Andhra HC (Pre-Telangana)
Unknown vs M/S. Bharath Vaddera Labour Contractor ... on 30 October, 2014
Author: C. Praveen Kumar
Bench: C. Praveen Kumar
THE HONBLE SRI JUSTICE C. PRAVEEN KUMAR
CRIMINAL APPEAL No. 1772 OF 2006
30-10-2014
P.Ranga Rao.....APPELLANT
M/s. Bharath Vaddera Labour Contractor and two others..RESPONDENTS
Counsel for Appellant:Sri Ch.Janardhan Reddy
Counsel for Respondents:Sri K.Venu Madhav
<GIST :
>HEAD NOTE :
? Cases referred :
1. 2008 Crl.L.J.452
2 2009(3)ALT (Crl.)286(AP)
3 (2009)14 SCC 398
4 (2007) 6 SCC 555
5 RCR (Cri) 2013 (3) 269
HONBLE SRI JUSTICE C. PRAVEEN KUMAR
CRIMINAL APPEAL No.1772 OF 2006
J U D G M E N T:
The appellant/complainant preferred the present appeal under Section 378(4) CrPC, challenging the judgment dated 01.05.2006, passed in S.T.C. No.232 of 2005 on the file of the VIII Metropolitan Magistrate at Rajendranagar, wherein and whereunder the Accused No.2, who was tried for an offence punishable under Section 138 of the Negotiable Instruments Act, was acquitted.
The facts in issue are as under :
The complainant/appellant filed a private complaint against the accused for an offence punishable under Section 138 of the Negotiable Instruments Act. The allegations in the compaint would show that Accused No.2 is a labour contractor and Secretary of Accused No.1, is known to the complainant. Out of acquaintance, the Accused No.2 approached the complainant in the month of January 2003 and requested him to finance an amount of Rs.2,00,000/- for his business necessities. Considering the necessities and acquaintance, the complainant advanced an amount of Rs.2,00,000/- on 10.01.2003. The Accused No.2 promised to return the said amount within one year, but however, failed to do so. Pursuant to repeated demands made by the complainant, Accused No.2 is said to have issued a cheque bearing No.389206 dated 24.05.2004 drawn on the State Bank of India, Hyderabad for Rs.2,00,000/-. The said cheque when presented for collection at Canara Bank, Rajendranagar branch on 26.07.2014 was returned with an endorsement the funds are insufficient. After receipt of cheque return memo, the complainant got issued a legal notice dated 07.08.2004 to the accused calling upon them to pay the amount due.
Inspite of receipt of the notice, the accused failed to pay the same. Hence, a private complaint was filed for an offence punishble under Section 138 of N.I. Act. After recording the sworn statement of the complainant, the case was taken on file and summons were issued to the accused.
On appearance, the accused was examined under Section 251 CrPC with reference to the accusation made against them, but the same was denied and claimed to be tried.
In order to prove his case, the complainant examined himself as P.W.1 and got marked Exs.P-1 to P-7.
After closure of the evidence, the accused was examined under Section 313 CrPC with reference to the incriminating circumstances appearing against them in the evidence of P.W.1. The accused denied the same and reported no defence evidence.
After hearing both sides, the trial Court acquitted the accused holding that the complaint was being instituted without there being any cause of action as the notice sent was not served on the accused. The court also held that the complainant failed to prove that Ex.P-1 was issued towards discharge of a legally enforceable debt.
The main ground urged by the learned counsel for the appellant is that the trial Court erred in dismissing the complaint on the ground that there was no proper service of notice on the accused. He submits that the notice was sent to a proper and correct address of the accused. According to him, when once the notice was sent to proper address it has to be presumed that there was proper service of notice in terms of Section 138 of the Negotiable Instruments Act.
On the other hand, the learned counsel for the respondents/Accused submits that the mandatory requirements, as contemplated under Section 138(c) of the Act, are not complied with as the notice was not served on the accused. His argument is to the effect that Section 27 of the General Clauses Act can be invoked to prove deemed service if there is no material to show service of notice. In the instant case, the notice was said to have served on one Sujatha, whose relationship with the Accused No.2 is not established. As no efforts were made to summon the said Sujatha, he submits that there was no compliance of Section 138 of N.I. Act.
