Karnataka High Court
M. Lakshmipathi vs Employees' State Insurance ... on 5 August, 2002
Equivalent citations: 2005(1)ALD(CRI)1, I(2003)BC328, 2003CRILJ354, 2002(5)KARLJ451, 2003 CRI. L. J. 354, 2002 AIR - KANT. H. C. R. 3113, (2003) ILR (KANT) (1) 155, (2003) 1 BANKCAS 328, (2003) 2 ALLCRILR 965, (2003) 2 CIVLJ 156, (2002) 5 KANT LJ 451, (2003) 1 RECCRIR 519, (2003) 3 BANKCLR 783
Author: K. Sreedhar Rao
Bench: K. Sreedhar Rao
ORDER K. Sreedhar Rao, J.
1. This petition is filed against the judgment of conviction dated 10-2-2000 passed in C.C. No. 24777 of 1991 by the XIV Additional Chief Metropolitan Magistrate, Bangalore. The petitioner is the accused and he was charged for committing an offence punishable under Section 138 of the Negotiable Instruments Act and after trial, he was found to be guilty and convicted. Accordingly, sentence of fine to an extent of cheque amount and three years imprisonment is imposed by the Trial Court. The Sessions Judge in Cri. A. No. 15017 of 2000 has dismissed the appeal of the petitioner. Being aggrieved, the present revision petition is filed.
2. The provisions of ESI Act cover the petitioner's establishment. There appears to be some default in remitting ESI contributions. A cheque dated 13-6-1990 for Rs. 63,134/- was issued by the petitioner in favour of the respondent-Corporation. The cheque came to be dishonoured. A statutory legal notice under Section 138(c) of the Negotiable Instruments Act came to be issued on 5-7-1990. The said notice is received by the petitioner on 10-7-1990. Thereafter, within one month, the complaint is lodged under Section 200 against the petitioner by the respondent for committing an offence punishable under Section 138 of the Negotiable Instruments Act. The Trial Court as well as the first Appellate Court have concurrently held that the accused is guilty. The provision of Section 138 is set-out hereunder for convenient reference.-
"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".
3. The dissection of the provision of Section 138 indicates the two important joint conditions, which give rise to cause of action for instituting a complaint. The preliminary and primary condition is that a cheque should have been issued for discharge of debt or other liability by the drawer and is dishonoured on account of insufficient funds. The second condition being that the payee or holder in due course should give notice in writing to the drawer within fifteen days from the date of knowledge of dishonour. The drawer, if he fails to make payment of the amount of money indicated in the dishonoured cheque within fifteen days from the date of receipt of notice, the payee or holder in due course will get a cause of action to institute a complaint under Section 138 provided such complaint is made within one month from the date of cause of action arising under Clause (c) of proviso to Section 138 as per Clause (b) of Section 142 of the Negotiable Instruments Act.
4. A close reading of the provisions of Sections 138(c) and 142 of the Negotiable Instruments Act indicate that the cause of action to institute a complaint would arise only when the drawer failed to make payment within fifteen days from the date of receipt of notice issued under Section 138(c) of the Negotiable Instruments Act.
5. In the present case, the notice was issued to the petitioner-accused on 5-7-1990 and received by him on 10-7-1990. Within fifteen days therefrom the petitioner should have tendered the amount pursuant to the notice issued under Section 138(c) of the Negotiable Instruments Act i.e., by the end of 25-7-1990. Whereas, before the expiry of the last day i.e., 25-7-1990, the petitioner takes a stay order against the recovery of the arrears in respect of which the cheque in question is issued. The stay order granted was in effect till 27-7-1990 and continued until further orders by the order dated 27-7-1990 by the ESI Court. The mere fact of dishonour is not a sole and a decisive factor to provide a cause of action for institution of a complaint. The most vital condition that gives rise to cause of action would be by the fact of default in not paying the amount pursuant to the notice under Section 138(c) before the expiry of the statutory period of fifteen days provided to the drawer for making payment. By any intervening circumstances the liability to make payment under Section 138(c) is suspended; validly the cause of action remains inchoate. The payee or holder in due course would not be entitled to lodge a complaint under Section 138 against the drawer. In the instant case, before the expiry of statutory period of fifteen days, the liability of the drawer was suspended by the orders of the ESI Court. In that view of the matter, there was no ripened cause of action for the complainant to lodge a complaint under Section 138(c). Therefore, the institution of complaint against the petitioner is bad in law and suffers for want of cause of action. The Courts below have missed the notice of this legal aspect. Accordingly, the petition is allowed. The impugned judgments and orders of conviction are set aside. This order of quashing the proceedings would not in any way come in the way of the respondent-Corporation to recover the arrears in accordance with the law.