SUPREME COURT OF INDIA
V. Raja Kumari
Vs.
P. Subbarama Naidu
Crl.A.No.887 of 1999
(Arijit Pasayat and C.K.Thakker JJ.)
02.11.2004
JUDGMENT
Arijit Pasayat, J.
1. The appellant (hereinafter referred to as the 'accused') calls in question legality
of judgment rendered by learned Single Judge of the Andhra Pradesh High Court
holding that the question whether notice as required under Section 138 of the Negotiable
Instruments Act, 1881 (in short the 'Act') has been served has to be
decided during trial and the complaint ought not to be dismissed at the
threshold on the purported ground that there was no proper service of notice.
2. Backgrounds facts in a nutshell are as follows:
3. Complaint was filed by respondent no.1 alleging commission of offence
punishable under Section 138 read with Section 142 of the Act. It was alleged
that cheque dated 30.6.1997 bearing no. SB/A/31 839579 for an amount of Rs. 80,
000/- issued by the accused in discharge of the advance amount paid by the
complainant in respect of the sale consideration was dishonoured by the drawee
bank on account of insufficiency of funds. The complainant received this
intimation on 2.8.1997. He got issued legal notice on 9.8.1997 through his
advocate to the correct address of the accused. In the complaint, it is stated
that the said legal notice was returned with an endorsement that the door of
the house of the accused was locked. Subsequently, the amount was not paid by
the accused. Hence, he filed the complaint.
4. The learned Magistrate after going through the contents of the complaint
recorded the sworn statement of the complainant. Taking into consideration of
the contents of the sworn statement, he opined that under Section 138 of the
Act, the service of notice on the person, whose cheque was dishonoured is
mandatory and in the instant case the notice was not served on the accused and
mere sending of notice by the complainant to the accused cannot be taken into
consideration. Holding thus, he dismissed the complaint.
5. The said order was assailed before the High Court. A revision petition in
terms of Sections 397 and 401 of the Code of Criminal Procedure, 1973
(in short the 'Code') was filed before High Court. The High Court by the
impugned order held that the procedure followed by the Magistrate is not
correct. The complainant complied with the requirement of law by sending
registered legal notice. Non-service of notice is not a ground for rejecting
the complaint, even before it is numbered. What is the effect of non- service
of the notice when the door of the house of the accused was closed, will be
considered after trial. Reference was made to a decision of the High Court in V.
Satyanarayana v. A.P. Travel & Tourism Development Corporation Ltd.1
where it was held that the complaint under Section 138 of the 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.
6. In support of the appeal learned counsel for the appellant submitted that
basic requirement for initiation of proceeding is service of notice. If the
complaint itself does not show that notice has been served, it is to be thrown
out at the threshold as was rightly done by the learned Magistrate and the High
Court erroneously interfered with it.
7. Strong reliance was placed on Shakti Travel & Tours v. State of Bihar
and Another 6), stating that when the complainant did not assert that
demand notice has been served, the complaint was not maintainable.
8. Learned counsel for the respondent-complainant, on the other hand, submitted
that the complaint clearly indicated that the accused managed to get an
endorsement about the 'house been locked'. This was clearly stated to be
incorrect endorsement. Therefore, as rightly held by the High Court the effect
of the endorsement has to be considered during trial.
9. The factual position in Shakti Travel (supra) as appears from the short
order of this Court was different. There was no mention in the complaint about
service of notice. In the instant case there is an assertion about incorrect
endorsement regarding locking of the house. The effect of such endorsement has
to be adjudged during trial.
10. The important point to be decided in this case is whether the cause of
action has arisen at all as the notice sent by the complainant to the accused
was returned with the endorsement "house been locked".
11. The conditions pertaining to the notice to be given to the drawer have been
formulated and incorporated in clauses (b) to (c) of the proviso to Section 138
of the Act. The said clauses are extracted below:
"(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."
12. On the part of the payee he has to make a demand by "giving a
notice" in writing. If that was the only requirement to complete the
offence on the failure of the drawer to pay the cheque amount within 15 days
from the date of such "giving", the travails of the prosecution would
have been very much lessened. But the legislature says that failure on the part
of the drawer to pay the amount should be within 15 days "of the
receipt" of the said notice. It is, therefore, clear that "giving
notice" in the context is not the same as receipt of notice. Giving is a
process of which receipt is the accomplishment. It is for the payee to perform
the former process by sending the notice to the drawer at the correct address.
13. In Black's Law Dictionary "giving of notice" is distinguished
from receiving of the notice" (vide p. 621) : "A person notifies or
gives notice to another by taking such steps as may be reasonably required to
inform the other in the ordinary course, whether or not such other actually
comes to know of it." A person "receives" a notice when it is
duly delivered to him or at the place of his business.
