Karnataka High Court
Sri N R Lakshminarayanan vs M/S Lead Consultancy And Engineering ... on 13 October, 2023
1
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF OCTOBER 2023
BEFORE
THE HON'BLE MRS.JUSTICE M.G. UMA
CRIMINAL REVISION PETITION NO.641/2020
C/W
CRIMINAL REVISION PETITION NO.615/2020
IN CRL.RP.NO.641/2020
BETWEEN:
SRI N.R. LAKSHMINARAYANAN
SON OF MR. N.S. RAMABHADRACHARYA,
AGED ABOUT 57 YEARS,
RESIDING AT NO.132,
SRIRANGAVIJAYAM,
7TH MAIN, 3RD STREET,
2ND BLOCK, NEW INCOME
TAX LAYOUT, NAGARBHAVI,
BENGALURU - 560 072.
... PETITIONER
(BY SRI: S. SUSHANT VENKATESH PAI,
SRI: UMAKANTHA .V., ADVOCATES)
AND:
1. M/S LEAD CONSULTANCY AND
ENGINEERING SERVICES (INDIA)
PVT. LTD., A COMPANY
REGISTERED UNDER THE
COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT NO.40, 1ST FLOOR, 10TH 'A' MAIN,
3RD CROSS, 2ND STAGE, INDIRANAGAR,
BENGALURU - 560 038.
REPRESENTED HEREIN BY ITS
DIRECTOR MR. C.G. KRISHNAN
2. MR. C.G. KRISHNAN,
SON OF SRI C.V. GANAPATHY,
AGED ABOUT 49 YEARS,
DIRECTOR, M/S LEAD CONSULTANCY
2
AND ENGINEERING SERVICES (INDIA)
PVT. LTD OFFICE AT NO.40, 1ST FLOOR,
10TH 'A' MAIN, 3RD CROSS,
2ND STAGE, INDIRANAGAR,
BENGALURU - 560 038.
3. SRI T. SELVARASU,
SON OF K. MARUTHACHALAM,
AGED ABOUT 50 YEARS,
DIRECTOR, M/S LEAD CONSULTANCY
AND ENGINEERING SERVICES (INDIA)
PVT. LTD OFFICE AT NO.40,
1ST FLOOR, 10TH 'A' MAIN, 3RD CROSS,
2ND STAGE, INDIRANAGAR,
BENGALURU - 560 038.
... RESPONDENTS
(BY SRI: A. SAMPATH, ADVOCATE FOR R1 TO R3)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING TO A.
SET ASIDE THAT PART OF THE JUDGMENT AND ORDER DATED
26.06.2020 PASSED BY THE LEARNED LXXIV ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE, MAYO HALL UNIT, BANGALORE
(CCH-75) HOLDING CONCURRENT CHARGE FOR IV ADDITIONAL
CITY CIVIL AND SESSIONS JUDGE, MAYO HALL UNIT, BANGALORE
(CCH-21) IN CRL.A.NO.25041/2018 PERTAINING TO ACQUITTAL OF
THE RESPONDENTS WITH RESPECT TO EXHIBIT P-2 CHEQUE AND
CONSEQUENT REDUCTION IN THE AMOUNT OF COMPENSATION
AWARDED TO THE PETITIONER AND ETC.,
IN CRL.RP.NO.615/2020
BETWEEN:
1. M/S. LEAD CONSULTANCY AND
ENGINEERING SERVICES (INDIA)
PVT. LTD., NO. 2729,
1ST FLOOR, 80 FEET ROAD,
3RD STAGE, INDIRANAGAR,
BENGALURU - 560 038.
2. MR. C.G. KRISHNAN,
DIRECTOR, M/S LEAD CONSULTANCY
AND ENGINEERING SERVICES (INDIA)
PVT. LTD NO. 2729,
3
1ST FLOOR, 80 FEET ROAD,
3RD STAGE, INDIRANAGAR,
BENGALURU - 560 038.
3. MR. T. SELVARASU,
DIRECTOR, M/S LEAD CONSULTANCY
AND ENGINEERING SERVICES (INDIA)
PVT. LTD NO. 2729,
1ST FLOOR, 80 FEET ROAD,
3RD STAGE, INDIRANAGAR,
BENGALURU - 560 038.
... PETITIONERS
(BY SRI: A. SAMPATH, ADVOCATE)
AND:
SRI N.R. LAKSHMINARAYANAN
SON OF MR. N.S. RAMABHADRACHARYA,
AGED ABOUT 57 YEARS,
RESIDING AT NO.132,
SRIRANGAVIJAYAM,
7TH MAIN, 3RD STREET,
2ND BLOCK, NEW INCOME
TAX LAYOUT, NAGARBHAVI,
BENGALURU
....RESPONDENT
(BY SRI: S. SUSHANT VENKATESH PAI,
SRI: UMAKANTHA .V., ADVOCATES)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING TO
