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2007(7) Supreme 522
Supreme Court of india
S.B. Sinha & Harjit Singh Bedi,JJ
M/s. Rahul Builders — Appellant
Versus
M/s. Arihant Fertilizers & Chemical & Anr. — Respondent
Appeal (crl.) 525 of 2005
Decided on : 02-11-2007
Negotiable instruments Act, 1881 – Section 138(b) – Service of notice – When the statute prescribes for service of notice specifying a particular period, it should be expressly stated - Section 138 does not speak of a 15 days’ notice - It contemplates service of notice and payment of amount of cheque within 15 days from date of receipt thereof. (Para 8)
(2000) 2 SCC 380, (2003) 8 SCC 300 relied upon.
Facts of the case:
1.Appellant and respondent 1 herein in the instant case entered into a contract for construction of a building and factory. Respondent1 made payment of Rs. 17,74,238 for execution for contractual work and a balance of Rs. 8,72,409 was pending, A cheque for a Sum of Rs. 1,00,000/- was issued by Respondent1 in favour of appellant which was dishonored. A notice was issued by appellant requesting to remit payment of pending bills. Despite receipt of said notice, no payment was made by Respondent1. An Application filed by respondent 1 for rejection of said complaint was dismissed. High Court however by impugned order quashed criminal proceedings pending against it on ground that 15 day’s notice having not been served upon respondent1, same was not valid in law and that complainant by reason of said notice having demanded a sum of Rs. 8,72,409/- as against cheque which was for a sum of Rs. 1,00,000/- only, notice was vague and did not serve statutory requirements of Provisos (b) and (c) of Section 138 of Act.
2.Present appeal has been preferred against said order of High Court.
Findings of the Court
The Court held that Section 138 does not speak of a 15 days’ notice. It contemplates service of notice and payment of the amount of cheque within 15 days from the date of receipt thereof. When statute prescribes for service of notice specifying a particular period, it should be expressly stated. In absence of any such stipulation, it was difficult to hold that 15 days’ notice was thereby contemplated.
The Court further held that unless a notice is served in conformity with Proviso (b) appended to Section 138 of the Act, complaint petition would not be maintainable. It is one thing to say that demand may not only represent unpaid amount under cheque but also other incidental expenses like costs and interests, but same would not mean that notice would be vague and capable of two interpretations. An omnibus notice without specifying as to what was amount due under dishonoured cheque would not subserve requirement of law. Respondent No. 1 was not called upon to pay amount which was payable under cheque issued by it. The amount which it was called upon to pay was outstanding amounts of bills, i.e., Rs. 8,72,409/-. The notice was to respond to the said demand. Pursuant thereto, it was to offer entire sum of Rs. 8,72,409/-. No demand was made upon it to pay said sum of Rs. 1,00,000/- which was tendered to complainant by cheque. As no demand was made for payment of cheque amount, hence held that impugned judgment could not be faulted. Appeal having no merit, dismissed.
Result: Appeal dismissed.
Judgment
S.B. Sinha, J. —
1. Failure on the part of the appellant to serve a proper notice strictly in terms of proviso appended to Section 138 of the Negotiable Instruments Act (for short “the Act”) whether would lead to quashing of a criminal proceedings initiated by II Additional Sessions Judge, Neemuch on a complaint made by the appellant herein is the question involved in this appeal which arises out of a judgment and order dated 22.11.2004 passed by the High Court of Madhya Pradesh in Misc. Criminal Case No. 2924 of 2004.
2. Appellant is a partnership firm. Respondent No. 1 entered into a contract with it for construction of a building and factory premises. Appellant executed the said contract. It submitted bills for execution of contractual work for a sum of Rs. 26,46,647/-. Respondent No. 1 had made payments of Rs. 17,74,238/- and a balance of Rs. 8,72,409/- was said to be outstanding. A cheque for a sum of Rs. 1,00,000/- drawn on Federal Bank Limited, Indore was issued by Respondent No. 1 in favour of the appellant. Upon presentation of the said cheque, it was not honoured on the ground that Respondent No. 1 had closed its account with the bank. A notice dated 31.10.2000 was sent by it to Respondent No. 1 stating:
“–Your cheque No. 693336 dated 30/4/2000 for Rs. 1,00,000/- has also been returned unpassed by the bank authorities with the plea that A/C No. 1461 has already been closed. Hence the undersigned is now free to take up any legal step against you to get the amount of my pending bills.
In view of the above, you are requested to remit the payment of my pending bills within 10 days from the date of receipt of this letter otherwise suitable action as deemed fit will be taken against you.”
3. As despite receipt of the said notice, Respondent No. 1 did not make any payment, a complaint petition was filed on 11.12.2000. An application was filed by Respondent No. 1 for rejection of the said complaint inter alia on the ground that the notice issued by the appellant was not a valid one. The said application was rejected. A revision application filed thereagainst before the District and Sessions Judge, Neemuch was also dismissed.
4.The High Court, however, by reason of its impugned order, in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure (Code), has quashed the criminal proceedings pending against it holding:
(i)15 days’ notice having not been served upon Respondent No. 1, the same was not valid in law.
(ii)The complainant by reason of the said notice having demanded a sum of Rs. 8,72,409/- as against the cheque which was for a sum of Rs. 1,00,000/- only, the notice was vague and did not serve the statutory requirements of Provisos (b) and (c) of Section 138 of the Act.
5. Mr. Sushil Kumar Jain, learned counsel appearing on behalf of the appellant submitted that the High Court committed a serious error in passing the impugned judgment so far as it failed to consider:
(i)Section 138 of the Act does not postulate a 15 days’ notice;
(ii)Non-payment of the amount of cheque being Rs. 1,00,000/- being a part of the demand sum of Rs. 8,72,409/-, no exception thereto could be taken.
6. Mr. Sanjeev Sachdeva, learned counsel appearing on behalf of Respondent No. 1, on the other hand, supported the judgment contending that the notice in question does not sub-serve the requirements of Section 138 of the Act.
7. Relevant portion of Section 138 of the Act reads as under:
“138. Dishonour of cheque for insufficiency, etc., of funds in the account .Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that ba
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