To appreciate the rival contentions, it may be necessary to refer to the evidence of P.W.1. In his evidence, the complainant, who examined himself as P.W.1, deposed that pursuant to acquaintance and repeated requests made by the Accused No.2, the complainant advanced a sum of Rs.2,00,000/- to the Accused No.2 for his business necessities in the month of January 2003. Pursuant to repeated demands made by the complainant, the Accused No.2 issued a cheque, which, when presented, was returned due to insufficiency of funds. Thereafter he got issued a legal notice calling upon the Accused No.2 to pay the amount. Though Accused No.2 is said to have received the notice, no amount was paid to the complainant. Hence, the complainant preferred the present complaint under Section 138 and 142 of the Negotiable Instruments Act. P.W.1 in his evidence got marked Exs.P-1 to P-7. Ex.P-1 is the cheque bearing No.389206 dated 24.05.2004, Ex.P-2 is the cheque return memo dated 28.07.2004, Ex.P-3 is the office copy of legal notice dated 07.08.2004, Ex.P-4 is the receipt of certificate of posting dated 07.08.2004, Exs.P-5 and P-6 are the postal acknowledgments dated 13.08.2004 and Ex.P-7 is Bank pass book of P.W.1.
P.W.1 was subjected to lengthy cross-examination. During cross examination, it was suggested to P.W.1 that he has no capacity to pay Rs.2,00,000/- and that he never paid any amount to the accused, but the same was denied. It was stated that Accused No.2 is a Contractor in C.P.W.D. and that he knows him since his childhood. He admits that except this transaction there are no money transactions between him and the accused. He also admits about his acquaintance with Ram Reddy, who was doing finance and chitfund business. It was also suggested to him that a blank cheque was issued by the accused to Mr. Ram Reddy as a security and that he got filed this false complaint by using the said blank cheque, but the same was denied by him. He however stated that he does not know who filled up the contents of cheque. He admits that Ex.P-1 cheque was not executed in his presence. He admits that the accused received legal notice on 13.09.2004 under Exs.P-5 and P-6. In order to give explanation with regard to providing hand loan, P.W.1 in his re-examination admits that he withdrew the amount in the month of November 2002 and paid the amount in January 2003.
That being the evidence on record, it is to be seen as to Whether the ingredients constituting the offence under Section 138 of the N.I. Act are made out or not ?
As seen from the evidence, P.W.1 deposes that acknowledgment cards Exs.P-5 and P-6 were served on the accused on 13.09.2004. A perusal of the said acknowledgment cards would show that one acknowledgment card contains the address of K.Chandraiah S/o. Yallaiah as R/o.H.No.4-6-70, Near Shivarampally Railway Station, Saibaba Nagar, Kattedan, Rajendranagar (M), R.R. District. The second acknowledgment card refers to M/s. Bharat Vedara Labour Contractor Co-operative Society Limited, Kattedan, Hyderabad. Both the acknowledgments are dated 13.09.2004 and signed by one Sujatha. The relationship of said Sujatha with the accused is not established. The presence of said Sujatha at both the places stands established as the signature on the acknowledgment cards is that of Sujatha, though the first acknowledgment card contains the address of the Accused No.2, showing the receipt of the same at his house, whereas the second one contains the address of Cooperative Society Limited at Kattedan.
The question is whether acceptance of registered letter by one Sujatha amounts to service of notice as contemplated under Section 138 of N.I. Act.
Before proceeding further, it would be relevant to extract Section 138 of the Negotiable Instruments Act:
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 provision of this Act, be punished with imprisonment for a term which may extend to one year, 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) the cheque has been presented to 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.
Explanation :_ For the purposes of this section, "debt or other liability"
means a legally enforceable debt or other liability.
With regard to service of notice, Section 138(b) of the Act postulates a condition where 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.
The Apex Court in M/s. Rahul Builders v. M/s. Arihant Fertilizers and Chemical and Anr., while dealing with service of notice in an offence punishable under Section 138 of the Negotiable Instruments Act, observed as follows :
Service of a notice, it is trite, is imperative in character for maintaining a complaint. It creates a legal fiction. Operation of Section 138 of the Act is limited by the proviso. Unless a notice is serviced in conformity with Proviso (b) appended to Section 138 of the Act, the complaint petition would not be maintainable. The Parliament while enacting the said provision consciously imposed certain conditions. One of the conditions was service of a notice making demand of the payment of the amount of cheque as is evident from the use of the phraseology payment of the said amount of money. Such a notice has to be issued within a period of 30 days from the date of receipt of information from the bank in regard to the return of the cheque as unpaid. The statute envisages application of the penal provisions. A penal provision should be construed strictly; the condition precedent wherefor is service of notice.