SET ASIDE THE ORDER DATED 26.06.2020 PASSED BY THE LXXIV
ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BANGALORE
(CCH-75) HAVING CONCURRENT CHARGE OF IV ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE (CCH-21) MAYO HALL UNIT,
BANGALORE IN CRL.A.NO.25041/2018 AND THE ORDER OF
CONVICTION DATED 01.3.2018 PASSED BY THE LVII A.C.M.M.,
MAYO HALL UNIT, BANGALORE IN C.C.NO.52958/2017 AND
CONSEQUENTLY ACQUIT THE PETITIONERS OF THE OFFENCE P/U/S
138 OF N.I ACT.
THESE CRIMINAL REVISION PETITIONS HAVING BEEN
HEARD AND RESERVED FOR JUDGMENT ON 29.08.2023 COMING
ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT
PASSED THE FOLLOWING:
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COMMON ORDER
Accused Nos.1 to 3 in CC No.52958 of 2017 on the file of the learned LVII Additional Chief Metropolitan Magistrate, Mayohall Unit, Bengaluru (hereinafter referred to as 'the Trial Court' for brevity), have preferred Criminal Revision Petition No.615 of 2020, impugning the judgment of conviction and order of sentence dated 01.03.2018, convicting them for the offence punishable under Section 138 of the Negotiable Instrument Act (for short 'the NI Act') and sentencing accused Nos.2 and 3 to pay a fine of Rs.2,500/- each, in default, to undergo simple imprisonment for a period of three months each and directing accused Nos.1 to 3 to pay compensation of Rs.8,00,000/- to the complainant and in default, accused Nos.2 and 3 to undergo simple imprisonment for a period of one year each and holding that the assets of accused No.1 is liable for payment of compensation amount. The impugned judgment of conviction was confirmed vide judgment dated 26.06.2020 passed in Criminal Appeal No.25041 of 2018 on the file of the learned IV Additional City Civil and Sessions Judge, Mayohall Unit, Bengaluru (hereinafter referred to as 'the First Appellate Court' for brevity), while modifying the 5 order of sentence i.e., accused Nos.2 and 3 to pay fine of Rs.4,00,000/- and in default to pay fine, to undergo simple imprisonment for a period of six months.
2. The complainant in CC No.52958 of 2017 before the Trial Court has preferred Criminal Revision Petition No.641 of 2020, impugning the judgment of the First Appellate Court, holding that the complaint in respect of Ex.P2 was premature and modifying the order of sentence passed by the Trial Court.
3. For the sake of convenience, the parties shall be referred to as per their ranks and status before the Trial Court.
4. Brief facts of the case are that, the complainant filed private complaint in PCR No.56466 of 2016 against accused No.1 - M/s. LEAD Consultancy & Engineering Services (India) Ltd., and its Director as accused Nos.2 and 3 alleging commission of offence punishable under Section 138 of NI Act. It is alleged that the complainant is the Diploma holder in Electrical Engineering having 33 years of experience. Accused No.1 is a Company incorporated under the Companies Act, 6 1956, engaged in consultancy services pertaining to Mechanical Electrical and plumbing designs etc.,. Accused Nos.2 and 3 are its Directors and they are in-charge and are responsible for its day-to-day affairs and administration of the Company, which was incorporated in the year 2008. Accused No.2 was knowing the complainant since four years and was aware of his expertise in the field. Both accused Nos.2 and 3 have approached the complainant expressing their desire to expand their consultancy service and sought for assistance and expertise from the complainant. Accordingly, the complainant joined accused No.1 - Company as 'Director- Technical' since 01.11.2010 as per the terms and conditions mentioned in the appointment letter. Considering the marketing skills of the complainant, his salary and other emoluments were increased periodically.
5. It is stated that, gradually, accused No.2 started adopting hostile attitude towards the complainant during mid 2016. There was an unpleasant work atmosphere in accused No.1 - Company. Therefore, the complainant thought of resigning from his job. Accordingly, on 01.08.2016 he submitted his resignation letter to accused Nos.2 and 3 7 through e-mail, giving three months notice, from the date of the mail. Accused No.2 replied to the said mail, accepting the resignation and appreciating the role of the complainant in improving the business of accused No.1. Accused No.2 in his mail dated 16.08.2016 while accepting the resignation of the complainant informed that he will be relieved on 31.08.2016. Accordingly, complainant returned all the company materials including the laptop which was provided to him.
6. The final employment settlement letter was signed by the complainant and accused No.2 on 31.08.2016 and two post dated cheques bearing Nos.3386 dated 30.09.2016 and 3387 dated 31.10.2016 for Rs.2,00,000/- each drawn on HDFC Bank, CMH Road Branch, Indiranagar, Bengaluru was issued in favour of the complainant. The said cheques were towards the salary of the complainant for the months of September and October 2016.
7. The complainant contended that the cheques in question were presented for encashment as and when they were due for payment, both the cheques were dishonored as payments stopped by the drawer.
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8. In the meantime, accused No.2 had sent a letter making frivolous allegations against the complainant on 01.09.2016 alleging that the complainant had forcibly taken the cheques from the Manager - Accounts. One of the laptop provided to the complainant was not returned and therefore, they would stop payment of the cheques taken by the complainant. It was also informed that the laptop surrendered by the complainant did not contain the data which was supposed to be in the same. Therefore, the complainant was called upon to approach accused No.1 on 08.09.2016. Such allegations made by the accused was without any basis. One of the laptop was lost and thereafter second laptop was provided to the complainant. The said laptop was surrendered by the complainant with Manager - accounts. However, it was contended that the complainant has deleted or stolen the data said to be in the laptop. Accordingly, accused No.2 filed a complaint with the police against the complainant making frivolous allegations. It is stated that the complainant has filed Criminal Petition No.6828 of 2016 before this Court seeking quashing of criminal proceedings initiated against him. 9
9. Since both the cheques issued by the accused in favour of the complainant towards payment of his salaries came to be dishonored as 'payment stopped by drawer', the complainant issued legal notice informing the accused regarding dishonor of the cheques and calling upon to pay the cheque amounts. The said notice was served on the accused, but reply dated 03.12.2016 was issued denying the liability of the accused to pay the cheque amounts. Thereafter, the complainant filed the private complaint before the Trial Court alleging commission of offence punishable under Section 138 of NI Act.
