IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 16TH OCTOBER, 2008 / 24TH ASWINA, 1930 CRL.A.No. 1119 of 2002 (D) (CC.1229/1999 of JUDL. MAGISTRATE OF FIRST CLASS COURT, CHAVAKKAD) .................... APPELLANT/COMPLAINANT: ---------------------------------- PETER S/O. VAZHAPPULLY THOMAS, THUMARAYOOR DESOM, PERAKAM AMSOM, CHAVAKKAD TALUK. BY ADV. SRI.RAJIT RESPONDENTS/ACCUSED: -------------------------------- 1. KONNAPPU S/O.MONIYANTHRA APPUKUTTAN, CHEMMANNUR DESOM, ARTHAT VILLAGE, TALAPPILLY TALUK. 2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA R1 BY ADV. SRI.V.R.DHEERAJ R2 BY PUBLIC PROSECUTOR SRI.P.A.SALIM. THIS CRIMINAL APPEAL HAVING BEEN FINALLY ON 16/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: V.K.MOHANAN, J. --------------------------------------------- Crl.A.No. 1119 of 2002 - D --------------------------------------------- Dated this the 16th day of October, 2008 J U D G M E N T The appellant herein is the complainant in C.C.No.1229 of 1999 on the file of the Judicial First Class Magistrate Court, Chavakkad, which is a case instituted for prosecution against the accused for the offence punishable under Section 138 of the Negotiable Instruments Act,1881 (for short 'the N.I.Act'). By the impugned order, the trial court acquitted the accused under Section 255(1) of the Code of Criminal Procedure. Hence, this appeal. 2. The case of the appellant/complainant is that on 5.4.1999, a sum of Rs.60,000/- was given as a loan to the accused at his request and towards the discharge of the above debt, the accused issued Ext.P1 cheque dated 19.5.1999 which was presented for encashment in the Perakam Service Co-operative Bank where the complainant maintained an account. Ext.P1 cheque pertains to the account of the accused maintaining in the Kunnamkulam branch of Kunnamkulam Co-operative Crl.A.NO. 1119 of 2002 :-2-: Urban Bank. When the complainant presented the cheque for encashment in his bank, it was dishonoured. Ext.P2 dated 25.5.1999 is the dishonour memo issued from the drawer bank. But, according to the complainant, he did not receive Ext.P2 dishonour memo either from the drawer bank or from the drawee bank. But, he received it only on 25.6.1999 in person from the bank of the complainant. The case of the complainant is that after getting Ext.P2 dishonour memo on 25.6.1999, he caused to issue Ext.P3 lawyer notice dated 7.7.1999 which was received by the accused as evidenced by Ext.P4 A.D. Card dated 10.7.1999. Further case of the complainant is that in spite of receipt of Ext.P3 lawyer notice intimating the accused about the dishonour of the cheque and demanding him to pay the amount covered by the cheque in question, he did not pay the amount and hence the complainant approached the court below by filing the complaint. 3. After having prima facie satisfied that a case under Section 138 of the N.I.Act is made out on the Crl.A.NO. 1119 of 2002 :-3-: basis of the allegation contained in the complaint, the court took cognizance upon the complaint and instituted C.C.No.1229 of 1999. Pursuant to the process issued by the court, the accused appeared and the particulars of the allegations were read over and explained to him to which he pleaded not guilty which resulted in further trial during which Pws.1 to 3 were examined from the side of the complainant and Exts.P1 to P9 were marked as documentary evidences. During Section 313 (of Cr.P.C.) questioning of the accused, he pleaded innocence and stated that he did not issue cheque to the complainant. According to him, the case instituted against him is a false one. His version is that he had borrowed as sum of Rs.1000/- from a finance company run by one Sahadevan and towards the said transaction, he had issued a cheque. The court, based upon the contentions advanced by the parties, formulated four issues for its consideration. The first issue was whether Ext.P1 cheque was issued for discharge of any debt or liability due by the accused. After having considered the Crl.A.NO. 1119 of 2002 :-4-: entire facts and circumstances and the evidence and materials on record, the court had found that Ext.P1 was issued for discharge of liability and debt as deposed by PW1. The second question considered was whether the statutory requirements to attract offence punishable under Section 138 of the N.I.Act are established. In answer to the above question, the court found that the notice contemplated under the proviso (b) to Section 138 of the N.I.Act has not been served on the accused. So, according to the court, there was no statutory requirement under Section 138 of the N.I.Act to prosecute the accused for the dishonour of the cheque. In the light of the finding under point No.2, the other points were not considered by the court and finally the court acquitted the accused. It is the above order of acquittal and finding, challenged in this appeal. 