Kerala High Court
Kunjan Panicker vs Christudas Alias A.J. Alex And Anr. on 9 September, 1997
Equivalent citations: [1999]98COMPCAS235(KER)
Author: D. Sreedevi
Bench: D. Sreedevi
JUDGMENT E.M. Thulasidas, J.
1. This appeal is by the complainant in S. T. No. 67 of 1990 of the Judicial First Class Magistrate, Neyyattinkara, who was the respondent in Crl. A. No. 6 of 1992 of the First Additional Sessions Court, Trivandrum, filed by the respondent herein against his conviction and sen tence for the offence under Section 138 of the Negotiable Instruments Act, 1881, which were set aside and he was acquitted. The appellant obtained exhibit P-l cheque dated October 22, 1989, for Rs. 26,600 from him towards payment of the amount he advanced, that was dishonoured by the Catholic Syrian Bank, Neyyattinkara branch on October 30, 1989, with the endorsement "refer to drawer", Thereupon, information was given to him, at whose request the cheque was re-presented on November 15, 1989, and it was again dishonoured as per exhibit P-2, memorandum, dated November 24, 1989, that was received along with the cheque on December 4, 1989. On the very next day a notice was issued to him demanding payment of the amount, that he did not accept and it was returned on December 7, 1989, as "not claimed". He waited for some time for him to make the payment, that he did not and, therefore, the complaint was filed.
2. At the trial, the respondent denied the execution of the cheque that he said was fabricated by making use of a blank cheque leaf that the appellant's son-in-law had stolen and maintained that no amount was actually due. But his contention was not accepted and the learned Magistrate found the case as alleged and convicted and sentenced him as stated above. The appellate court however disagreed with the findings of the Magistrate, which, it said were made only on the interested evidence of the appellant. It was further observed that the Magistrate was not justified to find the genuineness of the signature of the respondent in the cheque by comparing the same with that in his vakalath and also took exception to the failure to examine the official, who could have testified to its genuineness with reference to his specimen signature the bank had. The non-examination of the postman to show that exhibit P-3 notice was actually tendered or intimation thereof was given to him and he still refused to receive it was also commented upon. On these premises the judgment of the Magistrate was set aside and the respondent was acquitted.
3. In the course of hearing this appeal, the respondent's counsel relied upon the decision in Raj v. Rajan [1997] 1 KLT 302 and submitted that the notice issued was defective and "so without reference to the other contentions in the case, the order of acquittal must be upheld". But the appellant's counsel urged that the above decision required reconsideration. The learned judge also felt that the view expressed there "that any claim for a higher or lesser amount than the one covered by the cheque in the notice will make it insufficient, vague and illegal, requires reconsideration by a Division Bench" and accordingly the appeal has come before us.
4. We heard counsel for the appellant and the respondent and also P. Vijaya Bhanu, amicus curiae.
5. We do not have to restate the circumstances under which the provisions in Chapter XVII came to be introduced in the Act. They are self-contained and have to be construed strictly on the terms consistent with their object. The courts must be careful not to read between the lines and import into them matters that could not be spelt out from a plain reading of the provisions uninfluenced by notions of what is right and wrong.
6. The ingredients of Section 138 of the Negotiable Instruments Act have too often been stated. They are (1) that the cheque must be 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, and (2) that the cheque must have been returned by the bank unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with that bank. But nothing in the above section however would apply unless "(a) the cheque has been presented before the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier, (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 fifteen 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".
7. Under Section 139, there is a presumption that the holder of a cheque received it for the discharge of any debt in whole or in part. Under Section 140, it will not be a defence in a prosecution for an offence under Section 138 that the drawer had no reason to believe when he issued the cheque that it may be dishonoured on presentment for the reasons stated in that section. We are not concerned with the other provisions in that Chapter being not relevant for our purpose.
8. The cheque in question--we leave out of consideration the factual aspects of the controversy being not very relevant for this case--had been dishonoured by the bank, whereupon a demand was made by notice within the stipulated period of fifteen days of receipt of information as to its dishonour. Indeed the respondent had not acknowledged its receipt, that was returned as unclaimed. No doubt, the postman concerned was not examined, that we do not think was necessary in view of the evidence of the complainant and also because ex facie the notice contained an endorsement about its refusal, that caused it to be returned. He had done what was expected of him and gave evidence as was required in support of his plea without effective challenge. Indeed he could have only sent the notice to the respondent, at his correct address, that could reach him in the normal course of business, that he might either acknowledge or refuse, or fail to claim in spite of the information he had given. Refusal and even failure to claim in circumstances as here will be tantamount to service of notice. We might as well state that it was not his case at all that it had not been properly addressed to him and that therefore it was returned. The evidence in this case showed that it was properly addressed to him, that he refused/failed to claim it and that there was therefore proper service of notice upon him, whose grievance in this behalf was unfounded.
9. It was held in Madhu v. Omega Pipes Ltd. [1994] 1 KLT 441 ; [1996] 85 Comp Cas 263 (P & H) that (page 266) :
"'.. . giving notice' in the context is not the same as receipt of notice. Giving is the process of which receipt is the accomplishment. The payee has to perform the former process by sending the notice to the drawer at his correct address. If receipt or even tender of notice is indispensable for giving the notice in the context envisaged in Clause (b) an evader would successfully keep the postal article at bay at least till the period of fifteen days expires, Law shall not help the wrongdoer to take advantage of his tactics. Hence the realistic interpretation for the expression 'giving notice' in the present context is that, if the payee has despatched notice to the correct address of the drawer reasonably ahead of the expiry of fifteen days, it can be regarded that he made the demand by giving notice within the statutory period."