14. If a strict interpretation is given that the drawer should have actually
received the notice for the period of 15 days to start running no matter that
the payee sent the notice on the correct address, a trickster cheque drawer
would get the premium to avoid receiving the notice by different strategies and
he could escape from the legal consequences of Section 138 of the Act. It must
be borne in mind that the court should not adopt an interpretation which helps
a dishonest evader, and clips an honest payee as that would defeat the very
legislative measure.
15. relating, to giving of notice often receive liberal interpretation"
(vide p. 99 of the 12th Edn.). The context envisaged in Section 138 of the Act
invites a liberal interpretation for the person who has the statutory
obligation to give notice because he is presumed to be the loser in the
transaction and it is for his interest the very provision is made by the
legislature.
16. The words in clause (b) of the proviso to Section 138 of the Act show that
the payee has the statutory obligation to "make a demand" by giving
notice. The thrust in the clause is on the need to "make a demand".
It is only the mode for making such demand which the legislature has
prescribed. A payee can send the notice for doing his part for giving the
notice. Once it is despatched his part is over and the next depends on what the
sendee does.
17. It is well settled that a notice refused to be accepted by the addressee can be presumed to have been served on him (vide Harcharan Singh v. Shivrani ) and Jagdish Singh v. Natthu Singh ( 1).
18. Here the notice is returned as addressee being not found and not as
refused. Will there be any significant difference between the two so far as the
presumption of service is concerned? In this connection a reference to Section
27 of the General Clauses Act, 1897 will be useful. The section reads thus:
"27. Meaning of service by post.-Where any Central Act or Regulation made
after the commencement of this Act authorises or requires any document to be
served by post, whether the expression 'serve' or either of a the expressions
'give' or 'send' or any other expression is used, then, unless a different
intention appears, the service shall be deemed to be effected by properly
addressing, preparing and posting by registered post, a letter containing the
document, and unless the contrary is proved, to have been effected at the time
at which the letter would be delivered in the ordinary course of post."
19. No doubt Section 138 of the Act does not require that the notice should be
given only by "post". Nonetheless the principle incorporated in
Section 27 (quoted above) can profitably be imported in a case where the sender
has despatched the notice by post with the correct address written on it. Then
it can be deemed to have been served on the sendee unless he proves that it was
not really served and that he was not responsible for such non-service. Any
other interpretation can lead to a very tenuous position as the drawer of the
cheque who is liable to pay the amount would resort to the strategy of
subterfuge by successfully avoiding the notice.
20. This position was noted by this Court in K. Bhaskaran v. Sankaran Vaidhyan
Balan and Another).
21. The object of notice is to give a chance to the drawer of the cheque to
rectify his omission and also to protect an honest drawer. Service of notice of
demand in clause (b) of the proviso to Section 138 is a condition precedent for
filing a complaint under Section 138 of the Act. In the present appeal there is
no dispute that notice was in writing and this was sent within fifteen days of
receipt of information by the appellant-Bank regarding return of cheques as
unpaid. Therefore, the only question to be examined is whether in the notice
there was a demand for payment. (See Central Bank of India and Another v.
Saxons Farms and Others).
22. At this juncture it is relevant to take note of order passed by this Court
in State of M.P. v. Hiralal and Others2. It was, inter alia,
noted as follows:
"In view of the office report, it would be clear that the respondents
obviously managed to have the notice returned with postal remarks "not
available in the house", "house locked" and "shop
closed" respectively. In that view, it must be deemed that the notices
have been served on the respondents."
23. In Madhu v. Omega Pipes Ltd.3 the scope and ambit of
Section 138 clauses (b) and (c) of the Act were noted by the Kerala High Court
and Justice K.T. Thomas (as His Lordship was then) observed as follows:
"In Clause (c) of the proviso the drawer of the cheque is given fifteen
days from the date 'of receipt of 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 expires. 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 dispatched 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 a notice."
24. Burden is on the complainant to show that the accused has managed to get an
incorrect postal endorsement made. What is the effect of it has to be
considered during trial, as the statutory scheme unmistakably shows the burden
is on the complainant to show the service of notice. Therefore, where material
is brought to show that there was false endorsement about the non-availability
of noticee, the inference that is to be drawn has to be judged on the
background facts of each case.
25. In view of the aforesaid, the inevitable conclusion is that the High Court
was justified in its view and no interference is called for in this case.
26. The appeal deserves to be dismissed which we direct.
1(1997 (2) ALT (Crl.) 1 A.P.)
2(1996 (7) 523)
3(1994 (1) ALT (Crl.) 603 (Kerala)