10. The learned Magistrate took cognizance of the offence and CC No.52958 of 2017 came to be registered. Accused Nos.2 and 3 have appeared before the Trial Court in response to the summons and pleaded not guilty for the accusation made against them. The complainant examined himself as PW1 and got marked Exs.P1 to 19 in support of his contention. Accused No.2 examined himself as DW1 and got marked Exs.D1 and 2 in support of his defence. The Trial Court after taking into consideration all these materials on 10 record, came to the conclusion that the complainant is successful in proving the guilt of the accused beyond reasonable doubt for the offence punishable under Section 138 of NI Act, convicted and sentenced the accused as stated above.
11. Being aggrieved by the same, the accused have preferred Criminal Appeal No.25041 of 2018. The First Appellate Court on re-appreciation of the materials on record, held that the complaint with regard to the cheque marked as Ex.P2 is premature and therefore, no offence punishable under Section 138 of NI Act could be made out in respect of the same. However, it confirmed the judgment of conviction passed by the Trial Court for the offence punishable under Section 138 of NI Act in respect of the cheque - Ex.P1. It modified the order of sentence by sentencing accused Nos.2 and 3 to pay a fine of Rs.4,00,000/- and in default, to undergo simple imprisonment for a period of six months.
12. Being aggrieved by the conviction of accused for the offence punishable under Section 138 NI Act in respect of cheque - Ex.P1, the accused have preferred Criminal Revision 11 Petition No.615 of 2022 and being aggrieved by the finding of the First Appellate Court that the complaint with regard to cheque - Ex.P2 is premature and modification of the order of sentence imposed on the accused, the complainant has preferred Criminal Revision Petition No.641 of 2020.
13. Heard Sriyuths S Sushant Venkatesh Pai and V Umakantha, learned counsel for the petitioner and Sri A Sampath, learned counsel for the respondents in Criminal Revision Petition No.641 of 2020. Heard Sri A Sampath, learned counsel for the petitioners and Sriyuths S Sushant Venkatesh Pai and Sri V Umakantha, learned counsel for the respondent in Criminal Revision Petition No.615 of 2020. Perused the materials including the Trial Court records.
14. Learned counsel for the complainant contended that admittedly the accused have issued two cheques as per Exs.P1 and 2 towards legally recoverable debt i.e., salary that was due to the complainant. It is also admitted that both the cheques were dishonored as 'payment stopped by the drawer'. The issuance of notice and service of the same on 12 the accused are all admitted. Under such circumstances, the offence under Section 138 of NI Act is made out. The Trial Court has rightly convicted the accused in respect of both the cheques - Exs.P1 and 2 and sentenced them accordingly. But the First Appellate Court committed an error in forming an opinion that the complaint with respect to cheque - Ex.P2 is premature and thereby, convicting and sentencing the accused only with respect to Ex.P1 - cheque.
15. Learned counsel further submitted that Ex.P11 is the final settlement letter admittedly issued by accused No.2, where there is reference to cheques - Exs.P1 and 2 issued to the complainant towards the salary that was due to him. However, when the cheques were dishonored as payment stopped and legal notice as per Exs.P5 and 6 were issued, the accused have given a reply as per Ex.P18 and have categorically denied the liability and refused to pay the cheque amounts. When the accused categorically denied their liability to pay the cheque amounts, the cause of action for filing the complaint under Section 138 of NI Act arose. 13
16. Learned counsel placed reliance on the decision of the Hon'ble Apex court in NEPD Micon Ltd., and others Vs. Magma Leasing Ltd.,1 to contend that, if legislative intent in enacting Section 138 of NI Act is taken into consideration, contractual breach to honor the cheque was considered as an offence to promote the efficacy of banking system and to ensure that in commercial or contractual transactions cheques are not dishonored and credibility in transacting business through cheques is maintained.
17. Learned counsel placed reliance on the decision of the Hon'ble Apex Court in Goaplast (P) Ltd Vs. Chico Ursula D'Souza and another2, in support of his contention that the accused should not be allowed to get away from the penal provision of Section 138 of NI Act on technicalities, as it would provide a handle to the accused who is trying to avoid payment under legal obligations undertaken by them through their own acts and taking advantage of their own wrong. After admitting the liability and issuing cheques as per Exs.P1 and 2 towards payment of salary to the complainant, if the accused are permitted to give instructions to the Bank to stop 1 1999 SCC 253 2 (2003) 3 SCC 232 14 payment of cheques and later refused to pay the cheque amounts on receipt of legal notice, cause of action would arise in favour of complainant to present the complaint under Section 138 of NI Act.
18. Learned counsel placed reliance on the decision of High Court of Allahabad in Ravi Dixit Vs. State of Uttar Pradesh and others3, in support of his contention that by issuing the reply, the accused have made their intention very clear that they are not going to make payment of the cheque amount. Therefore, waiting for 15 days as provided under Section 138 of NI Act will be an empty formality, which cannot be accepted under any circumstance.
