Very important point
Where receipt of Notice of dishonour of cheque was denied by drawer and holder again presented cheque which was again dishonoured for insufficient funds by drawer’s Bank and holder sent a 2nd notice which was not complied by drawer and then holder filed complaint within one month of it, the same cannot be quashed as time barred on the basis of 1st notice, receipt of which was denied by the drawer.

Headnote:Negotiable Instruments Act, 1881 —Sections 138 Proviso and Section 142—Dishonour of cheque on account of insufficient funds—Limitation of one month from arising cause of action under Section 138 Proviso (c)—Service of Notice of demand—General Clauses Act, 1897—Section 27—Meaning of service by post—Notice sent by Registered post on 13.6.98—Drawer intimated by their letter dated 20.6.98 “received one empty envelope without any content in it, therefore request you to kindly sent the contents, if any”—Received by holder on 30.6.98—Holder sent 2nd Notice on 6.7.98 received on 27.7.98 after again presenting cheque on 1.7.98 and dishonoured for insufficient funds on 2.7.98—Complaint filed on 9.9.1998 —Quashed by High Court under Section 482 Cr.P.C. as time barred from first Notice—Whether correct? (No)—Appeal allowed—Case Law discussed.
       Held : To constitute an offence under Section 138 of the Act the complainant is obliged to prove its ingredients which include the receipt of notice by the accused under clause (b). It is to be kept in mind that it is not the ‘giving’ of the notice which makes the offence but it is the ‘receipt’ of the notice by the drawer which gives the cause of action to the complainant to file the complaint within the statutory period. (Para 6)
       Section 27 of the General Clauses Act deals with the presumption of service of a letter sent by post. The despatcher of a notice has, therefore, a right to insist upon and claim the benefit of such a presumption. But as the presumption is rebuttable one, he has two options before him. One is to concede to the stand of the sendee that as a matter of fact he did not receive the notice, and the other is to contest the sendee’s stand and take the risk for proving that he in fact received the notice. It is open to the despatcher to adopt either of the options. If he opts the former, he can afford to take appropriate steps for the effective service of notice upon the addressee. Such a course appears to have been adopted by the appellant-company in this case and the complaint filed, admittedly, within limitation from the date of the notice of service conceded to have been served upon the respondents. (Para 7)
       In Sadanandan Bhadran v. Madhavan Sunil Kumar, 1998(6) SCC 514 this Court held that clause (a) of the proviso to Section 138 did not put any embargo upon the payee to successively present a dishonoured cheque during the period of its validity. On each presentation of the cheque and its dishonour a fresh right and not cause of action accrues. The payee or holder of the cheque may, therefore, without taking pre-emptory action in exercise of his right under clause (b) of Section 138 of the Act, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But once a notice under clause (b) of Section 138 of the Act is ‘received’ by the drawer of the cheque, the layee or the holder of the cheque forfeits his right to again present the cheque as cause of action has accrued when there was failure to pay the amount within the prescribed period and the period of limitation starts to run which cannot be stopped on any account. (Para 8)
       It is conceded in this case that in response to the notice sent by the appellant through their counsel on 13th June, 1998, the respondents herein, vide their letter dated 20th June, 1998, intimated “received one empty envelope without any content in it. Therefore request you to kindly send the content, if any”. This intimation was received by the appellant on 30th June, 1998, the day on which the period of limitation on the basis of earlier notice was to expire. They had exercised the option to accept the averments made by the respondents in their letter dated 20th June, 1998 and issue a fresh notice after again presenting the cheque. The respondents have not denied the issuance of their letter dated 20th June, 1998. Despite admitting its contents, they opted to approach the High Court for quashing the proceedings merely upon assumption, presumption and conjectures. They tried to blow hot and cold in the same breath, stating on the one hand that the notice of dishonour has not been received by them and on the other praying for dismissal of the complaint on the plea that the complaint was barred by time in view of the notice served by the appellant which they had not received. The plea of the respondents was not only contradictory, and after thought but apparently carved out to resist the claim of the complainant and thereby frustrate the provisions of law. (Para 10)
       The High Court fell in error by not referring to the letter of the respondents dated 20th June, 1998 and quashing the proceedings merely by reading a line from para 6 of the complaint. The appellant in para 7 of their complaint had specifically stated that “Even though the complainant is not admitting the said allegation, on abundant caution the complainant presented the cheque again on 1.7.98 to the drawee bank through the complainant’s bankers, Punjab National Bank. The cheque was again dishonoured by the drawee bank on 2.7.98 a registered lawyer notice was issued to the 1st accused firm as well as to the 2nd accused intimating the dishonour of the cheque and demanding payment. The accused have received the notice on 27.7.98. The accused did not make any payment so far”. The receipt of the second notice has concededly not been denied by the respondents. (Para 11)
       Held consequently : Under the circumstances the appeal is allowed and the order of the High Court quashing the complaint filed by the appellant is set aside. The trial Magistrate is directed to proceed against the respondents in accordance with the provisions of law and expeditiously dispose of the complaint. (Para 12)

Judgment

Sethi, J.—The complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter called “the Act”) was quashed by the High Court vide the judgment impugned in this appeal holding that the same was barred by time as the complainant had allegedly failed to file it within the statutory period from the date of accruing of the cause of action.

2. In order to appreciate the legal submissions, a resume of facts of the case is necessary. In its complaint, the appellant-company had stated that Accused Nos. 2 to 9 who are partners of respondent-firm purchased cement from it and issued cheque for Rs. 9,13,353.84 on 26th May, 1998 which was drawn on Karur Vysa Bank Ltd., Ernakulam Branch. When presented for collection, the cheque was dishonoured on account of insufficiency of funds in the account of the accused. The information regarding non payment of the cheque amount was communicated by the Bank to the complainant on 2.6.1998. The complainant on 13.6.1998, through its Advocate, issued a statutory notice in terms of Section 138 of the Act intimating respondents 1 and 2 regarding the dishonour of the cheque and calling upon the respondents to pay the said amount within a period of 15 days from the receipt of the said notice. The postal acknowledgement receipt of the notice, served upon the respondents, was received by the complainant on 15.6.1998. However, the respondents 1 and 2, vide their letter dated 20th June, 1998, which was received by the Advocates of the appellant on 30th June, 1998, intimated that they had in effect received empty envelopes without any contents and requested the appellant to mail the contents. It is worth noticing that by the time the complainant received the intimation of the respondents, the statutory period of filing the complaint was about to expire. Believing the averments of the respondents to be true, though not admitting but as an abundant caution the appellant presented the cheque again on 1.7.1998 to the drawee bank through their bankers. The cheque was again dishonoured by the drawee bank on 2.7.1998. A registered statutory notice was issued to the accused intimating the dishonour of the cheque and the payment was demanded. The accused received the said notice on 27.7.1998 did not make the payment. According to the complainant, the accused on 6.7.1998 sent a registered cover to its Ernakulam office which contained some waste newspaper bits. As despite dishonour of the cheque and receipt of notice, the cheque amount was not paid, the appellant filed the complaint on 9th September, 1998, admittedly, within the statutory period from the second notice. The Additional Chief Judicial Magistrate, Ernakulam took the cognizance and issued process to the respondents. Instead of appearing before the Magistrate, the respondents filed a petition under Section 482 of the Code of Criminal Procedure in the High Court praying for quashing the complaint on the ground that the same was barred by limitation which was disposed of vide the judgment impugned in this appeal.

3. The Act was enacted and Section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instrument is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, in the present day would, are likely to be adversely affected as it is impracticable for the trading community to carry on with it the bulk of the currency in force. The negotiable instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to ano

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Cases Referred (3)