10. There is some controversy as to what the notice should contain and what it should not and the consequences. The demand as per notice must be for payment of the "said amount" of money and obviously "the said amount" is what was due under the cheque that had been dishonoured. If demand was not made for the "said amount", viz., the cheque amount, it will, no doubt, fall short of its legal requirement. Where, however, there was such demand, about which there can possibly be no vagueness or ambiguity, but at the same time there was also a claim in addition by way of interest and costs, the notice will nevertheless be one demanding payment of the "said amount", the claim on other counts not withstanding. Those additional claims are indeed severable that could be treated as surplusage and will not affect the validity of the notice, whose object is to alert the drawer of the cheque about the dishonour and give an opportunity to make payment within the stipulated time at the risk of his having to face a prosecution in default. There is no form prescribed for the notice, but its legal requirement must be strictly met. In a different context, but quite relevant to this case, the Supreme Court has held in Bhagabandas Agarwalla v. Bhagwandas Kanu, AIR 1977 SC 1120, 1122, that "it must be construed not with a desire to find faults in it, which would render it defective, but it must be construed ut res magis valeat quam pereat". If the cheque amount was paid in terms of the demand made in the notice within the prescribed time or before the complaint was laid, the drawer of the cheque will possibly be entitled to seek its dismissal and perhaps would necessitate the complainant to seek recovery of interest and costs he had claimed in the notice in an appropriate civil proceeding, since the right thereto has been saved in Section 138 of the Act itself, where it is said that "it is without prejudice to any other provisions in this Act". To say that the notice of demand should not contain anything more or less than what is due under the cheque is to straitjacket it to a formula that would nullify the tenor and language of the provision, which must be construed on its terms to conserve the object of the Act. But where however there was an omnibus demand without specifying what was due under the dishonoured cheque, the notice might well fail to meet the legal requirement and will be bad. However, it will be open to club in one and the same notice to the respondent amounts due from him under more than one cheque, which had been dishonoured, and he could as well be prosecuted on one complaint in relation to three transactions over a period of one year, if other relevant conditions have been satisfied.
11. In Gopa Devi Ozha v. Sujit Paul [1996] 2 KLT 886 the petitioner/drawer issued a cheque for Rs. 5,79,000 drawn on the United Bank of India, Lansdowne Branch, Calcutta, that was dishonoured upon presentation with the endorsement "insufficiency of funds in the account", A notice demanding the amount was sent, but to no effect, Thereupon, the complaint was laid. Several contentions were urged in defence and the one that is relevant for us here is relating to the discrepancy in the amount claimed in the notice, which was Rs. 6,50,000 as against Rs. 5,79,000 shown as due in the complaint. It was, therefore, submitted that either the complaint or the notice was bad and, therefore, the prosecution was not maintainable. It was held that (page 890) :
". .. the wording in Clause (b) to the proviso of Section 138 'a demand for payment of the; said amount of money by giving a notice, in writing, to the drawer of the cheque', refers to the cheque amount and not any other amount either smaller or higher than the amount mentioned in the cheque. So, the notice need to be given demanding the cheque amount. If any bigger amount or smaller amount than the cheque amount is mentioned, in my view, that will amount to difficulty to the drawer to know how much amount he has to pay or she has to pay as the case may be and that makes the notice insufficient and vague and the notice will become illegal ... In the instant case, the cheque amount was Rs. 5,79,000 whereas a demand was made from the petitioner herein by opposite party No. 1 for a sum of Rs. 6,50,000, That was not the cheque amount, and as such the notice is vague and insufficient and the said notice cannot be sustained in law."
12. The view is understandable and it could well be said that there was no proper or valid notice demanding payment of the amount under the dishonoured cheque. A learned judge of this court noticed this decision in Raj v. Rajan [1997] 1 KLT 502, which was an appeal by the complainant against the judgment of the Sessions Court, whereby the conviction and sentence of the respondent/accused were set aside and he was acquitted. What was due under the cheque dated January 9, 1991, was Rs. 40,000 that was dishonoured on presentation with the endorsement "refer to the drawer", that it was alleged was due to insufficiency of funds. Payment was not made in spite of notice. At the trial evidence was adduced by the complainant in support of his version. The learned judge was not satisfied with his evidence and observed that he had not made available the best evidence to show that there was no sufficient fund in the account of the drawer when the cheque was presented and returned. The findings of the appellate court were upheld and it was also said that the acquittal was justified in the light of the above decision of the Calcutta High Court, that was approved. The learned judge noticed that (page 305) :
"... the amount covered by the cheque is Rs. 40,000. But in the notice it was not the said amount which was claimed, but that amount together with interest without specifying the amount of interest or the rate of interest. That certainly makes a notice vague and insufficient. It cannot be treated as a notice as contemplated by proviso (b) to Section 138 of the Act. In the circumstances, for want of the proper and legal notice also, the acquittal is sustainable."
13. We would take those observations as "obiter" being outside the range of controversy in that case. Suffice it to say that a notice of demand in terms of proviso (b) of Sub-section (1) of Section 138 of the Negotiable Instruments Act will not be vague, insufficient or bad even if together with the amount due under the dishonoured cheque interest without specifying the amount or the rate and incidental cost had also been claimed.
14. We notice that the appellate court had failed to advert to all aspects of the case and upset the conviction for reasons that we are unable to unreservedly endorse. We are of the view that the matter deserves reconsideration by it and accordingly set aside the judgment and remand the case to it for fresh disposal in accordance with law.
15. The appeal is disposed of as above.
16. We record our appreciation of the help we had from P. Vijaya Bhanu, as amicus curiae.