19. Learned counsel also placed reliance on the decision of the Hon'ble Apex court in D.Vinod Shivappa Vs. Nanda Belliyappa4, in support of his contention that the law treats such lapses on the part of accused induced by inadvertence or negligence to be pardonable, provided the drawer after receipt of the notice pays the cheque amount within the prescribed period and that is the reason why clause 3 (2006)6 SCC 456 4 (2006)6 SCC 456 15
(c) of proviso to Section 138 of NI Act provides 15 clear days time to the accused and on his failure to make payment gives rise to the complainant to present the complaint. But when the accused categorically refused to make payment by issuing the reply notice, there is no sense in waiting for 15 days for no reason.
20. Learned counsel for the complainant further contended that even though in Ex.P15 - reply notice, the accused have raised untenable defence denying their liability to pay the cheque amounts and blaming the complainant of making loss by snatching the cheques from the Manager Accounts, the criminal complaint filed in that regard against the complainant alleging commission of offence punishable under Sections 420, 408 of IPC 65, 43, 66(B), 72(A) of Information Technology Act, 2000 came to be quashed by this Court vide order dated 28.08.2019 in Criminal Petition No.6828 of 2016. The co-ordinate Bench of this court while quashing the criminal proceedings initiated by the accused against the complainant, made it very clear that the allegations made against the complainant is solely out of spite and vindictive in nature and made with malafide intention. 16 The Court also observed that if the complainant has caused any loss to the accused, they could have recovered the said amount by filing a civil suit. But till today, no such attempt was made by the accused by filing the suit against the complainant. Therefore, it is clear that the accused have made out a ground to escape from their liability, without any basis. When they consciously issued the cheques - Ex.Ps1 and 2 - towards legally recoverable debt as referred to by them in Ex.P11, they cannot be permitted to raise lame excuses without any basis to give stop payment instructions to the Bank. Therefore, it is a clear case of the offence under Section 138 of NI Act as rightly held by the Trial Court and the First Appellate Court concurrently.
21. Learned counsel further submitted that even though the First Appellate Court concurred with the Trial Court that the accused have committed the offence under Section 138 of NI Act in respect of the cheque Ex.P1, it came to the conclusion that the complaint with respect to the cheque Ex.P2 is premature one. The cheque - Ex.P2 was presented for encashment and it was dishonored as payment stopped. The legal notice was issued by the complainant as per Ex.P6 17 calling upon the accused to pay the cheques amount. The said notice was served on the accused on 01.12.2016. The accused have issued the reply notice dated 03.12.2016 as per Ex.P18 denying their liability and refusing to pay the cheque amounts. Therefore, when the accused refused to pay the cheque amounts, the cause of action would arise in favour of the complainant to file the complaint. However, learned counsel submits that the complaint was presented on 17.12.2016 that is on the 15th day of service of notice, but the Trial Court took cognizance of offence on 22.02.2017, that is much after the cause of action arose against the accused. Under such circumstances, rejecting the complaint in respect of Ex.P2 on technicality would defeat the ends of justice and it will encourage such unscrupulous persons to take such untenable contentions even though they made their intention of not paying the cheque amounts very clear. Therefore, the First Appellate Court committed an error in holding that the complaint in respect of Ex.P2 was premature and modifying the sentence imposed on the accused. Hence, he prays for allowing the revision petition, in the interest of justice. 18
22. Per contra, learned counsel for the accused contended that as per Ex.P10, the complainant expressed his willingness to resign from the job by sending the e-mail and the accused have accepted his resignation on 16.08.2016. Ex.P11 is the letter of final settlement between the complainant and accused and it is dated 30.08.2016. The appointment letter is produced as per Ex.P8. The terms and conditions of employment of the complainant is enunciated in the said appointment letter. On 01.09.2016, the Manager - Accounts of the accused Company reported that the cheques in question were forcibly taken by the complainant without completing the relieving formalities. The complainant had not handed over one of the laptops and he has handed over the other laptop without any contents. Therefore, the complainant was called upon to visit the office on 8th September to arrive at a final settlement and to settle the balance amount. Admittedly, the complainant has visited accused No.1 - Company to settle the dispute amicably. Thereafter, as intimated by the accused to the complainant, stop payment instructions were issued to the Bank in respect of cheques Exs.P1 and 2.
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23. Learned counsel submitted that after service of notice issued by the complainant on the accused, he acknowledged it by issuing the reply as per Ex.P13. Therefore, the accused were having genuine reason for issuing stop payment instruction to the Bank and therefore, it cannot be said that there was any amount which was legally recoverable from the complainant. Under such circumstances, no offence under Section 138 NI Act is made out.
24. Learned counsel for the accused further contended that in respect of Ex.P2, the complainant has issued the notice as per Ex.P6 and the same was served on the accused on 02.12.2016. Without waiting for 15 days, as contemplated under clause (c) of Section 138 of NI Act, the complaint was presented on 17.12.2016. Therefore, the complaint itself is premature one and the learned Magistrate should have refused to take cognizance of the offence.
25. Learned counsel placed reliance on the decision of the Hon'ble Apex court in Yogendra Pratap Singh Vs. Savitri Pandey and another5, wherein, three Judge Bench 5 (2014) 10 SCC 713 20 of Supreme Court considered the reference as to whether the complaint could be presented before expiry of period of 15 days as stipulated in Section 138 (c) of NI Act and answered it in the Negative. Therefore, learned counsel for the accused contended that when the full Bench of Hon'ble Apex Court categorically held that, if the period prescribed in clause (c) of the proviso of Section 138 of NI Act, has not expired, there is no commission of offence nor there is actual cause of action for filing the complaint under Section 138 of NI Act, the complaint presented by the complainant is premature one and it should have been rejected by the learned Magistrate.
26. Learned counsel further submitted that even though the First Appellate Court held that the complaint presented by the complainant was premature one, it restricted its findings only in respect of Ex.P2. When the complainant has chosen to combine the causes of action and filed the common complaint, the entire complaint becomes premature and the cognizance taken by the learned Magistrate is vitiated. Therefore, the accused should have been acquitted on this sole ground. The impugned judgment of conviction and order of sentence passed by the Trial Court 21 as well as by the First Appellate Court are vitiated. Hence, he prays for allowing the present petition filed by the accused by acquitting the accused, in the interest of justice.
27. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is:
"1. Whether the impugned judgment of conviction and order of sentence passed by the Trial Court suffers from any infirmities and calls for interference by this Court?
2. Whether the First Appellate Court committed an error in confirming the judgment of conviction, modifying the order of sentence passed by the Trial Court and the same calls for interference by this Court?"
My answer to the above point No.1 is in the Negative and point No.2 is in the Affirmative for the following:
REASONS
28. In Yogendra Pratap Singh (supra), the two Judge Bench of the Hon'ble Apex Court granted leave and formulated the following two questions for consideration: 22
"1. Can cognizance of an offence punishable under Section 138 of NI Act, 1881 be taken on the basis of the complaint filed before the expiry of period of 15 days stipulated in the notice required to be served upon the drawer of the cheque in terms of Section 138 (c) of Act afore- mentioned? and
2. If answer to question No.1 is in the negative, can the complainant be permitted to present the complaint again not withstanding the fact that the period of one month stipulated under Section 142(b) for the filing of such a complaint has expired?"
29. The Division Bench considered that there were divergent findings on the position of law by various High Courts. It felt necessary that conflict in judicial pronouncements need to be resolved authoritatively and accordingly, referred the above two questions for consideration by a three Judge Bench of the Hon'ble Apex Court. Accordingly, the three Judge Bench considered the question referred to it from various angles in the light of divergent findings recorded by several High Courts, including 23 this High Court and answered point No.1 in the negative by holding in paragraphs 34 to 36 and 39 as under:
"34. Insofar as the present reference is concerned, the debate broadly centres around clause (c) of the proviso to Section 138 of the NI Act. The requirement of clause (c) of the proviso is that the drawer of the cheque must have failed to make the payment of the cheque amount to the payee within 15 days of the receipt of the notice. Clause (c) of the proviso offers a total period of 15 days to the drawer from the date of receipt of the notice to make payment of the cheque amount on its dishonour.
35. Can an offence under Section 138 of the NI Act be said to have been committed when the period provided in clause (c) of the proviso has not expired? Section 2(d) of the Code defines "complaint". According to this definition, complaint means any allegation made orally or in writing to a Magistrate with a view to taking his action against a person who has committed an offence. Commission of an offence is a sine qua non for filing a complaint and for taking cognizance of such offence. A bare reading of the provision contained in clause (c) of the proviso makes it clear that no complaint can be 24 filed for an offence under Section 138 of the NI Act unless the period of 15 days has elapsed. Any complaint filed before the expiry of 15 days from the date on which the notice has been served on the drawer/accused is no complaint at all in the eye of the law. It is not the question of prematurity of the complaint where it is filed before the expiry of 15 days from the date on which notice has been served on him, it is no complaint at all under law. As a matter of fact, Section 142 of the NI Act, inter alia, creates a legal bar on the court from taking cognizance of an offence under Section 138 except upon a written complaint. Since a complaint filed under Section 138 of the NI Act before the expiry of 15 days from the date on which the notice has been served on the drawer/accused is no complaint in the eye of the law, obviously, no cognizance of an offence can be taken on the basis of such complaint. Merely because at the time of taking cognizance by the court, the period of 15 days has expired from the date on which notice has been served on the drawer/accused, the court is not clothed with the jurisdiction to take cognizance of an offence under Section 138 on a complaint filed before the expiry of 15 days from the date of receipt of notice by the drawer of the cheque.25
36. A complaint filed before the expiry of 15 days from the date on which notice has been served on drawer/accused cannot be said to disclose the cause of action in terms of clause
(c) of the proviso to Section 138 and upon such complaint which does not disclose the cause of action the court is not competent to take cognizance. A conjoint reading of Section 138, which defines as to when and under what circumstances an offence can be said to have been committed, with Section 142(b) of the NI Act, that reiterates the position of the point of time when the cause of action has arisen, leaves no manner of doubt that no offence can be said to have been committed unless and until the period of 15 days, as prescribed under clause (c) of the proviso to Section 138, has, in fact, elapsed. Therefore, a court is barred in law from taking cognizance of such complaint. It is not open to the court to take cognizance of such a complaint merely because on the date of consideration or taking cognizance thereof a period of 15 days from the date on which the notice has been served on the drawer/accused has elapsed. We have no doubt that all the five essential features of Section 138 of the NI Act, as noted in the judgment of this Court in Kusum Ingots & Alloys Ltd. and which we have 26 approved, must be satisfied for a complaint to be filed under Section 138. If the period prescribed in clause (c) of the proviso to Section 138 has not expired, there is no commission of an offence nor accrual of cause of action for filing of complaint under Section 138 of the NI Act.