4. I have heard Mr.Rajit, learned counsel for the appellant and also counsel for the respondents. The learned counsel submits that the finding arrived on by the court below regarding the failure in compliance of Crl.A.NO. 1119 of 2002 :-5-: proviso (b) to Section 138 of the N.I.Act in sending the notice is without any basis and purely on surmises and conjectures. The counsel pointed out that while examining PW3, the secretary of the Bank of the complainant, it is categorically brought out in evidence that no intimation was sent from his Bank to the complainant based upon Ext.P2 dishonour memo dated 25.5.1999 received from the drawer bank. Counsel pointed out that as evidenced by Ext.P9, the complainant had established that he came to know about the dishonour of Ext.P1 cheque only on 25.6.1999 when he went to the Perakam Service Co-operative Bank. Therefore, it is the specific case of counsel for the complainant that notice contemplated by proviso (b) to Section 138 of the N.I.Act need be issued within 15 days from the date of knowledge of the dishonour of cheque or from the date of receipt of the information from the bank regarding the return of the cheque. Thus, according to counsel, in the present case, the complainant had complied with the statutory Crl.A.NO. 1119 of 2002 :-6-: requirement without any failure and there is no contra evidence to show that either he had information regarding the dishonour of cheque or receipt of information from any of the bank before 25.6.1999. Therefore, the finding of the court below is diametrically opposed to the facts and evidence on record and contrary to the statutory provision, counsel submits. 5. Proviso (b) to Section 138 reads as follows:- “138. Dishonour of cheque for insufficiency, etc., of funds in the account.-- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act,be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque or with both: Provided that nothing contained in this section shall apply unless-- (a) xxxxxxx xxxxxxx (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the Crl.A.NO. 1119 of 2002 :-7-: payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (emphasis supplied) On a reading of proviso (b) to Section 138 of the N.I.Act, it can be seen that the holder of a cheque will get a cause of action, only when he makes a demand for the payment of the money by giving a notice in writing to the drawer of the cheque within thirty days (in the present case only, 15 days since transaction in the present case was prior to the amendment) of the receipt of information by him from the bank regarding the return of the cheque as unpaid. On such demand and if the drawer fails to make the payment within 15 days from the date of receipt of the said notice, the drawee can initiate prosecution. In the present case, the crucial question is whether the complainant has sent a notice in terms of proviso (b) to Section 138 of the N.I.Act. As stated earlier, the evidence on record shows that Ext.P1 cheque dated 19.5.1999 was presented in the bank of Crl.A.NO. 1119 of 2002 :-8-: the complainant from where it was sent to the drawer's bank, viz., Kunnamkulam Co-operative Urban Bank through District Co-operative Bank, Thrissur. As there was no sufficient fund to honour the cheque in question, the drawer bank issued Ext.P2 dishonour memo dated 25.5.1999. By producing Exts.P6 and P7, the complainant has further substantiated the fact that on 25.5.1999, a sum of Rs.120/- was taken by the Kunnamkulam Branch of Kunnamkulam Co-operative Urban Bank towards the commission. Ext.P6 is the extract of Savings Account Ledger of Kunnamkulam Co- operative Urban Bank with respect to the account of the accused. Ext.P7 is the Cheque Return Register of the Kunnamkulam Co-operative Urban Bank Ltd., Kunnamkulam. From Ext.P7, it appears that the second entry dated 25.5.1999 is related to the accused drawer – Sri.Konnappu who maintained S.B.No.4658 and the reason for non-payment is seen as 'insufficient fund'. Thus, from Exts.P6 and P7, it can be seen that Ext.P1 Crl.A.NO. 1119 of 2002 :-9-: cheque was dishonoured for want of sufficient fund on 25.5.1999 and the same returned cancelled. During the trial, to substantiate the case of the complainant, he had examined PW3, the Secretary of the Perakam Service Co-operative Bank, Perakam. In his deposition, PW3 had categorically stated that Ext.P1 cheque came up for collection and accordingly, the same was sent to the District Co-operative Bank, but returned as unpaid. It is also stated that the cheque was returned on 25.6.1999 stating the reason as 'no funds'. He had produced the extract of the Cheque Bill Return Register of his bank and marked the same as Ext.P9. He had further stated that no memo was being issued separately to the holder of cheque who presented the same for encashment. During his cross-examination, he stated that he could not say about the return of the cheque from the District Co-operative Bank. He had also stated that in case the cheque returned is that of the bank, memo will be given and if the cheque is pertained to some other bank, no separate memo will be issued and party will enquire. Crl.A.NO. 1119 of 2002 :-10-: From the above evidence of PW3, it is crystal clear that no intimation regarding the dishonour of cheque in question has been given to the complainant and there is no material to come into a conclusion that the complainant was aware of the dishonour of cheque before the entry in Ext.P9. Though PW3 was cross- examined, there is nothing to show that the complainant has got information regarding the dishonour memo before 25.6.1999 as seen from Ext.P9 ledger. The trial court found that from the entries in Ext.P9, it is gatherable that Ext.P1 