Dishonour of Cheque; Varghese Andrews Vs. State [Kerala High Court, 01-12-2015]

Negotiable Instruments Act, 1881 – Section 138 (b) – General Clauses Act 1987 – Section 27 – Notice – Importance of giving notice in writing – Giving a notice under Section 138(b) is mandatory on receipt of the intimation from the bank. The evidence shows that there is noncompliance of mandatory provision, and no offence under Section 138 of the Negotiable Instrument Act will be attracted.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

P.D. RAJAN, J.

Crl.R.P.1153 of 2003

Dated this the 1 st of December, 2015

AGAINST THE JUDGMENT IN Crl.APPEAL 140/1999 of ADDL. SESSIONS COURT (SPL. COURT), KOTTAYAM DATED 24-02-2003 AGAINST THE JUDGMENT IN CC 702/1992 of C.J.M.,KOTTAYAM DATED 03-06-1999

REVISION PETITIONER(S)

VARGHESE ANDREWS, KOTTAYAM AND ANR.

BY ADVS. SRI.K.M.VARGHESE SRI.SHAHUL HAMEED MOOPPAN

RESPONDENT(S)

STATE OF KERALA AND ORS.

R1 BY PUBLIC PROSECUTOR SRI.N.SURESH

ORDER

The revision petitioners were accused in C.C.702/92 on the file of the Chief Judicial Magistrate, Kottayam for offence punishable under

Section 138 of the Negotiable Instruments Act

(hereinafter referred to as the N.I.Act). The complainant’s case in the trial court was that, accused 1 and 2, who are the proprietors of a business firm namely Friends Banana Marts, at Municipal Vegetable Market, Kottayam, borrowed a sum of Rs.31,000/- from the complainant and in discharge of that debt, they issued a cheque for Rs.16,000/- (Ext.P2) and another cheque for Rs.15,000/- (Ext.P3). When those cheques were presented for encashment, they were dishonoured for the reason of funds insufficient. Complainant demanded the amount by giving a notice in writing to the accused. Even after notice, there was no payment. In the circumstance, the above complaint was filed in the trial court.

2. The complainant examined PW1 and PW2 and marked Ext.P1 to P15 as documentary evidence. The incriminating circumstances brought out in evidence were denied by the accused while questioning him under Section 313 Cr.P.C. Accused examined DW1 and DW2 and marked Ext.D1 as his documentary evidence. The learned Magistrate convicted the accused under Section 138 of the N.I. Act and sentenced to pay a fine of Rs.15,000/-, in default, simple imprisonment for 3 months each. Against that, he preferred Crl. Appeal 140/99 before Sessions Judge (Spl.), Kottayam, which was dismissed by that court. Being aggrieved by that he preferred this revision petition.

3. The learned counsel appearing for the revision petitioner contended that Ext.P2 cheque of Rs.16,000/- was issued on 1.5.92, Ext.P5 dishonour memo shows that Ext.P2 was dishonoured on 29.05.92. There was no demand for the due amount by giving a notice in writing to the accused and there is non-compliance of Section 138 (b) of N.I. Act. This fact which ought to have been in favour of the accused was not considered by the courts below.

4. I heard the Public Prosecutor, who contended that the findings of the trial court is proper and no interference is necessary.

5. According to Section 138 of the N.I. Act, where any cheque drawn by a person on an account maintained by him with a bank for payment of money to another person from that account, in discharge of any debt or liability, is returned by the bank, either the amount of money in that account is insufficient to honour the cheque or that it exceeds the amount arranged from that account with the bank, such person shall be deemed to have committed an offence under Section 138 of the N.I. Act. This deemed provision is enacted subject to the condition that the cheque has to be presented within the statutory period in which it is drawn or within the period of its validity. Secondly, the payee or holder in due course of the cheque shall make a demand for such amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information from the bank and non-payment of due amount after receipt of notice by the drawer of the cheque.

6. Section 138(b) says that, 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 (before amendment, within fifteen days) of the receipt of information by him from the bank regarding the return of the cheque as unpaid. PW1 deposed that he demanded the money by giving Ext.P6 notice dated 12.06.92. Ext.P10 is the acknowledgment card, but postal receipt has not been produced in the trial court to show that he made a demand within the period provided under Section 138 (b) of the N.I. Act. Notice envisaged under Section 138(b) by payee to the drawer of the cheque which has been dishonoured can be sent by post or by fax. The responsibility on the payee on receipt of information from the bank with regard to the return of the cheque unpaid is to make a demand for payment within 15 days. It should be “by giving a notice in writing to the drawer of the cheque” and the method of making demand is prescribed in the clause. If notice has been sent by registered post, payee has to produce the postal receipt and the copy of the notice and the acknowledgment card so as to prove the giving of notice and receipt of notice within the statutory period. The penal provisions of the special statue must be construed strictly. Notice of demand of payment must be made in writing and not otherwise. Apex Court in

SIL Import USA v. M/s. Exim Addes Silk Exporters, Banglore, AIR 1999 SC 1609

held that notice given by fax is valid within the meaning of Section 138(b) of the N.I. Act. Therefore a realistic interpretation has to be given to the word ‘giving notice’. If the payee has despatched notice in the correct address of the drawer within thirty days from the date of intimation from the bank, (Earlier this period was 15 days but subsequently the period has been increased upto 30 days.) it should be pertinent to note that delay in every day would be fatal for the remedy under Section 138 of the N.I.Act. Apex court in