From a reading of the provision and the Judgment of the Apex Court referred to above, it is clear that service of notice is imperative for maintaining a complaint under Section 138 of the Act and the said service of notice has to be made by the payee or holder in due course by giving a notice, in writing, to the drawer of the cheque. This being a penal provision, the same should be considered strictly.
The learned counsel for the appellant placed reliance on various judgments of the Apex Court and this Court to show that if the notice is sent to correct address and if the same is unreturned, it is to be deemed as proper service of notice. He relied upon a judgment of this Court in D.Atchyutha Reddy v. State of A.P. and another , in support of his plea.
Issue identical to the case on hand came up for consideration before the Apex Court, M.D. Thomas v. P.S.Jaleel and another , wherein it was also a case where the complaint was filed under Section 138 of the N.I. Act. The trial Court acquitted the accused and in appeal the High Court set-aside the order of acquittal, convicted the appellant and sentenced the accused to undergo imprisonment till the rising of the court apart from directing the accused to pay the sum of Rs.1,20,000/-
to the complainant, in default, to undergo further simple imprisonment for a period of three months. Against the said order, a Special Leave was filed before the Apex Court. The main arguments advanced before the Apex Court was that the respondent did not serve notice upon the appellant as per the requirements of Clause (b) of proviso to Section 138 of the N.I. Act. It was specifically submitted that service of notice on the appellants wife cannot be treated as compliance with the mandate of law. After referring to the provisions of Section 138 of the N.I. Act, the Apex Court held as under :
Proviso to Section 138 specifies the conditions which are required to be satisfied before a person can be convicted for an offence enumerated in the substantive part of the section. Clause(b) of the proviso to Section 138 cast on the payee or the holder in due course of the cheque, as the case may be, a duty to make a demand for 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.
In the present case, the notice of demand was served upon the wife of the appellant and not the appellant. Therefore, there is no escape from the conclusion that the respondent complainant had not complied with the requirement of giving notice in terms of clause (b) of proviso to Section 138 of the Act. Unfortunately, the High Court overlooked this important lacuna in the complainants case. Therefore, the conviction of the appellant cannot be sustained.
But the judgment of a Three Judges Bench of the Apex Court in C.C.Alavi Haji v. Palapetty Muhammed and another observed as under:
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 aforenoted 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.
It appears that the judgment of the Apex Court in Alavi Haji case (4 supra) was not brought to the notice of the Court in M.D.Thomas case (3 supra). However, in Bhagwati Kumar Gupta v. State of Rajasthan considered both the judgments and held as under:
In view of the aforesaid authoritative pronouncement of the Hon'ble Apex Court in the larger bench reference, there is hardly any room for any doubt that the onus on the holder of the cheque before launching a prosecution under Section 138 of the Act is only to the extent of sending the notice to the correct address of the drawer. Thereafter, the necessary consequences as enshrined in Section 27 of the General Clauses Act would follow, as per which has to be presumed that the notice has been served on the addressed. It is not disputed by the learned counsel for the petitioner that the notice, which was sent by the complainant was at the correct address of the accused. Who at the correct address receives the notice cannot be the control of the complainant. It would be too harsh and virtually an absurd proposition to require from the holder of the cheque to manage the affairs in such a fashion that the same is served on the addressee himself. It is only in order to avoid such situation that the Legislature enacted Section 27 of the General Clauses Act providing for presumption of service, even in cases, wherein the notice is not accepted by the addressee or cannot be served for various other reasons. As interpreted by the Hon'ble Apex Court in C.C. Alva Haji's case, even a refusal to accept the notice has been considered to be a sufficient service upon the addressee. If the contention of the learned counsel for the petitioner is accepted then the same would lead to situation of absolute absurdity. Such an interpretation would be totally against the spirit of Section 138 of the N.I. Act. The unscrupulous accused would then easily manipulate the affairs and have the acknowledgement of the notice signed by anybody apart from himself/herself and then try to take a shield of non-service of the notice for raising a defence that the notice was not served and thus proceedings are vitiated. This in the opinion of this Court cannot be correct interpretation of the legal requirements of the Section 138 of the N.I. Act. The Hon'ble Apex Court whilst considering the case of M.D. Thomas (supra) was not made aware of the earlier Larger Bench decision rendered in the case of C.C. Alva Haji. Applying the law of precedents, the decision rendered by the Larger Bench of the Hon'ble Apex Court in the case of C.C. Alavi Haji has to be considered to be holding field and to be laying down the correct position of law.