39. Our answer to Question (i) is, therefore, in the negative."
30. Thus, the Hon'ble Apex Court held that if the period prescribed in clause (c) of proviso to Section 138 of NI Act has not expired, there is no commission of an offence nor accrual of cause of action for filing complaint under Section 138 of NI Act and therefore, cognizance of such offence cannot be taken on the basis of the complaint filed before expiry of period of 15 days, stipulated.
31. In view of its answer on question No.1 in the negative, the Hon'ble Apex Court held on question No.2 as under:
"41. ...... as we have already held that the complaint filed before the expiry of 15 days from the date of receipt of notice issued under clause 27
(c) of the proviso to Section 138 is not maintainable,. the complainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the Court of sufficient cause.
Accordingly, question No.2 is answered."
32. It is pertinent to note that in YogendraPratap Singh (supra) which came up for consideration before the three Judge Bench of the Hon'ble Apex Court, the accused had issued the cheque in favour of the complainant, which came to be dishonored on presentation. A notice was issued by the complainant to the drawer of the cheque informing about dishonor and calling upon him to pay the cheque amount. The notice was duly served on the drawer on 23.09.2008, as required under proviso (c) of Section 138 of NI Act. However, no payment was made by him. The complaint came to be presented on 07.10.2008, that is before expiry of stipulated period of 15 days. However, the learned Magistrate took cognizance of the offence on 14.10.2008 and issued summons to the accused. When the said order was assailed by the 28 accused before the High Court of Allahabad, under Section 482 of Cr.P.C, the Court held that the complaint is premature and therefore, cognizance taken on such complaint is barred in law. Accordingly, the criminal proceedings against the accused was quashed. Being aggrieved by the same, the complainant had approached the Hon'ble Apex Court. The Division Bench of Hon'ble Apex Court referred the matter to the three Judge Bench to consider the question formulated which is highlighted above.
33. In Narsingh Das Tapadia V.Goverdhan Das Partani6, the Hon'ble Apex Court had held that presentation of the complaint under Section 138 of NI Act before accrual of cause of action does not render it not maintainable, if cognizance had taken by the learned Magistrate after expiry of 15 days of the period of notice. This legal position ruled the field for almost 7 years. However, the two Judge Bench in Sarav Investment & Financial Consultancy (P) Ltd. V.Llyods Register of Shipping Indian Office Staff Provident Fund7, it is held that Section 138 contained a 6 (2007) SCC 183 7 (2007) 14 SCC 753 29 penal provision; it was a special statute. Having regard to the purport of the said provisions as also in view of the fact that it provides for a severe penalty, the provision warrant a strict construction. Emphasizing on clause (c) of the proviso to Section 138, which provides, providing 15 days time after receipt of the notice as an opportunity to pay the amount, it is to be held that the commission of the offence is complete only on expiry of 15th day after service of notice. However, the Division Bench of the Hon'ble Apex Court in Sarav Investment and Financial Consultancy (P) Ltd., (supra) had not referred to its earlier decision in Narsingh Das Tapadia (supra).
34. After analyzing the position of law in the light of various divergent findings, the three Judge Bench of the Hon'ble Apex Court in YogendraPratap Singh (supra) over ruled its decision in Narsingh Das Tapadia (supra), while approving the dictum laid down in Sarav Investment and Financial Consultancy (P) Ltd., (supra), answered the questions referred to it as stated above.
30
35. It is pertinent to note that the discussions held by the Hon'ble Apex Court in Yogendra Pratap Singh (supra) disclose that the Hon'ble Apex Court considered a situation, where the cheque issued by the drawer was dishonored, legal notice was issued by the complainant informing the accused about dishonor of the cheque and calling upon to make payment. The said notice was served on the accused, who failed to repay the amount within the stipulated period of 15 days from the date of service of notice.
36. It is also pertinent to note that in the present case, the facts of the case is conspicuously different as admittedly the legal notices - Exs.P5 and 6 were issued by the complainant informing the accused regarding dishonor of the cheques and calling upon them to pay the cheque amounts. The reply as per Ex.P18 was issued on 10.11.2016 and 03.12.2016, denying the claim of the complainant, raising various defence justifying dishonor of cheques and refusing to pay the amount. This eventuality was not considered by the Hon'ble Apex Court in YogendraPratap Singh (supra), relied on by the learned counsel for the accused. Therefore, the 31 question that would arise as to whether the cause of action for filing the complaint for the offence under Section 138 of NI Act would arise only after expiry of 15 days as contemplated under clause (c) to the proviso to Section 138 of NI Act or whether it arises when the accused categorically denies his liability to pay the cheque amount and refuses to pay the same.
37. Learned counsel for the complainant placed reliance on the decision in D. Vinod Shivappa (supra), wherein the Hon'ble Apex Court held in paragraph 13 as under:
"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 such a case if the drawer of the cheque is prosecuted without notice, it would result in great injustice 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 32 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 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."
(emphasis supplied)
38. Learned counsel for the complainant has also placed reliance on the decision of High Court of Allahabad in Ravi Dikshit (supra), wherein, the cheque was dishonored as there was instruction to stop payment and the dishonor of cheque was communicated to the accused by issuing notice. But he had no knowledge about the date on which the notice was served by the complainant. However, the accused replied 33 to the legal notice issued by the complainant. Therefore, it was contended by the accused that the complainant should have waited for 15 days and he could not have filed the complaint before expiry of such period. Hence, it was stated that the complaint filed by the complainant is premature one. Considering the said contention, the Court held in paragraph 12 as under:
"12. In the case in hand, the petitioner herein replied to the notice which goes to show that the intention of the drawer is clear that he did not wish to make the payment. Once this is clarified, should the complainant wait for the minimum period of 15 days, the answer would be 'no'."
39. In NEPD MICON Ltd., (supra), the Hon'ble Apex Court considered the facts of the case, where cheque was presented for encashment and the same was dishonored as account closed. Even after service of notice, the cheque amount was not paid. When the complaint was filed by the complainant, a contention was raised that since the endorsement was account closed, the offence punishable under Section 138 of NI Act is not made out. It is contended that since Section 138 of NI Act is a penal provision, it should 34 be construed and interpreted strictly. However, the Hon'ble Apex Court rejecting the said contention, held in paragraphs 9 and 15 as under:
"9. Learned counsel for the appellants, however, submitted that Section 138 being a penal provision, it should be strictly interpreted and if there is any omission by the legislature, a wider meaning should not be given to the words than what is used in the section. In our view even with regard to penal provision, any interpretation, which withdraws the life and blood of the provision and makes it ineffective and a dead letter should be averted. If the interpretation, which is sought for, were given, then it would only encourage dishonest persons to issue cheques and before presentation of the cheque close that account and thereby escape from the penal consequences of Section 138.
15. In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy......"
(emphasis supplied) 35
40. After analyzing the position of law on the subject, it is to be considered that the object with which Section 138 of NI Act was enacted. If the legal notice as provided under clause (c) to the proviso to Section 138 of NI Act was served on the accused, he will have 15 days time to make payment of the cheque amount. Therefore, the Hon'ble Apex Court consistently held that the complaint presented before the expiry of the said period of 15 days will have to be considered as premature. But if after service of notice, the accused issues a reply categorically denying his liability to pay any amount and refusing to pay the cheque amount, there cannot be any reason for the complainant to wait till the expiry of 15 days for presenting the complaint. Once the accused makes his intention clear that he is not going to pay the cheque amount, it will be an empty formality for the complainant to wait with his finger crossed, till expiry of 15 days for presentation of the complaint. No purpose would be served by waiting for 15 days as the intention of the accused was already made clear. Therefore, I am of the opinion that the cause of action for filing the complaint under Section 138 of NI Act would arise when the accused denies/disptues his liability to pay the 36 cheque amount and makes his intention clear that he is not going to pay the same. The complainant will have no reason to wait till completion of the period of 15 days contemplated under law as no purpose would be served by the same. It is not the contention taken by the accused that, they would have made payment of the amount claimed, if the complainant had waited for 15 clear days as provided under law. In that regard, the decision of the Hon'ble Apex Court in Yogendra Pratap Singh (supra) cannot be made applicable to the facts and circumstance of the present case, as such a situation was never considered by the Apex Court while answering the references.
41. In view of the discussions held above, I am of the opinion that the complaint presented by the complainant before expiry of 15 days period but after receipt of the reply by the accused categorically denying the liability and making their intention clear that they are not going to pay the cheque amount, cannot be considered as premature. The cause of action for filing the complaint against the accused for the offence under Section 138 of NI Act will arise when the accused denies his liability and refuses to pay the cheque 37 amount. Therefore, the complaint presented by the complainant in the present case before expiry of 15 days period, but after receipt of the reply notice, and taking cognizance of the offence by the learned Magistrate was valid under law.
42. Admittedly, accused No.2 filed criminal complaint against the complainant alleging commission of the offence punishable under Sections 420, 408 of IPC and under the provision of IT Act 2000. Learned counsel for the complainant produced the copy of order dated 28.08.2019 passed by the co-ordinate bench of this Court in Criminal Petition No.6828 of 2016, seeking quashing of criminal proceedings initiated against him. The said petition came to be allowed and the criminal proceeding against the complainant initiated by accused No.2 in Crime No.330 of 2016 of Indiranagar Police Station, Bengaluru came to be quashed.
43. It is relevant to refer to the observations made by the co-ordinate Bench of this Court while quashing the criminal proceedings, as held in paragraphs 5 and 6 as under:
"5. A careful reading of the above extract indicates that the company came to know about 38 the alleged misappropriation while handing over charge on 31.08.2016 itself, if in fact, the misappropriation had come to the notice of the second respondent on the date of handing over the charge in all probability, relieving letter would have been issued to the petitioner affirming full settlement certifying that no payments were due from both sides. In the wake of these unimpeachable documents, the allegation made in the complaint on the face of it appear to be an afterthought and are calculated to implicate the petitioner in a criminal case making false and baseless allegation that one of the laptop given to the petitioner has been retained by him.
