returned unserved though he was available. From the above admissions, the learned counsel for the complainant would contend that as the notice-Ex.P-4 was addressed to correct address of the accused, even if it is returned unserved for whatever reason, it must be deemed that service was effected and accused had knowledge of issuance of such notice. 9. Proviso to Section 138 of the Act contemplates, among other things, that unless 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 thirty days of receipt of information by him from the bank regarding the return of the cheque as unpaid and the drawer of such cheque fails to make the payment of the said amount of money to the payee or to the holder in due course, as the case may be, within fifteen days of receipt of said notice, the provisions of Section 138 of the Act are not applicable. Thus, before it can be said that the offence under Section 138 of the Act is made out, the above two conditions viz., issuance of a notice by the payee demanding the amount of money within the prescribed period and failure on the part of the drawer to pay the said amount within the prescribed period i.e., fifteen days of receipt of the notice, are required to be fulfilled. 10. Section 142 of the Act ordains that no Court shall take cognizance of the offence under Section 138 of the Act inter alia unless such complaint is made within one month from the date on which cause of action arises under clause (c) of the proviso to Section 138 of the Act. Thus, the cause of action for filing the complaint in terms of clause (c) of the proviso arises only on the failure of the drawer to pay the amount demanded in the notice within fifteen days of receipt of the notice. It is only after such cause of action has arisen, a complaint can be filed within one month from the date on which the cause of action arose i.e., within one month from the date following the expiry of the period of fifteen days prescribed for making the payment. Thus, it is not the issuance of the notice but the receipt of the notice by the drawer, which is material for determining whether and since when the cause of action has arisen. Admittedly, the notice said to have been issued by the complainant under Ex.P-4 is not served on the accused. The endorsement-Ex.P-5 shows that it was returned to sender as door was locked. The complainant alleged that the accused managed a false endorsement from postman concerned, which the accused categorically denies. There is absolutely no evidence to substantiate the said allegation. The evidence on record only shows that the door was locked and hence the notice was returned to the complainant unserved. When that is so, no knowledge of issuance of such notice can be attributed to the accused nor can it be said that there was deemed service on the accused, simply because the address mentioned on the envelope is correct. 11. The learned counsel for the complainant relied on a decision in K.BHASKARAN V. SANKARAN VAIDHYAN BALAN AND ANOTHER[1] wherein the Apex Court held that when the notice is returned as unclaimed, notice is presumed to have been served. The above decision is not applicable to the facts of the present case for the simple reason that in the present case, the notice was returned as the door was found locked not as ‘unclaimed’ by the addressee. There is any amount of difference between the two situations where the notice is returned as unclaimed and the notice was returned because the door was locked. 12. The learned counsel for the accused relied on a decision in M/S INDO AUTOMOBILES V. M/S JAI DURGA ENTERPRISES AND OTHERS[2], wherein the Apex Court held that notice sent to the respondent through registered post and certificate of posting to correct address must be presumed that service has been made effective. In the above case, a petition was filed under Section 482 Cr.P.C for quashing the summons issued and the High Court, by the impugned order, quashed the said proceedings on the ground that no notice was served on the respondent. The Apex Court while setting aside the said order and restoring the proceedings left it open to be considered at the trial stage as to the interpretation of the postal endorsement made by the postman. The parameters for quashing proceedings under Section 482 Cr.P.C are well settled and they are distinct and different from those to be considered in a full-fledged trial. In the present case, the trial Court based on the evidence held that there was no service of notice. It is also not the case of the complainant that notice was, in fact, served. The endorsement of the postman that it was returned because the door was continuously locked is very clear. Simply because the envelope was addressed to a correct address, no inference of deemed knowledge of the contents thereof on the part of the addressee can be drawn when he had no occasion even to know that such a notice was issued when it was returned unserved on the ground of the door being locked. The complainant has not adduced any evidence to show that the accused was very much available in the village at the said address during the relevant period. When the Act contemplates service of notice on the accused as a criterion for arousal of cause of action and when such service is not shown to have been effected in any manner permitted by or acceptable under law, the penal provisions cannot be invoked against the accused by ignoring the non-compliance with the statutory requirement on the part of the complainant. The finding of the learned Magistrate that there was no valid service of notice on the accused as required under Section 138 of the Act does not, therefore, call for any interference. 13. There is no iota of evidence adduced by the complainant to substantiate his plea that accused was doing paddy business and in connection with the same he borrowed Rs.1 lakh by way of hand loan and in discharge of the same, he issued the cheque-Ex.P-1. According to the complainant, the said borrowal of Rs.1 lakh was on 01-03-2004. P.W.1 has not produced even a scrap of documentary evidence to show that any such hand loan was taken by the accused. P.W.1 has also not produced his business accounts to show that the said borrowal is borne out by the same, though according to him he paid the said amount from his business counter. He claimed that he can file document to show that he was having Rs.1 lakh on that date, but he did not produce any such document. P.W.1 admitted that he cannot produce any document to show that he is capable of lending Rs.1 lakh. 14. According to the complainant, he lent an amount of Rs.1 lakh on 01-03-2004 and on the same day, the accused issued the cheque-Ex.P-1. The complainant has not adduced any evidence even to show that the accused was doing any paddy business. Thus, in the absence of any evidence to substantiate the claim of the complainant regarding the alleged borrowal of Rs.1 lakh by the accused, it cannot be said that there was any legally enforceable debt or liability on the part of the accused towards the complainant. The presumption contained under Section 139 of the Act arises only when the initial burden lying on the complainant to show existence of legally enforceable debt or liability, is discharged. 15. In G.B.LINGAM v. VITTA MURALI KRISHNA MURTHY AND ANOTHER[3], it was held as follows: “It is evident that when once the respondent takes the plea that the cheque was not issued for discharge of a legally enforceable debt or liability then the complainant is bound to prove the circumstances under which the cheque was given in his favour and that the same is issued in discharge of legally enforceable debt. Unless this initial burden is discharged by the complainant, the presumption available under Section 139 cannot be made use of against the respondent.” 16. It is well settled that the initial burden that the cheque was given and that it was issued in discharge of a legally enforceable debt has to be discharged before the presumption can be invoked. When the complainant fails to discharge the initial burden of showing that there was, in fact, a legally enforceable debt or liability due to him by the accused, the question of presumption under Section 139 of the Act in favour of the complainant, does not simply arise. In the present case, the complainant has miserably failed to discharge the initial burden cast on him and again there is no evidence to show that the accused had, in fact, issued a cheque as such in favour of the complainant. 17. Under those circumstances, the trial Court has rightly held that the ingredients of the offence under Section 138 of the Act are not at all attracted. The impugned order of the learned Magistrate, acquitting the accused for the offence under Section 138 of the Act, does not, therefore, call for any interference. 18. In the result, the criminal appeal is dismissed. _____________________ G.V.SEETHAPATHY, J 10th September, 2009. Lrkm. [1] AIR 1999 SC 3672 [2] 2008 AIR SCW 7436 [3] 1997(1) ALD (Crl.) 940 (AP)