cheque had been returned to Perakam Service Co-operative Bank as early as on 7.6.1999 and an amount of Rs.70/- was debited as commission for sending the cheque for collection. It is also clear from Ext.P9 that there is an entry that the cheque was received by the drawee-complainant on 25.6.1999. After examining Ext.P9 and after going through the deposition of PW3, the trial court had observed that the entry in Ext.P9 would not be sufficient enough to assume that PW1 had come to know about the Crl.A.NO. 1119 of 2002 :-11-: dishonour of cheque only on 25.6.1999. It was also observed as follows:- “Normally a debit advice/intimation to the customer would precede or would be simultaneously issued at the time the commission amount is debited. So there is every reason to assume that the complainant had come to know about the cheque on 7.6.1999. But, he took back the cheque from the bank only on 25.6.1999. The delay in taking back the cheque by the payee cannot be taken advantage of by the payee as to prosecute the drawer for an offence under Section 138 of the Negotiable Instrument Act.” According to the learned counsel, the above observations are unwarranted and that too without any basis. Under point No.2 in page No.6, the trial court had observed that “It could be found that the cheque returned on 25.5.1999 by the drawee bank had come back to Parakam Service Co-operative Bank on a day before 7.6.1999. Naturally, the customer ought to have had notice of the dishonour by Perakam Service Co-operative bank within a reasonable time. If PW3 is believed it could be found that it is customer who would come to enquire about the cheque presented for collection. So it has to be Crl.A.NO. 1119 of 2002 :-12-: assumed that commission had been debited from the account of the complainant on 7.6.1999 once the complainant had coem to enquire about the cheque presented for collection. There is every possibility to find that the complainant took the leisure to take back the cheque even after getting information about the dishonour on any earlier date.” Thus the trial court concluded that there were no reasons to find that the complainant was informed about the return of the cheque only on 25.6.1999. As pointed out earlier, the above observations are unwarranted and unfounded. The evidence and materials on records show otherwise. There is no evidence to show that the complainant came to know on 7.6.1999, the date of which the commission had been debited from the account of the complainant, that the cheque in question was dishonoured. The amendment was brought to the N.I.Act with a view to assist the holder of the cheque for the easy transaction and when courts are dealing with such cases, it has to be born in mind the object behind the amendment. Of course, the legislature has taken Crl.A.NO. 1119 of 2002 :-13-: care in securing the interest of the accused and for that purpose, proviso to Section 138 is incorporated. Therefore, apart from establishing the ingredients of Section 138, for a successful prosecution, the holder of a cheque or the complainant has to establish that he had complied with all the requirements provided under the proviso to Section 138. In the present case, on the basis of the evidence and materials, it can be seen that the complainant had sent a statutory notice within time In view of proviso(b) to Section 138, 15 days or 30 days, as the case may be, have to be counted from the date of receipt of information by the holder of the cheque/complainant from the bank regarding the return of the cheque as unpaid. If no such information is received from the bank, the period has to be counted from the date of knowledge of the complainant or the holder of the cheque regarding the dishonour of cheque for the purpose of calculating the days as envisaged by the proviso(b) to Section 138. Unless such interpretation is given, the result will be the defeat of Crl.A.NO. 1119 of 2002 :-14-: the legislative purpose. In the present case, the complainant had sent Ext.P3 lawyer notice dated 7.7.1999 which will come within 15 days from 25.6.1999, the date on which the dishonour of cheque came to the knowledge of the complainant as evidenced by Ext.P9 extract of ledger maintained by the drawee bank. It is also evident from Ext.P4 A.D.card that the accused had received Ext.P3 notice on 10.7.1999. If that be so, the complainant had preferred the complaint in time after due compliance of the statutory provision. Therefore, the finding arrived on by the court below under point No.2 is liable to be interfered with. Consequently, the impugned judgment is liable to be set aside. In the result, this appeal is allowed. The impugned judgment is set aside and the case is remitted back to the court below for fresh disposal. The parties are directed to appear before the court below on 14.11.2008 on which date the court below is directed to take up the complaint on file and to proceed with the Crl.A.NO. 1119 of 2002 :-15-: same in accordance with law and dispose of the same on merit. There is no order as to costs. V.K.Mohanan, Judge MBS/ Crl.A.NO. 1119 of 2002 :-16-: V.K.MOHANAN, J. -------------------------------------------- Crl.A.NO.1119 OF 2002 -------------------------------------------- J U D G M E N T DATED: 16-10-2008 Crl.A.NO. 1119 of 2002 :-17-: