Karnataka High Court
Sri. Roshan, S/O. Mahadev Kolvekar vs Ramesh Vithal Shet on 26 June, 2014
Author: K.N.Phaneendra
Bench: K.N. Phaneendra
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 26TH DAY OF JUNE, 2014
BEFORE
THE HONOURABLE MR. JUSTICE K.N. PHANEENDRA
CRIMINAL APPEAL No.2660/2009
BETWEEN:
SRI.ROSHAN S/O MAHADEV KOLVEKAR,
AGE: 37 YEARS,
OCC: BUSINESS,
R/O : KARWAR.
... APPELLANT
(BY SRI. V. P. KULKARNI , ADV.)
AND:
RAMESH VITHAL SEHT,
AGE: 36 YEARS,
R/O: HEGADEKOPPA,
SUNKSAL ANKOLA,
DIST: BAGALKOT.
... RESPONDENT
(BY SRI. SRINIVAS B NAIK, ADV.)
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THIS CRIMINAL APPEAL IS FILED U/S 378 (1) OF
CR.P.C. BY THE ADVOCATE FOR THE APPELLANT PRAYING
THAT THIS HON'BLE COURT PLEASED TO SET ASIDE THE
JUDGMENT AND ORDER PASSED BY THE J.M.F.C.II
COURT, KARWAR IN CRL.CASE NO.934/2006 DATED
21.3.2009 FOR THE OFFENCE PUNISHABLE UNDER
SECTION 138 OF N I ACT.
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THIS APPEAL COMING ON FOR ORDERS THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
The appellant being aggrieved by the judgment of acquittal dated 21.03.2009 passed by the JMFC (II Court), Karwar in C.C.No.934/2006, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'N.I.Act', for short) preferred this appeal.
2. The short question involved in this particular case is;
"Whether a person, who has issued a legal notice under Section 138(b) of the N.I. Act fails to take steps to file the complaint within a period of one month after the grace period given from the date of issuance of notice and due service of notice on the accused, is entitled to file the complaint on the basis of the subsequent notice issued by him."3
3. Before answering the above said question, several factual matrix of this case are very much relevant.
The appellant herein - Roshan filed a complaint against the respondent/accused - Ramesh Vithal Shet under Section 200 of Cr.P.C. alleging offence under Section 138 of the N.I. Act. It is the specific case of the complainant, that the accused has issued a cheque for Rs.2,30,000/- on 21.04.2006, drawn on Vijaya Bank, Karwar. On 17.05.2006, the said cheque was presented for collection through ING Vysya Bank. The same was returned with an endorsement "funds insufficient" in the account of the accused on 25.04.2006 along with a memo dated 25.04.2006. Thereafter, the complainant has issued a legal notice on 26.05.2006 and the same was returned with shara "not known - No addressee - returned to sender". In fact, after fifteen days of the issuance of the said notice, i.e., after the grace period of one month, the complainant ought to have filed the complaint. But the complainant has again issued one more notice dated 20.06.2006, which was dispatched on 4 23.06.2006 and the same was served on the accused on 26.06.2006. Thereafter, the complainant waited for fifteen days, and when the accused had not replied to the notice nor paid the amount, the complainant chose to file the complaint on 08.08.2006.
The learned Magistrate took cognizance of the offence, issued process against the accused and proceeded with the trial. The learned Magistrate recorded the evidence of the complainant and also of two witnesses PWs. 2 and 3. The complainant got marked eight documents at Exs. P1 to P8. The accused was examined under Section 313 of Cr.P.C. After hearing the arguments, the impugned judgment was passed by the learned Magistrate.
4. As could be seen from the judgment, the learned Magistrate, in fact, has not appreciated the evidence of PWs. 1 to 3 or the materials on record in order to pass the order on merits of the case though in one sentence the learned JMFC has stated in his judgment that;
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"an offence under Section 138 of the N.I. Act being a technical one, complainant has to prove his case beyond all reasonable doubts but, he has miserably failed to bring home the guilt of the accused for the alleged offence. In view of the present legal position, no presumption can be drawn in favour of the complainant. Accordingly, the evidence of PWs. 1 to 3 are not of trustworthy and there is no material on record so as to bring home the guilt of the accused for the alleged offence."
5. On merits, saying the above said words, the learned Magistrate has acquitted the accused only on the ground that the complaint was barred by time and there was no cause of action to file the complaint because, after first notice was issued and grace period was granted to the accused, the complainant has not filed the complaint before the Court within one month.
6. The learned Counsel for the appellant strenuously contended that the learned Magistrate ought to have 6 dismissed the complaint at the time of taking cognizance itself. When once the cognizance is taken, it is deemed that the delay, if any, in filing the complaint has been condoned by the learned Magistrate. Secondly, the learned Counsel contended that, when the second notice was issued, the Court has to consider why the first notice could not be served upon the accused and whether there was any intention on the part of the complainant to delay the filing of the complaint and what interest he has got in filing the complaint belatedly. He further contends that, in order to provide an opportunity to the accused, one more notice was issued. If the accused was a prompt payer and had any intention to repay the amount, he would have repaid the amount immediately after service of the second notice. Therefore, he contends that even the conduct of the accused shows that, at no point of time he had any intention to pay the cheque amount. Lastly, he contends before the Court that, even issuance of second notice and presentation of the cheque subsequent to issuance of first notice found to be not 7 an illegality by the Apex Court in latest ruling. Therefore, such a discrepancy should not be considered by the Court in order to favour the accused and that should not be a reason for acquittal of the accused.
7. Contrary to this, the learned Counsel for the respondent herein (for accused before the trial Court) strenuously contends that, under Section 138(b) of the N.I.Act, compliance of statutory requirement is sine quo non for the purpose of maintaining the complaint before the Court. When once the first notice was issued and the same was deemed to have been served on the accused and after providing fifteen days grace period and within one month thereafter, if the complaint is not filed, the cause of action arose lapses and thereafter, the complainant is not entitled to file the complaint. He also contends, in this particular case, no application was filed for the purpose of condoning the delay. Hence, the complaint itself is not maintainable and the same was rightly dismissed and the trial Court has proceeded to record the evidence of the witnesses and 8 ultimately on that ground, the trial Court has acquitted the accused.
8. Having heard the arguments of both the Counsel, now let me consider the above said contentions of the learned Counsel.
9. Section 138(b) of the N.I. Act, which is a mandatory provision mandates 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] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and 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, thereafter only within one month the complaint is to be filed."9
The tone and tenor of this particular provision clearly indicates that, after receipt of the notice issued, if the accused fails to make the payment of the said amount, then after giving grace period of fifteen days, the cause of action for the purpose of filing the complaint within one month arises. Therefore, the receipt of the notice by the accused plays a dominant role in such case.
10. Now let me see the records to ascertain whether the first notice issued by the complainant was served on the accused or not. What the learned Counsel contends before this Court is that, the address mentioned in the first notice, which is marked as Ex.P5, is mentioned in the second notice also. When it is the case of the complainant that the second notice was served on the same address, the first notice shall be taken as deemed to have been served on the accused. But in this case, on perusal of the cover of first notice issued, which is produced at Ex.P5, there is an endorsement made by the postal authorities that the postal authorities have visited the place for seven days and endorsement is made as 10 'Not known - No Addressee - Returned to sender'. The postal authorities have not made the endorsement that the said person resides there itself when they went there or he was not available to receive the notice. The cover has not been returned to the addressee with any shara that an intimation was delivered to the accused and in spite of the intimation delivered, the accused has not come to receive the said notice and therefore, it was sent to the sender. But the endorsement is otherwise as noted above. The endorsement that, "not known - no addressee", shows that, in spite of postal authorities going to that particular place, they were unable to find out whether any person was residing there or not. Therefore, perhaps this might have prompted the complainant to issue second notice to the said address to find out whether the said address is correct or not. I do not find any illegality or irregularity or incurable defect committed by the complainant.
11. Let apart, the legal point that should be decided by the Court is;
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"Whether the second notice could have been issued by the complainant even assuming that the first notice was deemed to have been served upon the accused."
12. In this regard, the learned Counsel for the respondent has relied upon several rulings as listed below:
1. Sadanandan Bhadran Vs. Madhavan Sunil Kumar reported in AIR 1998 SC 3043
2. Tameeshwar Vaishnav Vs. Ramvishal Gupta reported in ACD-2011-0-120
3. Prem Chand Vijay Kumar Vs. Yashpal Singh and Anr. reported in AIR (2005) 4 SCC 417 In all the above said cases, the Hon'ble Apex Court has held that, "Clause (a) of Proviso to Section 138 does not put any embargo upon payee to successively present a dishonoured cheque during the period of its validity.
But once the notice is issued on the basis of 12 dishonoured cheque, there cannot be any further presentation of the cheque and there cannot be any second presentation or issuance of second notice to the accused.
It was categorically held that, if once the notice is issued notifying the accused, calling upon him to make the payment due, if he does not make the payment or does not reply the notice, then immediately after the lapse of the grace period within one month from the date, the complaint has to be filed. The cause of action arose after issuance of notice to the accused, if it lapses, the complaint becomes invalid and barred by time."
13. These rulings, in my opinion, clearly envisage that, the notice must be served on the accused or it should be shown that, notice is deemed to have been served. In one of the rulings noted above, the Apex Court has held that;
"the notice was issued to the accused and the same was received by the accused, but he did not pay any 13 amount or replied the notice. In spite of that, second notice was issued and therefore, the Court held that there was no occasion for the complainant to issue any second notice and the accused was acquitted on that ground."
14. The learned Counsel for the appellant has cited a latest pronouncement of the Hon'ble Apex Court reported in AIR (2013) 1 SCC 177 in the case of MSR Leathers Vs. S. Palaniappan and Anr.. The same question cropped up before the Apex Court. The Apex Court ruled as follows:
"1. Negotiable Instruments Act, 1881 - Sec.138-A - Prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched - prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the 14 requirements stipulated in the proviso to Section 138 of the N.I. Act.
(emphasis supplied) If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the 15 cheque presented again gets dishonoured for the second or successive time.
Negotiable Instruments Act, 1881 - Sec.138, Proviso
- Three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable.
The first condition is that the cheque ought to have 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.
The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make 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 of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
The third condition is that the drawer of such a cheque should have failed to make payment of the 16 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. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing cheque." (emphasis supplied).
15. The above said ruling clearly emphasize that, even after issuance of the first notice, even after service of first notice on the accused, if for any reason, the complainant is obliged to present the said cheque once again before the bank, the complainant has to comply with the other three conditions. Therefore, it goes without saying that the circumstances, under which the second notice was issued or the presentation of the cheque was made by the complainant has to be more meticulously looked into by the Courts in 17 order to come to the conclusion that whether there was any deliberate inaction on the part of the complainant or whether the complainant, with an intention to harass and cause inconvenience to the accused, has made delay in lodging the complaint.
16. In this context, it is also worth to note here another decision of the Hon'ble Apex Court reported in LAWS (SC) - 2006-5-13 in the case of D. Vinod Shivappa Vs. Nanda Belliappa. In this particular case, the Hon'ble Apex Court has categorically considered the purpose of issuance of the notice and under what circumstances, the accused can take the defence of non-service or any defect in service of notice upon him. The observation of the Apex Court is as follows:
"Section 138 of the Act was enacted to punish those unscrupulous persons who purported to discharge their liability by issuing cheques without really intending to do so, which was demonstrated by the fact that there was no sufficient balance in the 18 account to discharge the liability. Apart from civil liability, a criminal liability was imposed on such unscrupulous drawers of cheques. The prosecution, however, was made subject to certain conditions. With a view to avoid unnecessary prosecution of an honest drawer of a cheque, or to give an opportunity to the drawer to make amends, the proviso to Section 138 provides that after dishonour of the cheque, the payee or the holder of the cheque in due course must give a written notice to the drawer to make good the payment. The drawer is given 15 days time from date of receipt of notice to make the payment, and only if he fails to make the payment he may be prosecuted.