Even in the present case, though the complainant is said to have sent the notice to the correct address of the accused, which fact is not in dispute, the same was received by one Sujatha. As stated above, acknowledgment cards received pursuant to the notices sent to both the addresses contain the signature of one Sujatha. The Accused No.2 did not lead any evidence to show that he has nothing to do with the said Sujatha. No effort was made to adduce evidence to prove that the said Sujatha is neither the wife, the daughter, friends or a neighbour of the accused. It was not even suggested to P.W.1 that the Accused No.2 has no relationship with the said Sujatha.
But a perusal of record would show that personal notice sent by the learned counsel for the complainant pursuant to an order of this Court, while granting leave at the time of admission of the Appeal, to the same address was received by the Accused No.2. The notice sent to the same address by the High Court after admission of the appeal was received by the Accused No.2. It is also brought to the notice of this Court that as the learned counsel for the Accused No.2 was not appearing before this Court, a notice was again sent pursuant to a direction given by the Court, which was also received by the Accused No.2. The Accused No.2 did not adduce any rebuttal evidence to show that the letter/notice was not sent to the correct address and that the said Sujatha has nothing to do with his family or the household. The Accused No.2 failed to establish that he has no information about the notice being received at his house. That being the factual position, in view of Judgment of the Three Judges Bench of the Apex Court in Alavi Hajis case (4 supra), it cannot be said there was no proper service of notice on the accused.
In sofar as issuance of cheque towards legally enforceable debt is concerned, the trial Court held that since Accused No.2 was sued in his individual capacity and not in the capacity of the Secretary of Accused No.1 society, Accused No.2 cannot be held liable for an offence punishable under the Act.
P.W.1 in his evidence categorically stated that Accused No.2 is the labour contractor and Secretary of Accused No.1 society. Due to acquaintance, Accused No.2 approached P.W.1 and requested to advance a sum of Rs.2,00,000/- for his business necessities in the name of Accused No.1 society. It has been elicited in the evidence of P.W.1 that Accused No.2 alone came to P.W.1 and obtained loan for the purpose of Accused No.1s activity.
It is true that no document was executed in token of receipt of the amount but P.W.1 explained the source of income by stating that he withdrew the amount from the account and paid the same to the accused. The said version of P.W.1 could not be demolished, except suggesting that Ramreddy was having finance and chit fund office and that the present complaint has been filed at the instance of said Ram Reddy on the basis of blank cheque issued by the accused to him as security.
The said suggestion remained a suggestion. No oral or documentary evidence has been adduced to probablise the same. Therefore, when the signature on the cheque was found to be that of Accused No.2, issued on behalf of Accused No.1-Society, the accused failed to establish even by preponderance of probability as to how the cheque signed by Accused No.2 came into the possession of the complainant.
Further, the finding of the trial court that Accused No.2 was sued in his individual capacity also appears to be incorrect. A perusal of the cause title would show that Accused No.1 society was represented by its Secretary K.Chandraiah and the secretary was shown as Accused No.2. By this, it does not mean that Accused No.2 was individually shown as an accused. The cheque issued infavour of the complainant also show that it was issued by Accused No.1 and signed by Accused No.2. Hence, prosecuting Accused No.1 and Accused No.2 for the loan taken by Accused No.2 for Accused No.1s business activity cannot be said to be incorrect. Therefore, it can be safely held that Accused No.2 has issued the cheque in discharge of a legally enforceable debt.
Accordingly, Criminal Appeal is allowed and the Accused No.2 is found guilty for an offence punishable under Section 138 of N.I. Act. He is directed to pay a fine of Rs.2,10,000/- (Rupees two lakhs and ten thousand only), in default he shall undergo simple imprisonment for a period of six months. Out of the fine amount paid by the Accused No.2, a sum of Rs.2,00,000/- shall be paid to the complainant under Section 357 CrPC within 4 months from today.
As a sequel to it, miscellaneous petitions if any, pending in this criminal appeal, shall stand closed.
_____________________ C. PRAVEEN KUMAR, J Date:30.10.2014