6. The documents produced before the Court prima facie disclose that whatever articles including the laptop given to the petitioner has been returned before walking out from the company. Under the said circumstances, there was no basis for respondent No.2 to proceed against the petitioner on the purported allegation that the petitioner herein has retained the property belonging to respondent No.2 and on that account huge loss has been caused to the company. It is quite understandable as to how the Director of a company could exclusively maintain the data of the company as alleged in the complaint. The manner in which these 39 allegations are leveled against the petitioner indicate that solely out of spite and vindictiveness criminal process is set in motive with malafide motivate. In the circumstances of the case, even assuming that the petitioner has caused any loss to the company, the same could be recovered by the company by filing civil suit. The same does not furnish a cause of action to initiate criminal action against the petitioner. The allegations made in the complaint, even if accepted as true, do not prima facie make out the ingredients of a criminal offence, much less under Sections 65,43,66(b), 72(A) of Information Technology Act, 2000 and under Sections 420, 408 of IPC. In that view of the matter, the criminal process initiated against the petitioner being illegal and abuse of process of Court, cannot be sustained."
(emphasis supplied)
44. Even though, such observations were made by the Court while quashing the criminal proceedings against the complainant herein, admittedly the accused have not taken any steps to institute the civil suit for recovery of the loss said to have been caused by the complainant nor he has challenged the order passed by this Court quashing the criminal complaint. Therefore, it could be conveniently 40 concluded by holding that the accused have thought of an ingenious idea of issuing the letter as per Ex.P12 on 01.09.2016 i.e., a day after final settlement arrived at between the complainant and the accused as per Ex.P11 and prepared the ground to give stop payment instructions to the Bank. Admittedly, the accused have not paid any amount to the complainant towards his salary for the work which he had done before resigning from his job. It is not the contention of the accused that they would have made the payment of cheque amounts to the complainant, if he had waited for 15 days from the date of service of notice. The accused have already made their intention very clear not to pay the cheque amounts and they have not paid the same till today.
45. It is also relevant to note that the legal notice was served on the accused on 02.12.2016. The reply notice as per Ex.P18 is dated 03.12.2016. Therefore, within a day the reply as per Ex.P18 was issued by the accused making their intention clear, the complaint came to be filed on 17.12.2016. That means to say, even after receipt of the reply as per Ex.P18, the complainant had not rushed to the Court with the complaint seeking to take cognizance of the offence. But he 41 waited till 17.12.2016 and presented the complaint with a request to take cognizance. It is also relevant to state that the Trial Court took cognizance only on 22.02.2017. But there is no attempt on the part of the accused to pay the cheque amounts to the complainant. Therefore, waiting for 15 days even after reply and refusal by the accused to pay the cheque amounts, would be a futile attempt and an empty formality. Under such circumstances, I am of the opinion that the moment the accused issues the reply disputing the existence of legally recoverably debt and refusing to pay the cheque amounts, the cause of action would arise in favour of the complainant to present the complaint and to seek taking cognizance of the offence. However, even if the complaint was presented before expiry of the time prescribed under Section 138 NI Act, the learned Magistrate may in his wisdom wait for completion of the prescribed period to take cognizance of the offence as provided under Section 142 of NI Act. Therefore, the complaint filed by the complainant in the present case cannot be termed as premature one, but the cause of action arose in favour of the complainant on receipt of such reply by the accused.
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46. The fact of issuing Ex.P11 and determining the final amount that was due to the complainant by the accused is not in dispute. In Ex.P11, there is a reference to Exs.P1 and 2 issued towards full and final settlement of the amount that was due to the complainant. Admittedly, those cheques were dishonored as there was instruction for stop payment as warned in Ex.P12. Even after service of notice, the accused have not repaid the cheque amounts. On the other hand, issued reply as per Ex.P18 disputing the existence of legally recoverable debt and refusing to make payment. When the accused admits the issuance of cheques as per Exs.P1 and 2, its contents and signatures found therein, the presumption under Sections 118 and 139 of NI Act would arise and the burden shifts on the accused to rebut the said presumption. Even though, voluminous evidence and documents are placed before the Court, the defence taken by the accused is not acceptable. It cannot be said that the accused had probabalized his defence. Under such circumstances, it cannot be said that the accused have rebutted the legal presumption. Therefore, the accused are liable for conviction. 43
47. I have gone through the impugned judgment of conviction and order of sentence passed by the Trial Court. It has convicted the accused and sentenced them as stated above for the offence punishable under Section 138 of NI Act. However, the First Appellate Court placing reliance on the decision of Hon'ble Apex Court in Yogendra Pratap Singh (supra), held that the complaint in respect of the cheque - Ex.P2 is premature. In view of the discussions held above, the facts and circumstances considered by the Full Bench of Hon'ble Apex Court in Yogendra Pratap Singh (supra) is distinguished from the facts and circumstances of the present case. Therefore, I am of the opinion that the finding of the First Appellate Court holding that the complaint in respect of cheque - Ex.P2 is premature, is liable to be set aside.
48. Accordingly, I answer the above point No.1 in the Negative and point No.2 in the Affirmative and proceed to pass the following:
ORDER
(i) Criminal Revision Petition No.615 of 2020 filed by the accused is dismissed.44
(ii) Criminal Revision Petition No.641 of 2020 filed by the complainant is allowed.
(iii) The judgment of conviction and order of sentence dated 01.03.2018 passed in CC No.52958 of 2017 is restored by setting aside the finding of the First Appellate Court that the complaint in respect of Ex.P2 is premature.
(iv) The amount in deposit, if any, be transmitted to the Trial Court to appropriate the same towards fine and compensation.
Registry is directed to send back the Trial Court records along with copy of this order.
Sd/-
JUDGE BH