The object which the proviso seeks to achieve is quite obvious. It may be that on account of mistake of the bank, a cheque may be returned despite the fact that there is sufficient balance in the account from which the amount is to be paid. In 19 such a case if the drawer of the cheque is prosecuted without notice, it would result in great in- justice and hardship to an honest drawer. One can also conceive of cases where a well intentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond his control, even though he genuinely intended to honour the cheque drawn by him. The law treats such lapses induced by inadvertence or negligence to be pardonable, provided the drawer after notice makes amends and pays the amount within the prescribed period. It is for this reason that clause (c) of proviso to Section 138 provides that the section shall not apply unless the drawer of the cheque fails to make the payment within 15 days of the receipt of the said notice. To repeat, the proviso is meant to protect honest drawers whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfil their promise but on 20 account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque. The proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, it being a part of their modus operandi to cheat unsuspecting persons."
In such manner, the Hon'ble Apex Court has held that, even the non-service of notice cannot be taken as defence by the accused person before the Court unless, he shows his bona fides by showing to the Court that immediately after the receipt of summons from the Court, he has made arrangements to pay the amount due under the cheque or deposited the amount before the Court.
17. Therefore, it goes without saying that the Court has to analyse the entire circumstances of the case in order to ascertain whether there was any deliberate inaction on the part of the complainant in issuing the second notice so far as this case is concerned. Returning to the factual matrix of 21 this case, it shows that the first notice issued to the accused was returned with the shara as noted above. When the complainant received back the cover with such shara, it must have prompted him that the said notice issued by him might not have reached the correct destination of the accused and he must have confused himself with regard to the address mentioned on the cover. Therefore, to test whether the said address is the correct address of the accused or not and also with an intention to provide one more opportunity to the accused to test his intention, he must had issued another notice as per Ex.P6, which has been served on the accused. Even after service of the second notice, the conduct of the accused shows that he did not reply the said notice nor made any efforts to pay the amount to show his bona fides. If the notice issued was returned with some endorsement otherwise than the one mentioned ('not known - no addressee'), an inference could be drawn that the said notice was deemed to had been served on the accused.
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18. Further added to that, in the above said rulings, the Hon'ble Apex Court has made it amply clear that, when the notice was issued on the dishonour of cheque and even after service of notice on the accused, the complainant has presented the cheque for the second time for the reasons best known to him and even after presentation of the cheque, once again for the second time, the notice was issued to accused and the same was served and thereafter, the complaint was filed. Therefore, the order of Apex Court is amply clear that the Court has to look into the surrounding circumstances to ascertain the conduct of the parties. The earlier view of the Hon'ble Apex Court that, "once the notice is issued and served on the accused, there was no question of presentation of the cheque once again, and cause of action once arose, it ends for ever and the cause of action arose only once to the party", has been diluted in the later division.
19. Therefore, it all depends upon the facts and circumstances of each and every case. The Court should be positive in its approach in analyzing the materials on record. 23 Considering the conduct of the complainant and the accused, insofar as this case is concerned, issuance of the second notice is only with an Intention to provide an opportunity to the accused to make the payment. But the accused has not shown his bona fides that he would have been the prompt payer of the said amount, if he received the notice.
20. Under the above said circumstances, I am of the opinion the trial Court has committed a serious error in acquitting the accused only on this particular technical ground. As I have already narrated, the trial Court has not analysed the evidence on record and not recorded its opinion so far as other ingredients of the offence on merits etc. If this Court step into the shoes of the trial Court and decide the matter on merits and convict the accused or acquit the accused, holding that complainant has proved or not proved his case, then the accused or complainant may lose an opportunity to challenge the said judgment before the competent Court. Even otherwise, it is the domain of the 24 trial Court to appreciate the materials on record and record its findings on the merits of the case.
21. Hence, judgment of the trial Court requires to be set aside and the matter requires to be remitted to the trial Court for fresh disposal in accordance with law in view of the observations made in the body of this judgment. Accordingly the following order is passed:
ORDER Appeal is allowed. The judgment passed by the trial Court in C.C.No.934/2006 dated 21.03.2009 is hereby set aside. The matter stands remitted to the trial Court with a direction to the Magistrate to decide the matter on considering the merits of the case.
As issuance of notice and service of notice is already decided in this Court, the trial Court shall not give any finding insofar as issuance and service of notice are concerned.
Sd/-
JUDGE