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2006 Supreme(Bom) 1391
(KARNATAKA HIGH COURT)
Mrs. MANJULA CHELLUR, J.
G. N. Raju - Appellant.
Vs .
B. S. Jaiprakash & Am. - Respondent.
Criminal Appeal No.323 of 2002
Decided on 2nd September, 2005.
B. M. SHYAMPRASAD and Associates, for Appellant.
VIPIN KUMAR JAIN and Associates, for Respondents.
The legal point established in the judgment is that a conviction under S.138 of the Negotiable Instruments Act does not prevent the complainant from approaching the Civil Court for recovery of the amount, and the significance of the Court taking cognizance of the offence under S.138.
Headnote:
S.138 of Negotiable Instruments Act - Acquittal Challenge - Summary of Acts and Sections: S.138 of Negotiable Instruments Act - Summary: The court discussed the nature of S.138 of the Negotiable Instruments Act, emphasizing that the provision was brought into the Act to address the problem of dishonored cheques in the mercantile world. The court highlighted that a conviction under S.138 does not prevent the complainant from approaching the Civil Court for recovery of the amount. The court also addressed the issue of premature presentation of the case and the significance of the Court taking cognizance of the offence under S.138. The judgment emphasized the need for the trial Court to proceed on the merits of the case and not indulge in issues of limitation, premature presentation, or the nature of the dispute.
Fact of the Case:
The complainant advanced a loan to the accused, who issued a cheque that was dishonored. The accused claimed the cheque was issued as security for a frustrated land deal. The trial court held that the matter was of a civil nature and the complaint was premature.
Finding of the Court:
The court found that the trial court erred in its interpretation of S.138 of the Negotiable Instruments Act and the premature presentation of the case. It directed the trial court to proceed on the merits of the case and not indulge in issues of limitation, premature presentation, or the nature of the dispute.
Issues: Nature of the cheque issuance, premature presentation of the case, interpretation of S.138 of the Negotiable Instruments Act, and the trial court's handling of the matter.
Ratio Decidendi: The court emphasized that a conviction under S.138 does not prevent the complainant from approaching the Civil Court for recovery of the amount. It also clarified the significance of the Court taking cognizance of the offence under S.138 and directed the trial court to proceed on the merits of the case.
Final Decision: The appeal was allowed in part, and the matter was remitted back to the trial Court for fresh disposal of the case on merits.
The concept of premature presentation under Section 138 of the Negotiable Instruments Act refers to the situation where a complaint is filed before the expiry of the mandatory notice period, which is typically 15 days from the date of receipt of the notice by the drawer of the cheque (!) (!) .
The legal understanding is that the mere presentation of the complaint before the court does not automatically mean that cognizance has been taken by the court. Cognizance is considered to be taken only when the court applies its mind to the facts of the case and formally records this action, which may occur at a later stage than the initial presentation of the complaint (!) (!) .
If a complaint is filed prematurely, i.e., before the expiry of the notice period, it does not necessarily invalidate the proceedings. The critical factor is when the court takes cognizance of the offence. If cognizance is taken after the expiry of the 15-day notice period, the complaint is considered to have been filed at the appropriate time, and the premature presentation does not affect the legality of the proceedings (!) (!) .
Furthermore, the date on which the court takes cognizance is the relevant point at which the statutory period begins to run. If the court's cognizance is recorded after the notice period has expired, the complaint is deemed to have been filed in time, and the proceedings can continue on the merits of the case (!) (!) .
In the case discussed, it was observed that the complaint was presented before the court on a date that was considered premature because the court had not yet taken cognizance at that time. However, subsequent proceedings indicated that cognizance was ultimately taken later, after the expiry of the notice period, rendering the initial premature filing legally acceptable (!) (!) (!) .
In summary, the key point is that the validity of the complaint in terms of timing hinges on when the court takes cognizance, not merely on the date of presentation. Premature presentation does not invalidate the proceedings if the court's cognizance is recorded after the statutory period has elapsed (!) (!) (!) .
Therefore, in cases of premature presentation, the focus should be on the date of cognizance, which determines whether the complaint was filed within the permissible time frame under the law.
2. According to the complainant-appellant when the accused persons approached the complainant for advancement of loan, a sum of Rs. 5,50,0001- was advanced and in repayment of the said amount a cheque dated 5-12-1997 for Rs.5,50,0001- was drawn on Syndicate Bank, Seshadripuram Branch in favour of the complainant towards the discharge of the whole debt. As the said cheque was dishonoured for insufficient funds as per the bank endorsement, after issuing mandatory notice dated 25-3-1998 the complainant launched the prosecution when the accused failed to pay the amount under the cheque.
3. The respondent/accused appeared and contested the matter. The defence of the accused was there was a sale transaction pertaining to the landed property between the complainant and one Krishnamurthy and the said deal got frustrated. Therefore, this cheque came to be issued as a security as the said sale transaction of the land was entered into between the complainant and the said Krishnamurthy at the instance of the accused persons. Therefore, the said cheque was neither issued towards legally recoverable debt or any other liability as such. They also produced certain documents EX.D-1 to D-3 in support of their evidence.
4. The complainant marked 6 documents apart from leading oral evidence. The learned Judge ultimately held that the entire transactions seems to be of a civil nature, therefore, it shall not dispose of the matter on merits as the parties have to resolve their disputes in Civil Court as already a suit was pending between the parties. Incidentally it also held that the complaint was premature as complainant did not wait till the expiry of 15th day to launch the prosecution against the accused after service of mandatory notice as contemplated under S.138 of the Negotiable Instruments Act. However, the learned Judge did not believe the defence raised by the accused with reference to Ex.D-3 and other documents.
5. Section 138 was brought into Negotiable Instruments Act having regard to the peculiar nature of the problem the Mercantile World was facing. As a matter of fact at one point of time the person who gives the cheque would feel ashamed if the cheque gets bounced. We are at a stage where the said phenomenon has become an order of the day. This probably compelled the concerned authorities to bring such a law so as to punish the drawer if the cheque issued by him is not honoured by him. This was made penal and the punishment or the sentence under the said provision is either imprisonment or by way of fine. The fine could be double the amount under the cheque.
6. This does not mean the creditor or the person to whom such cheque is given by the accused either towards the debt or liability foregoes his right to recover the said money in a Civil Court. The conviction under S.138 of the Negotiable Instruments Act need not be fine alone but it could even be imprisonment. In that situation for the offence committed by the accused, he would be punished but so far as the loss caused to the complainant, he has no remedy. Therefore, mere launching of prosecution or even obtaining conviction under S.138 against the accused does not prevent the complainant from approaching the Civil Court for recovery of the amount which is legally recoverable. Therefore, the learned Judge went on wrong footing saying as the deal was initially a land deal attracting the civil litigation, this has to be resolved in a Civil Court.
7. Any cause of action which gives right to the party to approach the Court if under law he is entitled to prosecute, it is at his option he can do so. Merely because it opts out to proceed on the criminal side, it does not stop him from proceeding in the civil Court. Section 138 of N.I. Act being a quasi civil and criminal nature, definitely the
