Andhra HC (Pre-Telangana)
G.S. Srikanth, Md, Talavadi Rock And ... vs Sri Lakshmi Financiers & Others on 3 August, 1998
Equivalent citations: 1998(5)ALD268, 1998(2)ALD(CRI)378, 1998(2)ALT(CRI)486, [1999]98COMPCAS321(AP), 1999CRILJ329
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
ORDER
1. This application is filed under Section 482 of the Code of Criminal Procedure, 1973, to quash the complaint and proceedings in CC.No.31/97 on the file of the III Addl. Judicial Magistrate of First Class, Kakinada. The petitioners herein are A-3, A-4 and A-7 in the said criminal case.
2. The first respondent herein filed a complaint against the petitioners herein and some others before the III Addl. Judicial Magistrate of First Class, Kakinada, under Sections 138 and 142 of the Negotiable Instruments Act, 1881 (for short 'the Act'). In the said complaint A-1 is M/s. Talavad Rock & Mineral Products Ltd., Chennai, a company represented by its Chairman and other Directors. In the said complaint it is inter alia alleged that the accused issued a cheque for Rs.10.00 lakh on 17-10-1995 favouring the complainant towards part satisfaction of a debt incurred by the accused. The complainant presented the cheque for collection on 10-1-1996 and the said cheque, which was issued towards part satisfaction of the debt was dis-honoured by the Bank with an endorsement "exceeds arrangement". The complainant was intimated about the same on 22-1-1996. The complainant thereafter got issued a statutory notice dated 24-1-1996 to the accused. It is further alleged that A-1 received the notice on 29-1-1997 and A-7 refused to receive the said notice. The accused, however, issued a fresh cheque on 30-9-1996 for the said sum of Rs.10.00 lakhs. The complainant presented the said cheque for collection on 9-12-1996 and the same was also dis-honoured with an endorsement "payment stopped by the drawer". Again the complainant got issued the statutory notice dated 14-12-1996. The time and date of offence, according to the complainant, are as follows:
Date of cheque: 30-09-1996 Date of presentation: 09-12-1996 Date of Return of cheque: 11-12-1996 Date of Legal Notice: 14-12-1996
3. It is also specifically alleged in the complaint that A-1 is represented by its Chairman; A-2 is the Chairman of the Company and A-3 is the Managing Director of the Company. A-4 is the whole time Director of the Company. A-5 to A-7 are the Directors of the Company. It is the seventh accused who executed the relevant and required documents. A-7 is alleged to have executed a personal guarantee bond and promissory note for the said amount and also issued cheque dated 17-10-1995 for Rs.10.00 Lakh. The complainant presented the said cheque dated 17-10-1995 for realisation of the debt due to the complainant. The said cheque was dishonoured showing the reason "exceeding arrangements". The complainant got issued the registered notice dated 24-1-1996 to pay the amounts and A-1 received the notice and A-7 refused to receive the same.
4. Finally, after receiving the notice, knowing fully well of the consequences, it is alleged that, the accused issued another cheque on 30-9-1996 in favour of the complainant for the same amount towards part satisfaction of the debt due to the complainant. The said cheque was presented on 9-12-1996 by the complainant and the same was dishonoured with an endorsement "payment stopped by the drawer" on 11-12-1996. The complainant got issued the statutory notice dated 14-12-1996 to the accused. Neither the returned postal cover nor the acknowledgment from the accused were received by the complainant.
5. At this stage, it is required to notice that there is a specific allegation in the complaint that "all the accused are jointly and severally liable and all the accused are managing the business," The cause of action for the complaint, according to complainant, arose on 30-9-1996 and subsequently thereafter when the complainant got issued the legal notices. The complaint was presented in the Court on 30-1-1997.
6. In this application it is urged that the first petitioner is not the Managing Director of the Company, as on the date of filing of the complaint and some other person has been inducted into the Board as Managing Director of the Company with effect from 4-10-1996. This argument is required to be notice only for the purpose of rejecting the same. Not only the company, but every person, who at the time the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company shall also be deemed to be guilty of the offence and shall be liable to be proceeded against and punished under Section 138 of the Negotiable Instruments Act. There is no dispute whatsoever that on the date of the alleged offence, the first petitioner was the Managing Director of the Company. Therefore, he cannot contend that he is not liable for the alleged offence committed by the Company.
7. The only point strenuously urged by the learned Counsel for the petitioners is about the requirement of service of notice. The learned Counsel would urge that the complaint filed by the first respondent does not satisfy the requirement of law. It is urged that the complaint, it self, does not disclose that any notice, as such, was served upon the accused. Service of notice is a mandatory requirement. The service of notice upon the company and the persons responsible for its management is the mandatory requirement. The learned Counsel for the first respondent would urge that notices ware sent under registered post on 14-12-1996 to the accused and neither the postal cover nor the acknowledgment from the accused was received by it. The first respondent had waited until expiry of fifteen days and then filed the complaint. The learned Counsel for the first respondent would further urge that the statutory notice was sent under the registered post acknowledgment, due and service of notice shall be deemed to have been effected at the time at which the letter would be delivered in the ordinary course of post, unless the contrary is proved. The learned Counsel for the first respondent would rely upon Section 27 of the General Clauses Act, 1897.
8. It may be noticed that the complainant filed an office copy of the notice dated 14-12-1996 along with the complaint, apart from other documents.
9. The learned Counsel for the petitioners, however, relied upon a decision of this Court in A. Sudershan v. Mannan (Shabir), 1997 (6) ALD 202. In the said decision, it is held by this Court that "from a combined reading of clauses (b) and (c) of Section 138 of the Negotiable instruments Act, it is clear that unless a notice in writing is received by the drawer of such a cheque the offence would not be constituted. Therefore, the receipt of notice is absolutely necessary as a pre-condition for constitution such an offence. But, it is very important to notice that in the very same decision, while referring to Section 27 of the General Clauses Act, it is held that "in other words if such a document is sent by registered post and if it does not return pack it is deemed to have been served. But such presumption is a rebuttable presumption and it is always open to the addressee to prove that in feet he did not receive such a registered post." It is only having regard to this kind of presumption found under Section 27 of the General Clauses Act, 1897, and also similar presumption found under Section 114 of the Indian Evidence Act, the Courts in India have presumed the service of such a notice or document when such a registered post is not returned back. On further elaborate consideration of the matter, the Court in the said decision came to the conclusion that such presumption is not available when the notice is returned by the postal authorities because the addressee was not available for seven continuous days and held that "therefore, only because a person is not found in his house by the post-man for seven continuous days, there cannot be a presumption of the service of the notice.''
10. The said decision in clear terms supports the case of the complainant and not of the accused. Here is a case, where it is clearly alleged that the notice was sent under registered post and the complainant did not receive the returned postal cover or the acknowledgment from the accused. According to Sri V.L.N.G.K. Murthy, learned Counsel for R-1, the presumption under Section 27 of the General Clauses Act is available. The further observation of the Court that service of notice is a mandatory requirement would also not help the case of the petitioners/accused. Once it is established that notice was sent under Registered post Acknowledgment due and if neither the postal cover nor the Acknowledgment is returned, the presumption available is that the addressee had received the notice. It would be a case of service of notice. In such cases requirement of Section 138 of the Negotiable Instruments Act shall be deemed to have been complied with.
11. This Court in V. Satyanarayana v. A.P. Travel and Tourism Department Ltd., 1997 (1) ALD (Crl.) 706 (AP) = 1997 (2) ALT (Crl.) 1, observed that:
"In Madhu's case 1994 (1) ALT (Crl.) 603, K.T. Thomas, J. considered the scope of Section 138, clauses (b) and (c) of N.I. Act and observed as follows:
In clause (c) of the proviso the drawer of the cheque is given fifteen days from the date 'of receipt of the said notice' for making payment. This affords clear indication that 'giving notice' in the context is not the same as receipt of notice. Giving is the process of which receipt is the accomplishment The payee has to perform the former process by sending the notice to the drawer in his correct address, if receipt or even tender of notice is indispensable for giving the notice in the context envisaged in clause (b) an evader would successfully keep the postal article at bay at least till the period of fifteen days expired. Law shall not help the wrong doer to take advantage of his tactics. Hence the realistic interpretation for the expression 'giving notice' in the present context is that, if the payee has despatched the notice in the correct address of drawer reasonably ahead of the expiry of fifteen days it can be regarded that he made the demand by giving notice within the statutory period. Any other interpretation is likely to frustrate the purpose for providing such notice."
If the contention of the learned Counsel for the petitioner that simply because as the notice was not served, the complaint is liable to be dismissed without enquiring into the circumstances under which the notice was returned, is accepted, it would facilitate the evil minded persons to manage the postal authorities to return the notice and then to claim that the complaint under Section 138 is not maintainable and in such circumstances, the very object of incorporating Sections 138 to 142 would be defeated. The Kerala High Court in Madhu 's case (supra) also took the same view that laws shall not help the wrong doer to take advantage of his tactics. The Madras High Court in Prasanna 's case 1992 Crl. LJ 1233, also observed that if the accused deliberately avoids to receive notice, it would amount to constructive service of notice. The Apex Court in State of Madhya Pradesh v. Hiralal and Ors., , also observed that if the respondent obviously managed to have the notice returned with postal remarks 'not available in the house', 'House locked' and 'shop closed' then it must be deemed that the notices have been served on the respondents.
Therefore, the crucial question is whether the notices were sent to the correct address of the petitioner-accused and whether the petitioner-accused managed the postal authorities to return the notice with some false endorsements are questions of fact which can be decided during the trial of the case only. Complaint under Sections 138 of the Negotiable Instruments Act cannot be quashed or dismissed merely because the notice was not served on the accused or drawer without enquiring into the circumstances leading to the non-service of notice."
12. The Apex Court in Attabira Regulated Market Committee v. Ganesh Rice Mills, , observed that "though notice was sent to the respondent on 14-4-1992 till date neither Acknowledgement nor unserved envelope has been received. Under these circumstances, the notice must be deemed to have been served on the respondent."
13. In Indian Bank v. Datla Venkata Chinna Krishnam Raju, , the Apex Court observed:
"Notice was sent by registered post but neither the A.D. card nor the unserved registered cover has been received back by the Court. We, therefore, presumed, that the respondent has been served.''
14. In M/s. Madan and Company v. Wazir Javir Chand, , the Apex Court while interpreting the provisions of the J&K Houses and Shops Rent Control Act, 1966, dealing with the requirement of a valid notice to terminate the tenancy, observed that:
"...if a registered letter addressed to a person at his residential address does not get served in the normal course and is returned, it can only be attributed to the addressee's own conduct."
15. The decision of the Allahabad High Court in Rajiv Kumar v. State of UP., 1991 Crl. LJ 3010, upon which reliance is placed by the learned Counsel for the petitioners, does not improve the case of the petitioners. The Allahabad High Court merely held that:
"Service of notice of demand and failure to pay inspite of notice are conditions precedent for fastening liability on drawer and in the absence of notice no cognizance can be taken under Section 142 of the Negotiable Instruments Act."
But, here, we are confronted with the question as to what would be the effect when the notice, sent under registered post acknowledgment due and neither the unserved registered postal cover nor the acknowledgment is returned to the sender.
16. In my considered opinion if the holder or the payee of a cheque makes a, demand for payment by giving a notice, in writing to the drawer of the cheque under registered post acknowledgment due and if neither the unserved postal cover nor the acknowledgment is received by the payee or the holder of the cheque, a presumption would arise about the service of notice upon the drawer of the cheque. The complaint filed after expiry of fifteen days from the date of the said notice would satisfy the requirement of law.
17. But the crucial question that would arise for consideration is as to whether such a notice was at all sent under registered post acknowledgment due in the present case?
18. It is urged by the learned Counsel for the petitioners that there is no evidence whatsoever before this Court that such a notice was sent under registered post acknowledgment due. It may be noticed that a copy of the statutory notice dated 14-12-1996 has been filed along with the complaint and the list of documents' would show the same. There is a specific averment in the complaint that the "notice dated 14-12-1996 was sent under registered post acknowledgment due and the complainant has received neither the unserved postal cover nor the acknowledgment. As observed by me the presumption that is available that the notice is deemed to have been served, is a rebuttable presumption. It is hot as if for all practical purposes, the Court has to presume and proceed as if the notice was served as is required in law. It shall certainly be open to the petitioners accused to rebut the presumption and establish that in fact, the complainant did not send any such notice under registered post acknowledgment due. At this stage, it is not possible for this Court to record any finding as to whether the notice was in fact, sent to the petitioner accused under registered post acknowledgment due. In a proceeding under Section 482 of the Code of Criminal Procedure, this Court has to proceed on the assumption that the averments made in the complaint are true on their face value.
19. The learned Counsel for the petitioners further urges that the complainant did not enclose the postal receipt along with the complaint evidencing the, registration of any cover containing the statutory notice. It is a matter of evidence. Failure to produce the postal receipt by the complainant may have its own consequences and may be, it would be easy for the petitioner/accused to/rebut the presumption of service of notice. There is no doubt that the initial burden would be, upon the complainant to prove that the statutory notice was sent under registered post acknowledgment due. These are all the questions of fact which cannot be gone into by this Court. Further these are matters for inquiry and trial by the competent Court of jurisdiction.
20. "For all the aforesaid reasons, it is not possible for this Court to accede to the submissions made by the learned Counsel for the petitioners to quash the proceedings in C.C.No.31 of 1997 on the file of the III Additional Judicial First Class Magistrate, Kakinada. The petition fails and it is accordingly dismissed.
21. After pronouncement of the judgment, the learned Counsel for the petitioners, submits that all the petitioners need not be present during the, course/ of hearing of the case and one of the Directors may be permitted to represent them during the course of enquiry and trial. The petitioners shall file an application to that effect before the Trial Court, which shall be considered by the Trial Court permitting one of the petitioners to represent others on all the dates, except oh the dates on which their presence is required for the purposes of enquiry and trial.